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VOL. 131 | NO. 53 | Tuesday, March 15, 2016

Tennessee House Approves Deannexation Bill

By Bill Dries

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The Tennessee House approved a deannexation bill Monday, March 14, in a 68-25 vote after an emotional debate and a tide of amendments that were all voted down on the floor.

Republican state Representative Mike Carter of Hamilton County also disputed Memphis Mayor Jim Strickland’s claim that the city of Memphis stands to lose approximately $80 million in sales and property tax revenues.

Carter said the estimate in meetings with city leaders and state Comptroller Justin Wilson is $27 million in possible losses.

Carter believes the city is adding in lost revenue from commercial and industrial property that is not included in the bill that would permit residents in annexed areas to petition for a deannexation referendum.

“The general obligation debt of the city of Memphis that accrued during the annexation will continue to be paid,” Carter said. “How in the world would that harm you financially?” he asked in response to questions from Democratic state Representative G.A. Hardaway.

In a statement minutes after the House vote in Nashville, the Strickland administration stood by its $80 million estimate saying there would be a $64 million impact in total property tax revenues including $28 million in residential property tax revenue. The $80 million total tax impact includes $15 million in sales tax revenue.

Strickland, in a written statement, said he is “disappointed” by the House vote. “But we will continue to share with members of the Senate the facts about the bill’s impact, including the devastating effects it could have not only on Memphis but on our entire region.”

Democratic state Representative Joe Towns sponsored a series of unsuccessful amendments that would have upped the percentage of signatures required on a petition to get a deannexation move on the ballot for a vote. The percentage is of the votes in the county in the last general election for Tennessee governor.

If it becomes law it would sunset or go off the books in 2019 and the petition drives have a 75-day period to garner the necessary signatures.

“You don’t live in our area and we don’t need your help, ever,” Towns said to Carter. “This is not the first time y’all have imposed yourself on our business in Memphis and Shelby County. … What gives you the gall to dictate to us? No one is that smart to tell us what we need to do. Handle your own business in your own back yard and get out of our business.”

Carter defended the bill’s provision that limits the debt obligations of deannexed taxpayers to a pro rata share of general obligation bonds for services in their areas.

“Are you aware that Memphis is borrowing $75 million to $90 million a year on its deficit?” he asked. “There are a lot of people that don’t want to hung on that debt.”

He also pointed out deannexed residents would likely be paying their share of the debt within the area for more than 18 years after deannexation.

Carter said he included Memphis and five other cities in his bill because of complaints he had from annexed residents in those areas in a statewide survey of annexation’s impact.

“One thing became clear. These were egregious annexations,” Carter said. “Each one of these cities, these citizens have been in litigation or constant protest … since the date it occurred.”

The use of the word “egregious” is essential to the proposal since without it, Carter said the legislation would likely be declared unconstitutional.

Democratic state Representative Raumesh Akbari of Memphis tried unsuccessfully to amend the term out of the bill –

“This wasn’t an egregious violation,” Akbari said referring to court rulings backing the annexations as well as state law approved by the legislature. “It was in the confines of the law at the time.”

It was a move Carter referred to as “absolutely brilliant.”

“It would show the true colors of the bill,” Akbari replied. “Only including certain parts of the state is unconstitutional.”

Carter’s argument about opposition to “egregious” annexations also appeared to apply the intent to annexations before the May 1989 start of the deannexation time frame that were opposed by residents in court and those who also opposed an annexation but didn’t go to court.

Also voted down by the House was an amendment by Democratic state Representative Karen Camper of Memphis that would have allowed deannexation referendums specifically in south Cordova and Southwind.

Republican state Representative Steve McManus of Cordova cited the annexation of south Cordova

“The folks from south Cordova woke up one morning on July 1, 2012 and they read in the newspaper, ‘You are annexed,’” he said. “We were also told. … ‘You owe taxes for the entire year’. …. Please give the people a chance to vote on their future.”

And Republican state Representative Curry Todd of Collierville said earlier annexation of other parts of Cordova left those residents “without anyone to speak for them.”

“The homes plummeted in value around that time,” he said. “You could not even sell your house for what it was worth. What they got was taxation without representation.”

The bill is awaiting action in the state Senate.

PROPERTY SALES 81 201 16,108
MORTGAGES 40 104 10,026
BUILDING PERMITS 130 336 38,272
BANKRUPTCIES 28 56 7,528