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VOL. 130 | NO. 13 | Wednesday, January 21, 2015

Council Approves Schools Deal, Appoints Boyd

By Bill Dries

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Two weeks after they ignored a proposed $43.1 million settlement of the six-year old schools funding legal standoff, Memphis City Council members Tuesday, Jan. 20, approved a $41.8 million settlement with Shelby County Schools.

The settlement came from the mediation process that began before Thanksgiving, a court- supervised mediation that some council members have long favored.

By contrast, the earlier proposal presented by Memphis Mayor A C Wharton Jr. and approved by the Shelby County Schools board was the result of direct talks between Wharton and Shelby County Schools superintendent Dorsey Hopson.

Council members decided two weeks ago in a private meeting with their attorney that they would neither approve nor reject Wharton’s proposal, but would instead resume mediation.

Some also criticized Wharton for not negotiating or haggling with Hopson on the dollar amount.

The overall dollar amount reflects cash as well as credits that are part of the agreement which now awaits approval by the Shelby County Schools board.

The city would pay Shelby County Schools $8 million from the city’s reserve fund by mid February and then pay a total of $20 million more in annual payments of $1.3 million for the following 15 fiscal years, by mid-February in each of those years.

The city would also continue to pay principal and interest on a 1998 bond issue that was part of the city’s legal counterclaim against the $57 million judgment the school system won in Chancery Court and on appeal after the council cut schools funding in 2008 in violation of state law.

The principal and interest on the 17-year old bond issue comes to $8 million. There is a credit to the city for continuing Memphis police services in schools valued at $2 million.

There could be a credit in the city’s favor of $1.3 million if the school system opts to continue Memphis Police services in schools after the 2015-2016 school year.

And the city agrees to spend up to $3.8 million on school system construction projects on a one-time only basis.

The settlement approved by the council differs from Wharton’s proposal by $1.4 million and uses the same structure of an immediate payment with installment payments after that.

The biggest difference is in the cash part of the settlement with the city paying $4.7 million less in the proposal that surfaced Tuesday compared to the earlier proposal.

In 2010, council member Shea Flinn, who was the council member closest to the mediation process, proposed a $21 million lump sum payment, with no credits or other conditions, to settle the stand off.

In other council action Tuesday, former council member Berlin Boyd was the choice of the council to fill the vacancy created by the resignation of District 7 council member Lee Harris who left following his election in November to the state Senate.

Boyd garnered the seven votes necessary to fill the seat in the second round of balloting among the 12 remaining council members. His rival was Shelby County Democratic Party chairman Bryan Carson, who got five council votes.

Boyd serves the 11 months left in Harris’s term of office and he will be among those running for the district seat and a full four-year term of office in the October city elections.

Boyd was appointed to the council on an interim basis in 2011 following the indictment of council member Barbara Swearengen Ware on an official misconduct charge. In that instance, Boyd did not seek election to the council seat in the 2011 city elections.

Ware and prosecutors later agreed to a diversion deal in which she admitted no guilt.

Ware was among the six citizens who applied for the vacancy, telling her one-time council colleagues that she had “a burning desire to pick up where I left off.”

Ware got one vote in the first round of balloting from council member Janis Fullilove. Because she didn’t get at least two votes in that round, Ware did not advance to the second round under council rules.

The council also delayed a vote for two weeks Tuesday on the resolution that would create a Beale Street Tourism Development Zone.

Council member Harold Collins argued major transactions the nine-member authority board might make should be subject to council approval. Other council members cited their long-standing reservations about the long-term agreement made through the nonprofit Beale Street Development Corporation with Performa Entertainment for the revitalization and reopening of the district between Second and Fourth Streets starting in late 1983.

In an executive session briefing on the administration’s Fairgrounds redevelopment plan, council members heard from Housing and Community Development director Robert Lipscomb that the city might seek approval from the Tennessee Building Commission next month of the city’s application for a Tourism Development Zone. The zone would cover the Fairgrounds and a three mile area around it.

Lipscomb also said another study to determine what kind of facilities should be in a more specific Fairgrounds blueprint to come would follow.

Wharton said in December, the city would likely seek approval of a Tourism Development Zone for the Fairgrounds and then put together a detailed plan of facilities for the Fairgrounds after that.

Some council members Tuesday questioned the timing of the two steps and whether the plan should come before the TDZ.

Incremental sales tax revenue captured in the zone would finance the remake of the Fairgrounds as a public recreation area designed to attract amateur sports tournaments and related sports tourism.

Lipscomb and the administration’s Fairgrounds team of eight consultants and attorneys also pushed a multi-purpose indoor venue that would replace the Mid-South Coliseum.

Larry Cranor, a real estate, planning and economic development consultant with RKG Associates, estimated the TDZ would bring in $340 million over 30 years to finance the project.

Bond counsel Tyree Daniels, of Raymond James, told the council that would finance revenue bonds with no ad valorem taxes backing the bonds and no debt service guarantee from the city of Memphis.

Attorney Hunter Humphreys of Glankler Brown also spelled out an expanded interlocal agreement between the city and Shelby County government for county support of the city’s TDZ application in Nashville.

It still includes a pledge by the city to make up any incremental tax revenue local public school systems might lose.

But the city would specifically agree to a $3.6 million lump sum payment toward schools funding and $321,636 in annual payments for years after that.

Under the agreement, Shelby County Schools would have access to the multi-purpose facility for its events including graduations. The city would build a new football field and track to replace those existing facilities at the Fairgrounds. And a new gymnasium would be built for the Maxine Smith STEAM Academy, formerly known as Fairview Middle School.

Council members plan to devote more time in their committee schedule to a fuller discussion of the Fairgrounds plan on Feb. 3.

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