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VOL. 129 | NO. 27 | Monday, February 10, 2014

City Delays Fairgrounds Zone Application Vote

By Bill Dries

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The city of Memphis won’t be going to the Tennessee Building Commission in Nashville this week for approval of a Tourism Development Zone for the Mid-South Fairgrounds.

The administration of Memphis Mayor A C Wharton Jr. decided to delay the proposal last week as it reviewed the fairgrounds renovation financing plan with Memphis City Council members.

The delay comes as there is opposition in some local quarters to the financing plan and anything less than local unanimity usually leads state government bodies to either delay their vote on such a measure or turn it down.

The city of Memphis has delayed its proposal to the Tennessee Building Commission to seek approval of a Tourism Development Zone for the Mid-South Fairgrounds.

(Daily News File/Lance Murphey)

Shelby County Commissioners voted down a resolution earlier this month urging the building commission to reject the TDZ application.

But the project and its financing prompted lots of questions from council members last week. And council chairman Jim Strickland challenged the basic premise the administration has been pushing in seeking a 3-square-mile zone that includes Overton Square and the Cooper-Young business district.

“What your plan does is take Overton Square’s sales tax, Cooper-Young’s sales taxes, which are growing naturally – without any input from the fairgrounds,” Strickland said. “And it would take them out of the operating budget and put them in the fairgrounds.” “Only the state portion,” replied city Housing and Community Development director Robert Lipscomb.

“No. It’s in your application. Look at your application. It’s in a footnote,” Strickland countered. “It does include the local sales tax option. The lawyers have told me that.”

To make its case that the incremental sales tax revenue captured in the zone for fairgrounds redevelopment would have no impact on the share of the sales tax that goes to local public schools, the administration brought in Mark Mamantov, an attorney with the Knoxville office of Bass, Berry & Sims PLC.

Mamantov wrote the legislation that governs the establishment and use of Tourism Development Zones in Tennessee. He wrote it as Knoxville sought the state’s first TDZ to renovate the grounds of the 1982 World’s Fair held in that city.

But Strickland’s point was that the zone would divert parts of the local sales tax revenue that would otherwise flow into the city’s general fund. The general fund is the chief revenue source for the city’s operating budget.

“The natural growth is going to be addressed through the natural growth formula,” Mamantov said of the state law.

The law attempts to separate incremental sales tax revenue generated by the redevelopment project and incremental sales tax revenue that is caused by other “natural” growth or growth unrelated to the redevelopment project.

“You just have to rely on the statutory mechanism,” he added. “You really can’t really know. It’s really conjecture whether this will help or hurt Overton Square. To an extent there might be a little bit of natural growth there, it will be well made up by other growth that would occur elsewhere in the district.”

Mamantov also acknowledged the local part of the sales tax would be affected by the Tourism Development Zone.

“There were people down there at the table that denied that the local sales tax was involved,” Strickland said, in a reference to the Wharton administration. “Money that would normally go into the operating budget will be diverted to the fairgrounds.”

“Some of it depends on whether you are creating increment or not,” Mamantov replied. “To the extent you are creating increment – you wouldn’t have that money for your operating budget anyway. To the extent it’s natural growth, the formula in the statute isn’t going to be precise to the penny, but it will essentially protect the growth.”

And Mamantov argued that the benefit is that sales tax revenue that would otherwise go to state government remains in Shelby County. It’s the point Lipscomb has repeatedly made in pushing the project. But Strickland said the state sales tax revenue that stays in Memphis goes directly to the fairgrounds.

“You are trying to make an argument for the entire deal, and I’m trying to get answers to the questions and information to make a decision. In answer to every question, you want to argue the whole deal,” Strickland said. “That’s the problem with the community and the County Commission is you can’t get answers to questions. Y’all want to argue tourism. All of the tourism money that’s coming in, all of the money’s going to the fairgrounds. It’s not going to help the entire community.”

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