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.



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

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.
************* 

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.  


*************** 

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.

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

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

Thursday, August 13, 2020

No Expansion of Middle School Unless City Restores Funding




If the City fails to restore funding to the Houston Middle School expansion project, there will be no expansion of the middle school.

The City Administration gives two reasons for cutting the funding for the expansion of Houston Middle School, and postponing it for one year 1. The pandemic has led to uncertainty over City revenues, and 2. Now is not a good time for the City to issue bonds in the capital markets.

The 2021 budget proposal, which includes capital improvements projects (CIP) for the next five years, will have its third reading at the next BMA meeting. The plan includes 2.5 million dollars in the 2022 budget for Houston Middle School expansion, which is just 50% of the original commitment. 

Another item in the City's CIP for 2022 is 5.5 million dollars for the purchase and development of land for tournament  long fields south of Winchester off Forest Hill. That project, when completed, would add about $300,000 to the City's operating expenses.

  

While Alderman Rocky Janda regularly states that GMSD has plenty of reserves to to build the addition, GMSD representatives dispute that, because those reserves are committed to specific projects. As an example, a large amount of reserves are needed because state money is not available for the district for several months after school begins, and it is needed to pay bills from September through the end of the year.

Another hit in the GMSD budget this year is the $355,000 annual payment to Shelby County Schools. Previously, the City has covered this expense, but the City left this payment out of its budget this year, stating GMSD must cover this commitment for the remaining six years.

You may read additional details in this Daily Memphian article: 



Listen to the Board of Mayor and Aldermen Work Session on July 23, to hear the entire discussion of the school budget. 



In this excerpt, Alderman Sanders asks the GMSD representatives if there will be a school expansion at all if the City fails to contribute the full $5.0 million dollars promised. The answer is a resounding  "no".  Later, Patrick Lawton states that the funding could always be revisited in next year's budget if financial conditions warrant.

Sunday, August 9, 2020

Beacon Center Lists Germantown Last in "Cost of Government" Index

The Beacon Center of Tennessee is a non-partisan, libertarian, non-profit that acts as a watchdog for government spending and individual freedoms. It ranks Germantown #30 out of 30 Cities in "Cost of Government", behind even Nashville, which rates #29 in that category, and Memphis at #28.

Besides "cost of government", three other categories were measured (Germantown ranks in parenthesis) --free enterprise (#20), private property (#14), and individual liberty (#16).

Overall Nashville, and Memphis and its suburbs are at the bottom of the rankings. Memphis ranks #25, and Germantown #26.


"Germantown did poor because it spends a lot on taxpayer funded lobbying money. Its debt is very high per person. It’s actually higher than Memphis believe it or not," said Shultis.  Link 


This poor rating comes out at an opportune time, as there is a small window of opportunity for citizens to express their feelings about the City budget. Instructions for commenting are at the bottom of this post.  


In this year's budget, tucked away in the capital expenditure budget for the Parks, is a mere $50,000 for due diligence and down payment on acreage south of Winchester for a sports complex. This complex is projected to need an annual subsidy of $200.000 to $300,000 per year. I understand that the City needs more athletic fields to meet the needs of the citizens, but the City should make the case for that need, and also give citizens a range of options that do not necessarily include tournament level fields. The City already supports other enterprises, such as GPAC, and GAC, the Great Hall, the Pickering Center, and The Hay Barn. All of these will need funds from general expenditures because of the pandemic. They also suffer during recessions.  The good news I guess is that at least our "cost of government" rating cannot go lower than dead last. Because of budget issues, the City has cut back and put off promised renovations and expansion of the middle school. Shouldn't those funds be prioritized above an athletic complex that will cost the City hundreds of thousands of dollars a year?

The time is NOW to express your opinion on these issues. There is an on-line meeting tomorrow on the budget, and the City is seeking public comment. From the City--
The budget does not include a merit increase for general government employees. There are no plans for layoffs. Vacant positions will be left open.  

Perhaps this would be a good time to abandon the vacation buyback policy. Under that policy, employees can substantially increase their pay by foregoing vacation days. This has the added expense of inflating retirement pay, which is computed on the last three years of salary, and that includes vacation buybacks.

I wonder what a "general government employee" is. My feeling is that employees at the managerial level should not receive raises when the "general" employee does not.

However you feel, please be a good citizens and express your viewpoint. From the City:

Anyone wishing to speak for or against this request is invited to participate. Submittals, 500 words or less, emailed to BMAPH@Germantown-TN.gov prior to noon on August 10 will be delivered to all members of the Board of Mayor and Aldermen prior to the 6 p.m. meeting. Comments must include the name, address and phone number of the person submitting. 
Board of Mayor and Aldermen Meeting August 10

Sunday, August 2, 2020

Vote by Mail Arguments heard by Tennessee Supreme Court


I saw nothing in our newspapers about the State's appeal of a lower court ruling that would force the State to allow vote-by-mail due to the pandemic. I therefore call your attention to The Nashville Tennessean, which covered the arguments made last week:  


Absentee Ballot Battle 

In short, the state shifted its argument to allow those with pre-existing conditions, or those who care for people with pre-existing conditions, to vote by mail this year. Previously, in lower courts, its arguments ignored the pandemic altogether, and no allowance was made for voting by mail due to the pandemic. The State, in its Supreme Court argument, did not specify any pre-existing conditions that would qualify, and it appears the honor system would be at play if the Court adopts the State's current argument. One would just sign that, under the threat of perjury, there is a pre-existing condition which prevents a safe in-person vote. 
 

The plaintiffs argue that limiting voting access goes against the rights of voters as guaranteed by the state and U.S. Constitution.Tennessee is one of the few states that requires a voter to have a specific reason to be able to vote absentee.

Currently, the list of reasons for voting absentee are on the application--and on the Shelby County Election Commission website. At this point, the language re: the pandemic reads as follows: 



  • You are hospitalized, ill, or physically disabled and cannot vote in person and/or I have determined that it is impossible or unreasonable to vote in-person due to the COVID-19 situation.
  • You are a caretaker of a person who is hospitalized, ill, or disabled, and/or I have determinted that it is impossible or unreasonable to vote in person due to the COVID-19 situation.

Presumably, if the Supreme Court accepts the State's current argument, there will be the requirement of having a pre-existing condition added to the above language.    

Blue and Black Ink 

Just a bit of a heads up if you are voting absentee-- I was a bit confused by the instructions sent with my absentee ballot. One piece of paper said to use a blue or black ink pen, not a pencil or red ink. The ballot itself said only black ink is allowed. To be on the safe side, I used the more restrictive instruction-black ink.


Thursday, July 23, 2020

Sarah Freeman, Germantown Citizen, on Discrepanices at Shelby County Election Commission

Sarah Freeman, Germantown citizen and history professor at Arkansas State University, was a poll watcher in the 2018 election. As a result of some of her experiences during that process, she took a deeper dive into the numbers. She acquired the SCEC database showing the voting totals on the machines for each early voting location, and attempted to reconcile them to "poll pad" numbers. The poll pads tally the number of times that a person is looked up on the SCEC data base at each precinct. The poll pads are sealed and locked away securely each evening at each voting location, and unsealed the next day, presumably because these are important for election security.

She discovered that the "poll pad" number totals do not include those voters whose correct address does not match the address on the SCEC records. The voters without matching addresses vote on the machines but are not included on the poll pad tally. At many of the early voting locations she could find little or no attempt to reconcile the poll pad numbers to the machine vote numbers each day. Furthermore, there are wild variations in the number of voters that fall into the "wrong address" category at each voting location, and at each day in some of the early voting locations. 

When Ms. Freeman requested the report of the "auditors", she discovered that there is no "audit". An accounting firm is employed for each election, and, because they have the capability and the credentials to perform audits, they are routinely called "auditors". However, they are only charged with checking a few boxes for a certain number of tasks, and reconciling machine votes to anything is not among their charged tasks. The accounting report specifically states that it does not verify the integrity of the election.

Without further ado, here is Ms. Freeman's report, followed by the email she sent to several parties yesterday: 


Politicians, the press, public servants, and citizen activists,

Please read the attached letter which examines some very troubling documents and data collected from the Nov. 2018 Shelby County election. There were many red flags in that election, and I hope this letter will open up conversations about what can and should be changed in the current election process. Unless and until the process is improved with much better security, a real audit, and (I hope) a shift away from voting machines to a verifiable voter hand-marked ballot system, the integrity of our elections will continue to be undermined.

Let me know if you have any questions and/or would like to see the documents mentioned in the letter. 

Thank you.

Prof. Sarah Wilkerson Freeman
Germantown, TN 38138

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

Here are a few of my past blog posts about elections and the Shelby County Election Commission, as well as a couple from other sources (please note  that the SCEC has billed the City $19,000 for the Barzizza election appeal. I did not write a post about this because it was adequately covered in traditional news sources):  

Friday, April 24, 2020

Alderman Scott Sanders--An Interview


This past Thursday I conducted a phone interview with Alderman Scott Sanders. We discussed several topics, including his vision for the future of the City; school funding and capital expenditure issues post COVID 19; and the final vote on the cell tower at Dogwood School. I used my notes to create a Q and A format. I also note that, for the sake of brevity, I have summarized his answers.

Germantown 2030 Plan, Dense Development, Citizen Commissions, and the Future of the City

Shining a Light: Do you believe that the citizens of Germantown support the Germantown Forward 2030 plan? I ask that because three of us conducted a poll of Germantown NextDoor neighborhoods, and over seventy percent of nearly 1000 respondents want no new apartments in the City. Only seven percent want the full build-out of apartments referenced in a study by City staff members-- that study notes a possibility of adding over 2000 new apartment units. The balance of the respondents on our survey want to keep more or less the same ratio of apartments to single-family homes that the City now has. There seems to be a disconnect between the results of our poll and the “citizen led” Forward 2030 plan.

Alderman Sanders: I stated in my campaign that we need to revisit the 2030 plan. It is not representative of the way citizens feel. In my opinion, the City Administrator and Mayor appoint to the commissions and long range planning committees only those who have the same pro-development mindset that they have. Most citizens do not share that same viewpoint. Also, I've seen many of the candidates that lose elections receive consolation prizes-- appointments to important commissions or committees.  Brian White, who is now on the design review commission, Dave Klevan, who was appointed to the Industrial Development Board, and Greg Marcom, who was a member of the Germantown 2030 Forward planning committee are some examples of that. All of these commissions guide how the city moves forward. The City purports that these commissions represent the views of the greater community, but they actually do not. City departments were highly involved in the Forward 2030 plan, and the members were largely administration supporters. The process was fashioned in a way that insured that the result would be consistent with the administration’s viewpoint. 

Shining a Light: Why are people attracted to Germantown as a place to live? 

Alderman Sanders: Traditionally, people have been attracted to the City because of the tight knit neighborhoods, mature trees, strict zoning restrictions on signs and building height, aesthetics, and the peace and quiet away from the hustle and bustle of Memphis. One hundred percent the two most important factors are great schools and public safety. 

Having said that, although Germantown has always been the premier city in West Tennessee, we are losing our edge, and we may be losing our desirability because of the way we have changed. There is a lot of jockeying going on between Germantown and Collierville now. Their new state-of-the-art high school is attracting a number of families who see concrete evidence of that City’s support of the new school system. Also there is now a commitment there to limit dense development. The aldermen that I have talked to from Collierville regret the number of apartment units that they have approved in the past, and they pledge not to approve any more other than those in the pipeline. In Collierville, the aldermen are all respected by the administration. There is not any infighting. The board there holds regular work sessions, open to the public. Heck I just saw an article in the Daily Memphian and saw even with their hiring of their new police chief that they held open interviews of the candidates where the public and press could attend. Here there seems to be a great lack of trust in the government by our residents, and I feel it is because the administration does not seem to value the opinions of all the aldermen and the residents can see that. Instead of listening, our viewpoints are suppressed.  

School Funding Issues


Shining a Light: I want to talk a little bit about the school system since you brought that up. At a recent School Board meeting, it was announced that the annual $355,000 payment pledged to Shelby County Schools would no longer be paid by the City because of budget concerns arising as a result of the novel coronavirus pandemic. In the future it will be paid by the school system. This is at a time when GMSD is facing its own funding problems. How did this decision come about? 

Alderman Sanders: I have no idea. I was not consulted in any way about that. The aldermen vote on the budget, and that payment was always included. The first time I heard about it was when I listened to the school board meeting. I'd like to see the original settlement agreement to see who the parties were, was it the City of Germantown or the Germantown Board of Education? Perhaps it was their responsibility all along and the City chose to handle the payments for them in the early years due to lack of funding and starting a new district. I don't know at this point. This is not the only time we have not been consulted on something regarding GMSD. As you likely recall, the administration required GMSD to pay $232,000 extra for a utility sized pipe for a potential water tower when the new elementary school was built. All utility fund expenditures must be approved by the BMA, but the administration totally skipped that step. We never even heard about a water tower until after GMSD incurred the expense, and sought to be reimbursed. Because the water tower location has since been moved, the extra $232,000 spent for the pipe was wasted. The City had to reimburse GMSD for the funds by retroactively approving the expenditure. Yet there is no state statute allowing for a retroactive approval from the utility fund since GMSD has no authority to spend funds from that account. The end result of this mismanagement was $232,000 of taxpayer money down the drain. 

As for the payment to SCS, I prefer that the GMSD spend its budget on educating the students rather than making payments to Shelby County. I have always been supportive of everything the school system needs, whether it is money for increased security or for renovations at the middle school. I also heard for the first time that the City has taken the middle school addition off the capital improvements budget for next year. The capital improvements portion of the budget approved issuing a bond in the amount of $5 million this year and has already passed the BMA. The City Administrator apparently contacted Superintendent Manuel and said that was off the table now due to budget concerns. I am not sure the City has the authority to make this decision without a BMA vote. And I was neither consulted nor informed about the decision. We should have had a work session about all this to hear from the City the reasoning for their decision. The board may have agreed to delay or postpone this capital project due to the potential for lost revenues from the pandemic, I don't know. 

All of these things are typical. Often I am the last to find out about things, as I am not kept in the loop at all. I often read about something in the newspaper, and then see another alderman quoted. I wonder of course, about the lack of communication between the administration and at least some of the aldermen.  

The City Budget


Shining a Light: As a result of COVID 19, the City's sales tax revenue has been severely reduced, and GAC and GPAC are receiving no revenues at all. The City obviously must make some budget cuts somewhere. The Planning Commission gave the administration a pass on presenting a budget for next year.  How do you feel about all this? 

Alderman Sanders: Memphis is submitting a budget on time, and the County is submitting a budget on time. These budgets are much more complex than ours, so why can't we approve a budget for the coming year? I have written an email to Patrick Lawton saying, among other things, that there should not be an open ended time extension on submitting a budget. When will we see it? I also asked him some additional questions about possible cuts to the budget.

Shining a Light: Do you mind sending me a copy of that email?

Alderman Sanders: I would be happy to send you a copy. [The copy is included at the end of the interview.] 

Capital Expenditures- Road Projects

Shining a Light: Since you brought up the issue of the school renovation, let’s talk a bit about some of the other capital expenditures that have been planned. I noticed on the agenda sheet for the meeting Monday that some previously approved capital expenditures for various road projects are being cut. Do you have any feelings about those?

[Alderman Sanders expressed regret about losing the 80% of state funding on the Wolf River/Germantown Road intersection project, but he was unsure as to whether or not the project had been dropped by the state. After the interview Alderman Sanders let me know that he got a response from the city administrator about this project. Alderman Sanders was told that the bids came in over the state budget. The budget was $4 million and bids came in at $8 million so the state agrees that the bids on the agenda for Monday should be rejected. At this point Germantown is not sure how the state will proceed.]

Shining a Light: How much have we spent on that project to date? 

Alderman Sanders: There are so many different parts to it that I can’t even estimate. I would probably have to submit an open records request to find out.  

Capital Expenditures, Water Tower, Sports Complex, School Expansion


Shining a Light: What about other capital expenditures planned for next year? Besides the school expansion, there are plans to buy a property south of Winchester for a sports complex, and of course there is the water tower. Do you know anything about those? 

Alderman Sanders: No, I don’t. They do not keep me informed. I expect the administration will try to go forward with those at some point. 

Shining a Light: Citizens may push back if the City goes forward with the sports complex while at the same time  postponing the expansion of the middle school. The sports complex would be the third major enterprise the City supports, the other two being GPAC and GAC. That may be a bit unusual for a City our size. And we can all see now that City-supported enterprises, while they can provide great benefit for the citizens, may also present financial risk for the taxpayers during an economic downturn. I also have never seen a real cost/benefit analysis for the sports complex, which I believe is essential before undertaking a project like this.

Alderman Sanders: Well, I think the sports complex is a priority for the administration, so I expect it to come up at some point. Let me tell you a story to demonstrate the way things are done. I have had to start a spreadsheet on projects that we pass so that I can keep up with them. We vote on something and then we don’t know what happens. I happen to live near Cameron Brown Park, and one day recently I saw a number of cars parked on Farmington. I remembered that the BMA passed a measure to add sixty parking spaces at the park for the events that are held there, specifically so there would not be overflow parking on Farmington. The next time I saw Pam Beasley (Parks Director) I asked her what happened to the parking places the BMA voted for. She said that she placed the project on hold after talking to the city administrator because she may need that money for the sports complex if the land comes in over budget. That is not right. That should be a BMA decision. We had already voted on the funds for the parking places. Those funds are committed That leads me to believe they are determined to purchase the land for a sports complex. We’ll see. 

GPAC Cost Overruns


Shining a Light: What is your take on all the GPAC cost overruns?  I remember listening to a person speak at a BMA meeting in “Citizens to be Heard”. He said he was a supporter of GPAC who donated his time as an usher. He supported public funding for the arts, but he was concerned about the cost overruns. He concluded with this: “GPAC is not DaVinci and Germantown is not the Medicis.”

Alderman Sanders: Yes, Holy cow! The City leaders had to talk State Senator Brian Kelsey into extracting $2.5 million dollars grant money from the state to take care of some of the cost overruns. I kept voting for more funds for the overruns since the state provided the additional funding, and then finally for the last $900,000 requested, I had enough and voted against approval of the additional expenditure.  That vote against the final funding was mostly because some of the work had already begun before the proper approvals had been sought from the BMA. 

Cell Tower at Dogwood


Shining a Light: The vote for the final approval of the cell tower is scheduled for a vote on Monday.  Some citizens feel there should be a public meeting so their feelings can be heard. How do you feel about this? 

Alderman Sanders: I hate that it is on the agenda during this time when we are meeting on-line, and city hall is closed. However, this has been going on for 18 months, and after the last hearing (design review) it's been known that the issue would be presented to the BMA in April (tentative date) even before the virus. Everyone has been expressing their viewpoints by email and telephone calls. I've already received hundreds of pages of information over the last 9 months to a year, and read every single page of what has been sent. I continue to conduct my own research, and have answered every citizen email (except those received in the last 48 hours) and will do so up until Monday afternoon.   

You know I campaigned on improving our poor cell service, and no matter how I vote I am going to make a large number of citizens unhappy, yes or no. I'm just going to have to do what I figure is best for the overall population, our businesses, and visitors to the city. I will get criticism on social media either way, but I think the majority of citizens realize I evaluate each agenda item independently and vote my conscience.

Shining a Light: Thank you for your time. Don’t forget to send me your email to Mr. Lawton. 

Alderman Sanders: No.problem. I will do that.  

The email that Alderman Sanders referenced in the text is below. To date, he has received no response.