VOL. 130 | NO. 33 | Wednesday, February 18, 2015
Council Critical of Wharton Debt Restructuring
By Bill Dries
First reviews from Memphis City Council members Tuesday, Feb. 17, to Memphis Mayor A C Wharton’s plan to restructure the city’s debt payments were harsh and skeptical.
Wharton wasn’t present in council committee sessions Tuesday as council member Jim Strickland played audio of Wharton in 2010 telling council members that the restructuring of city debt then was a “plain vanilla” transaction.
City Finance Director Brian Collins told the council Tuesday that the 2010 restructuring came with a balloon payment that doubles to $30 million in fiscal year 2020 – a crucial fiscal year for city finances. That is when the city must begin to make its full annual required contribution to the city’s pension liability under state law.
Strickland and council member Harold Collins, meanwhile, were sharply critical of the new restructuring saying it simply pushes the balloon payment further out just as the 2010 restructuring did.
Strickland wants the city to begin making the $74 million annual pension payment in two fiscal years including the current fiscal year and make that the city’s formal pension policy.
Collins favors making the new pension policy an ordinance instead of the resolution the administration has proposed because he argues it would be more difficult to change as an ordinance.
Council members voted to hire their own consultant to review the administration’s restructuring proposal, just as it did to review the city’s estimates and projections on pension liabilities this past summer. Council chairman Myron Lowery is expected to have some estimate next month of how much it will cost to use Segal Consulting of Atlanta, the same firm the council used for the pension discussions this past summer.
The earliest there would be a council vote on the restructuring plan, which is already approved by the Tennessee Comptroller, is the March 3 council meeting. But a vote at that meeting seems unlikely with the move to a consulting firm.
In other action, council members approved $23.7 million in capital funding to begin long-held plans to move city government facilities onto the Raleigh Springs Mall property including a new Raleigh branch public library, and a new Memphis Police traffic precinct as well as a new area precinct for cops currently stationed at the Old Allen precinct.
The city’s plan is to use the public facilities as a catalyst for private investment in the mall which the city describes as a “town center.”
The council approved another $7.5 million to the project in late 2013 and the city expects to get $6.2 million from selling the property where the current police precincts are as well as the existing library. According to the same city documents, the total also includes what the city would make from selling a parcel of land the city bought at the northwest corner of Austin Peay Highway and Yale Road that it had planned to use for various government offices over several years including the traffic precinct.
The mall is at the southeast corner of Austin Peay and Yale.
Earlier this month, Wharton announced the city had reached a settlement with owners of out parcels on the mall property for the redevelopment. But he also said the city had begun eminent domain proceedings against the owners of the mall itself who have clashed with the city over the town center concept.
The city hopes to extend the concept with the same strategy at Southbrook Mall in Whitehaven and the Soulsville Town Center in South Memphis.
The Raleigh Springs Mall plan has also been pushed by council member Bill Morrison who represents the area. A group of 60 residents of the area supporting the plan were present for Tuesday’s council session.
Council members also approved on the second of three readings an ordinance creating a Beale Street Tourism Development Authority to guide future plans for the entertainment district.
And the council delayed for two weeks a vote on a used car lot at 1780 Getwell Road near Mallory in South Memphis.