Wednesday, January 25, 2012

Revenge of the 'Burbs

A guide to this year's surefire blockbusters on public schools.

Posted By on Wed, Jan 25, 2012 at 12:56 PM

For months, Bartlett mayor Keith McDonald and Germantown mayor Sharon Goldsworthy watched and waited.

In 2010, a referendum on general Memphis and Shelby County government consolidation passed in Memphis but was soundly defeated in the suburbs. In 2011, the focus shifted to the school systems as the Memphis board of education surrendered its charter and voters approved the action in a Memphis-only referendum. In August, U.S. District judge Samuel H. Mays laid down the law on a joint school board, and a transition planning team was appointed to oversee the merger in 2013.

That leaves 2012, and McDonald and Goldsworthy and their suburban counterparts are passive spectators no more. The game has shifted to their home field as they move to establish municipal school systems. Now, they're the ones holding the meetings, hiring the consultants, and sitting behind the microphones and dictating the action.

"I probably didn't think Memphis City Schools would give up their charter," McDonald said last week. "They did. They probably didn't think we would start our own municipal school system. We might."

Get ready for the Revenge of the 'Burbs. No need to rush out and see it. This blockbuster will run for years.

The Big Three are Germantown, Collierville, and Bartlett. All of them are at least 79 percent white, with a retail base to generate local sales taxes and a strong property-tax base — the two ways to fund municipal school systems if voters approve them in a referendum.

"The town that has the good school system is the town that is going to grow economically," said former Shelby County commissioner Charles Perkins, an attorney who has advised local school systems and mayors over the years. "If you ask people to vote on raising taxes, they're usually going to vote it down. Schools are one of the few things that could get it passed."

Germantown has 38,844 residents and a median home value of $281,000. Collierville has 43,965 residents and a median home value of $273,100. Bartlett has 54,613 residents and a median home value of $169,700. Arlington is the fast-growing up-and-comer, with 11,517 residents, a median home value of $219,000, and a high school built in 2004 that pulls students from Bartlett High School, which was built in 1917 and is 600 students below capacity.

The subject of school ownership dominated meetings last week of suburban leaders and their hired consultants led by former Shelby County Schools superintendent Jim Mitchell.

Students and school buildings are the chess pieces in this game. Students ought to have a bounty on their chests, because they bring with them state and local funding that allows the system to operate. School buildings were paid for by all residents of Shelby County (the exception is Arlington High School, paid for by a tax on residents outside of Memphis), but Mitchell told suburban mayors and aldermen that a legal case can be made for municipalities getting them for free.

Leaders of the Big Three happily accepted Mitchell's report and its hopeful prognosis and set about scheduling public meetings in February and referendum dates this spring. There was not a word about the Transition Planning team, which is early in its work but, at this point, might as well be selling "Herenton For Mayor" T-shirts in the suburbs.

The suburban votes have not yet been taken, but the road map is pretty clear. Barring court intervention, Germantown, Bartlett, Arlington, and Collierville aim to have their own municipal school systems in place by 2013 and will stake a claim on their current buildings and sports facilities at no charge.

If this were to happen, the future county school system would look pretty much like the current Memphis city school system, with different boundaries and a new school board and possibly a new superintendent.

The municipal systems would compete for students with private schools, charter schools, the county system, and home-schoolers. And they might well wind up competing with each other if they can't come up with cooperative agreements for divvying up thousands of students who attend suburban schools but live outside their municipal boundaries.

Such students account for a large percentage of the black student population, especially in Germantown, which is 3.6 percent black but its schools are 25 percent black. There was some wishful thinking among aldermen at the Germantown meeting about forming a joint system with Collierville, but Mitchell shot it down.

"You're going to have to create your own district," he said.

Mitchell is an old hand at this game. He worked with the Shelby County school system and suburban developer Waymon "Jackie" Welch when Cordova and southeast Shelby County were booming. Schools such as Cordova High School and Southwind High school and some of their feeder schools were built with sharing agreements between the city and county school boards. Welch was the county schools' preferred school site vendor.

"I kind of had the franchise for a while," he once told me.

The city of Memphis and Shelby County provided the roads and the sewer extensions, developers and homebuilders flocked to the suburbs, and the families provided the students that filled the schools. Cordova High School was turned over to Memphis, but Southwind High School — the only county high school that is almost all black — is in Memphis annexation limbo. It is a county school for now.

Mitchell and the suburban mayors say the munis should get the schools for free because they already paid for them. It is more accurate to say that, with the exception of Arlington High School, the residents of Shelby County, 74 percent of whom live in Memphis, paid for all of the city and county schools through their county property taxes. The county issued the bonds.

The suburbs (except Lakeland, which has no property tax) used their local taxes to pay for municipal buildings, police forces, and, in some cases, sewer systems. If they become municipal school systems, they will, as Mitchell acknowledged, have to pay for future school construction, which could push the extra tax levy above the projection of 15 cents per $100 of valuation. McDonald has already said a commitment to a new $26.5 million high school is needed "day one" in Bartlett. As part of Shelby County, suburban residents could also be subject to tax increases passed by the Memphis-dominated county commission.

Memphians are now taxed twice for schools, including a "one-time assessment" of 18 cents on their 2011 tax bills. Lowering property taxes is on the Memphis City Council's agenda. Memphis has a combined tax rate of $7.21 cents, compared to a rate of about $5.50 in the Big Three suburbs.

Watching all this play out, we can be sure, is the learned and inscrutable Judge Mays. As author John Updike wrote about baseball immortal Ted Williams, gods do not answer letters. Nor do judges answer letters or give interviews on active cases.

In his August ruling, Mays said the former county school board's electoral districts were unconstitutional because they excluded Memphis. That resulted in the new 23-member board.

Mays put much faith in the separate transition planning commission to submit a plan to the board "for consideration and approval, as it deems appropriate."

Mays hung fire on the issue of municipal school districts. In legal language, the issue was not "ripe."

Any harm, he wrote, "would not occur until an attempt was made to create a municipal school district or special school district. Nothing in the record suggests that such an attempt has been made or will be made in the future. Any harm depends on contingent future events."

That was then, this is now. Either Mays was using an awfully cloudy crystal ball or the issue is about to achieve "ripeness" if it hasn't done so already.

There is one more bit of unfinished business by the court.

In his acceptance of the terms of the new joint school board on September 28, 2011, Mays said "the court will appoint a special master to assist in implementing the consent decree and to resolve disputes among the parties as to any aspect of the transition to a combined school system or the operation of the separate school systems."

The time for that appointment also seems ripe.

Wednesday, January 18, 2012

Some Good News on Jobs

It's complicated, but mayors and chamber produce the numbers.

Posted By on Wed, Jan 18, 2012 at 3:13 PM

For the first time since 2006, Memphis and Shelby County had a net increase in jobs and reaped nearly $1.2 billion in new capital investment by private businesses in 2011.

Mayors A C Wharton and Mark Luttrell, along with Greater Memphis Chamber president and CEO John Moore, made the joint announcement Tuesday.

"We're not in the red zone any more," said Moore.

Which sort of added to the confusion. The red zone, you see, is good in football, at least for the offense, but bad in economic development. Moore said the eight-county Memphis metro area lost jobs every month from January 2007 to June 2011. But a corner was turned in 2011, when there was a net increase of 15,000 jobs.

Speaking specifically about Memphis and Shelby County, Moore said that in 2011 there was $1,184,098,514 in capital investment and 3,709 new jobs. In recent years, the chamber has focused on Memphis and Shelby County instead of the region, but some government statistical reporting on jobs is still done regionally.

But wait, it gets a bit more complicated. Those are only projects on which the chamber was involved and only projects announced in 2011. So, for example, Electrolux isn't counted because it was announced in 2010. And Bass Pro doesn't count because it is a city deal, not a chamber deal. Job fluctuations at FedEx and AutoZone and Morgan Keegan don't count. And job cuts at Delta Airlines and other employers don't count against the 3,709 new jobs, which is an estimate that could be higher or lower when the projects come on line in 2012 and 2013.

Anyway, no one was in a quibbling mood Tuesday. The bottom line is, well, let's let Wharton do that:

"The bottom line is, Memphis is open for business," said Wharton, adding, "what part of a billion is it that you don't understand?"

"We've seen a huge comeback all of a sudden," said Mark Herbison, senior vice-president of economic development for the chamber.

The total includes 28 projects landed in 2011. The biggest catches include Mitsubishi Electric Power Products (300 jobs), Blues City Brewing (500 jobs), Flextronics (600 jobs), Kruger (100 jobs), and the Great American Steamboat Company (300 jobs).

Mitsubishi got a tax abatement, but Herbison said the company will make $28 million in payments in lieu of taxes over the next 15 years. The city guaranteed a $9 million loan for the Great American Steamboat Company and is building Beale Street Landing and its boat dock, largely with public funds.

But city and chamber officials differentiated those deals from the Electrolux deal, which includes $40 million in incentives from the city and county and $95 million more from the state. Following the announcement, they passed out mock $1 billion bills with the names of 22 expanding companies, few of which are household names.

"The small businesses are the backbone of our growth," said Luttrell.

Electrolux was the topic of an earlier press conference Tuesday at Wharton's office. The Memphis mayor said he is confident that the Canadian transplant, which makes kitchen appliances, will honor its commitment to hiring locally based women- and minority-owned businesses — an issue near and dear to many Memphis City Council members. This week's council agenda includes a "resolution to evaluate economic development using Memphis tax dollars."

Electrolux intends to spend more than 50 percent of the $80 million construction contract locally. To date, $15.3 million worth of work has been awarded, including $14.5 million to local companies. Of that amount, $6.3 million went to firms owned by women and minorities. Contract awards are expected to continue for four months. The plant will be fully operational in 2014, with 1,200 employees. The contractor is Yates Construction.

Asked to explain the scoring system for evaluating favored companies — a black female, for example, could count twice — the mayors ducked it with a joke about not wanting to get into higher mathematics.

Actually, the math is not that complicated, but the politics is. The main thing is to get a black or female representative on your company's list of officers if you want to get some business and stay out of hot water with the council.

As Wharton, an old hand at such matters, put it, "If you wave your hand about working with Electrolux, somebody is going to find you."

Wednesday, January 11, 2012

The Might of Blight

Like porn, we know it when we see it, and we have plenty of it.

Posted By on Wed, Jan 11, 2012 at 2:33 PM

I live in an old neighborhood in Midtown. Nicer, more community-minded neighbors and prettier old homes and streets you will not find.

On Saturday night, there was a neighborhood progressive dinner, and, as often happens, the state of the neighborhood came up in conversations. What have you heard? What do you think? What do you know?

And what about blight?

Blight is tough as rusty nails, iron pipes wrapped in asbestos, and old concrete.

Blight, by definition, doesn't care.

Blight just is.

Blight is impossible to ignore, like Sears Crosstown in Midtown and the Sterick Building downtown. Blight gets a nice seat at the table or in the living room and just sits there and makes rude noises and doesn't say anything.

Blight can be cool, like the Tennessee Brewery, with a foundation stone that says 1890 and lots of black-and-white pictures of beer trucks in better days. Or the Sterick Building back in the days when men wore hats and drove Dodges and Oldsmobiles and Packards.

Blight can be a charmer, with nostalgic tales of the days when Dad and Grandpa and Mom used to live or work there.

Blight doesn't have to be old. The Horizon on the south end of the skyline is less than 10 years old and isn't even finished and has never been occupied.

Blight is connected. There are historic tax credits out there to fix up blighted properties. There are people who will buy and hold blight in hopes that someone will come along and buy them out. There are people of good will who will defend blighted property in the name of preservation.

Blight has all the time in the world.

Blight is hard to pin down. Owners change hands, live out of town, can't be reached, don't want to be reached, have phones that are disconnected, and the letters LLC after their name.

Blight is a freeloader, relying on good neighbors to pay the carrying costs by fixing up their places and paying taxes and mowing yards and planting trees and picking up trash and preserving some shred of value and hope in blight's own sorry self.

Blight is cynical, like a guy who comes up to you and says, "Hey, Mac, wanna buy a wallet cheap?"

Blight knows the game of catch-me-if-you-can.

Blight laughs at fines.

Blight would look good in a disaster movie about a cataclysmic earthquake in a fairly large Southern city on the Mississippi River with a $100 million demolition fund.

Blight can be invisible like that old spot on your couch that you have been living with so long that you ignore it.

Blight has good intentions and will get around to doing something next year when this, that, and the other fall in place.

Blight always needs more time.

Blight knows that bigger is better. Demolishing an old mule barn to build AutoZone Park is one thing, but demolishing a multistory building with enough concrete to fill a lake or build a pyramid is something else.

Blight hasn't lost a big one since Baptist Hospital on Union Avenue in the Medical Center was demolished in 2005.

Blight has friends and relies on them to clean up the mess someone else made and abandoned.

Blight is contagious as a bad cold in January and a street full of rotting roofs and broken windows.

Blight is expensive. Big Uglies cost too much to tear down, and they cost too much to fix up in the building era of seismic codes and ADA regulations.

Blight is us, from the downtown skyline to historic Midtown to battered Frayser to disposable suburbs.

Wednesday, January 4, 2012

Football Gold Mine

Bowl games: fun for fans, lucrative for the people who run them.

Posted By on Wed, Jan 4, 2012 at 1:22 PM

It's the extended bowl season once again: three weeks down, one more to go before the national championship game.

There are 35 bowl games this year, including the AutoZone Liberty Bowl in which Cincinnati beat Vanderbilt. The announced attendance was 57,000, and even if the actual crowd was several thousand less than that, it was still a good day for Memphis.

"At Blues City Café, we had our biggest New Year's Eve ever," said Kevin Kane, head of the Memphis Convention & Visitors Bureau and part-owner of the restaurant. "It was a perfect storm: Saturday night, New Year's Eve, and spectacular weather. It was huge for Beale Street and the Peabody."

With or without a football playoff, bowl games are also huge for the people who run them and earn mid-six-figure salaries in many cases. The bowls operate outside the NCAA, unlike all other college championships. They are run by nonprofit organizations in cities such as Memphis and Nashville that fancy themselves tourist destinations. Promoters work with sponsors, universities, and media to create the best match-ups and drum up as much holiday enthusiasm as they can over five days of events. As nonprofits, the organizations must make their federal tax returns public.

On GuideStar, an organization that reports on U.S. nonprofits, I looked at tax returns for a sample of 10 major and mid-level bowl games. Although the returns are the most recent available, they are one or two years old, and this season's numbers may be different. As a benchmark, University of Memphis athletic director R.C. Johnson's salary is $316,725.

Tostitos Fiesta Bowl: a major bowl with $17 million in revenue and a $9.7 million payout. John Junker, CEO, earned $673,888 in 2009. But Junker got caught with his hand in the Tostitos jar. He was fired by the Fiesta Bowl in 2011 and the bowl was fined $1 million after an investigation of inappropriate spending.

Allstate Sugar bowl: $12.5 million in revenue and a $6 million payout in 2009. Paul Hoolahan, CEO, earned $593,718.

Bridgepoint Holiday Bowl: $10.8 million in revenue in 2010 and a $4.2 million payout. CEO Robert Binkowski earned $283,095.

Cotton Bowl: a golden oldie with $10 million in revenue, $6.75 million payout. CEO Rick Baker earned $470,147.

Outback Bowl: $9.6 million in revenue, $6.6 million payout. CEO Jim McVay earned $615,840.

TaxSlayer.com Gator Bowl: $8.7 million in revenue and a $4.5 million payout in 2009. CEO Richard Catlett earned $348,629.

Hyundai Sun Bowl: $6.5 million revenue and a $4.1 million payout in 2010. Executive director Bernie Olivas earned $170,423.

Franklin American Mortgage Music City Bowl: $6.8 million in revenue, $3.6 million payout. CEO Scott Ramsey made $310,715.

Alamo Bowl: $4.3 million in revenue, $3.6 million payout. President Derrick Fox earned $419,000.

The Liberty Bowl is unusual. Its financial reporting is the least transparent of the bowls I checked. Executive director Steve Ehrhart and associate director Harold Graeter are not paid by the nonprofit Liberty Bowl Festival Association. They work for businessman Billy Dunavant. Ehrhart is on the tax form as an unpaid board member.

The 2010 form lists revenue of $6.23 million, mainly from ticket sales ($2.5 million), television and radio rights ($2 million), and sponsorships ($1.2 million). The "management fee" was $2.357 million, nearly as much as the team payout of $2.65 million. In 2009, the payout was $3.65 million, and the management fee was $2.37 million. In 2008, the payout was $3.5 million, and the management fee was only $1.23 million.

The Liberty Bowl Festival Association describes its charitable purpose as "promoting the social and economic welfare of the Mid-South and its citizens" along with American universities.

Ehrhart said his compensation is included in the management fee, but he declined to say how much it is. He said the Liberty Bowl was restructured in 1994 when "it was struggling to make ends meet" and several expenses were lumped together. He said payouts declined when the game fell in the pecking order for team selection. This year's payout will be roughly $2.8 million.

Under Ehrhart's leadership, the Liberty Bowl has enjoyed good games, good crowds, good ratings, and good weather that would make Bear Bryant roll over in his grave at the memory of his last game on that icy night in Memphis in 1982.

Ehrhart came here from the Colorado Rockies to work for Dunavant and the Memphis Showboats in 1985. Whatever the sport, he knows the score. The trend in any business these days is pay what you will, but you must have transparency. The Liberty Bowl needs to get with the program.

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