Wednesday, March 6, 2019

BMA Retreat--Water Tower, Sales Taxes, Purchase of GCC, and Update on Apartment Moratorium

Sarah Freeman wins the SALOG Transparency Award  for yet again video recording an important meeting. In truth, at the February 23 BMA retreat, she missed the first part of the discussion on the water tower, including the part where Bo Mills, Director of Public Works, reported that the City's water system scored highly on an evaluation by an outside organization (even without a new water tower). The video is in two sections. Part 1 has most of the water tower discussion (a water tower at Forest Hill Elementary is being discussed) and some of the sales tax discussion, while Part 2 contains the remainder of the sales tax discussion and the discussions on the possible purchase of the Germantown Country Club property by the city, and, most importantly, in my opinion, the update on the apartment moratorium.  I briefly discuss each of these things below.

Here is the unedited footage, beginning in the middle of the water tower discussion.

Here is Part 2:

Water Tower:

I found it interesting that the Mr. Mills kept referring to "we" when discussing the property owned by GMSD. There was no discussion about what compensation would be offered to the schools for use of the property at the new elementary school. As you can see, the school system holds the title to the land. 

In fact, The Daily Memphian made that point in its write-up:

Germantown Residents Wary of Possible Water Tower

According to the article, Jason Manuel has not heard from the City concerning their offer for the property. According to the article, he is particularly interested in receiving the property at Houston Levee Park for the high school use. The article also mentions opposition to the water tower from area homeowners and a land developer.

During the water tower discussion Mr. Mills stressed the importance of a water tower for the health of our water system, citing things such as more water storage needed for large fires, an inadequate spare water tower that needs to be taken offline, the need for our newer water tower to be shut down temporarily for maintenance, the importance of water for Methodist hospital, and the need for water for mothers to mix formula for babies.

A question came from Alderman Scott Sanders about various other options to a water tower, and Mr. Mills stated that a cost/benefit analysis would be presented later in the program--one that compared a water tower with pumps and underground storage. But what Mr. Mills called a cost/benefit analysis was simply a list of reasons why he felt that a new water tower was better for our system than pumps and underground storage. There were no dollars attached to any options, as was pointed out by Alderman Massey. Aldermen Massey and Sanders also questioned Mr. Mills about possible locations elsewhere. Mr. Mills wants a water tower on the highest part of the City. South of Winchester is too low and would not work for our system because of the relationship to the other water tower.  Additionally, when pipe was laid to the new school, the pipe laid was large enough to accommodate the needs of the water tower. The plan is for the entire City, including developments south of Winchester who are now serviced by MLGW, to be part of the Germantown water system. Yes, the City could acquire property elsewhere near the railroad track rather than using the school property for a water tower, but "we" already own the school property. Asked why he did not provide a cost/benefit study, he answered that an outside organization would have to evaluate our system to determine how to make it work with underground tanks and pumps.

Sales Taxes:

In this part of the retreat, I learned that Alderman Sanders has been appointed to be the liaison to the Tennessee Municipal League in order to facilitate state legislation that benefits the City, and that Mayor Palazzolo is happy to have him assume that role. I also learned that even though the state is collecting local sales taxes from Amazon and some other online websites, there is not yet any formula for distributing that money to the municipalities. The state has a big surplus, and naturally the municipalities want the to share in that surplus. 

Germantown Country Club Purchase: 

The City ordered an appraisal of the GCC property, as the Parks Commission is ready to work this piece of property into the 75 million dollar parks proposal. The City will have to make a decision on a bid before settling on the exact usage of the property has been determined. You may view the video to see Parks Director Pam Beasley lay out some possible uses.

One possibility is that part of the property could be developed, with the rest of the property for a City park. I am hoping that the appraisal takes that possibility into consideration. Much of the property is not at all suited to development, due to it being in a flood plain. If the City acquires the property in the flood plain, and a developer ends up with the higher land, that could be the highest and best use of the land. However, the purchase price per acre of land that is not able to be developed should be negligible compared to land that is not in the flood plain. The CIty certainly does not need to effectively subsidize the developer's purchase of land by overpaying for land in the flood plain! These were the thoughts running through my head as I listened to Ms. Beasley's presentation.    

Patrick Lawton stated that the Financial Advisory Commission was on board with the plan for the City plan to consider the purchase of the property.

CIP Funding for the City

The City is in the process of prioritizing capital improvement projects for the City. Mr. Lawton mentioned the road improvement projects that were submitted to the MPO for funding. Those that are approved by the Metropolitan Planning Organization will be completed; those that are not will not.

Five Year CIP Plan for GMSD

Funding for the schools was discussed- Field house- $200,000 per year for 5 years (matching), Security improvements $500,000 for 2 years, $1.5 million for boiler project, and $5 million for modification and expansion of the middle school. Mr. Lawton had earlier warned that the middle school expansion cost was likely underestimated.

Moratorium Update:   

One of the most important parts of the retreat was the shortest in length. For several months the City has been gathering data to determine the costs of development. In July the moratorium on apartment building ends, and the report that comes out on the costs of development is crucial for the future of our City. There were a few hints of the report to come: 

1. Assistant City Administrator Jason Huisman reported that to understand the impact of dense development, we must also understand the impact of all other types of residential development. I agree with that. As I reported earlier, a study commissioned a couple of years ago by the City showed that all residential development had a net fiscal cost. (see No New Dense Development Will Not Keep Our Property Taxes Low.) Of course, when developing a plot of land, and the decision is single-family development vs. dense development, the costs associated with the development must be determined on a per-acre basis, not a per-unit basis. 

2. What I found odd and disturbing was the decision to divide the City into districts-- these include fire, police, and school attendance zones in evaluating the fiscal costs. That may makes sense for infrastructure needs, but school attendance zones?? Really?? Why in the world would school attendance zones affect the fiscal cost of dense development? In fact, they should have no bearing. If one school is overcrowded, and another one has room, attendance zones could (and should) be modified. There is absolutely no reason to try to justify denser development just because one particular school is not full, for example. The school system should be considered as a whole. If any divisions are made, then  they should not be by attendance zones, but by elementary, middle and high school only. Even then, fixed costs associated with school building need to be factored in, because dense development could actually cause the city to need to build yet another elementary school.  That possibility should be part of the mix, and the way to factor that cost in is to compute, and assign to each expected student a cost for school infrastructure.

P.S. I happen to have been a cost accountant at one point in my life, which is why so many of my posts are about finance. We shall see.



  1. You're playing fast and loose with your description of much of the water tower recap. First, you say that "Mr. Mills wants a water tower on the highest part of the City," but that's not entirely accurate. It's not about what Mr. Mills personally wants. As he explained, water flows downhill as a result of gravity, so placing the tower along the higher ground allows for a shorter tower to be built, which is safer for water system components, more cost effective for taxpayers, and has the least aesthetic impact. You also omitted the fact that a tower along Winchester would need to be taller than any other structure in Germantown today. Would residents want such a tall tower? It would also cost much more to build and maintain than a shorter tower.

    You also neglected to mention the reason a tower was even recommended in the first place. A tower was recommended primarily because of public safety. Currently, if something were to happen to the primary tower, our entire water system would be compromised. We would need many underground pumps at extreme cost to replace one tower. As it stands today, when the main tower is taken out of service for TDEC required maintenance, we are forced to rely on the older tank. The older tank holds 75,000 gallons of water. On the days of our lowest water demand, we use 6 Million gallons. So, leaving the current system unchanged or even installing one underground pump station still forces us to rely on a very old backup tank and risks contamination to our water system.

    Something else you neglected to mention is that the cost-benefit analysis that Alderman Massey is asking for is a huge undertaking. We can't just install one underground pump station instead of a tower and still have a safe water supply. We would need many pump stations scattered throughout the city (each requiring about about an acre of land, plus excavation costs, plus electrical service, plus many other costs) to achieve the same result as a tower (and that still wouldn't have the safety). Massey's analysis would require months of work by an engineering firm, real estate analysis, construction estimates, and excavation estimates. The analysis alone could cost close to $100,000. Is that a reasonable expense on the taxpayers? It looks like Massey is hoping for some paralysis by analysis (asking for such complex and expensive analysis that nothing gets done).

  2. Do you oppose a water tower? Why does it seem the main Germantown water tower is celebrated, and yet building an additional water tower to provide guaranteed uninterrupted water service to residents is a bad thing? Water towers are iconic staples of 'small town' life and that's what all the hopping and hollering over apartments is in support of. When does the hypocrisy end