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.

 

Bob Mendes

Bob Mendes represents all of Nashville as a Council-At-Large member of Nashville’s Metro Council. He is Chair of the Council’s Charter Revision Committee, a member of the Metropolitan Audit Committee, and a member of the Council’s Budget & Finance Committee, Rules & Confirmations Committee, and Ad Hoc Affordable Housing Committee. Bob also practices business law at Waypoint Law PLLC. Bob’s complete bio is here. You can follow Bob @mendesbob.