Poor decisions with taxpayer money keeps Memphis from moving forward | Opinion

Memphis does not move forward because of a lack of governmental oversight.

As just one of many examples, over 25 years, local legislative bodies have restricted approximately $138 million in city and county funds to, of all things, Downtown public parking garages.

The Memphis City Council and Shelby County Commission authorizes the funding restriction through the Downtown Memphis Commission, known as the DMC, using a little-known fund, called the PILOT Extension Fund, PEF, for local economic development.  

The financial information in this article was obtained through public documents and/or public information requests. Less current PILOT Extension Funds liabilities, in a majority Black community in need, over 25 years, $138 million in taxpayer funds could instead be used for the following:  

• 1,300 students, per year, served with post-secondary wrap-around services
• 130 small businesses, per year, served with $10K each in forgivable loans
• 1,000 impoverished, per year, served with affordable housing

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Now, the former is real economic development, in that it helps to increase wages and the quality of life for a community in need. But, unfortunately, such trade-off analyses are never conducted by the Memphis City Council or Shelby County Commission.

And they certainly do not listen to taxpayers. But they do routinely formally schedule and hear from the DMC and the Economic Development Growth Engine.

Typically, proposals made by these organizations are rubber-stamped with little questioning or due diligence by local legislative bodies.

Given the former, on Dec. 21, 2020, the County Commission, through reconsideration, shockingly disallowed scheduled due diligence, as requested by the county chief financial officer, assessor and trustee on a $62 million downtown public parking appropriation, using the DMC's PILOT Extension Fund.

In testimony, while the meetings were closed to the public, the County Commission recognized DMC’s former president, Jennifer Oswalt, who now lives in Knoxville.

Oswalt proceeded to make a material misrepresentation, on the public record, by understating DMC parking garage debt by approximately $12 million in pursuit of the $62 million request. As a result, the obnoxious $62 million appropriation was approved by a rubber-stamping County Commission.  

Had due diligence occurred, it would have revealed a DMC organization called the Downtown Mobility Authority (DMA), that oversees public parking, generating $2 million in public parking revenue and losing $1 million in 2019.

This loss signals a lack of adequate parking demand to support a $62 million taxpayer investment in downtown public garages.

Public parking should normally financially support itself through parking fee revenue. But, for a moment, consider the alternative, that public parking needs a public subsidy.

What is the absolute most a $2 million public parking operation should be subsidized? Maybe $1 million at the most?

But with no analysis, rubber-stamping legislative bodies are scheduled to subsidize downtown public parking garages by a whopping $5.5 million per year over 25 years.

Further due diligence would have also revealed, a DMC that makes taxpayer-funded loans, while extending commercially unavailable terms, for non-public private garage development. These loans are extended to real estate partnerships that involve such local names as Hyde, Orgel and Carlisle.

In fact, $21 million in loans were made to these three partnerships, with interest rates of 2%-3% for between 45 and 60 years, all while in addition to the loans, 20-year property tax abatements were awarded to the developments.

To make matters worse, on March 22, 2020, as meetings were again closed to the public, the DMC and a Knoxville-residing Oswalt were back before the County ommission.

This time the request was for $15.5 million more in taxpayer funds, using the PEF, to purchase the blighted 100 N. Main for $12 million and $3.5 million for another private garage loan for Billy Orgel. The request was approved, resulting in a total of $77.5 million appropriated for unneeded downtown public parking.     

Also, on the agenda for March 22, 2020, were the DMC audited financials that the county commission had previously refused to review through due diligence. No discussion of DMC financials ever occurred, while the commission rubber-stamped the DMC financials that involve a restricted fund that will generate $138 million over 25 years.

The DMC PILOT Extension Fund appears to be nothing more than a slush fund, the lack of legislative oversight, due diligence and trade-off analysis is why Memphis does not move forward.

Defining what economic development is and is not will go a long way in helping Memphis move forward, while knowing that loaning public money for private development, that includes abated properties and investing in unneeded public parking garages just ain’t it.

Joe B. Kent is a taxpayer advocate and lives in Memphis.