Behind the Headlines — December 4, 2015

Behind the Headlines — December 4, 2015


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funding for Behind the Headlines is made possible in part by… – [Voiceover] Yuletide
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WKNO Production Fund, the WKNO Endowment Fund,
and by viewers like you. Thank you. – The priorities and politics
of the county commission, tonight on Behind the Headlines. (orchestral music) I’m Eric Barnes, publisher
of the Memphis Daily News, thanks for joining us. I’m joined tonight
by Terry Roland, chairman of the Shelby
County commission. – Good to see you. – Absolutely, and
Heidi Shafer, also from the county commission. Thanks for being back. – Thanks for having me. – Also Bill Dries,
senior reporter with the Memphis Daily News. Well, we’ll talk through– A lot is going on
with the commission, but I want to start
with, because it’s maybe emblematic
of a conversation that is going on in the
business and political community throughout Memphis
and Shelby County, and the whole area,
which is the combination, and it involves EDGE, EDGE
being the organization, Economic Development
Growth Engine, that administers PILOTs
and other tax incentives, and a proposal that the
mayors came forward with, city and county, back in
the spring, I believe, to combine the Community
Redevelopment Agency into EDGE. I think you’re
concerned about that. – Absolutely. – Tell me, let’s talk about
why, maybe I turn to Bill, what is the Community
Redevelopment Agency, so people understand, it’s
a very important group, but it’s not one that
gets as much play. – Right, basically,
its value is that it is the agency that
primarily deals with development in the uptown
section of Memphis, as well as the Highland
Road development by the University of
Memphis, and so you had this proposal which I believe
first came up on the cityside, Mayor Wharton was the first to surface with it over there, it drew some resistance there, and now it’s drawing resistance among the commission,
as well as some questions about what this means. – And it administers the
TIFs, not the PILOTs, attacking increment financing,
which we’ll get into, but why are you concerned
about this proposal? – Well, first of all, I mean, A, the way it was
created, I think after being there for six
years and watching it, it wasn’t created right. What you have now,
you have a board that virtually has no power. The president, Reid Bulberger, he doesn’t have to
report to the board– – To the EDGE board. – To the EDGE board. He reports to the mayor. To me, there’s no
oversight there. EDGE needs some tweaking. We cannot unscramble the egg. EDGE, it is a good
tool, but we have to restructure it in a way, and what I’m suggesting
is that we put the member of the city
council and commission that are on EDGE, make
them voting members, give the EDGE board the power, let them hire the
president or whatever, he reports to the EDGE board, and the EDGE board reports
to the city council and the county commission. – Would the county commission
and the city council vote on proposals in that? I mean, would they have
formal voting oversight of the PILOTs and so on? – Eventually, I mean,
evidently, we still do. And, therefore comes– See, I’ve been to Nashville
and Charlotte and Louisville, and that’s why these, I don’t want to
say PILOTs, TIFs, that’s how these other cities
are beating us to death, is with TIFs. And, if you put all
your eggs in one cart, under one domain, you know, are we really using,
reaching our potential? – Yeah. If you want,
Bill do a quick tutorial on what a TIF is,
versus a PILOT. – Tax Increment Financing
is what TIF stands for. Basically, what you’re
dealing with in that case is property tax
revenue that is going to come back into, it, it amounts to an
exchange of that going into the project
to finance the bonds that are involved for it. – Is it also sales tax? That the sales tax that would
otherwise go to Nashville comes back into, the former head of the budget
committee is nodding to me. – Yes. – Sales tax money that would
otherwise go to Nashville stays in that TIF area. – Correct, and
the reason that it can have a real benefit is that instead, when Nashville gets it, then they spread it
out amongst other counties in the state, whereas this way, with TIFs, you’re able to keep
it for yourself to rebuild and reinvest
in your own community. And so, I see some real
benefits with TIFs. If you don’t mind me
backtracking just a little bit, I really have thought
EDGE was a great idea, and I think it’s really
advanced us down the road. Prior to EDGE, when
businesses would come in front of the two
legislative bodies it was, it was kind
of a grilling process, and sometimes, companies started to redline us, out of
doing business with us, because they didn’t
want to take the PR hit of being asked in
a public meeting questions that, you know, that they weren’t
ready to disclose, like some of their private
financing and things, and, of course, then
the media would hit it, you would take the
most fraught examples. So, what EDGE has
really done well is created a streamlined
kind of one-stop shop for when people want to
come do business with us, instead of going
to the City Council and the County Commission,
all these different places. There is a first
place for them to go, corral that, get them
to the right places, and then move forward. But like with any program, you know, you start
something off, and you can’t always
predict exactly how things are going to flow. There probably do need
to be some tweaks. – Which you would–
For instance. – For instance, the fact
that the city councilman and the county commissioner
have no voting rights over that at all. – On that EDGE board. So, they’re really
just observers. – They’re just observers,
but that is our, that is our legislative duty. We’re the ones that have
full responsibility for it. – So, to combine CRA, the Community
Redevelopment Agency, into EDGE, it would have to go
to the full county commission and the full city council. Long ways from that happening. If some tweaks happened, would you be in favor
of CRA going under EDGE? Or, is it too early to say? – Well, it’s not really
too early to say, but at the end of the day, putting voting
members from each body would go a long way with what I, settling the oversight
issue, and making the president, for
lack of better terms, responsible to
report to the board. Right now, the board
doesn’t have any power. – But do you worry that– And, Reid Dulberger’s
been on the show before, and other people,
and everyone says about PILOTs and these, that they are an evil, and
people have various degrees to which they say it
is a necessary evil. Because they’re difficult
and they’re frustrating, and they’re frustrating
for taxpayers, and, all that. But they are necessary,
what people will say, because the process in Desoto
County is so streamlined. It’s a very simple system, and it really is
embodied in one person. So, the businesses
that are looking to locate or relocate, they can, the advocates say, they
go to this one guy, and he doles out the incentives,
done, signed, it’s over. Versus, this very
bureaucratic process that, as Heidi just said. So, I’m assume you don’t
want to go back to that very bureaucratic process. – No, no, no, that’s
what I said about, you can’t unscamble the egg. But we can implement
different levels of oversight and one of them being
a voting member. But let me say
this about PILOTs. I’m very mixed on PILOTs. I know sometimes people say
they’re a necessary evil. But you got to look at
it in a common sense way. You know, say, for instance, just give you a
good for instance, say, nine and a half
billion dollars, if you give a PILOT to a company for nine and a half
billion dollars. Well, that nine and a
half million dollars, the government still
needs that funding to run on, right? So, the only other way
that Shelby County has to replace that 9.5
that you just gave away is to put it on the
back of the taxpayer in the form of a property tax. We got to get away from that. That’s killing Shelby County. – One more question, and
we’ll move on from this stuff. Why are TIFs not used– I’ve heard various
people say this, but let’s go to you, Heidi. Why– All these other
cities, as Terry just said, they use TIFs way more
effectively than we do. Why does Shelby County, Memphis, why do they, why
don’t we use TIFs? – Well, and it’s interesting, so, every commission
has a different makeup, as Mr. Dries will sure testify. So, when you have
new members on, they have different ideas. Previous county
commissioners have really just had a bee in
their bonnet about TIFs, under the idea that,
we’re too poor a community for TIFs to be successful. They think that
we won’t generate the increment in order to do it, they think we’re too
poor a community. I think that, I think
it’s worth doing, worth going into
and worth investing. But you have to do your
due diligence on it. – Yeah, right. Your take on why, and
then we’ll move on. Why we don’t use more TIFs. Is that, do you think that’s… – I think that, in the past, you’ve had one person
over there in the CRA. They haven’t had any staff. We’ve done three TIFs,
one of them is the Uptown, we did one in Millington– – [Heidi] One on Highland. – One on Highland. Well, there’s four,
then, because we did
Elvis Presley, too. – OK, OK. So, it’s partly
just a staff thing, and I’ve read that, too, that the agency was set up, but it doesn’t have full time
staff, and so on and so forth. OK, let’s move on. Bill. – Let’s talk about
the county commission having its own attorney, which is another hot
topic of discussion between the commission
and the administration. So, to review where
we’ve been on that, the commission
approved doing that. The mayor vetoed that. The commission
overrode that veto. Where are we now, Mr. Chairman? – Well, I’m in talks
with the county attorney. We’re going to try
to work through this. If we can’t get there, we might go to court, just ask
for a declaratory judgment. Let me say this. We played by the rules. First of all, the only way we could hire a
special counselor, completely says
it in the charter that we are within our rights
to hire a special counsel. Well, we did that. I did that
with a stroke of the pen. Just to get it started, OK? But I wanted buy-in
from the commissioner. So, we passed– And the county attorney
clearly sent me a letter, saying if he can’t
write a contract to us, we pass the resolution. We passed the resolution. The mayor vetoed it,
we overrode his veto. Now, if you look at the charter, and believe me, I’m
not thinking of going in this direction, but the next step
per the charter says that I write him a letter
and give him ten days or we can start ouster
procedures on him. I don’t want to do that. So, what I’m, if the
county attorney and myself and the commission can’t
work out something, I’m sure we’ll go to court, and what we’ll do is we’ll
get a different attorney, we won’t use the one that
we’re trying to hire, because that wouldn’t
be appropriate– – Julian Bolton. – Right, Julian Bolton. And I’ll tell you why we
came up with Julian Bolton. But anyway, if we
go, we’re going to go just to ask for a
declaratory judgment, and, of course, I’m going to
ask the people that I know, three people,
especially the chairman of the charter commission that wrote the charter
to come in and tell us what they meant, and they meant for
us to have council. – Mm-hmm. Commissioner Schaffer,
your point on this. – Thank you, yes. I’ve been around up at the
commission for quite a while because I was staff for
Commissioner Flynn, also, so I’ve worked with several
different county attorneys, and the real rub
is the legal advice that we’ve been getting lately has been differently interpreted than any other
county attorneys ever and before, so, the way
the charter is structured, there is a county
attorney’s office that’s supposed to serve both the executive and the
legislative branches, and we’re co-equal branches
of government, right, but there are supposed to be
checks and balances there. And previous county
attorneys have always, if there are differences between
executive and legislative, they realize they cannot be
legal council for both parties. Right? You can’t do that. So, they would hire
outside council. This county attorney has
failed and refused to do so, and is trying to
represent both parties, and in my view that
is an unacceptable
conflict of interest. This is really important.
This is Civics 101. This is the
separation of powers. This is about the commission
being the voice of the people. We’ve got to keep
a balance in there. The executive branch
is trying to reach over and reach into our powers,
and we can’t allow that. – What started this? What was the issue,
or the issues that you just said,
that started this? And I’ll start with Heidi,
but the same question to you. – So, for me, it’s been
over a year’s worth of very questionable
legal interpretations. I’ll give you several examples. One is we were told
during budget season that we had no right
to amend the budget, that all we could do was
vote the budget up or down. It’s clearly not said
that way in the charter. Another one that they said– – Mr. Roland is
agreeing with you. – Another one that we were told is that we don’t have the
right to our own council, or to hire anybody
that we desire. Another one, this
is a small one, but you know how I
am about money, Bill. The proposal came up
in front of us to spend nearly a penny, over a
penny on the tax rate, 1.8 on building a new
building to house archives. When I asked why we
were still housing paper in an era where everyone is
housing things digitally, the response we got
from our attorneys is that it was a state
law that required it. And I pressed him on it, and
asked him for the citation. They said they’d get
it to me, never did. I called Trey Hargutt
over at the state, and there is no such law, and Trey’s over at archives, and there is no such law at all. So, I object to spending
over a penny on the tax rate to build a building. But we’re getting
consistently poor information. – Let me– – Do you agree with all that? – I agree 100 percent, and me and Heidi’s been together
a long time in politics. Let me tell you,
when I, or Heidi, or one of the other
commissioners sends
up for a resolution. Let me give you a good one. I just told the administrator, we’re trying to, what
we’re trying to do is combine two
temps’ jobs and hire a full time person
for our front desk, and we’re talking about
hiring a budget analyst. So I had him write up a
resolution, to leave it blank. And, the resolution
has still to this day not made it back to me, – From the county commission. Or the county attorney. – Attorney. But, the mayor gets a copy of it and he’s going all over
town showing people. Now, that’s not right. – Right, and there’s an
even deeper issue, though, and this one to me is the
really problematic one. The county attorney threatened
our legislative immunity if we disagree with
any of his opinions. And he’s trying to make
in my view his opinion binding on the commission, so what he’s saying is that
if we pass a resolution and his opinion disagrees
with what we passed that we could run
the risk of having our legislative immunity removed which would mean we’d be
open to personal lawsuit. We even posed the question, if we got an opinion from the attorney general of
the state of Tennessee, and he agreed with us, but
you agreed the other way, and he said, no,
my opinion rules. The opinion of an attorney– The attorney general of the
United States of America, his opinion is not
binding on the Congress. An opinion of an
attorney is never binding on a legislative body. And so, these are
issues that are, like I said, it’s Civics 101. They’re real issues, though. – Mr. Chairman, you’ve
talked about working out a contract deal with the
Shelby County attorney’s office between the commission
and the attorney’s office. And Mayor Lutro has
responded pretty forcefully in discussions
I’ve had with him, saying that that
may be a contract, but that contract ultimately
comes back to him. It ultimately winds up with him, even though you’re talking
with the county attorney. Is that accurate,
and if that is… – If that’s accurate, and I
told him, per the charter, he’s over the contracts. OK? But as per the charter,
I’m over the agenda. So, if he wants
something on the agenda, he needs to talk about
maybe signing this contract. – And, you know, what
this says is that, an administrator, the
mayor is an administrator. The commission is
the county, OK? The commission makes the laws. The administrator is
taxed with the charter with executing those laws. – And so, this is
obviously ongoing. Next step, going to court to get clarification from a
judge on how the charter, you think it should
be interpreted, and we go from there. When will that
happen, timing wise? – I’m going to say right
after the holidays. – If we have to. – If we have to. – If you can’t negotiate it. – I’m hoping we can
still work it out. – Right. I’m hoping
we can work it out. But, these are, you know,
these are very serious issues. – Yeah, and there
are some important
concepts involved here. But, from hearing
what you’ve both said, and from hearing what
the mayor has said, right now there’s not a
whole lot of agreement between the two points
of view on this. – But I’m glad you
brought that up. It’s not us not willing
to work with him. It’s the vice versa. – And this has been
developing for over a year. We have tried and tried
and tried and tried. And it’s becoming
worse, not better. So, it’s just one of those
things that’s natural. We have an adversarial
form of government, right? – So, one of the, I think you
mentioned the budget analyst. Am I right, that one thing
that came up recently is, that’s similar to this is,
that there was a surplus. Good news, a surplus economy, it was 20, 24 million,
I can’t quite remember– – 22. – 22, excuse me. 22. But, it caused a great
deal of frustration for a lot of commissioners, because, you had cut
things, and you had fought through a budget season, and then it comes in 20
million dollars ahead. Is that, and you’ve
talked about wanting a budget analyst, right, that works for the commission. Is that going to move forward, or is that tied up
in the same fight? – No, well, it kind of
is and kind of ain’t. But, let me explain to you. When they came to us, first
time that I’ve ever seen this, they came to us
in budget season, said, we’ve got a six
million dollar surplus. Well, common sense tells me that if you’ve got a six
million dollar surplus, then you charged the
people too much last year. So, that’s when we started
working towards a tax decrease, which I think is probably one
of the most pressing things to keeping Shleby
County vibrant, and keeping people
in this county. But, what do you think, Heidi? – You were budget committee
chair for many years, now vice chair. – Right. So, yeah, I think
that that’s a real issue, is with the tax decrease. Most counties, I’ve been looking into best practices of counties, most counties, the
legislative body has an auditor general, and also a fiscal adviser, that works for them, that
is a stable staffed office, that keeps things
moving even through term limited transition. Remember, this is
the first time, we’ve only been
under term limits for a short amount of time, and I’m for term limits. One of the consequences
of term limits, though, is that you lose
that legislative
institutional memory, that’s right. And, so, in order to keep
some of those things, to fill in those holes, I think the commission has
to staff up a little bit to get good independent advice, because right now
it’s all being driven from the executive branch. They’re hired and fired
only by the mayor. And this isn’t personalities, this is executive
versus legislative. We’ve got to be a
little more independent, and we’re the ones with
the fiduciary duty. – You guys just– On
selling finiancing, the county commission
refinanced, what, three hundred million dollars. Is that a scoop and
toss kind of thing that the city got
criticized for, or was that a fiscally
sound kind of move to refinance that? – Let me answer that one. We actually weren’t
given enough information to really know about it. And that’s, that’s really– Oh, it’s good, we’ll give
you the short version is what we’re hearing a lot of. That’s what a fiscal
advisor would do. – Because the short answer is
that it was refinanced down to a lower interest rate,
that’s lower in cost, which, on the
surface, sounds great. But you still have
unanswered questions. – But, the 2006 bonds that
were included in that, let me make this
perfectly clear, not even one dime had been
paid toward the principal of that 2006 bond. And I really have a
problem with that. When you haven’t paid
anything down on that bond, and you’re refinancing already, because you haven’t
gained anything. – Yeah, right. We’ve got about four
minutes left. Phil. – Just going back to
that for a second, is there a balloon payment
involved, though, further out, because that was the
issue on the city side with the scoop and toss, and I didn’t hear any mention
of a balloon payment– – I don’t think there is, Bill. – Fewer years down the road. – Where does the county’s,
again, the county’s pension situation? The county’s, I mean,
there’s been such an emphasis in the city of Memphis, and
other places around the county, is the county on firm
footing in terms of pension obligations and so on? – Well, our pension
system is pretty well off, but I’m going to tell
you, the big thing that’s hovering
over Shelby County is this 1.2 billion
dollar OPEB debt that the school system has. – They covered through to the
new Shelby County schools, everything went into that one– – Right, and,
Commissioner Schaffer and the rest of
the commissioners, we had Tony Saunders come in, and Tony Saunders
wast he gentleman that the governor of Michigan hired and brought in to
straighten out Detroit. He has met with
the school systems, and I think that he’s going
to work with the school system to try to get them to– And, we’re looking into
our OPEB in their with it, because maybe there’s
some savings there, if they do the schools
and Shelby County’s. So, I’m going to tell you, that’s one of the most important
things that’s facing us. – Your thoughts on that? – Well, I think that
that’s exactly right, and OPEB is going
to be a bigger– And by the way, OPEB is for
Other Post-Employment Benefits. We like to throw
around these acronyms. So, it is going to be
very shortly required that there will be a
limited amount of financing. So, we want to get
out in front of that. There are some discrepancies
in the numbers that we’ve seen about what our true
OPEB liability is, and the reason I’m looking
for an auditor general. – On the county side
or on the school side? – County side. County side. And, you know, everyone likes
to ride the school system, I think we need to
look at ourselves as hard as we’re looking
at the school system. If we’re going to ask the
schools about their OPEB, we have a fiduciary duty
to really delve into our own financing. We’re doing OK. But, could we be doing better? Our tax rate is so high that it is costing
businesses right now 33 percent more. – Right, right, right. Bill, minute left here. – It looks like next
year, the commission is going to bring to
a head or talk with the leader of Global
Ministries Foundation, who, I believe, he was supposed
to appear this past week before the committees. – And he runs a series of
housing apartments around town– – Right, apartments that
involve HUD subsidies. But, he had
representatives there, but he wasn’t there this past– – Right. It was my understanding
that he had never committed to come, and I did want to
just clear that up. There have been, you know, this is
not an easy situation when you’re talking
about housing. So, it’s a hard group
of folks to house, some of them are
fourth generation, being in public housing, it’s very crime infested. You’re not going to
solve all the problems. But I think that one
will be a real issue and will come up soon. – OK. We’ll leave it there. Sorry to cut you off,
we’re out of time. Thank you both for being here. – Thank y’all for having us. – Thank you for joining us. Join us again next week. – [Voiceover] Yuletide
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