Tuesday, March 28, 2017

Proposed Carter Development--Questions Raised; Planning Commission Meeting April 4

By now, you undoubtedly have heard about the proposed Carter development project at Arthurwood Cove and Poplar, just west of Saddle Creek behind Iberiabank.  

Those who missed the first round of discussion in the Planning Subcommittee meeting, or those who want further information, might consider attending the April 4 Planning Commission meeting. 

Although there certainly are positive elements in this proposed plan, as detailed by our leadership and the media, there are also concerns as well. I will now share some of my concerns with you. 

Is TIF appropriate in an a high-rent, upscale area? 

Through tax incentive financing (TIF), a municipality foregoes future property tax revenue - more specifically tax increases that the project owners would have paid as the property's value increased. Please see my earlier post discussing the appropriate and inappropriate uses of TIF. 

Smart Growth; The IDB; Tax Incentive Financing, and Possible Adverse Consequences  

Take a look at the excellent article on the Smart Growth America website linked in my post. I cannot help but wonder: Are we genuinely applying Smart Growth's principles, or are we simply cherry picking those portions of Smart Growth that we like, and ignoring the rest?

Is the lost opportunity worth it in this instance?

TIF traditionally is primarily used to develop blighted areas. Because a blighted area's chances of improvement are neglible, a TIF development rarely results in significant lost opportunities for future tax revenue increases. This is not the case, however, when the subject property is likely to be developed without TIF. The Carter development is located adjacent to the highest-rent retail area in Shelby County. This reflects the fact that our city has become a financially signficant population center. I challenge anyone to find a TIF project in a comparable location anywhere in the state, or, for that matter, the country. From a Tennessee Advisory Commission Publication:

Although all commercial developments in our City are important, a TIF project takes on special importance precisely because of the loss of future tax revenues. Projections may indicate that other factors such as increased sales taxes will exceed the opportunity cost (ie, the foregone tax revenue), but any failure of the project to meet those projections will result in lost revenue. The ongoing viability of the Carter project thus merits heightened scrutiny. 

Will traffic and drainage (runoff) be issues?

Potential drainage issues are discussed in the staff report on the project:

Traffic issues are discussed in a report commissioned by the City:  

This traffic study is based on counts taken in January 2017. The report does not, as best I can tell, consider the future impact of the following: Thornwood, (Germantown Road and Neshoba); Travure (Poplar, east of Kirby Parkway); and Trader Joe's (Exeter near Poplar). These projectes, currently under development, undoubtedly will increase traffic in the same area affected by the Carter Project. 

Furthermore, the traffic report does not address the expected increased traffic on New Riverdale Road and Neshoba Road that is certain to take place. These streets will be used as an alternate route around any slowing of Poplar traffic during rush hour. It is important that we understand the additional burden that will borne by these already heavily traveled residential streets. In order to obtain this understanding, we must have a report that will consider the combined impact of all these projects. 

Are we bucking national trends? 

Significant national trends may also affect the long-term viability of the Carter project. At the present time, we have prime commercial areas that sit vacant. One reason for this vacancy may be that national trends may be impeding development. I will mention just three of these trends: online shopping, increased home entertainment, and teleconferencing in lieu of face-to-face meetings.

Retail commerce, including even food delivery services,
is shifting rapidly from brick and mortar to online: 

Brick and Mortar Retailers in a Death Spiral  

Netflix and other home entertainment options provide a powerful inducement to stay at home rather than venturing out. Big screen TVs are, after all, relatively cheap. Because the Carter project includes a movie theater, we must necessarily consider the theater's long-term viability in light of this trend towards home entertainment. How much longer will content providers early-release their first run movies to theater chains? 

Online conferencing, whether done from the home or the office, is becoming more common. This, of course, reduces the need for travel and business hotel space. 

In short, "live, work and play" is now more home-oriented than ever. This is particularly the case with millenials. Please understand I am not saying that people will never leave their homes or that retail shops, theaters, restaurants and hotels will disappear or no longer be needed. I am simply saying that, in assessing the Carter project, we must consider the effect that national trends will have on retail businesses. 

Can the City absorb three new hotels at once? 

This development will have a hotel, and as some of you have already pointed out, there are already two new hotels being developed nearby, at Thornwood and Travure. Neither Thornwood nor Travure is a TIF project, although Mid-America Apartments, part of Travure, did receive tax incentives.  

Is there a market for luxury apartments in Germantown?

The Carter project's apartments will be located above the retail establishments. As befitting a high-rent location, the tenants are expected to have higher incomes. Carter will compete directly with Thornwood's luxury apartments. Can we successfully absorb both Thornwood's and Carter's luxury apartments? 

The recent trend towards renting as opposed to buying began after the housing crash. The initial dearth of apartments led, as it inevitably does, to an oversupply nationwide. Consequently, the trend is reversing. CBS News explains it.

Renters rejoice: Experts predict renting will become more affordable next year.

"Incomes are growing faster [than rent prices] for the first time in quite some time," Gudell said.

Zillow predicts rental rates will rise only about 1.5 percent in 2017, Gudell said. This is due in part to an increased supply: A lot more multifamily rental units are being built, and many renters have doubled up with roommates. These two things have helped supply rise to meet rental demand.

I fear that Carter may be coming in just as the supply of apartments is overtaking demand.  As the real estate market continues to stabilize, more and more home dwellers may revert to buying over renting.

Will parking garages attract shoppers to the development?

Carter's two garages will be used by the apartment tenants, by the hotel guests, and by patrons of the restaurants and shops. It is this "common use", along with the free parking that will be provided, that make these garages TIF-qualified.

Because street parking will be limited, visitors will often find it necessary to use one of the two garages, or else avail themselves of valet parking. While some may not find this an inconvenience, others will. The latter likely will shop elsewhere. Garages and valet parking work fine in some places, but will they work in our suburb?

How far is too far, when walking from apartment to car?

I previously noted that apartment dwellers will be using the garages. I am advised that these garages will not be located adjacent to the apartments, as the apartments are above the retail establishments that are interspersed throughout the development. Tenants thus will be required to walk to and from their cars, the length of the walk dependent on their apartment's proximity to the garages. Think: umbrellas, mittens, boots, grocery sacks, work attire in the hot sun beaming down on asphalt, etc.

Will prospective tenants pay a rent of $2000 per month to lease an apartment that requires them to park in a free-standing garage? Such parking may be acceptable in downtown Memphis, but I have my doubts about its acceptance here. Meanwhile, Thornwood's luxury apartments will have their own attached garage with secure elevators. If you were in the market for a luxury apartment which of these two developments would you find more attractive? Or, as many have wondered, would you choose either Carter or Thornwood when you could live downtown and have a view of the Mississippi River?

I ask again: Is the Carter development worth the TIF risk?

I cannot overemphasize the fact that Carter is not a project in which private parties bear all the risk. Because the City will be foregoing future tax revenues we citizens will essentially be partners in the development. Under ideal circumstances, the project's revenue to the City through sales taxes would more than make up for both lost future tax revenue and out-of-pocket expenses (police, fire, etc.) necessarily associated with the development. This result would provide a win for both taxpayers and Carter. But, if Carter's revenue projections fall short, taxpayers would be adversely affected. Extra care thus must be taken to ensure the project possesses the attributes that will make it viable over the long haul.  

TIF approval for this project may also open the flood gates. You may rest assured that developers of  future projects in prime locations will apply for TIF.

What do you think?

If you have strong pro or con feelings about this development, please contact the aldermen, Mayor, and members of the Planning Commission, and explain your reasons. Remember: If TIF is approved, you will be a partner in the development. Your voice needs to be heard.

From the City of Germantown website:   

The commission is composed of ten members, plus seven citizen members appointed by the Mayor. The Mayor and an alderman appointed by the Board are also members. Members select a chairman. Members include Mayor Mike Palazzolo, Alderman Forrest Owens, William D. Bacon, Wm. Hale Barclay, Rick Bennett, David Clark, Mike Harless, George Hernandez, Keith Saunders and City Attorney David Harris.

The above is a direct quote from the Germantown website. I am a little confused by the word "plus". That term is most likely a mistake. I have to assume that there are only ten members of the Planning Commission, since only ten are listed.

Friday, March 24, 2017

Public Meeting April 24 on Alcohol Sales in T4 Areas

The City website has announced that there will be a first reading of a proposed ordinance on alcohol sales in T4 areas this coming Monday.  

All interested parties should pay close attention.   

The public hearing has been scheduled for April 24. 

The last time zoning changes were proposed, the citizens did not get adequate notice of the hearing, as was discussed in Major Proposed Zoning Changes, a "Public Hearing" and Nobody Came.

I need to note that yet again the method for announcing the public hearing is not particularly transparent. It is in the agenda for the BMA meeting on this coming Monday. I strongly suggest  that the City distribute this information more broadly so that it it is not be incumbent on citizens to closely check the agendas before each BMA meeting. 

One possibility would be to distribute the information on NextDoor, as the City now uses that app to tell us about traffic issues and other items of interest. 

And we must not forget, the City has our water bill email addresses! 

At the very least, public hearing dates should be featured prominently on the home page of the City website.

Obviously some change on alcohol sales in T4 is intended, and at the present time we are seeking clarification on the specifics of what this ordinance means. Here it is: 

Proposed T4/Alcohol Ordinance

This issue was first raised when it was part of a huge number of proposed ordinance changes that was scheduled for a third and final reading in January, as discussed in Bars and Liquor Stores?  In "transition" T4 zoning? 

Because there were so many substantive issues in one package that was incorrectly characterized as "housekeeping changes," and the lack of transparency, the BMA in Executive Session was told by the Mayor that the item would be pulled from the agenda, and the issues would be discussed at their February Retreat.

I attended the portion of the retreat that discussed the proposed zoning changes, and the City administration was instructed to work with interested parties and neighborhood associations. Some of the objections to the alcohol changes came from Neshoba North, which is by a "triangle" of a T4 zoned area between Cordova Road and Germantown Road. According to leaders of that neighborhood, they have not been contacted by the City about the proposed changes. Why not?

Hopefully, after the first reading, there will be some clarification about the meaning of the proposed changes. I hope that the City administration would then discuss these changes with Neshoba North residents and other affected parties BEFORE the public meeting, and ensure that the citizens have  a clear understanding of what the proposed zoning changes would mean for their neighborhoods. 

Wednesday, March 1, 2017

Emails Confirm Suzanne Jones' Account of Contact with SCS Board Chair Chris Caldwell

As background, please read Suzanne Jones Caught in a Crossfire of Accusations, Publicly Scolded at GMSD Budget Work Session.

Because this blog promotes transparency above all, I thought it a good idea to look further at the communications that took place between Ms. Jones and SCS Board Chair Chris Caldwell.  Ms. Jones has provided a detailed description of those communications.
Suzanne Jones Statement
Mr. Caldwell's description of those same communications, as portrayed in Jennifer Pignolet's article in the Commercial Appeal, directly contradicted Ms. Jones. As I now explain, the facts, based on the evidence I have been able to review to date, reveal that Ms. Jones' version is 100% correct.  

Let's now review Ms. Jones' and Mr. Caldwell's differing accounts.

Mr. Caldwell's original email to Mayor Palazzola, dated February 13, and read aloud just hours later by Linda Fisher at the GMSD Budget work session, stated the following:

There is nothing really factual or specific about the contact in this email, and it does not even name Suzanne Jones. However, the Commercial Appeal article, written in response to the "scolding" of Ms. Jones by Ms. Fisher at the budget work session, states the following: 

Shelby County Schools board Chairman Chris Caldwell slammed a Germantown Municipal School District board member this week for continuously negotiating with him and other SCS board members over control of the suburb's three namesake schools. 

Caldwell said Suzanne Jones, elected in November, called him and sent him emails to the point where he asked her to stop contacting him. 

Suzanne Jones, in her description of the events, states:  

I would like to be very clear….I have not tried to negotiate at any level for the 3Gs. What I did do was to try to establish a rapport with fellow Board members and Administration to begin to build relationships...........................(snip).....................................

I called him the day after my lunch and he was not receptive to my call and he asked me to send him an e-mail which I did. These occurred on January 20th. Mr. Caldwell then called me and e-mailed me on January 23rd and let me know that he did not want to speak with me again and that any and all negotiations would go through the Mayor and our School Board Chair. Since this date I have not proceeded with any conversations nor contacted any SCS board members related to the 3Gs. 

The two things I wanted to shine a light on, given the discrepancy in the two accounts:

1. Did Suzanne Jones attempt to "negotiate"?

2. Did Suzanne Jones call and email him excessively? Was her account consistent with email records?

Having already been provided with Ms. Jones' detailed account, I decided to give Mr. Caldwell the opportunity to refute or confirm her statement. I emailed him on February 20th requesting more details, and asked him if, in light of Ms. Jones' detailed account, he confirmed or denied the Commercial Appeal's portrayal of his description of his communications with Ms. Jones. He never responded to my email.

I simultaneously filed an open records request with GMSD for all emails between Mr. Caldwell and Ms. Jones. Here is the sum total of their email communication:  

As can be seen, Ms. Jones sent one email of significance, on January 20. It begins by her thanking him for his time that night. The email thus corroborates Ms. Jones' statement that she talked to him by phone that night.  Mr. Caldwell briefly responded on the 23rd, and then followed up that response with another email in which he underlined and capitalized in bold the word "IF". It is obvious that Mr. Caldwell was signaling that there might be no further negotiations for the possible purchase of the legacy schools. 

Ms. Jones briefly acknowledged receipt of Mr. Caldwell's emails. No other email communications took place between the two.  

The Commercial Appeal's story, as supposedly told by Mr. Caldwell, would have us believe that Ms. Jones was constantly harassing Mr. Caldwell.  As I have explained, the evidence squarely refutes the Commercial Appeal's version of the communications.The Commercial Appeal to date has taken no steps to clarify this story.  Assuming the newspaper is sincerely interested in accurate reporting, it should follow up with another article that reports the truth.

Many will be concerned not only by the Commercial Appeal's inaccurate story, but also by the made-for-the-media public scolding delivered by Ms. Fisher at the beginning of the February 13 budget work session.  Had Ms. Fisher not made these remarks, there would have been no story in the Commercial Appeal. One may wonder whether this was nothing more than an orchestrated scheme to cast a dedicated public servant in a bad light.