Thursday, June 28, 2007

Don't Ask, Don't Tell

Interim Councilman Henry Hooper faces nearly $400,000 in federal tax liens.

Posted By on Thu, Jun 28, 2007 at 4:00 AM

Two things are troubling about the selection of Henry Hooper to replace Rickey Peete on the Memphis City Council:

First, the IRS assessed nearly $400,000 in tax liens against Hooper between 2000 and 2005. Second, Hooper didn't volunteer this information and explain it to the council, and members didn't ask him about it.

Hooper, agent/owner of State Farm Insurance and Finance Agency and a former United States Secret Service agent, was chosen to replace Peete for the remainder of the term that expires at the end of this year. It's not clear yet whether Hooper will be a candidate in the October election.

Peete resigned shortly before pleading guilty in federal court last week to bribery charges. It is the second time Peete has been convicted of bribery in the performance of his public duties. He was indicted in December along with Councilman Edmund Ford. Ford has pleaded not guilty and is still on the council. Ford's unpaid MLGW bills have drawn federal scrutiny and taken up hours of council time.

If there was ever a time for full disclosure of potentially embarrassing money matters, this is it. With Memphis at the center of the Tennessee Waltz, Main Street Sweeper, and MLGW investigations, this is no time for don't ask/don't tell. Hooper, who ran for sheriff in 2002 and the Shelby County Commission in 1994, is no virgin. The City Council, which is rewriting its ethics code, well ...

The IRS assessed Hooper for $109,958 in taxes, interest, and penalties for 1998, $99,755 for 1999, $73,138 for 2000, and $113,112 for 2001. The assessments were in 2004 and 2005. The notice of a federal tax lien reads as follows:

"We have made a demand for payment of this liability, but it remains unpaid. Therefore, there is a lien in favor of the United States on all property and rights to property belonging to this taxpayer for the amount of these taxes."

In an interview Tuesday, Hooper said the civil dispute involves a business trust and deductions which the IRS did not allow. He said he has hired an attorney and taken the case to tax court in Cincinnati. He said the investigation began when the IRS looked into an illegal offshore trust in which he was not involved, but the same people who set up that trust also set up his trust. He is hopeful of a settlement.

"Our trust was not illegal, but they were not going to let us deduct everything we wanted to," he said.

He said he wasn't trying to hide anything from the City Council.

"I was not under any legal obligation to go into a personal tax matter," he said. "There has never been any question of my integrity at any time in my life. Now it becomes a question because somebody is trying to discredit me."

He said the tax lien is "totally different from" Ford's overdue utility bills because his tax issue is in court and there are no charges of favoritism.

On the resume Hooper submitted to the council, he lists his federal employment including the Secret Service for 24 years, six years with the Green Berets, and 22 years as an insurance agent and businessman. That was enough for council members. Jack Sammons said he learned of the tax lien after Hooper was chosen, but "it wouldn't have bothered me" because it is not unusual for businesses to have IRS disputes that drag on for several years. "It's sort of refreshing to be dealing with someone who has enough business to have a tax challenge," he said.

Councilman Carol Chumney, however, said the tax lien should have been disclosed and "would have influenced my vote."

The Secret Service, until 2003, was, like the IRS, a division of the U.S. Treasury. Hooper said he worked with IRS agents during his career.

Memphis politics is a forgiving business. Once you're in the club, it's a new day. It wasn't only the voters in his district and his colleagues who embraced and forgave Peete. He was chairman of the board of the Center City Commission for five years and also served on the board of the Riverfront Development Corporation.

After pleading guilty last week, Peete stopped to shake hands and make a brief statement in front of the news cameras. Then he grinned and waved and climbed into an SUV. If you weren't listening, it was hard to tell if he won or lost.

That was Rickey Peete. Henry Hooper is no Rickey Peete. He should take pains to make that clear.

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Thursday, June 21, 2007

Flashback to 1991

It's not the snakes but the old bulls that define Herenton-era politics.

Posted By on Thu, Jun 21, 2007 at 4:00 AM

In the immortal words of Mary Winkler after she whacked her husband, our "ugly got out" last week.

The bizarre events involving Mayor Willie Herenton, attorney Richard Fields, and his client-turned-accuser Gwen Smith promise an ugly year of retro politics driven by religion, race, revenge, and fear.

Doubtless there are plenty of snakes of all kinds in Memphis, but the city's biggest problem are the old bulls who still run the show. The relationship between Herenton and Fields goes back to 1969, when, as principal and teacher, they joined a school boycott called "Black Mondays" to get black representatives on the school board.

Fields supported Herenton and the NAACP when the school board tried to appoint a white superintendent in 1978. When Herenton was elected mayor in 1991 by just 142 votes, Fields was one of only two prominent white citizens to publicly support him. In federal court that year, he helped strike down the runoff provision in mayoral elections, enabling Herenton to win with 49.4 percent of the vote. He represented Herenton in his divorce and in well-publicized lawsuits filed by a teacher and a police officer.

"I know how to keep confidences," Fields said in a Flyer interview last week.

An activist at heart, he also knows how to take matters into his own hands. He tried to influence county and judicial elections last year by recommending some candidates and criticizing others with information gleaned from public records. He got in the middle of a state Senate election involving attorney Robert Spence earlier this year. And in March, he took a mayoral poll, and when it showed strong signs of Herenton fatigue, he took it to the top floor of City Hall.

"That's been my role," Fields said. "I get to disagree with him. That's the kind of relationship we have."

Or had, anyway. Fields says they met cordially that afternoon for three-and-a-half hours, talking about old times and the mayor's legacy as well as the poll and the people surrounding Herenton, particularly Reginald French, an unsuccessful candidate for sheriff last year and head of the beer board. Fields suggested Herenton not run again. "I was trying to help him go out gracefully without any mess," Fields said.

Herenton gave a much different account. At a news conference, he mocked Fields and said his sincerity and concern for his legacy were bogus. Then he called him a snake.

Fields said he was "distressed" by that, and, moreover, he is tired of activism.

"I would really like to get out of the business of being the person on the front lines," he said. "I wish some young black lawyers would come forward. But there's a lot of resentment out there because of the judges' survey that I did."

He denied having a sexual relationship with Gwen Smith, who was jailed in Nashville last week for violating probation, or giving her any files or indictments that are not public record. He said businessman and Joseph Lee accuser Nick Clark is "my client," but he isn't working for any mayoral candidate, announced or otherwise.

Not that anyone is knocking on his door. Rough-cut, outspoken, and married and divorced four times, Fields is one-of-a-kind. Five years ago, when they were still on good terms, Herenton said, "A lot of my friends don't understand my friendship with Richard because he irritates the hell out of them."

The mayoral campaign of 2007 will be the most interesting and bitter one since 1991. On New Year's Day, Herenton cast himself in biblical terms of being "on the wall" like Nehemiah at Jerusalem. He quoted Scripture at his press conference last week and drew a chorus of "amens" from police officers and supporters in attendance.

Addressing black Memphians specifically, he warned of efforts to divide them and said, "This time, divide-and-conquer ain't going to work."

Ominously, he said, "There are those in this community who would like to see me removed by any means," and, without naming anyone, "They might resort to what happened to Dr. [Martin Luther] King in Memphis."

A bit stunned by that one, I asked the mayor's friend and former campaign chairman Charles Carpenter, who was there, if he heard what I heard. At first, he said there had been death threats against the mayor, but when I said I thought that should be reported, he said he wasn't sure. Standing nearby, police director Larry Godwin said he was unaware of any such threats.

By appealing for racial solidarity, Herenton has little to lose. He already cast black challenger Herman Morris as a "boy" in league with whites from the geriatric set. He has more than $500,000 in his campaign account but has raised only $1,650 this year, and much of what he raised last fall came from supporters in Detroit and Atlanta. In 1999 and 2003, he raised more than $300,000 each year.

And he is right that the polls showing him on the skids are biased and misleading. As the four-term incumbent, he can rally old warriors including attorneys Carpenter and Ricky Wilkins, former MLGW presidents Joseph Lee and Rev. James Netters, and political hands French, Sara Lewis, Deidre Malone (the Shelby County commissioner who orchestrated the Gwen Smith media festival), Sidney Chism, Gale Jones Carson, Stephanie Dowell, Pete Aviotti, Rick Masson, and TaJuan Stout Mitchell. Even some of the now-maligned "wealthy business leaders" may get over it and join Team Herenton once they see how the field shapes up and which way the wind is blowing.

Herenton's demand for a federal investigation of "an ongoing civil/criminal conspiracy designed to entrap African-American leaders in the city of Memphis" was a politically shrewd reminder that the scorecard so far in Operation Tennessee Waltz and Main Street Sweeper shows six black elected officials in Memphis and no whites. The unpopular Republican attorney general Alberto Gonzales, who is barely hanging on to his job, probably won't do a thing. And if any federal indictments come out of the investigation of Ralph Lunati's strip clubs, they can be spun as the work of snakes if they touch anyone close to the mayor.

Divide-and-conquer may not work, but that is assuredly the strategy. The latest one to employ it is Herenton.

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Thursday, June 14, 2007

The ABCs of TDZs

The meaning of "tourism" is being stretched to the breaking point.

Posted By on Thu, Jun 14, 2007 at 4:00 AM

What do condos and a golf course in Pigeon Forge in the Smokies, a Bible-story theme park in Middle Tennessee, and Graceland have in common? They're all proposed Tourism Development Zones, the latest craze in public finance in Tennessee.

Last week, the state legislature approved TDZs, as they're called, for Graceland and the Mid-South Fairgrounds.

The government jargon is confusing, but the idea is fairly straightforward and not really new: A hot tourist destination generates additional property and sales taxes that fund public improvements that generate more private development, and so on.

Although it isn't called a TDZ, Tunica is an obvious example of a big tourism windfall. A county with 10,000 residents lays a 4 percent tax on the casinos, netting over $50 million a year. Many of the customers come from afar. The taxes fund new schools, roads, law enforcement, fitness centers, a downtown mall, and an arena. City and county leaders have to work hard just to think up ways to spend all the money. Property taxes in Tunica were cut to zero. Now that's tourism-driven development.

TDZs were originally supposed to help pay for convention centers and "qualified public use facilities." The definition has been stretched to include privately owned tourist attractions and "qualified associated development" a mile and a half away. Tennessee lawmakers, apparently fearing a cascade of "me-too" requests from small-scale TDZ projects across the state, set a threshold of at least $200 million of investment. But when wishful thinking is the ante, players will always be drawn to the table, including the developer of the proposed Bible Park USA near Murfreesboro.

In Memphis, Graceland is a tourist attraction with worldwide recognition. But it counts visitors in hundreds of thousands, while Gatlinburg and Tunica count them in millions. Investor Robert S.X. Sillerman, whose company, CKX Inc., owns the marketing rights to Elvis Presley, says it will spend over $100 million on two hotels, an expanded visitors center, and retail shops if the public sector does about $60 million. According to CKX filings, this will "grow the Graceland experience as the centerpiece of the Whitehaven section of Memphis." Having sold records, movies, and memorabilia, the King of Rock-and-Roll is now selling buried power lines, blight removal, and clean streets.

The Mid-South Fairgrounds as a TDZ is another stretch. Tourism was the driving force of the fairgrounds when Libertyland opened on July 4th, 1976, the American bicentennial. The Mid-South Fair was a regional draw, and there were major concerts at the Mid-South Coliseum. Thirty-one years later, Libertyland and the Coliseum are closed, the cattle barns are an eyesore, and the fair will soon be moving, The only "qualified public use facility" that can lap up state TDZ funds is the stadium.

Whatever happens at the fairgrounds in its next incarnation will primarily be for the patronage and benefit of Memphians, not tourists. Say there is some combination of a renovated or new football stadium, a minimally renovated Coliseum, the Salvation Army/Kroc recreational center, the Children's Museum, playing fields, a school, new housing in the Beltline neighborhood east of the fairgrounds, and one or more big-box retailers such as Wal-Mart or Target. Where's the tourism tax windfall?

A typical University of Memphis in-conference football game crowd is about 30,000. Unless the Tigers get into a Bowl Championship Series conference, that isn't likely to change. If the retailers and restaurants, aka "qualified associated development," fail or don't come, everything else is either publicly owned or nonprofit, and that means no tax revenue, and taxpayers are left holding the bag.

Improving the fairgrounds and Elvis Presley Boulevard with ordinary taxes may be hard politically. But twisting the meaning of plain words to collar state or federal funding is a dangerous game. Look at the FedExForum parking garage and its phantom MATA station. Some of the most extravagant follies in Memphis — the trolley, The Pyramid, Mud Island, Beale Street Landing — have been or will be built in the name of tourism, which is one reason many Memphians regard them with apathy or resentment. Anyone who proposes to develop Graceland or the Mid-South Fairgrounds (including Henry Turley, who is a board member of the parent company of this newspaper) has their work cut out for them, even with TDZ approval from Nashville.

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Thursday, June 7, 2007

Are You Wasting Words?

Former politicians discuss the prospects for four proposed public projects.

Posted By on Thu, Jun 7, 2007 at 4:00 AM

It's a long road for big public projects. The ones that make it to the finish line — Mud Island, expansion of Liberty Bowl Stadium and skyboxes, The Pyramid, FedExForum, AutoZone Park — have a prime mover, state and private-sector support, and good timing. Getting built, of course, is no guarantee of success, but that's another story.

Four multimillion-dollar proposed projects are in various stages of development as Mayor Willie Herenton and members of the City Council enter the home stretch of their four-year terms. They include Beale Street Landing, turning The Pyramid over to Bass Pro Shops, expansion in and around Graceland, and a new football stadium.

How likely are those things to happen, given a possible changing of the guard at City Hall? And what are the key factors that will make or break them? I asked four former Memphis politicians with combined experience of more than 40 years in local government — former mayor Dick Hackett and former council members TaJuan Stout Mitchell, John Vergos, and Jerome Rubin. Mitchell now works full-time for city government. Hackett is director of the Children's Museum. Rubin works for the Center City Commission. And Vergos is in private business.

The odds are that one or more projects will falter in Memphis or Nashville. All of them except Beale Street Landing require hefty state tax rebates. The total cost of all four projects, based on published estimates, could easily exceed $200 million.

"On the council, there is collective memory loss about prior projects," Vergos said. "Each one is a new project with no relevance to fiscal responsibility."

Beale Street Landing. The $29 million Tom Lee Park riverfront project, financed with federal and local funds, has been in, out, then back in the budget. City Council members were expected to vote Tuesday afternoon.

"It's on go," said Mitchell. "The council made it clear it wants to see that project." (At least three members have opposed it.) Hackett agreed it is likely to get built because it complements other downtown investments. "The riverfront has to always be one of the significant priorities, whoever is in office," he said. Rubin agreed the project is "very likely," in part because so much money has already been spent on it. Vergos called it "somewhat likely" if backers can show that tour boats would otherwise bypass Memphis.

Bass Pro in The Pyramid. The hype and the local private-sector involvement faded last year. Mitchell remained bullish that "we will see a happy conclusion of that project sooner than we think." Vergos rated it highly likely, if Bass Pro assumes the debt on the building. Hackett, who was mayor when The Pyramid was built, called the marriage "somewhat unlikely" because "from the outside looking in, there appears to be lukewarm interest on Bass Pro's part, although I would love to see it happen." Rubin rated it somewhat likely that Bass Pro will fulfill its end of the tentative deal.

Graceland expansion. Elvis Presley's name and home were in the news last week when investor Robert S.X. Sillerman announced his plan to take Graceland operator CKX Inc. private. In an interview with The Commercial Appeal, Sillerman said the plans for a new hotel, visitors center, and other improvements depends on public investment.

Mitchell, who represented Whitehaven for eight years, called that scenario "somewhat likely" but only "if Tourist Development Zone legislation gets passed so we get resources from the state." Rubin, a self-described "big fan" of Whitehaven, called it "not very likely" and said the key issue is "What is the connection between [CKX's] interest and the public assistance?" Hackett, who grew up in Whitehaven, called it somewhat likely "if the city and Graceland can document some payback to the city." Vergos rated it highly likely because "cleaning up Elvis Presley Boulevard is a city obligation."

New $150 million stadium. Mayor Herenton unveiled the idea on New Year's Day, but five months later, nobody of much influence has seconded the motion. Hackett, Vergos, and Rubin said it is unlikely to happen. "It's strictly a question of affordability versus other priorities," Hackett said. "State funding is key." Rubin said the limited usage of the stadium, which hosts nine or 10 events a year, is the problem. Vergos said the key is an independent estimate of making the existing stadium compliant with the Americans With Disabilities Act. Mitchell, the city's administrator of intergovernmental relations, discreetly said, "It's too early to call."

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