Month: October 2019

About reallocated capital spending dollars

(UPDATED: Oct. 31, 2019 at 4:00 PM, updates are underlined)

(ALSO SEE THIS FOLLOW-UP NOV. 1 POST)

Mayor Cooper announced today that he will reallocate approximately $18 million of capital spending dollars approved during the Dean administration for a Gulch pedestrian bridge to other infrastructure spending around the county. I’m getting a lot of questions about the mechanics of how this works and whether Council approval is needed. The short answer is “No Council approval is required as long as the new proposed spending was included somewhere in the 2013 enabling legislation. Some of the smaller proposed spending items (traffic calming, garbage cans, street lighting) may not fit into a category that was authorized in the 2013 legislation and therefore might have to come to the Council for approval. This is an open question for me as of Oct. 31 at 4PM.

This will necessarily get in the weeds.

The conventional wisdom is that the $18 million for the pedestrian bridge was approved by a Capital Spending Plan in June 2013 by RS2013-710. However, the legislation does not actually ever mention a pedestrian bridge. It simply approved $300 million worth of general obligation bonds that could be spent on a long list of types of projects listed in Section 1 of the resolution.

At the time, the practice was that the Finance Department would issue a memo describing how the money would be spent. Here’s the May 29, 2013, memo that relates to RS2013-710. This memo is where $18 million for “Bridges” was listed. (Even this never mentioned the Gulch pedestrian bridge specifically…just “Bridges.”) This memo and its itemized list of how to spend the money was NOT ever made part of the legislation. I wasn’t in the Council at the time. I’m told that the Council trusted that the administration would spend the $300 million formally approved in the resolution on the things listed in the separate side memo.

Then Mayor Barry and a new Council were elected in August and September 2015. One of Mayor Barry’s early wins was that she found $15 million for sidewalks projects in November 2015. The mechanism was that previous bond resolutions had (like RS2013-710) simply approved a sum of money without specifying in the legislation what exactly would be purchased with the money. This allowed the new mayor to legally shift some previously approved capital spending from what had originally been described in a side memo to sidewalks instead.

In June 2016, when the new Council was considering its first capital spending plan resolution, we wanted to tighten up this process. The idea of shifting money around to whatever capital projects the Mayor wants seemed too loose to us. I asked to have the contents of the traditional side memo to be included with the 2016 legislation. And then-Councilmember Cooper and I worked on adding specific language to the resolution to not allow reallocating funds from one listed category of spending to another without further Council approval.

And then in the most recent capital spending plan resolution that the Council passed in October 2018, I added a further amendment to list out the specific projects that were being funded.

The takeaways are:

  • For capital spending plan resolutions approved before 2016, the mayor has broad legal authority to spend the authorized funds on any project in the city’s approved Capital Improvements Budget and authorized generally by the resolution without regard for what was listed in the side memo that accompanied the legislation. Politically, Mayor Barry caught a little heat for doing this, but spending the “found” money on sidewalks was broadly popular. I’d expect that Mayor Cooper’s announcement today will similarly receive widespread support.
  • For capital spending plan resolutions approved in 2016 and later, reallocating funds would be more difficult. Since the side memo itemization is now part of the legislation, shifting spending could only happen if the new spending were to fit within the same listed category as the originally intended project.
  • Since today’s announcement relates to $18 million approved as part of RS2013-710, I believe that the Mayor has the power without further Council approval to spend whatever is left unspent from that $18 million an any project listed in the City’s Capital Improvements Budget and authorized generally by the resolution. Basically, he can spend whatever is left of that $18 million on pretty much any capital project he wants as long as the general category of spending was included in Section 1 of RS2013-710.

Separate from this analysis, I am still working on learning more about two things:

  • The press release from the Mayor’s office today says there is $17.95 million of the original $18 million left. I’m asking for an itemization of what was spent and what it was spent on. In particular, there was reportedly $2.66 million paid for land easements in 2016 — I’d like to know how that fits into the mix.
  • I’d like to understand whether $18 million of bonds already were issued for this and there is still $17.95 million sitting today in a Metro bank account somewhere, or if this is $17.95 million of approved debt that has not yet actually been borrowed by Metro.
  • Does all of the new proposed spending fit into a category listed in Section 1 of RS2013-710. In particular, does traffic calming ($1.5 million), garbage cans ($500,000), and lighting ($500,000) fit into a category? If not, those new spending items may need to come before the Council.

I expect I’ll get answers to these additional questions soon enough. But I wanted to get this update posted because I am getting a lot of questions about the mechanics of this and whether Council approval is needed…and it is not needed for the majority of the spending, but may be needed for a few of the smaller dollar items.

Please pardon typos. I wrote this quickly.

 

Sheriff decides to no longer house ICE detainees

Today, Sheriff Hall announced that Nashville’s jail will no longer house ICE detainees. This is a welcome change. Thank you, Sheriff Hall.

Our goal is for every one of Nashville’s residents to have faith and trust in their ability to fully interact with city government, whether that’s through schools, the health department or the justice system. Sheriff Hall’s announcement moves our city closer to that goal.

I have been working with Tennessee Immigrant & Refugee Rights Coalition toward the goal of no longer housing ICE detainees in Nashville’s jail for several years. In 2017, I and seven co-sponsors introduced BL2017-743, but that was deferred after first reading. After ICE’s well-publicized actions in Nashville this summer, I approached Sheriff Hall again about this. Under Tennessee law and the Metro Charter, the sheriff has the final say over who is housed in Nashville’s jail.

I along with fifteen co-sponsors were prepared to introduce legislation asking Metro to terminate the contract by which Metro gets paid to house ICE detainees. With Sheriff Hall’s announcement that the jail will no longer house ICE detainees, there is no need for the legislation.

While this important policy change won’t solve all of the immigration concerns in Nashville, today, we can celebrate our city’s commitment to focus first and foremost on the work of local government and making Nashville a safer place for all our neighbors.

We’re a month into the new term…

We are headed into the second month of the new Council term. There’s a lot brewing. Today I’ll talk about some of the money and budget issues facing Metro, but let me start with a handful of the more significant non-money issues:

Non-money issues

  1. New Mayor, New Finance Director, New Legal Director: We have a Mayor who ran on change and now the top three positions on the first floor of the Courthouse have a cumulative six weeks of experience in Metro’s executive branch. They are highly skilled, diving in, and working hard. I assume that we may see some learning curve issues for a while??
  2. Transit: From conversations I’m having with people all over the county (not just the core), I think there’s some appetite to get back to transit sooner rather than later. I continue to believe that a focus on comprehensively good bus service along with substantial gains in sidewalks and bike lanes would be a winning place to start the conversation. I also think that Metro should pick out the worst traffic snarls in the outer third of the county and fix them. For the most part, these are formerly rural roads carrying too much volume and need to be upgraded no matter what the city does with transit.
  3. Policing: The Community Oversight Board has not been effectively established yet. My assessment is that it will take the Mayor’s office making it a priority if the city is going to properly implement the board. On top of this, there is confusion about the game plan for body cameras. And, there has been no public indication yet about what the relationship will be between Mayor Cooper and Chief Anderson. I won’t be pessimistic just a few weeks into this new term…but this topic has me worried.
  4. Sidewalks: Last term, Metro’s sidewalk program got bogged down with allegations of procurement irregularities and free sports tickets from vendors. The resulting Metro audit work is not done yet. We’ll be looking to the new administration to find a way to get these issues resolved and get more sidewalks built a lot faster than last term.
  5. Soccer, Fairgrounds, and the 10 acres: This topic has the feel of two fighter circling and sizing each other up. I don’t know whether we are going to end up with a genuine fight or a handshake. For now, here’s what I think is going on:

Mayor Cooper and his team are trying (I think) to come up with a total price tag for all work out done to date at the Fairgrounds, and a total expected price tag, and to compare that to the original projections.

Apparently, the development team for the 10 acres can’t get financing for their new building due to the “Freeman Amendment.” This was added to one of the soccer stadium bills. The Freeman Amendment requires the 10 acres to be returned to Metro if there is no professional soccer on the site for any 24 month period during the first 30 years of the 99 year lease. Will the Mayor agree to fix this to allow the financing to go forward? Will the Mayor want a price to be paid for this? Will a Council member file legislation to fix this without the Mayor agreeing to it? All open questions.

There’s also some talk that the cost of non-stadium work on the site is over-budget. I have no idea whether this is correct or not. So far, it’s just a rumor.

As we get through the end of 2019, I imagine we’re going to learn a lot more about whether these issues will turn into a fight or an agreed path forward.

Money issues

  1. Comptroller: Here’s my October 3, 2019, post about meeting with the State Comptroller. The Comptroller will be in the Metro Council Chamber on November 13, 2019, from 4:30 to 6:30 PM to give a presentation and answer Council questions about Metro’s finances. I’ll provide more analysis after the presentation. For now, I’ll repeat that it took years to get to where we are today. Fixing it is very doable, and it will take several years of discipline, honesty, and effort. Not austerity. Not squeezing constituents on services or employees on pay — just discipline, honesty, and effort.
  2. Water rates: In the next several weeks, the State of Tennessee will order Metro to raise its water rates. It is embarrassing that the State has to order Metro to get its act together. Metro Water Services will also be present at the November 13 meeting to make a presentation about what is happening and why. On this one, in addition to the inevitable finger pointing about “how did this happen,” I think a lot of Council members are going to be upset about the fact that the Council never got told that the city was getting in trouble with the State. I and several co-sponsors will be introducing legislation to increase the Council’s annual oversight with Metro Water to make sure no future Council is kept in the dark like this.
  3. Mayor’s efforts to find more money downtown: A few weeks ago, the Mayor and Convention Center Authority (CCA) announced that the CCA will begin to make large annual payments that are the equivalent of property taxes on the Music City Center. Today, that is $12.6 million per year. There are still open questions about how this relates to the current $10 million per year that the CCA is paying Metro under a Memorandum of Understanding. Once that MOU expires in a year, I think the CCA and the Mayor will need to talk about whether the CCA will keep paying the $10 million to Metro each year (in addition to the $12.6 million property tax equivalent payment), or whether the CCA will pay some other amount, or if the CCA will instead start paying for capital improvements around downtown.
  4. Other places to find money: The rumor mill in Metro is going full speed about other ways the Mayor might find money. Some of the rumors could potentially make sense. Others sound outlandish. Since I really can’t tell what is potentially true and what is completely made up, I won’t spread these rumors. My point is that a central effort in the Mayor’s office these days is to honor his campaign promise to look for additional sources of revenue before talking about property tax rates.
  5. Under One Roof: Mayor Briley had announced that, if he won the election, he would propose spending hundreds of millions of dollars on the MDHA Envision projects. This “Under One Roof” program was never fully-baked and no funding for it was ever requested or approved. Now Mayor Cooper has announced that he is not going to pursue that plan. I agree with this approach. It is critically important that Nashville have high-quality low-income housing. If we spend hundreds of millions, we all need first to understand the expected cost of the Envision projects, what the total investment would be, and how the cost is calculated. None of that has been done yet. I think we will learn more in the coming months.
  6. MNPS: The needs of the school systems aren’t going away. As reported in the media in the last few weeks, MNPS may need more than $100 million per year in new operating funds to modernize their pay structure.

Again, this is a partial list of issues. Our election lull in the Council is about over. Though there is a lot of hard work to do, these are high class problems. Nashville is a dynamic, growing city. We will work through these issues and build a better future.

Met with Comptroller and Mayor today…

I am sending this message to Metro Council members today…

On August 6, 2019, the Tennessee Comptroller of the Treasury sent a letter to Mayor Briley and the Metro Council. The letter raised substantial questions about Metro’s finances. The letter acknowledged receiving Metro’s FY 2020 operating budget and that Comptroller was “in the process of discussing a number of fiscal concerns that need to be clarified or addressed.” The Comptroller’s concerns are not resolved at this time. More work is necessary.

This morning, newly-elected Mayor John Cooper and I went to meet with the Comptroller and his staff about the August 6 letter and next steps. I was invited because the Vice Mayor Jim Shulman appointed me last week to be the chair of the Council’s Budget & Finance Committee.

The Comptroller made an extensive presentation about Metro’s finances including long term trends for revenue, expenses, and debt service. It was a lot of information and the Comptroller offered to also make a presentation to the full Council. Mayor Cooper and I agreed that this would be valuable for everyone. This is likely going to happen in November. That will give the new Mayor, new Council, and new Finance Director time to get in place and up-to-speed.

I don’t want to over-simplify the information, but in summary, the presentation told us a lot of what we already know. Over many years, Metro has increased spending faster than revenue has grown. To make ends meet, the city has spent down its savings and relied on non-recurring revenue from one-time asset sales. As both the Mayor and I have been saying for some time, this approach can’t last forever and must be fixed. We also discussed the need for the Council to approve a new cash management policy. I believe we are on pace to consider this in November 2019.

Nashville is a vibrant, successful city. The Comptroller shared the twin messages that the situation is fixable, and that it has to be fixed now. I look forward to working with the Mayor, the Metro Council, and the Comptroller to improve the city’s budget.

When we are able to schedule a presentation from the Comptroller for the Council, I will let you know.

 

Bob Mendes, Chair, Budget & Finance Committee