Smart Growth; "Tax-Increment Financing"; The IDB, and Possible Adverse Consequences

Thornwood Development at Neshoba and Germantown Road is an Example of Mixed-Use Smart Growth

Citizens might wonder why a single appointment to the Industrial Development Board (first discussed in the January 22 blog post) is so important that I am shining a light on this issue for the third time in a week. Today I attempt to explain that in the simplest possible way. To do that I first need to briefly review "Smart Growth". 

Smart Growth, adopted in 2007, allows for special zoning classifications in certain areas, ensuring denser development in our land-locked community.  We are following the recommendations of Smart Growth America.  

The Smart Growth America Website

The organization describes Smart Growth:

  

The Smart Growth America website notes the Thornwood development.

 The Memphis Daily News Discusses Thornwood

We have adopted Smart Growth, we have embraced Smart Growth, and we have touted Smart Growth. I would love to have a nickel for every utterance of the term "Smart Growth" that has come out of our leaders' mouths. 

Yet I have not heard one single mention of the significant reservations about the Tax-Increment Financing administered by IDBs which are listed in a paper in the Smart Growth America website. Why not?  Are our city leaders even aware of these reservations?  Or are they cherry picking what they like about Smart Growth America, and ignoring articles that the organization deems worthy enough to include on the website?

Recently, the possible use of TIFs in Germantown has been in the news: 

Germantown Seeks to Bolster Development with TIFs 

Excerpt:

 
Again, TIFs are the responsibility of the IDB, which is comrised of citizens appointed by the Mayor. Elected officials cannot have much oversight over the IDB because of the need for the bonds to be designated as "revenue" bonds, and not backed by the full faith and credit of the City.

Let's look at a few things that the paper on the Smart Growth America website has to say about TIFs:   

Tax-Increment Financing- The Need for Transparency and Accountability in Local Economic Development Studies

Excerpt:

 

Please note that TIFs are meant to spur redevelopment of areas in difficult economic straits.  

  

Even the use of TIFs to fuel development in previously undeveloped areas is deemed inappropriate in the paper. 

Note added 1-28: TIFs in Memphis have been used to encourage redevelopment in marginal areas of town, such as around Graceland, Highland Row near U of M, and the Greenlaw area of downtown.  These are all in areas of needed redevelopment. Memphis has not used TIFs in areas of prime real estate such as near Laurelwoood.  

Exactly which portion of Germantown are in economic straits? I cannot quickly think of any. I am not saying that there are no such places. All I am saying that the IDB should limit its use of TIFs to areas which truly need a boost to start development or to help enable redevelopment. But again, it is not just I saying that. IDB should at least roughly follow the recommendation of the academic paper endorsed by Smart Growth America, and limit TIFs to economically challenged areas.

What are the consequences of not limiting TIFs to economically challenged areas? 

Among the possible adverse consequences attributed to TIFs are the following (listed in the paper):

1. Failure to achieve public goals.  By definition, TIFs take money away from schools and parks (unless the property tax is raised to make up the difference). 

2. The process of TIFs, which often take place without public awareness and input, create the opportunity for favoritism and corruption. 

3. TIFs can create "slush funds" for public officials.  

These and other adverse consequences are fully discussed in the "Executive Summary" of the above link.   

Here is the newly approved IDB TIF Policy:

Germantown TIF Policy

I see no reference in this new policy to the types of areas that are appropriate for TIFs.  Such distinctions should be part of the TIF policy. Since they are not, we may be likely to experience the adverse consequences.

As I discussed in my January 22 post, the public's best opportunity for oversight is the BMA's approval or disapproval of the Mayor's nominees. It is essential that IDB members be individuals who will use TIFs in the manner intended.

Mayor says Application Deadlines Not Hard and Fast; Vote for IDB Board Member delayed

The Commercial Appeal gives us  a good idea of the flavor of the BMA meeting Monday night when it discusses the mayor’s nomination to the IDB Board—Dave Klevan. This harkens back to the good old days when this blog focused mostly on tracking Commercial Appeal articles.

 

Germantown postpones Dave Klevan Appointment After Questions Raised 

Excerpt:

In her comments in Citizens to be Heard, Sarah Freeman noted that that putting the vote into the consent agenda of a BMA meeting did not legally constitute a nomination. The City should have been well prepared for that, as I had noted that point in my first blog post about this issue. Had the administration been smart about this they could have discovered this well before the meeting. Instead, they were forced to take a five minute break in the middle of the meeting to consult with the City Attorney, who agreed with Ms. Freeman. The nomination was made Monday night, and the vote was put off until the next BMA meeting.

Here is a clip of Ms. Freeman speaking on the issue and the actions that ensued.

  
So far Ms. Freeman is batting 1000 as a watchdog in 2017. Prior to the previous BMA meeting she discovered the City had not communicated key parts of the proposed zoning ordinance changes to elected officials, and the agenda was changed at the last minute in the executive session prior to the meeting.

Other parts of the discussion had to do with the nomination itself, and the dates of the applications.

In the following clip, Alderman Barzizza extolls the many virtues of the candidate who actually got her application in by the deadline--Janet Geyer.


Dean Massey points out all the errors and inconsistencies in the process of making the nomination. There was public notice of all commission and board positions, and the public notice included the opening on the IDB. That public notice listed an application deadline of November 30. Was that a sham?  Here is Clay Bailey’s take on this from Outside the Loop in the Commercial Appeal:  
   

Outside the Loop   
Excerpt:

Here are clips from the meeting:  


Dean Massey makes a convincing case that the opening on the IDB Board was held  specifically for Mr. Klevan. Mr. Klevan could not have legally been able to serve in this position as a sitting alderman. 

Here is an abbreviated timeline.

 

I find the December 12 entry particularly interesting.  

Mayor Palazzolo gets in his two cents worth about Mr. Klevan as he makes his formal nomination. He makes no attempt to compare his credentials those of Ms. Geyer. Since this is the position vacated by Greg Marcom, I am wondering if this position isn't the consolation prize for a favored alderman candidate who loses an election. He also explains that applications deadlines are squishy.....or something. 

Industrial Development Board Nominee

Among the items on the Consent Agenda of the upcoming BMA meeting on Monday, January 23, is the appointment of former alderman Dave Klevan to the Industrial Development Board.  

Here is the item: 

It is the Mayor's responsibility to nominate an IBD Board member. BMA has the responsibility to approve (or disapprove) that nomination. Here is the operative language: 

When there is a vacancy, here is what is supposed to happen: 

The Mayor and the BMA should carefully consider the qualifications of the candidates. The IDB, it is important to note, operates mostly independently of the BMA. It is authorized to issue tax-free revenue bonds for development projects that meet certain criteria.  Revenue bonds, as the name would indicate, are paid from a project's revenue; these bonds are not backed by the full faith and credit of the City. The IDB's independence from the BMA  in issuing bonds is essential to ensuring that the City bears no responsibility for paying the bonds in the event of a shortfall in a project's revenue. 

In a recent article about the Germantown IDB, the Commercial Appeal discusses another aspect of the financing that may be obtained from the IDB--TIF, or tax increment financing:

Germantown seeks to bolster development with TIF  

TIFs can work for the benefit of both the developer and the City, but only if careful attention is given to details, such as ensuring that the City is not saddled with the expenses of maintaining an asset (such as a garage) that could burden the City with  repair costs in the future. It is also important to avoid speculative ventures with developers who may not be able to weather the next financial downturn. The City does not want the IDB-issued revenue bonds to fail, because that could indirectly affect the City's own credit worthiness, or worse, directly affect the ability of the IDB to issue more revenue bonds.  

Given the IDB's need for independence from the BMA, the potential for transparency issues is real. This blog may address any such issues that arise.  Indeed, one might question whether that an upscale community like Germantown even needs an IDB, since the usual focus of an IDB is to boost employment in marginal areas.

Nominations for the current vacancy for the IDB were first discussed in the BMA meeting held December 20. The Mayor stated that the IDB Board had one opening, but that it was not going to be filled at this time. At this point, the November 30 deadline application had already passed for the public to apply for positions on the various commissions and boards, including the IDB. Following the Mayor's statement, Alderman Barzizza, aware that an application had been submitted, recommended that applicant-- Janet Geyer. The discussion concerning the IDB then terminated, with the Mayor saying he would make a decision later. Here is the audio: 

Link to Audio

Subsequently, on December 28, Mr. Klevan submitted his application. The timing of his application is interesting, coming as it did almost a full month after the formal deadline for applications for the appointments to boards and commissions. Was the position held open so that Mr. Klevan could apply later? Why did he not  apply during the time frame given the general public?           
  
Here is Ms. Geyer's application, submitted on 11-17-2016: (click to enlarge) 

In her application, Ms. Geyer's listed as her "special qualifications" the following: 

While working as the Assistant Administrator of Collierville for 3 years, I was the staff liaison for PILOTS, responsible for oversight, compliance and new applications. I also served as the Pension Committee Chair. I also developed, ran and provided metrics for the town's community survey-2 years-reviewed department budgets, prepared annexation budgets, summaries, etc. I am a certified Municipal Finance Officer.


These qualifications, particularly her work with PILOTS (payment in lieu of taxes), appear to make Ms. Geyer particularly well suited for the position.

Here is Mr. Klevan's application, submitted on 12-28-2016:  


In his application, Mr. Klevan listed as his "special qualifications" the following: 
    
20+ years as a community volunteer

Mr. Klevan, to be fair, obviously completed his application quickly, so I would urge you to check out the website that he posted in support of his candidacy for alderman so that you can see a more complete biography here.  

This is an important position affecting the City's future commercial development. As noted above, due to the need for the issued bonds to be "revenue bonds" (as opposed to backed by the full faith and credit of hte City)  the IDB operates mostly independently of the BMA. The BMA does have responsibility to approve or disapprove the Mayor's nominee. The nomination must not be rubber-stamped, and the BMA should take its advise-and-consent role seriously.  

Sadly, correct procedure has not been followed in this case. It is inappropriate, I submit, for the Mayor to announce a nomination to an important board by merely putting it on the "Consent Agenda" just a few days before the meeting. Generally, items on the Consent Agenda are routine, mundane matters (for instance, the purchase of lawnmowers). The Consent Agenda should not be used for considering important Mayoral nominations. The nomination itself should take place in an open forum, with plenty of time available thereafter for the BMA to consider the qualifications of the person being nominated. 

In this instance, very little notice was given, and this matter's placement on the "Consent Agenda" leaves the distinct impression that the approval was intended to be a mere formality.

 

Zoning Changes Tabled--To Be Discussed at Retreat

Thank you, Germantown citizens, for your calls and emails!

Tonight I arrived at City Hall, with my well-timed three minute speech in hand, and took a seat. The agenda was announced...........and modified. The package of zoning changes that I was prepared to speak against had been tabled in its entirety in the Executive Session, to be discussed at the BMA retreat in February.  At that point, it may be sent back to the Planning Commission.

Thank you, Germantown citizens, for your emails and calls to our aldermen.  We truly made a difference!  Keep alert, as we are going to see this ordinance come up again shortly, most likely modified if they do as they say and try to involve homeowners' associations.  

Please look at my other posts about this, because the history of this is pretty scary. We came very close to being saddled with zoning changes that were grossly misrepresented by the City administration.  

Major Proposed Zoning Changes, a Public Hearing, and Nobody Came   

Bars and Liquor Stores, in "Transition" T4 Zoning

And thank you, Board of Mayor and Aldermen, for doing the right thing. Now I can go watch the football game!



  

Bars and Liquor Stores? In "transition" T4 zoning?

The pictured establishment could now be allowed in T4 zoned areas in Germantown if the City implements zoning ordinance changes that were characterized by Cameron Ross (Germantown Economic and Community Development Director) as a "general maintenance and review of zoning codes and processes". Ho, hum, just an inconsequential change to your residential neighborhood. No need, felt the City, to let us know about minor changes like bars being allowed directly across the street from single family homes.  

This zoning change is up for a public hearing at the next BMA meeting on January 9.  An earlier "public hearing" gave little notice of the magnitude of the changes, and the public is now being given another opportunity. See my previous blog posts for more detailed discussion of the history:  

Major proposed zoning changes, a "public hearing" and nobody came 

Germantown Delays Final Vote on Zoning Changes 

Official Word on New Hearing on Zoning Changes

Exactly where are Germantown's T4 neighborhoods? Here are just two of them, and I will use one of them as my main example:  

Apology: the lower red circle is a bit too big. Thornwood is T5 designation, It is the area just east of Thornwood that is T4.

The T4 neighborhood adjacent to Germantown Heights abuts single family residences where kids ride their bikes to Riverdale School. The school is just west of the area, off Neshoba. Under the proposed zoning changes, there would be NO buffer zone between these homes and establishments like the one pictured.  

Neshoba North is another residential neighborhood directly affected by this same change. Undoubtedly the absence of a buffer zone would negatively impact the value of the homes in these areas.  

When this triangular-shaped property was originally zoned T4 under Smart Growth, residents fought it, but although they were unable to stop the T4 designation, they at least obtained from the City assurances that the new T4 zoning would both prevent bars and liquor stores from coming to their area, and serve as a buffer zone between the residential and the commercial (T5) areas. Now, in a "bait and switch" fashion, the City wants to retract these assurances. 

If the citizens of Germantown want to allow bars and the like to abut residential areas, so be it. But shouldn't we have greater transparency about this? And discussion?   

These proposed major changes are hardly routine. They should have been highlighted by the City.  That would have been “true” transparency.

While Sarah Freeman was able to uncover other significant changes earlier, she was able to uncover this particular change (allowing bars and liquor stores in T4 areas) only this week, so deeply was it disguised in the red-lined changes of the proposed zoning ordinance provided to us by the City. 

Page 205 of the City's red lined changes:   

This expansion of permissible T4 commercial activities was noted neither in the BMA meetings nor the Planning Commission meetings.  Ms. Freeman happened to notice the above table from the City's link to the red lined changes, and she called Cameron Ross to ask the meaning of it.   

It is preposterous that changes as substantial as this were characterized by Ross as merely "cleaning up the language" in the zoning ordinance. See Commercial Appeal article 

The other T4 area shown in the image above is immediately east of Thornwood. The development most affected is Somerset, the new expensive custom homes being built by Regency Homes.

There are other T4 areas scattered around, mostly off Poplar and Poplar Pike. Here is a rather small version of the current zoning map. If you click on it to enlarge it you might be able to read it. 

Why, you may ask, doesn't the City have the most current official zoning map on its web page? Cameron Ross claims that technical reasons prevent the City from posting it; however, Sarah Freeman bought a hard copy of it from the City for five dollars, and I had that copy scanned for seven dollars. Between the two of us and the scanning services of FedEx Office, and the free services of Google, this blog now is able to give you the transparency that the City has been unable or unwilling to provide.  

Download for Most Current Germantown Zoning Map 

  

Now, this is a pretty big file, but I am puzzled that someone who is not particularly tech savvy (me) can provide this and the City cannot. If they are worried about security, why not establish a separate cloud account for public documents? I do not claim to be tech savvy, but this does not seem like rocket science. How can the zoning document even be interpreted without access to the most current zoning map?   

Importantly, a precedent has been set and a protocol has been established for considering changes in zoning with respect to alcohol. Any change should be considered separately from other ordinance changes, not as part of a group, where it can be easily missed, by citizens and aldermen alike. 

Our administration and our elected officials should be following the precedent set when three readings took place which clearly stated what was being voted on, in 2013-2014:  



Please note that this change was not buried in a large document in an incomprehensible table. 

And, in March of 2014, the amendment was passed.

I have touched here on just one of the many substantive proposed changes in the zoning ordinance here, and, in summary, not only was this change not mentioned during either the meeting of the Planning Commission or the BMA meeting, the change was also buried in a table in a lengthy document  and the most current zoning map was not provided to the public. Let's bring back the transparency we had in 2013-2014!    

I covered two other proposed changes in my previous blog post-- (see previous blog linked above for more details):

1. Garage "lighting" would be changed to "lighting fixtures" in the T4R neighborhoods. This seems to affect only Nottoway. If Gill Properties was to sell its interest in Travure, then the next owner could build a garage with lights shining into the Nottoway homes, as long as the lighting fixtures were obscured.  Why this has to be rewritten is a complete mystery. That should be a question asked of the administration.  Whose idea was this?  It makes no sense to change this because this only affects one property.  If it applied more generally, why would we want commercial garage lighting to intrude on neighborhoods, when it can easily be blocked?

2. With warrants, one story buildings will be allowed in the Smart Growth areas, a major change from the "dense" retail that was envisioned with Smart Growth. This is a larger question.  Does Smart Growth itself need to be revisited, due to market forces?

Citizens who care about these zoning issues should contact their aldermen, and attend the public hearing Monday.  

Please urge the alderman to vote against this group of substantive zoning changes, which have been grossly misrepresented as "general maintenance."  Each one merits its own separate vote and discussion. To do less is to obfuscate, be opaque as opposed to transparent, and to break with established protocol.

List of Aldermen and their email addresses

  

Reminder--January 5 GMSD Public Meeting--School Site Selection Committee

This is a reminder that the long awaited results of the school site selection committee will be made public on January 5. 

From the GMSD website: 

I want to give GMSD administration a HUGE round of applause for their transparency. A very comprehensive report on the results of the survey is on their website for all to see. As an example, here are two charts that I found there. 

In addition, the commentary by the survey takers has been compiled and included. It is very comprehensive.

If you haven't already checked it out, I recommend that you take a look. 

Criteria Development of School Site Selection 

More links are listed here:  

Land Option Links