Behind the Headlines – March 1, 2019

Behind the Headlines – March 1, 2019


– (female announcer)
Production funding for Behind the Headlines
is made possible in part by: the WKNO Production Fund, the WKNO Endowment Fund, and by viewers like you.
Thank you. – The Memphis City Council on
MLGW rates, tax incentives, and much more, tonight
on Behind the Headlines. [dramatic orchestral music] I’m Eric Barnes, president
and executive editor of The Daily Memphian. Thanks for joining us. I am joined tonight
by three members of the Memphis City Council, starting with Sherman Greer,
newly appointed member. Thanks for being here. – Good evening,
thanks for having me. – Kemp Conrad, thanks
for being here again, and now the Chair of the
Memphis City Council again, thanks again for
being here again. – Thanks for having
me, thank you. – And Cheyenne Johnson, also one of the newly
appointed members, thank you for being here. – Thank you for the invitation.
– Along with Bill Dries, reporter with
The Daily Memphian. So, I’ll start with you, Kemp, you are the newly elected, this is your second
time as chair, I believe, of the City Council. You all recently voted to limit
the rate increases for MLGW. The had come with a
four, five year plan, we had J.T. Young, the
president CEO of MLGW, on the show last week
talking about their plan to increase, I think
it was give or take ten percent over five years,
gas, electric, and water. You gave them, I think,
a 3% increase on water. What was the thinking
there, and again, everyone votes their own way, so you don’t represent all
the views on the council, but what was the
thinking in not giving that increase funding,
which again, they justified, if people watched the show
last week, on a need to invest a whole lot money in
capital improvements. – Sure. Before I hit on that, I
just wanna say one thing, and that is I’m just really
excited about this city council. We’re still in the
first quarter of 2019, and it’s a historic council,
first time we’ve had eight African-Americans
on the council, and the first time we’ve had
four African-American females. We have a great council, and I
just wanna let Memphians know that what we’re gonna
work on this year is getting stuff
done for Memphis, the council working together, working with the mayor’s office, it’s not about who
can get the credit, but how much good we can do. And so, I think that Memphis
can expect really good things out of this council
and this mayor in 2019. So, I’m thrilled about it, and it’s an honor to
serve as chairman again. Memphis Light, Gas and
Water, went back and forth, this has been
something that’s been out there for a long time. There is no doubt
that we need to invest in our infrastructure, but
the question is how to do it. There’s been a lot of
discussion recently about how to maybe tap
into MISO over in Arkansas, is that the best way to do
it, that’s a multi-year, five-year process to
even get out of TVA. There is a school of thought that Memphis Light,
Gas and Water is a division of
the city of Memphis, but they operate like
their own entity, and that’s something that I
know a lot of council members, and I think some
of the administration, are frustrated with,
that they are on an island, and something that they need
to be better integrated. We did make a lot of changes
around our benefit structure several years ago, now
our property tax rate was way too high, that
was our only choice, I’m not saying that MLGW has
to do the exact same thing, but there is a lot of costs
there that can also be taken out and still being fair
to employees, benefits, pension, health care,
things of this nature, and then I would say, too, I
think there’s some frustration with how Memphis
Light, Gas and Water is not a really good
partner sometimes on economic development,
they’re slow, they’re bureaucratic, so
these are all some things that I think factored
into that decision, so those are the things
we really need to look at. That’s why there wasn’t
consensus, frankly, at the last meeting,
the preparation, the responses to questions,
it did not give the majority of the council the
confidence that we were ready to raise rates on
rate payers yet. The council wasn’t convinced. I think we will get there,
but there needs to be some other things done
first, and that’s what we’re gonna work on
the rest of this year because we do need to invest
in our infrastructure. – Cheyenne, first,
how did you vote, and why, on those questions
of the rate increases? – On water, I did
vote for an increase, but no for gas and electric. The reason being, the
explanation that was provided at the last meeting stated
that they were in a deficit for the water, and we were
just trying to cover them for one year only
to bring it forward, but I agree with what our
Councilman Kemp has said, but the other thing I think
needs to be brought forward is that I think they’re trying. I think that Mr. Young
is putting forth an effort to have a good campaign out
there to educate the public about what’s
actually taking place in Memphis Light, Gas and Water, and I think it’s like
Mr. Kemp said before that people don’t
understand the operation. We just don’t have
all the information. I think they just need to be
a little bit more transparent with their day-to-day operation, and let the citizens
understand why they operate on a $800 million budget
every year, and they still don’t have the funds to
do what they need to do. – Councilman Greer, obviously
you’re a couple months into the position, a rate on
this, this is the kinda thing that people, you know,
when there’s a storm, and power is out,
everyone is upset with both MLGW, but
also the council. MLGW is, as Councilman Conrad
said, a division of the city, what was your vote, and why? – Well, I was the one,
go back two meetings, that asked them to go out and
talk to the community first, educate people, but I
voted yes on all three this time around, and it’s
because we asked President Young to go out and really
talk to the community. I showed up at three of
those town hall meetings, and I watched the one
online, and I participated in two neighborhood
association meetings of my own, and I asked that
question to the people that were in my district,
and they largely said, hey, let’s do it,
it’s happened now. What’s interesting,
one gentleman said, “Hey, my bill was
$300, of this $300, “how much of that would’ve
gone to maintenance, so they should’ve taken
that money and kept up”, but at the same time, he said, “Well, look, that problem’s
already happened, “I don’t want my utilities
off, I wanna fix it, so let’s just hold them
accountable from here”, so I voted for it ’cause
I saw it looking, for me, probably about 45% or so
said, hey, let’s increase, about another 25% to 30% said
I need more information, but only about, I
think maybe 15% or so, kind of what their survey
said, said, hey, no way at all. – Yeah. Bill. – What do you think of
what you’ve heard about some changes in, I guess,
Marta’s relationship with TVA? How deep should the exploration
go on that, do you think? – Very deep, I think that’s
totally worth exploring, I mean when you’re looking at, I’ve met with quite a few
individuals who talked about what we could save,
potentially save, and I don’t think we’ve
looked at that hard enough or long enough,
and interestingly, and we were talking
about yesterday, possibly going and taking a
trip to TVA, to Chattanooga, to really look at
this and see how far they’re willing to
come and meet us and really see what these
costs are and let them tell us their side, but
we’re really exploring it, and I think we have
to explore all three of these options that
we’ve heard about. – Cheyenne, there were the
immediate considerations on the deficit and
the water division, but what did you think
of what you heard about changing
that relationship? – I think that the
citizens of Memphis is ready for a change. I don’t care where
it has to come from, when we’re talking about
development in the city, we’re talking about new
businesses coming into the city, it shouldn’t be any difference
for our current services. I think everybody needs to
review what’s taking place in their particular division, be it Memphis Light
Gas and Water, be it strictly in the
Strickland administration, and if there’s a possibility
to make a change, to make improvements that will
help the citizens save money, I think we need to
explore every possibility. – Kemp, this could
take several forms. You could still have a light,
gas, and water division, but a different
electric division. How serious to you
think the exploration of that is going to
be going forward? – I think it’s gotta be serious. The estimates are– – (Cheyenne)
Millions. – Yeah, several
hundred million dollars in savings, in power savings,
so it’s a big number, but it’s also, I don’t think
that we want 13 council members trying to figure out how
we get power from TVA, or across the river and
how you bring it over, kinda like us trying
to build a nuclear, the administration
needs to lead it, working, we need to
be a part of that, but I don’t think the
council can drive it, so we need to
seriously explore it, and maybe we can close
the discussion on this. The city of Memphis,
we do government at the speed of business now,
that’s what we’ve worked on for the last three years,
it’s what we’re gonna do this year, MLGW
needs to catch up. We do need to explore
that, but still, even if we gave
TVA notice today, we can’t change for
five more years, so we’re not gonna hold
back on these investments, we still have to do that,
there are other savings that can be found, MLGW
needs to be a better partner on Memphis Light, Gas and Water, and to Councilman Greer’s point, we’re not just sitting
around until next year, we’re gonna wait
for the next budget. Vice Chairwoman Patrice Robinson is the MLGW committee chair,
she’s a long-time employee, now retired at Memphis
Light, Gas and Water, she knows the organization,
she is leading a delegation. Councilman Greer, some other
people that are gonna go work with TVA, can we get rates down? How can we negotiate
those things? So, we’re not quitting,
we didn’t just pass it, kick the can, come
back next year, we’re still working on it,
we started working on it the day after the vote,
we know we need to make these infrastructure
investments, but we wanna do it in
a way that doesn’t just pass all the costs
on to rate payers, if there are other
savings that can be found, and that’s our
charge and our duty, and it’s what we’re gonna do. – You mentioned
business and the city moving at the speed of business, and you also mentioned
tax incentives with, or being a partner in
business development, I should say, and
economic development. There is a lot of news on the
economic development front lately, you know, in
terms of incentives, and it’s always the debate
about PILOTs and how that works. There was a bad one, I
guess, if you can say that, for Memphis, which is Electrolux
leaving, and I’m curious, I don’t know who
wants to take, I mean, were you in council when
Electrolux came to town? I think you were.
– I believe I was, yes. – So, they’re leaving. Was it a good deal? Was it worth the
incentives that the city, I mean there’s a package of
incentives, but what the city did for Electrolux, in
hindsight, was it a good deal? – I don’t think you can
look at things in hindsight, I think would we
do that deal today with no clawback,
would the state? No, that would not happen
today, so it’s hard to look back at something that
happened a couple years after the financial downturn,
when there were gonna be a thousand jobs or thousands
of jobs, so I don’t think it’s, the decision was made based
on the best information in a very, very different time,
in a very different economy. What absolutely, categorically
would not happen anymore, I don’t think that
anybody would sign up for, is there being no clawback
if a company came in and promised certain
things and did not deliver, I think that is the thing
that has really changed. I will say on things
like the PILOTs and property tax abatements,
those are taxes that aren’t, if there’s not a PILOT,
you don’t get the, there are no future taxes
if a project doesn’t happen, so at the end of the
day, we’ve got more… poverty is the biggest
challenge in Memphis, Tennessee. And we have to grow the
companies that are here, we need to recruit new industry,
and economic development and jobs are the
way out of poverty, and I think because of
what we’ve been doing, that’s why we have unprecedented
growth and momentum, companies relocating
here, growing here, and that’s what we need
to keep focusing on. – Cheyenne, you had been on
the show a couple other times, when you were
assessor for 10 years, I think I had that right, three times elected the
Shelby County tax assessor, and worked there for
many years before that. From that seat, put your
old assessor’s hat on, was the Electrolux
deal worth it? – I think so. I mean, at the time, like
I said, it brought jobs in. I think the problem
that I’ve heard, and since I’ve been
on the council side and found out about Electrolux, is that it just wasn’t enough
monitoring taking place with the company, but the
concept and the intention to bring that we
probably couldn’t have done any better at
that particular time. – And, does that math that
Councilman Conrad talked about, a lot of people talk
about PILOTS, and again, I’m not talking about the cash
incentives from the state, we’ll kind of set that aside,
but just the pure city, county, PILOT tax abatement, is that a net increase to the
bottom line of the tax base in Memphis ’cause
you’ll get a lot of people who will go, who will
come on this show, or will go on the comments
section of our site or wherever and say look,
PILOTs are just tax giveaways, we’re giving taxes to these
people to stay or to relocate. – Well, the truth is, when you
aren’t actually on a PILOT, the percentage that the
city and country receive is pretty low, it’s not as
large as people actually think it is, but the other part
about it is, it did bring jobs. if the land had remained vacant, it still would’ve been
out there as flood land, we would’ve had very low
taxes, so in this case, we did get a small
percentage from the city and for the county
for property taxes, we also got jobs, and who knows? We may have another tenant
in that building pretty soon. – Councilman Greer, do you
hear from constituents, again, a couple of months
into this appointed position you’re in, who are,
there’s a lot going on, FedEx Logistics is
moving downtown, ServiceMaster a couple
years ago, Indigo Ag, this J & J Logistics is going
to the old Mall of Memphis, there’s a ton, as
councilman Conrad had said, there’s a lot of
activity going on, most all of those
include some amount of local city and
county tax incentives. Do you hear criticism
from your constituents about how that is handled? – Well, I think they don’t
understand tax abatements, a lot of times, and when,
like she just explained, if you let that piece
of land sit vacant, it’s not gonna really
generate any taxes anyway, but you build a business
there with Electrolux, hate to see them leave, and
hate that they’re gone so fast, but the hope is that we’d
attract another company, go in there, that infrastructure
is already built up for someone to come in, so
it’s ready for the next– – Tenant. – Tenant, but again, if
you didn’t build it up, then you wouldn’t
have the taxes anyway, so it’s a loss to lose them, but I don’t see it so much
as a loss in the terms that we don’t gain
something from it. – I’ll turn to you,
Councilman Conrad said there’s more accountability
now, that the Electrolux thing wouldn’t have happened with
the clawbacks and so on, do you think there’s
enough accountability on what EDGE does now, the economic development
tax incentive. – I don’t know all the
policies and procedures, but I did talk to them
a couple weeks ago, and I still think
there probably can be some additional reviews or
monitoring of the process. Back to what Commissioner
Greer was saying, Councilman Greer, I’m
sorry, was saying, the other problem with
policy in the community, people don’t realize
how much money these investors are actually
placing on the table. They think they’re only
getting tax reliefs, and these tax are actually
paying for these projects, but these developers are
truly bringing money, millions of dollars to
make a project work, and the small amount
that they’re receiving in a tax incentive
to get started, is just not understood by
a lot of the citizens here. – Bill, with 10 minutes left. – You all recently wrapped
up action on a series of de-annexations, which
was one of the first votes that you two were a
part of on the council, it was the South
Cordova annexation. I think pretty easily,
I think we would agree it was the most controversial, or certainly the most discussed
of the five de-annexations, but there wasn’t a
whole lot of controversy about it in the end with a vote. Mr. Chairman, how did
we get to that point, do you think it was a good
decision, ultimately, to make? – I do, at the end of the day, we did a very detailed
cost benefit analysis of what it costs us to provide
services to all these areas, and in the long run,
we’re gonna save money, there is no doubt
that over time, Memphis has grown too
much by annexation. It cost a lot of money
to extend sewer, police, build fire stations,
and when I look back at the business case that was
done when we annexed these, long before I was
on the council, it was phony math, and the
numbers haven’t added up, and the reality is we
need to focus on our core, we need to get more businesses,
which we’ve been doing here, more people moving
back into Memphis to use the infrastructure
we have and invest in where we already, we
have those things, and I think what this will
allow us to do is to do that, and focus on the
core, and over time, if you look at the savings in
these areas in not doing it, we’re gonna be much better
off, and we can focus on a smaller footprint, and I
think it was the right call. But, I don’t think we’ll be
doing any more of it, either. – Sherman, ultimately, for you, that bottom line
carried the day, but it still wasn’t an easy
decision for you to make. – No, it was tough,
and I’ll say one part is you never to be
in a position where people want to leave you. But, at the same time I’ll
say, or my grandma will say, if you don’t want me, I
don’t want you. [laughs] I understand where they
were coming from, though, I went to their town hall
meeting where Councilman Colvett had a meeting, and they
largely, a huge lot of them, expressed that they wanted
out, and what I did, they sent a lot of
emails to all of us, I compared their emails to
their physical addresses, and to really see if
we were really hearing from that community, and
largely, they wanted out. So, that’s the reason I voted
that way, and also I saw, in terms of the economics, it
really didn’t help the city. I think at the time,
the city saw it as bringing extra
tax dollars in, but you never wanna make
decisions short term that way. – And, it is frustrating
when you hear from people that say things about Memphis,
at the end of the day, a lot of those folks,
they work in Memphis, they come get
entertained in Memphis, they’re going to dinner,
they go to the Grizzlies, the Tigers, the
Redbirds, et cetera, so when you hear
kinda the rhetoric, it’s very disappointing,
but what I will say is when the city did annex
that area many years ago, the reality is the
city did not deliver a lot of the services that
should have been done. Streetlights, sidewalks,
things of this nature, and so, that was a
very valid complaint, we still had to
do all that stuff, that was gonna cost
a lot of money, so at the end of the day, anybody
that lives in this region, Memphis is the core,
Memphis is the heartbeat, and people need to
really be grateful about all the wonderful things
that are going on in Memphis. That’s really what’s
heartbreaking, when you hear people
talk about this, ’cause if it
weren’t for Memphis, if you’re in Germantown,
Collierville, wherever, you know, you wouldn’t be
there, working, living, if it were not for Memphis, and that’s what I want
people to remember, is Memphis is a great city, it’s the heartbeat
of this whole metro, and if Memphis doesn’t
prosper, nothing else prospers. – So, Cheyenne, where
were you in this decision? – I supported it.
– you saw the same numbers. – I saw the same numbers.
– But, you also heard the comments, too. – Exactly, and I think
I support the comments both of these council
people have already said. That’s what the people
wanted, and it seemed to make Memphis a better place because we’ll have less expenses
in order to cover those services, so I
was supportive of it. – How much does Memphis 3.0,
that’s coming to committee, is that right, soon? Memphis 3.0, the overall
sort of strategic plan for the city, a lot
of land use issues, a lot of what Councilman
Conrad is talking about, building up, not
out, and density. What was your
impression of that? Again, both as a councilperson, but as a former assessor
who was very in the weeds of properties and the dynamics
of neighborhoods and so on, what are your first
thoughts on 3.0? – Thank goodness,
something’s being done. – For you, what’s being done? ‘Cause a lot of people still
don’t really understand what the 3.0 is,
it’s a catchy slogan, but so what is being done? – Okay, what’s being done
is that they have identified 14 different locations
throughout Memphis, as far as pivot points
throughout the city, that they will be using
as a central location to draw community involvement
in those particular areas. Unfortunately, some
of Super District 8, I think we need
another location, we don’t have another, I think
we only have two or three over there, but it’s
there to make sure that whatever the needs of
the communities are, will be addressed in
a central location, and then spread
throughout and advertised and publicized
from that location. – Councilman Greer,
your take on 3.0? – Well, I look at it from
the prism of Raleigh. So, we had the
Raleigh Town Center that’s coming out of
that Raleigh Springs Mall was a economic engine for
that Raleigh community, well, really Raleigh and
Frayser for a long time. Wolfchase opened,
everyone stopped shopping, the area closed up. So, in the capacity
you look at it from the Raleigh Town Center
and the excitement it brings, and it really pushes
their business owners to really try and
coalesce and build back in that particular area,
I think it’s phenomenal. And, it has brought a lot of
the neighborhood associations and a lot of neighbors out
talking about what it can be, and re-envisioning what
this Raleigh used to be. – Let me say, too, it’s
an opportunity for us to start loving Memphis again. Getting back and realizing
how great Memphis really is. It’s been an awesome
experience for me to serve on this council, just the
last two or three months, to realize what all takes
place on a daily basis in order to make this city run. This is an opportunity for the
citizens to actually see it. There are so many
nonprofit organizations, so many agencies, so many
different divisions of the government
that work together to make this a great city. I think we need to just start
recognizing these individuals and these organizations, lift
them up and then come together and be a great city, so I think that’s the most important
thing about 3.0. – From a council point of view, how can 3.0 be used,
not just put on a shelf. I mean the mayor’s office, other people have talked
about that from day one, this has to be something
that is a document that guides Memphis,
not just we point to it and say, well, we did
that and check the box. – Yeah, well, I think
part of this is, this isn’t the council’s
plan or the mayor’s plan, it’s the people’s plan,
I mean, there have been hundreds of meetings, thousands
of people have had input, and I hope that folks
demand that we execute what the vision is, and so we
all think it’s very important, we were talking
earlier on the show, if we can maintain our
spending discipline on debt, in 2026, we’re gonna have
another $40 million a year recurring, about
8% of our budget, of our operating
budget as debt service that will be freed up to invest. There’s a lot we
need to invest in as it relates to community
centers, libraries, deferred maintenance,
more infrastructure, parks, libraries,
things for youth, all these things
where we lag behind, and so if we can
maintain this discipline over the next several
years, then we’re gonna have a lot of cash freed up that
we can invest into things like Memphis 3.0 to
continue the momentum and the growth of Memphis. – Just two minutes left, Bill. – And, speaking of
that discipline, you all got an
early look at where the city’s financial
fortunes are going, and in the upcoming budget year, for the fiscal year
that starts July 1, you’ll be making the last
of the installment payments, for lack of a better term, on the annual
pension contribution, which I think the
amount’s fluid, but it started out at
around $78 million. At the same time, you’re
hearing that in 2026, down the road a bit,
there’s gonna be about $40 million that’s freed up, that the city no longer has
to put into debt service. Those are good numbers, but
you’ve been pretty cautious about saying well, don’t go
spending the money just yet. – Well, that’s always
whether it’s your business, or in your household, you
have to be disciplined. We have been disciplined,
especially the last three years, around those kind of things, we will have now fully funded our annual required contribution
for the pension plan, which we will keep
doing now ongoing, so that’s a very, very important
thing that we’re doing now, and so, I wanna
say, too, you know, the City of Memphis
operating budget, it’s about
$650 million per year. Our natural growth
that we get to spend, just based on growth,
it’s only about $10 million per year. $10 million a year is
what we get just from growth. In a growing economy
that we’re in, so kinda compare that to the
$40 million that we’ll free up when the debt service goes down, but we only have
$10 million more to spend. You know, a one or
two percent pay raise for all the employees
eats up a lot of that, and there’s so many other needs, and that just shows kinda
how tight our margin is, and being on the council for
a long time, I can tell you, we have really, in
terms of efficiencies, done pretty much
everything we can. Our tax rate has been
flat for over 10 years. What other city in America
has made the changes and has a flat tax rate, and
that just shows the discipline. – Alright, we will leave it
there with the last word. Thank you all for being here,
and thank you for joining us. Join us again next week. [dramatic orchestral music] [acoustic guitar chords]

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