VOL. 130 | NO. 52 | Tuesday, March 17, 2015
Council Weighs City Debt Payment Restructuring Proposal
By Bill Dries
Memphis City Council members discuss and could vote Tuesday, March 17, on a restructuring of the city’s debt payments.
Memphis Mayor A C Wharton Jr. has proposed the restructuring to delay a balloon payment in 2020 that would see the city’s annual payment go from $15 million the year before to $30 million in that fiscal year.
The balloon payment currently comes in the same fiscal year the city is supposed to – under state law – begin making its full annual required contribution of $74 million to the city’s pension fund.
Memphis Mayor A C Wharton Jr. is proposing a restructure of city debt payments that would push a $30 million balloon note beyond 2020, the same year the city must fully fund the annual required contribution to its pension, as required by state law.
(Daily News File/Andrew J. Breig)
The city is currently at the $48 million mark in the ramp-up over five fiscal years.
But some on the council argue the city should meet the annual pension contribution in two fiscal years, counting the current fiscal year, and not push the balloon payment beyond 2020.
At the 1 p.m. executive session, council members will hear from consultants at PFM, the municipal finance firm the council has hired to advise it on the restructuring proposal.
It is the combination of the debt payments and the pension annual required contribution in 2020 that is the central point of the presentation the PFM consultants will make to the city council.
That is reflected in a Power Point presentation from PFM circulated Monday afternoon by council chairman Myron Lowery.
“Restructuring the debt provides an opportunity to focus on paying the pension obligation,” reads the last point on the summary slide.
The summary also notes that the restructuring would lower the city’s estimated gap between revenues for pensions and debt service and the combined annual debt service and pension costs in 2020 by $104 million.
That would bring the city’s revenue gap for the pension and debt service combined to $68 million, which means there would still be considerable “budget stress” for city leaders in future fiscal years.
If the city does nothing in terms of the restructuring, the PFM consultants put the gap at $172 million.
But the PFM summary also adds that the restructuring would add $12.7 million to the city’s debt service expense. And it notes “higher interest rates will increase financing costs and mitigate some of the benefit of the restructure.”
The council meets at 3:30 p.m. at City Hall, 125 N. Main St. Follow the meeting and get updates from committee sessions earlier in the council day @tdnpols, www.twitter.com/tdnpols.
Council chairman Myron Lowery has said he will call for a vote on the restructuring resolution at the afternoon session that follows the non-voting executive session.
Also on the agenda Tuesday is an agreement between the Memphis-Shelby County Port Commission and the Tennessee Wildlife Resources Agency. The agreement would amend the 2001 existing contract permitting bow and arrow hunting on Presidents Island to allow a spring turkey hunt with shotguns as well as bows and arrows. Certain parts of the industrial area have plenty of wildlife including deer and turkeys.
In the past, industrial tenants on Presidents Island have had concerns about the use of guns near their facilities.
In zoning and development matters, the council votes Tuesday on a special use permit for a four story, 104-room LaQuinta hotel between Union and Monroe Avenues at Danny Thomas Boulevard to be developed by Gopal Govan.
Govan would demolish the brick building on the site, which was a Men’s Warehouse apparel store and before that a brake repair shop.
The council also considers a planned development on Lamar Avenue at Winchester Road that is a convenience store and gas station for trucks and tractor-trailer rigs by Speedway LLC.
The six-acre site would have 20 gas pumps for cars and five pumps for tractor-trailers with a 4,600-square-foot convenience store along the city’s major freight corridor.
The site will also have a dedicated traffic signal to be timed with other signals on Lamar.
Speedway will have the traffic signal installed as well as a northbound left turn lane on Lamar.
Meanwhile at an 8:30 a.m. committee session, council members discuss an administration request for three more attorney positions in the city’s law division. The new positions would work specifically on issues related to the gang task force, the city’s blight task force and in the city prosecutor’s office.
The additions would bring the city attorney’s office to 60 positions and increase the law division’s budget for the current fiscal year by $78,801.75 with an annual increase in the next fiscal year of $315,207. The base salary for each position would be $92,263. With benefits, the salary comes to $105,069.
A contract between the city and U.S. Coast Guard – in which the Coast Guard would rent the city’s public boat ramp near its headquarters at the eastern end of the A.W. Willis Bridge – is up for discussion at a 9:15 a.m. committee session.
The Coast Guard would pay $1 per year for the lease over a term of 18 years. The bridge links the Memphis mainland to Mud Island.
Also up for discussion at the same committee session is contingency funding to widen the Poplar Avenue Bridge at the Poplar-Sweetbriar Road interchange in East Memphis and add an on-ramp there.