Sunday, November 1, 2020

Update on Campaign Donations-- the Rich get Richer

Just a quick update on the latest (through October 24) total dollar amount of campaign contributions that aldermen candidates are reporting. There is obviously a lot at stake this election. The establishment candidates candidates, specifically those endorsed retiring aldermen Janda and Owens-- McCreery, Hicks, and Ueleke, are still raking in the cash. Their challengers-- Johnson, Musso, Miles, and Motley, cannot keep pace. I reported third quarter accumulated contributions in this Donations Over the Top in Aldermen Races. Here are the updated figures of contributions reported to the Shelby County Election Commission through October 24:   


 
As I was writing this, I realized that The Daily Memphian has come out with an article on contributions, with totals:  
 
Finances, Endorsements, Show Alignment in Germantown Elections

I have collected the new reports from the candidates' filings and placed them in this folder for your convenience. 

Folder with October Alderman Candidates Filings  

The previous reports: 

Quarters 1-3 Candidate filings

Of particular note are two large donations to Ueleke's campaign from PACs-- the FEDEX PAC, and the Tennessee Association of Realtors PAC.  McCreery scored a large donation from Ray Gill, developer of Travure, the multi-story office building and hotels on Poplar just east of Kirby. Hicks also reported a large donation from the Tennessee Association of Realtors PAC and from the campaign funds of Forrest Owens. 


Monday, October 19, 2020

Donations Over The Top in Aldermen Races

The $$$ donations reported to the Shelby County Election Commission by alderman candidates are staggering, especially for a job that pays only $12,000 per year. These are the totals reported as of September 30:  


Jon McCreery took the prize, with only a little less money than former Alderman Barzizza had when he ran for Mayor in 2018. The three candidates most flush with cash are all supported by Mayor Palazzolo, Alderman Forrest Owens, and Alderman Rocky Janda. Their signs are in front of the former Germantown News Building, now owned by ex-alderman and current SCEC Commissioner Frank Uhlhorn, and they are all using Watkins-Uiberall accounting firm, the long-time City auditor, for their filings.  
  
As you can see, in each position, the administration-supported candidates have considerably more than twice the donations of their challengers. Educated voters will keep that in mind when they see television ads or read slick mailers.  

Where does all this money come from?

Although the SCEC has most of the filings on its website, for easy access I put them all in a folder. For convenience I combined reports when a candidates reported more than one quarter.


I wondered if Collierville candidates for Mayor needed this much cash, so I checked some SCEC filings for them. I found only two candidates with significant donations, one with $11,000, and another with $10,250. 

As of this writing, some third quarter reports have not yet been updated on the SCEC website.



Thursday, October 8, 2020

Three Roundabouts in Northwest Germantown on Project List

 
Carmel, Indiana, the model for our City, is a sort of "roundabout central" for the USA. It seems as if our City may still trying to emulate that financially troubled City. 

I mentioned in the discussion of the post Will Old Germantown be Sacrificed to Asphalt? that there were some other unusual road plans on the MPO project list. Unlike the Old Germantown plans, these three Neshoba Road roundabouts have an actual target date-- 2026-2030. Remember that these plans are not set in stone and can often change dates, or be dropped.  

Since the intersection of Exeter and Neshoba has recently been improved, one would hope that this intersection will not be included in the final plans. Perhaps the Thornwood developers were not in favor of a roundabout there, and were able to convince the administration to have a more traditional intersection at that location. That is pure conjecture.

I have questions about roundabouts on Neshoba, for several of reasons. There are homes at these intersections, and it will likely take at least parts of yards, if not the homes themselves, depending on the size of the roundabouts. I also wonder how fire trucks will be able to pass. The administration is always telling us that the City cannot have speed bumps (or something similar)  because of the adverse effect on response times. But roundabouts surely would slow fire trucks more than speed bumps, which can be specifically designed to accommodate fire trucks.  

This one minute video describes all I know about the roundabouts on the project list:


Friday, October 2, 2020

Germantown News Muzzled

 

 
News Flash! Germantown News has been sold to a Camden, TN, firm-- Magic Valley Publishing Company, and moved to Bartlett, TN. All employees, including Mark Randall, the editor, have been let go. 

I promised I would follow the story, after ex-alderman Frank Uhlhorn purchased the building. I am not sure exactly what happened, but a lessor has a lot of control over a lessee.

See Ex-Alderman Uhlhorn Purchase Building Housing Germantown News for the back story. Weren't we all waiting for the other shoe to drop. #GermantownNewsGate  

Mark Randall's post from the Facebook Group  Germantown Discussion Group- Anything Goes (Almost)

Germantown News was sold Monday to Magic Valley Publishing who own the weekly newspapers in Bartlett, Millington, and Collierville. Unfortunately, none of us who were at Germantown News will be making the transition. I want to say thank you to the people of Germantown for your wonderful hospitality and for making the job enjoyable!

Wednesday, September 30, 2020

Will Old Germantown be Sacrificed to Asphalt?

 





What are these, in the above graphic? Something smells in these two projects taken from the Metropolitan Planning Organization (MPO) Livability 2050 list, and I might as well let everyone get a whiff of the stench. Before I attempt to explain what could become both a seven-lane road and a five-lane road cutting through Old Germantown, you may want deep background on the very unpopular Germantown Road Realignment project.  

Background

This web page that was put together by opponents of the project at the time, around five years ago. Citizens fought and won the battle against this, but apparently not the war.  

Remember the brouhaha that began when I suggested that citizens who do not want Germantown Road Realignment write to City officials and request that they remove Germantown Road Realignment from the MPO's new Livability 2050 plan? (see: Let's Get This Straight-Realignment is on the MPO project list, It is Not Dead)  An MPO official at a meeting seeking public input about the new 2050 Livability plan suggested that citizens should talk to our public officials if we wanted the plan removed from the list. It seemed a simple request-- after all, City officials were calling the project "dead." Why would a "dead" project still be on a brand new MPO list being formulated?  And why would city officials even want there if it was truly "dead"?

In an attempt to appease the riled up citizens, the BMA simply passed a resolution saying it was not seeking Germantown Road Realignment, nor was it seeking to have a bridge across the Wolf River at Forest Hill Road. The City did NOT state that it was requesting removal of the project from the MPO list. A resolution is meaningless, of course, except for a brief period of time, as it may be unresolved at any time with a simple vote.  

Getting Germantown Road Realignment off the MPO list is the only way to make sure it a project is truly "dead" rather than hibernating. When I went to yet another public meeting of the MPO, after the 2050 Livability plan came out about a year ago, an official, in response to my question, denied that it was on the list.    


The Two Separate Old Germantown Projects


 
The above information came from page 188 of the pdf of the MPO's Livability 2050 plan. It is currently unfunded and in the "Vision"  list. This project could mean that Poplar Pike is being widened all the way from Old Germantown to Poplar east of Forest Hill Road. I cannot say for sure. Now for the next project:



This is found on page 189 of the pdf, also in the Vision Project list. It is clear as mud. 
Excuse me? Germantown Road is to be widened from 5 to 7 lanes? What is wrong with this picture? Germantown Road in Old Germantown is only 2 lanes. It only expands to five lanes near Methodist Hospital. The only true 5 lane road going from Poplar Pike to Poplar now is West. How is there even room for Germantown Road to expand to seven lanes? Is this a Germantown Road expansion or a realignment? Is this some sort of purposeful muddying the waters? 

In any case, there are two projects on the MPO plan running through the area, a 7 lane road that is either a Germantown Road realignment or expansion from 2 (and 5) lanes to 7 lanes, the most likely scenario, or possibly a West Street expansion that is misnamed, and a 5 lane Poplar Pike Project that may or may not follow Poplar Pike all the way to Poplar east of Forest Hill.  

I am sure the administration will clear all this up if citizens ask.  Whatever they say, there will be a lot of rhetoric attached, so it is important to know what it means for a project to be on the MPO list. 

What Does Being on the MPO List Mean?

Let's look at what being on the MPO list means. It means it may be funded any time all funding parties agree. Projects on the list move around a lot. The Germantown Road Realignment fight was about five years ago. And where had it been on the MPO list?  It was not scheduled until 2030, but it was plucked from 2030 and landed in 2015.  

And look where the Poplar Pike project is now-- it has no date and no funding. It is on a "Vision Project List". Please note that I found the Poplar Pike project with this list of Germantown projects, all without funding on a sort of "wish" list in the final pages of the document. The Germantown project is on a different page in the same list.


Looks like a lot of unpopular projects were kind of stuck in the same place, at the end of the projects, without a date and  unfunded--Hacks Cross opening to Poplar, a bridge over the Wolf River on Forest Hill Irene, and further widening of Germantown Road from five lanes to seven from Poplar Pike to Stout Road. You can see for yourselves by looking at the list.  For a complete list, you may look at the document itself. 

But, as evidence that these projects can come forward at any time, look at the first project on the list--widening Forest Hill Irene Road from Winchester to Poplar Pike from 2 lanes to 4 lanes. Well, I just drove down the new 5 lane Forest Hill Irene Road in that location. So the above list must have been compiled prior to that project beginning. Yes, the newly-finished Forest Hill project was on the exact same wish list as the both the Poplar Pike project, and the Germantown project unfunded. It did not matter where it was on the list, when there was a need and a desire for the Forest Hill project, it was there for the plucking, and all funding agencies agreed to it. Conclusion: The fact that it is on the list at all means it can be brought up at any time, no matter if it has a project date or funding attached to it.

The Sale of the Germantown News, and the Sale of its Building on North Street to an Administration Supporter

Now what, if anything, all this has to do with Frank Uhlhorn's recent purchase of the building housing Germantown News I do not know. It could easily be in the path of the road. Was he assured he would get his money back, and possibly more, when road realignment happened? Does it mean the project will come sooner rather than later?  

Perhaps that purchase has more to do with getting the owner of the Germantown News out of their lease. Remember when I told you that  the administration was not that happy with the new editor of the Germantown News? Turns out the Germantown News itself was sold in the last few days, to Magic Valley Publishing, from Camden, TN. The family-owned business also publishes a paper in Bartlett. The Germantown News will henceforth not be located in the building that Frank Uhlhorn purchased, and instead be located in Bartlett. I told you I would be following the story, and that is the latest information that I have.  

More to Come

I have some more shockers to talk about from the MPO plan. You can read the plan and find out what I mean, or wait for my subsequent post. Here is a hint!  


Monday, September 28, 2020

Candidate Forum Reveals Views on Mixed-Use Residential Projects and Role of Aldermen

The Candidate Forum last week sponsored by the Leadership Germantown Alumni Association gave  viewers insight into the the aldermen candidates' views on mixed-use residential projects (apartments) and alderman's role. None have previously served in elected office. First, some general observations:  

The candidates agreed on a broad variety of issues: 


no property tax increases

support the needs of GMSD 

no stand-alone apartment buildings 

want single family housing at GCC site

property owners can sell their land to whomever they want, but zoning has to be followed. 

all declare themselves to be independent of any group, and will govern independently.

Unfortunately, there were not any questions about the crumbling drainage ditches or other infrastructure issues.

The moderator, Richard Ransom, did not pretend to be neutral, as he stated that
 the leadership of the City was doing a great job, and he loves the idea of mixed-use residences and living at Thornwood. That was both jarring, and also refreshingly honest. A neutral moderator would have been much preferable, but at least he did make his bias known, several times throughout the debate.   

I am going to focus solely on the differences among the candidates, which are centered on their approach to governing, and their feelings about mixed-use developments that contain a residential component (apartments).  

I like to make small parody videos, and viewing after this debate I was moved to make this gif about the candidates' views on governing style:   


 


If you have time, please view the entire forum video, or, better yet, I added a link below to the specific location in the video for each position. Here are the distilled views of the candidates on the two issues. I link each of their websites-- just click on their names. If they have served on a Commission, I note that in italics directly under the candidates' name, and something about their tenure.


Position 3 click for Forum 



Terri Johnson

Role as Alderman- Listen to the Citizens and Represent their Viewpoints

Development- Citizens Don't Want More Apartments. 
We have apartments and there are vacancies. No to Carrefour

Sherrie Hicks  

Commissions: Ms. Hicks has served on several commissions, and was an early supporter of Smart Growth. She currently is on the Planning Commission. She voted twice for the cell tower at Dogwood School, and recused herself once. She voted for the original outline plan of Carrefour, but her only absence of the year was when the second, revised Carrefour outline plan was considered. She has supported all administration development plans in the last two years.

Role as Alderman- Wants Decorum and Respect at BMA

Development- Won't Support Any  Development that Overcrowds Schools, 
Germantown zoning land area will always be 90% residential, so mixed-use residential not a big deal, since it will be limited to 10% of the land area.



John Paul Miles   

Commissions: Mr. Miles serves on the Great Hall Commission. It has no real role in local governing.

Role as aldermen--represent the citizens. 
Disconnect between current leadership and citizens. 

Development--Germantown is a great place to live, we don't need 6-8 story buildings popping up. "No" to apartments in mixed-use, no to Carrefour.

Brian Ueleke  

Commissions: Mr. Ueleke has served on many commissions, including the all-important Financial Advisory Commission, that passes the budget on to the BMA, including the capital expenditures budget involving infrastructure needs. 

Role as Alderman-- Explain City decisions to citizens through communication. 

Development- All projects will be evaluated by impact.

Rod Motley  

Role as Alderman-Follow the will of the people

Development- No to mixed-use residential. People want safety and uncrowded schools. No to Carrefour. 


Position 5 click for Forum  


Brandon Musso  

Role as alderman-Follow the will of the citizens. 

Development- People move here because of the small town feel and the schools, not to live in an urban center. 

Jon McCreery 

Commissions: While he has not served on a Germantown Commission, he served on the Shelby County Land Use Control Board.

Role as alderman- Try to compromise.


Development- Cannot pre-judge projects, cannot pre-judge Carrefour. 

**********
   
As of June 30, the Shelby County Election Commission reports the following donations for each of the candidates:  

Sherrie Hicks    $16,388  
Brian Ueleke     $11.890 
Jon McCreery   $37,700 

The other candidates had no funds on June 30.



Here is another gif, about the will of the people on apartments:   










ezgif.com gif maker (1)

Wednesday, September 16, 2020

Carmel, Indiana the Model for Germantown....

Without any proof, our leaders boldly assert that the City receives fiscal benefits from dense development. Let's take a look at Smart Growth in Carmel, Indiana, which our City leaders choose to emulate. Carmel, in fact, is a perfect example of dense development not resulting in fiscal health. While it is an affluent city, it is now mired in one billion dollars in debt, has had its debt rating downgraded twice, and is particularly vulnerable to economic downturns. 

But Clay Bailey, writing for the Commercial Appeal on June 23, 2016, after visiting Carmel declared it a "nice prototype for Germantown's future."  He also considered Carmel "one of the success stories of the Smart Growth approach." Ron Maxey, in a later Commercial Appeal article that year stated that Carmel is a "model for the Smart Growth concept Germantown would like to emulate long term," and it "reimagined things like density, land use and transportation probably 15 years before Germantown started thinking about it." As proof of the City's commitment to use Carmel as a model, city leaders took a nice long weekend trip to Carmel in early May, 2016, where they explored the city's numerous roundabouts, and other features of Carmel.  


 

Rocky Janda, Patrick Lawton, Mayor Brainard (Carmel), Mayor Palazzolo, Mary Anne Gibson, and Dave Klevan, during their visit to Carmel. 

 

Carmel, a suburb of Indianapolis with a population of 100,000, is the hometown of City Administrator Lawton. Mayor Palazzolo even lived there for a short time. It was reported that Mayor Palazzolo was particularly enamored with the look of the buildings up against the sidewalks in the downtown area when he visited the City.

No doubt Carmel has transformed its roadways by replacing traffic signals with roundabouts. It has a thriving arts district. It is also a City in turmoil politically, with a controversial Mayor who has led the City down the path of fiscal irresponsibility. Do you think that could not happen to our City? I started looking at Carmel again after The Beacon Center of Tennessee ranked Germantown #30 out of  30 cities in Tennessee in "cost of government".  If we were behind Carmel by 15 years, what is in store for us 15 years down the road, if we continue on that same path? What I found out is not pretty.  

I take you no further than an article in the Indianapolis Monthly this past May-- Does Carmel Have a Spending Problem?  It details the cost overruns of a City-subsidized hotel project that had gone over budget by 18 million dollars. The Mayor did not see fit to inform the governing body of this overrun. Tim Hannon, a freshman City councillor mused: "Is this how things work here? I have to find out about the city’s finances from reporters?" 

Considering that both Aldermen Scott Sanders and Dean Massey complain that they find out about city matters from newspapers before they are informed by the administration, one wonders if our leaders emulate their lack of transparency from Carmel leaders, in addition to their penchant for dense development. The article states: "In Carmel, it’s increasingly clear that the amount of spending may be only part of the problem. What really infuriates Brainard’s most vocal critics is the opaque way in which his administration goes about doing it." 

At one point Mayor Brainard wanted to purchase a five million dollar carousel. Ultimately that was turned down, but the debt rating was downgraded shortly thereafter. According to the Indianapolis Monthly article, S&P wrote in a letter to the city that it was concerned that Carmel’s “crowded budget,” “high fixed costs,” and “heavy dependence on sometimes more volatile tax-increment revenues” would leave it vulnerable to the effects of a recession. One has to wonder about the fiscal effect of the pandemic in Carmel.  

In one way Carmel wanted to emulate Germantown. It used Germantown as an example when their Mayor's salary was raised, and he became the highest paid mayor in Indiana as a result. Perhaps Germantown should be looking at Carmel for salary comparisons. Although I do not have recent figures, in 2018, after the raise, Mayor Brainard was due to make $149,000, compared to Patrick Lawton's then salary of $212,500. Please note that Mayor Brainard also serves as the administrator of Carmel.

So goes the story of Carmel. We haven't heard as much about Carmel from our leaders lately. I wonder why not? I also wonder if roundabouts are still in our future. And we all wonder what our City will be like in 15 years.













 











 




Monday, September 14, 2020

Ex-Alderman Uhlhorn Buys Building Housing Germantown News

 

 


As you read this, recall the expression "Follow the money": 

On the surface, the purchase of the property at 7545 North in the heart of Old Germantown seems an unlikely investment for the homebuilder ex-alderman. So why did Mr. Uhlhorn purchase it? Could it have anything to do with the fact that the lessee, Germantown News, is under new ownership, and the  editor, Mark Randall, has written on subjects that have upset the administration? As an example, one of Mr. Randall's first articles was about Alderman Massey being muted in an online BMA meeting, and Mr. Massey having to text Alderman Sanders during the meeting to ask the Mayor to unmute him. Or, is this to ensure that any Germantown Realignment proposal goes a little more smoothly next time around? Yes, this building would be destroyed if that project reared its head.

A landlord can put pressure on a tenant, so we will have to see in the future what, if any, changes occur at Germantown News. I will not speculate here, but I will be watching closely.

So how much was this worth to Mr. Uhlhorn?  According the the Commercial Appeal property transfers, the cost was $353,100.  

Mr. Uhlhorn looms larger than life in politics in Germantown, and has been discussed in several different contexts:  

He ran an unsuccessful race for the Tennessee House a few years back.  

He owns a life insurance policy that the City is still paying premiums on.

In 2008, he and his friend Mike Palazzolo admitted campaign violations in their aldermen races, as sample ballots they distributed made it appear they were endorsed by the Republican Party, when, in fact, there was no such endorsement.  

He has been appointed as a commissioner to the Shelby County Election Commission.

He was one of the main donors to the "Germantown Values PAC" supporting administration candidates in the 2018 election. The PAC hired Caissa Public Strategy, who conducted illegal polling at New Bethel during that election. The firm was also exposed in a Commercial Appeal article for passing out literature at polling places that claimed the same candidates were either Democrats or Republicans, depending on the way people generally vote at that precinct. 

Here Mr. Uhlhorn is shown with Mayor Palazzolo at a Tigers' game. 



Here is the the Assessor's page for the property:   





Thursday, September 10, 2020

Costs and Plans for Stormwater Drainage

 

 
I referred to the City's infrastructure needs that have been neglected for decades in my recent Elephants in the Room post. And in the Drainage Survey I compiled, it was revealed that nearly 50% of the households that responded had experienced problems with stormwater drainage. The flooding last year caused seven million dollars in structural damage to homes in the City. That does not include replacement for furniture, appliances, electronics, etc.  

What do we need to bring our stormwater infrastructure into the 21st century, how much does it cost, and what do we have planned? My research indicates that our drainage system likely needs at least $170 million of upgrading  In the recently passed budget, just under $11.5 million* is scheduled to be spent in the next six years. 

******** 

When I requested an audio or video of the Finance Commission subcommittee on stormwater that met last Feb. 27, I was told there was none available. When I asked for the minutes, or even draft minutes, I received the following:  



That wasn't exactly helpful. However, I had also requested handouts from the meeting, and a PowerPoint was included. Here is the grand total of the cost estimate: 
 

This document seems to be based on 2017 information, and projects the timeline for the City to complete the needed work by 2023, beginning in 2017. That obviously was not accomplished.

A more modest $32.1 million proposal (the total of the column CIP FY21-26 in the below image) was also included, to begin to fix the issues now-- the total of all of the projects:  (22+3+3+3.25+.85+0=32.1) 

The $32.1 million total of all the above projects obviously was at least discussed at the February meeting. That total was far greater than what finally made it into the capital improvements budget--just under  $11.5 million, passed by the BMA:  





Here are the costs and projects that were budgeted for the last four fiscal years:  
  
2020 $1,075,000

 
 

2019 $200,000
 

2018 $350,000
 

2017 $1,770.000 



Some additional information and maps from the City are available on the Developments in Germantown website. Questions about the CIP budget for drainage should be directed to the City.  

Phase 1 

Phase 1b 

Phase 2 

Phase 3 

 ***
The figures of the six year budget have been updated to reflect the budget passed by the BMA. I was relying on the budget posted on the City website to be accurate. The BMA budget was slightly different from the budget passed by the Finance Commission. The total six-year CIP budget number for drainage should be $11,485,000 rather than $10,610,000.  Sadly no new project was added. The change simply moved budgeted funds unspent from last year into this year's budget. The work on Lateral E budgeted for last year was not completed. Alderman Scott Sanders contacted me about this post and requested that I correct the figures.

Thursday, September 3, 2020

Apartments vs. "Mixed-Use" - also Neglect of Infrastructure Needs; Two Elephants in the Room


There are actually more than the two elephants in our City's room-- that is, the things that the administration does not want us to know, or talk about, particularly in an election year. Thus, I will let each of the above elephants stand for a group of issues. One elephant represents the financial challenges the City faces, due to past and current City leaders continually kicking basic needs down the road, and instead using taxpayer funds to seek external rewards and engage in self-promotion. The "boring" things like maintaining an aging water system (think: broken water mains and blue water stains),  ensuring the retirement account is properly funded , adding safety and  adequate space for the school system, and rebuilding the storm drains (think: floods) are all but forgotten. These things aren't nearly as sexy as building a big screen and high dollar outdoor venue in a relatively small space and narrowing Germantown Road, causing the resultant traffic jams and difficulties for businesses in the area. No matter who is elected as aldermen, there will likely have to be future property tax increases, simply to catch up with the infrastructure needs that have been long-neglected.  

The OTHER elephant in the room represents the development projects that will likely be coming before the BMA in the next two years. These projects have specifically been delayed so as not to influence the upcoming November municipal elections. A NextDoor poll found that 71% of citizens want no new apartment complexes, and 22% want just a few more apartment units. That means, of course, that every candidate will claim to be anti-apartment. But the loophole?? The moniker "mixed-use" takes care of that.  


 
"Mixed-Use" Means Apartments

 If you are among the 90% of citizens that wants to limit apartment growth in some manner, beware of the double-speak. Administration candidates claim to be against new apartment projects, which, by the way, are already banned, but in the same breath, they favor so-called "mixed-use" projects, which include, ahem, apartments.  An apartment complex with a laundromat and coffee shop attached could be labeled "mixed-use". 

So, these administration candidates say they are against new apartments, while they actually FAVOR new apartments. Two apartment/mixed-use projects that will come before the City in the next two years are 1) Viridian, an apartment complex on Winchester that our administration graciously exempted from the apartment moratorium and stand-alone apartment ban, and 2), Carrefour, a dense, 6-10 story multi-building complex at Kirby and Poplar. The City has already spent millions of dollars on extra infrastructure for this project, while virtually ignoring the infrastructure needs of current citizens.  

The former Germantown Country Club property has a contract to be sold, but the purchaser is unknown at this time and no plans have been submitted. Which candidates do you want in office when those plans are considered? 

Viridian--

Viridian, which is on Winchester at the Collierville border, stands out as the City's only project that did not get unanimous approval by a Planning Commission noted for unanimity. The outline sailed through that body with a mere 4-3 vote (the Mayor abstained, as he generally does). 

Yet Mary Anne Gibson, Rocky Janda, and Forrest Owens used that vote as a reason to pass the outline plan in the BMA. Dean Massey and John Barzizza voted against the measure. Viridian plans call for 310 apartment units, while the entire Forest Hill Heights small area plan only calls for 252 rental units. Director of Economic Development Cameron Ross misrepresented the Small Area Plan when presenting Viridian to the Planning Commission and the BMA. (see December 11, 2017 post).

When citizens objected to Viridian and other projects, the apartment moratorium was enacted, but this project was grandfathered in. It is now the only "stand-alone" project allowed. It could come through next at the planning commission with a coffee shop attached, just so it can be called "mixed-use" to assuage any aldermen that claim to be against apartments, but for "mixed use".    

Some more information: 

Opposition to Viridian Grows Across City  

Carrefour 

Carrefour is the massive nine acre project planned for the Kirby Parkway/Poplar corner. It will require two additional traffic lights-- one on Poplar, and one on Kirby between Poplar Pike and Poplar. The Planning Commission unanimously gave the original outline plan its approval in the autumn of  2018 , and the BMA followed suit, in the same 3-2 vote as Viridian. The only candidate in the November election who voted on this project is Sherry Hicks, who voted for the Carrefour outline plan as a Planning Commission member.



Office 430,000 sq. ft.
Hotel  2 hotels 240 rooms
Retail 100,000 sq. ft
Apartment Units 0   

****************

The original outline plan indicated no apartment units, but a new outline plan was submitted included 320 apartment units. The Planning Commission passed the measure unanimously.  Alderman Candidate and Planning Commission member  Sherry Hicks was absent for the vote. This was the most important vote of her tenure, and her only absence from the Planning Commission for the year.  

Office  320,000
Hotel 1 hotel, 174 rooms 
Retail 100,000 sq. ft.
Apartment Units  320


 



 
Last December, the new Carrefour outline plan passed the BMA in a 3-2 vote, this time with Aldermen Massey and Sanders dissenting. 

It is unknown if the Carrefour developers will need yet another outline plan due to the pandemic. Office lease rates have declined since many people are working from home. This June 10 Commercial Appeal article speculates that Travure would be the last new office building built for awhile. My guess is that the developers will build the apartment building first, and then seek modifications. If that happens, it can't even be deemed a mixed-use project, simply another apartment building.  

More information on Carrefour--  

320 high-rise apartments at Carrefour, and the 7% solution.

Germantown Country Club 

This project has not yet closed, nor do we know who the new owner is. What we do know is that Mayor Mike Palazzolo promised, in a statement made on January 4, 2019, that he would not support smart growth zoning changes for this piece of property. 

“I can state unequivocally that, as your Mayor, I will not support a proposal to rezone or develop this land for multi-family housing, nor will I support Smart Growth zoning for the area,” Palazzolo wrote. “If the property does not remain as a country club, any changes will occur with regard for the interest of the adjoining property owners.”


He could reverse course and plead that he has no final say in the matter, and that the Planning Commission and the BMA decide that. Please do remember that the Mayor alone decides who is on the Planning Commission. The BMA simply approves a slate that is submitted by the Mayor. This may become more difficult for the Mayor if his choice candidates are not elected. 

I need to add an addendum to this--this MBJ article names Spence Ray as the buyer, and states that the project is going to be 2,500 to 6,500 square feet homes. It states that no zoning changes are contemplated. As we know, there is a history of bait and switch in this City, so we shall see what happens after the election.



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Beware of wolves in sheep's clothing, and be very careful in your vote for aldermen. There are some very qualified people running for aldermen, but suffice it to say you can take the establishment candidates  "anti-apartment" stances with a big grain of salt. 





Sunday, August 23, 2020

Tournament Level Sports Fields--Appraisal of Forest Hill Property


As I listened to the most recent BMA meeting, I realized that I needed to request the City-ordered appraisal of the property being considered for the tournament long fields. The entire meeting may be found on the City website. Scott Sanders made a number of interesting points about the appraisal in the meeting. He moves to postpone this decision until after the election, when the new Board can have a full work session about the project.




Here is the appraisal- link 

Page 2 The subject property has been offered for sale for more than 20 years.   

Page 4 Prolonged disruptions in financial markets may impact commercial real state markets

Page 4 COVID is a unique event that is expected to be temporary, a reliable estimate of the impact on commercial real estate is not possible,  

Page 22 The site characteristics are as follows:  Gross land area 44.06 acres, Usable Land area, 31.06 acres, usable land % is only 70 %,   

Page 24 According to discussions with the city of Germantown there will be a required detention basin PLUS an additional 5 acres of non-disturbance area and is estimated to cost AT LEAST $1,000,000

Page 41 A review of online data indicated that the subject property taxes were delinquent as of the date of the property appraisal.

Page 55 The appraised value of the property is $3,310,000 but is adjusted by the cost of the detention basin as discussed, which the city estimates as $1,000,000 leaving a value of 2,310,000 

Page 56 If the actual cost of the detention basin differs, it could alter the value conclusion,   

Sanders further states that this is a six million dollar project and there will still be the need to find a corporate partner to build the fields, install lighting, concession stands, restrooms etc., and states that we shouldn’t gamble with the taxpayers money.

Our Master Park Plan indicates that a long field complex will never be a revenue generating facility, in fact it will cost the taxpayer approximately $330,000 to maintain the facility each year.

Dean Massey seconded Alderman Sanders' motion.

The motion failed 3-2.
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I am a big proponent of having adequate sports fields in the community, but I feel that we need to consider more than this one exceptionally costly option, given the underfunded pension plan liabilities and infrastructure needs of the community.

The third reading of the budget is tomorrow, August 24. If you want to voice your opinion about the sports fields, or anything else in the budget, email 
CTBH@germantown-TN.gov. You must include your name, address, and telephone number.



Thursday, August 20, 2020

City Pension Fund Underperforms; Needs Injection of Capital


Abstract: A substantial number of the City's long-standing, loyal employees are nearing retirement age, and the City must ensure their pensions are secure, supported by a properly managed and funded retirement plan. The City pension fund lost money in the last fiscal year, and it has significantly underperformed comparable indexes for the past ten years. Furthermore, current estimates of future performance (for actuarial purposes) are, as acknowledged by the City's own plan advisor, inflated beyond reasonable expected returns. If the fund's future returns simply match historical performance over the past ten years, the City will need to contribute ever-increasing amounts to the fund each year. This will either constrict future City budgets or require tax increases.  


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I shine a light on the following: 


*Losses this past fiscal year were significant, while the benchmark was up 5.6%

*The past ten years showed pension fund returns lower than the benchmark.

*Alderman Sanders asked about increasing contributions to pension fund in the budget in BMA work session, and Patrick Lawton obfuscated in his answer.  I heard no discussion of the difficulties the fund faces at the either the FAC or the regular BMA meeting.

*The expected returns from the pension fund are overstated, but lowering the expectations to a realistic level would clearly reveal the gap the City will need to fill in order to honor its commitments.

*Due in part to underperforming assets, the RPAC  this year voted for changes in the allocation of the funds investments, against the advice of the fund manager.

*Late this year, the actuary will compute the amount the City should put into the pension fund. One estimate suggests it could be as high as two to three million dollars.

*Alternative investments could be considered to try to increase the returns, but that could increase risk or decrease the liquidity of the fund.

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Discussion:

I glanced over the budget prior to the most recent BMA meeting, the public hearing on the budget. My eyes suddenly stopped at the Pension Fund page (p. 110).  From the column "FY 20 (year ending June 30, 2020) Estimate": 



Pension Revenues Fair Value Appreciation (Depreciation)  ($7,327,000); Realized Gain (Loss) $3,645,000, Interest ($97,000), and Pension Expenses Trustee Fees $245,000.

As can be seen, these figures show an estimated net loss for the year of approximately 4 million dollars, or a loss of over 5%. Yet both the S&P index and bond indexes were up well over 5% for the same period of time.  


Contrary to what the above figures show, the fund manager's report on returns through June 30 reveals there was a FY 20 loss of only 1.7%. With the information available to me, I cannot reconcile these amounts-- there likely could be timing differences in the accounting entries and/or the reporting, or perhaps the budget figures overestimated the loss prior to the actual returns becoming available. But, either way, both figures are well below the benchmark amount reported by the fund manager for the period (FY 2020), which was a positive 5.8%. Below are the full manager's reports, for the first and second quarter of calendar year 2020.



I saw no reference in this year's public budget to additional City payments into the pension fund due to these losses, but perhaps I missed it in the extensive amount of material provided. Nor did I hear any discussion of the pension fund in the Finance Commission meetings on the budget, or in the most recent BMA meeting. This is surprising, as the need for increased payments into the pension fund over the next five years would affect the five-year capital funds budget passed by the Finance Commission and BMA as part of the overall budget.

There apparently was a reference to increased payments to the pension funds in the 2021 budget in the material given to the aldermen. At the July BMA Work Session on the budget, Alderman Sanders asked the following, 


Alderman Sanders:
I did have a question on these individual budget detail sheets. You had one thing that really stuck out to me was our additional money we were putting into our retirement and our cash balance.  It looks like we are adding $828,900 into our retirement and $74,600 in our cash balance plan. I don't know what's going on there, why we are adding so much into those two.

You may listen to that question, and Patrick Lawton's rambling, non-response in the video below.
He offered no specifics about the performance of the fund; nor did he address the need for increasing future payments into the fund. These two issues, needless to say ,bear heavily on the discussion of the FY 2021 proposed budget, particularly in light of the proposal in the budget for adding a tournament sports complex likely costing well in excess of $6,000,000, a complex which should be noted, which would have to be subsidized by the City, to the tune of $300,000 per year.



There was, of course, extensive discussion of the returns in the pension funds, as well as the likelihood of future payments into the funds, in the Retirement Plan Advisory Commission (RPAC) meetings on April 1 and August 12. These video meetings are available on the City website. Because I wanted to link to a few discussions in these meetings, I uploaded the audio of the two meetings to YouTube. This file is embedded below.

Gerber-Taylor has been the investment advisor for the pension fund since 1988. Since inception, they report higher returns than the benchmark-- 7.9% versus a benchmark of 7.5%. The bulk of the higher performing years were concentrated in the first years of the fund, when the pension fund was much smaller than it is now. Unfortunately, none of the returns in the reported periods in the last ten years (6.4% per year average overall), beat the benchmark (8.4% per year over the ten year period). This screenshot of performance of the fund is from this year's fund manager report ending 6-30-2020, which is linked above. 
Click to enlarge and see the fund returns vs. the benchmark- 65% MSCI World and 35% BBGBarc Aggregate Index

Discussion in the first RPAC meeting centered around the performance of the fund through March 31, which at that point was a negative 14% due to the abrupt slide in the stock market. The causes of the fund's underperformance were discussed, and  some changes in the asset allocations were approved at the meeting, which was not the recommendation of the fund manager. With the recovery of the capital markets, the August meeting focused not only on allocations within the fund, but also future expected returns of the fund. The fund manager stated that returns of 7.0% to 7.5% (as indicated in the actuarial reports) were unrealistically high due mostly to the plunge in interest rates and other market conditions. He recommended that the City use a lower expected rate of return, and steadily infuse the pension fund with more money each year, so that the budget hit in one year would not be too difficult. 

Some of the members of the Commission suggested alternative investments that could get the fund to perform nearer to the actuarial figure used (7.25%). At one point the fund manager called the pension fund fairly "high beta", meaning wide fluctuations are possible, which in layman terms means "risky". He also stated that a longer meeting with the actuary would be needed before committing to alternative investments such as private equity. Although they could yield higher returns, alternative investments could also mean higher risk and lower liquidity.

 

A few of the specific points and conversations in the meeting are linked below:  

April 1 meeting 

Link Alderman Rocky Janda leaves meeting for an emergency as investment advisor discusses poor returns on some investments such as pipeline partnerships and investments in Japan. 

Link Member asks how the losses will affect the budget if there is no improvement. Patrick Lawton states that the City would have to make contributions to the fund like we did in 2008-2009. Another member makes a statement that we should stay the course with our plan like we did in that period of time, and not make the mistake of getting out of the market. 

Link Pension fund is fully funded at $90 million dollars. Actuary looks at 25 year returns which is around 7.5%. 


The Commission discussed and voted for several tweaks to the allocations in the fund, contained in the minutes which can be found here:  Minutes
 

August 12 meeting 

Link Meeting begins here 

Link Member asks "How achievable is  the  7.5% return, in your opinion?  Advisor: It is a pretty tough nut, when you are thinking about equity valuation levels where they are today with expected returns in the 5% or so range. We are going to need to see value added from our managers to be able to get there, when you talk about bonds sort of in 1.0 to 1.5% returns. It is a pretty tough nut.................. Mathematically from a probability standpoint, no question, it is the math we are all facing, a low return environment, so what does that mean, higher contributions. The one good thing this means for Germantown is that this fund is frozen, that was a great move, years ago, but what it means for investors and for pension funds is higher contributions, relatively speaking, and for endowments and foundations, probably need to watch your spending policy, you know, lower it to the extent that you can. We are dealing with that with our clients across the board, it is a tough situation.  

Link Where does the portfolio protect itself if we have another Q1 or some semblance? Answer: Well, yeah, we have a fair amount of beta in this portfolio. 

Link Member:We have to fund the pension fund in November or December............ This is now August............I am guessing this is probably about a two or two and a half million dollar.into this account from the City. Rocky Janda: I hope not but I think you are probably right. This is one of the biggest contributions we have ever done and we are still using almost eight percent. (turns out this is 7.25% assumed return). Advisor: My point earlier, I counsel. that this probably needs to go lower and I know this increases the liability and increases the funding.but it is probably the prudent thing to do. It does not have to be done in one fell swoop but it is really hard to see how we get a 7.0% return with tools in the toolkit. 

The balance of the discussion was about how to get the returns higher with different types of investments. 


Germantown is not alone in its issues with pension fund shortfalls. Here is a larger discussion of the problems facing states and municipalities:


Local Government Pension Funding