Wednesday, December 17, 2014

Even After Mayor's Announcement, Settlement of City's Debt to SCS is No Slam Dunk

Councilman Flinn says Mayor "undercut" mediation, may have to come to Council for money; Meanwhile,Fairgrounds TDZ's prospects may be enhanced with County Commission.

Posted By on Wed, Dec 17, 2014 at 12:20 PM

click to enlarge Dissenter Flinn
  • Dissenter Flinn
On what was, very likely, the busiest news day in recent Memphis history, one landmark event that came in somewhat under the radar may yet turn out to be a misleading blip on the screen.

This was an announcement from Mayor A C Wharton on Tuesday (a day during which he made several) that he had agreed with Shelby County Schools Superintendent Dorsey Hopson on a settlement figure — roughly $43 million — for the long-pending litigation against the City on a $57 million school-support default by the City Council.

There is an existing court order binding the City to this debt as a maintenance-of-effort obligation, though representatives of the city and of SCS, the successor to Memphis City Schools in holding the debt, have been involved, with the assistance of a third-party mediator, in negotiations over that sum.

Mayor Wharton’s announcement of a settlement was made independent of the mediation efforts, and at least one participant in the negotiations, Councilman Shea Flinn, said on Wednesday that he was “rankled” by the Mayor’s announcement, which he saw as politically motivated, presumably with an eye on next year’s mayoral election, and which, he said, had “undercut” the mediation efforts.

Flinn said a commitment to keep details of the mediation effort confidential kept him from elaborating further. He conceded that the city charter entitled the mayor to resolve lawsuits, but made a point of noting that, unless Wharton was in a position to make such a financial commitment on his own, “he’ll have to come to us [the Council] for the money.”

According to the agreement, which was approved by the SCS Board Tuesday night, the first installment of $6 million would be due as early as February 1, with the City obligated to annual payments in the $2 million range over the next 13 years.

Nobody needs to be reminded that almost all of the discussions between Wharton and the Council in recent months have been about loaves-and-fish efforts to spread the city’s limited resources around to meet basic commitments. Nor does anyone need to be reminded that the Mayor has had a tendency to make major announcements without prior consultations with the Council and sometimes without having taken the most basic preliminary steps to make sure that the announcement is solidly based.

A case in point was a ceremonial “signing” ceremony held in City Hall in 2013 on behalf of an agreement with city sanitation workers that involved including them in the city pension system and simultaneously revising their work circumstances. No one on the Council was there or had even been sounded out on the deal, and, by the time action was taken on the proposal, many months later, its contours had undergone substantial change.

Another matter that would be impacted by the settlement announced by Wharton, if it holds, is the fate of city development czar Robert Lipscomb’s proposed Fairgrounds TDZ development project, which is awaiting approval by the state Building Commission. The project, which does not formally require the endorsement of the Shelby County Commission, nevertheless would see its chances of approval greatly enhanced by such an endorsement — particularly, as GOP Commissioner Heidi Shafer notes, in view of the Republican domination of state government, if the suburban Republicans on the Commission got behind it.

Shafer herself called news of the apparent settlement of the school debt “very good news” and, said it would remove “a real impediment” in the way of a Commission endorsement. She noted that one reason why the Commission has not yet acted on the TDZ project was the fact of the City’s outstanding debt to SCS, whose schools are funded by county government.

‘“This goes a long way toward taking that thorn out of our paw,” Shafer said. And Commissioner David Reaves, who represents Bartlett and had been most prominent in raising the issue of the unresolved school debt, began tweeting similar sentiments on Tuesday after learning of the settlement announcement.

Republican Commissioners Steve Basar and Mark Billingsley said they thought a settlement of the school-debt issue would ease the way toward the Commission’s possible endorsement of the TDZ, but both said they maintained doubts about the efficacy of the project.


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