Inept use of taxpayer money halts progress
Memphis does not move forward because a lack of governmental oversight.
As just one of many examples, over 25 years, local legislative bodies have restricted approximately $138M in City and County funds to, off all things, downtown public parking garages.
The city county and county commission authorizes the funding restriction through the Downtown Memphis Commission, DMC, using a little known about fund, called the PILOT Extension Fund, PEF, for local economic development.
The financial information in this article was obtained through public documents and/or public information requests. Less current PILOT Extension Funds liabilities, in a majority Black community in need, over 25 years, $138M in taxpayer funds, now mistakenly reserved for unneeded downtown public parking, could instead be used for the following:
h 1,300 students, per year, served with post-secondary wraparound services
h 130 small businesses per year served with $10K each in forgivable loans
h 1,000 impoverished, per year, served with affordable housing
Now, the former is real economic development, in that it helps to increase wages and/or the quality of life for a community in need. But unfortunately, such trade off analyses are never conducted by the Memphis City Council or the Shelby County Commission.
They certainly do not listen to taxpayers. But they do routinely schedule and hear from the DMC and the Economic Development Growth Engine.
Typically, proposals made by these organizations are rubber stamped with little questioning or due diligence by local legislative bodies.
Given the former, on Dec. 21, 2020, the Shelby County Commission, through reconsideration, shockingly disallowed scheduled due diligence, as requested by the county chief financial officer, assessor and trustee on a $62M downtown parking appropriation, using the DMC’S PILOT Extension Fund.
In testimony, while the meetings were closed to the public, the County Commission recognized DMC’S former President, Jennifer Oswalt, now living in Knoxville. Oswalt proceeded to make a material misrepresentation, on the public record, by understating DMC parking garage debt by approximately $12M in pursuit of the $62M request. As a result, the obnoxious $62M appropriation was approved by a rubber stamping county commission.
Due diligence would have revealed a DMC organization called the Downtown Mobility Authority (DMA), that oversees public parking, generating $2M in parking revenue and losing $1M in 2019. This loss signals a lack of adequate parking demand to support a $62M taxpayer investment in downtown public garages.
Public parking should financially support itself through parking fees. But, for a moment, consider that public parking needs a public subsidy.
What is the absolute most a $2M public parking operation should be subsidized? Maybe $1M? But with no analysis, rubber stamping legislative bodies are scheduled to subsidize downtown public parking garages by a whopping $5.5M per year over 25 years.
Further due diligence would have also revealed, a DMC that makes taxpayer funded loans, while extending commercially unavailable terms, for nonpublic private garage development. These loans are extended to real estate partnerships that involve such local names as Hyde, Orgel and Carlisle.
In fact, $21M in loans were made to these partnerships, with interest rates of 2-3% for between 45 and 60 years; in addition to the loans, 20-year property tax abatements were given to the developments.
Defining what economic development is and is not will go a long way in helping Memphis move forward.
Joseph Kent is a taxpayer advocate and lives in Memphis.