Category: Uncategorized

Follow-up: Capital Spending Plan

Earlier today, I posted about my plan to try to amend the Capital Spending Plan to remove $40 million related to the Sheriff’s Office.

This afternoon, I was told that the Council hasn’t amended a Capital Spending Plan for at least 10 years. If that’s true, wow!

For background, there are two different documents – the Capital Improvements Budget (CIB) and the Capital Spending Plan (CSP).  The CIB is a huge document that has 6 years of capital projects listed in it. The document is messy. For example, a new Sheriff’s Department headquarters is listed twice in the CIB. (Look at Item 17GS0018 on page III-27 for $20,000,000, and Item 17SO0001 on page III-153 for $21,464,700.) Our new Mayor has committed to have the Planning Department clean up the CIB and its presentation. But that is expected to take a few years.

If a project is listed in the CIB, it is considered to be eligible for capital spending. But being listed in the CIB does NOT mean that any funds are actually appropriated for the project. In order for a project to actually be funded, it has to appear in the CSP and the Council has to approve Metro incurring the debt to pay for the CSP. This might make you wonder, “Well, who cares if a project is in the CIB or not??” Here’s why – if a project is in the CIB, it only takes 21 votes to approve funding for the project. If a project is not in the CIB, it takes 27 votes to approve funding for the project. So, it does matter if a project is in the CIB.

Apparently, for years and years, the Council has removed or added projects to the CIB.  Last year, for example, the flood wall and the police HQ were removed from the CIB.  I’m told that there is no recent history of removing projects from the CSP. I’m not sure this makes sense to me.

I would think that there are some projects where the Council should look at the CIB, and others where we should look at the CSP. With the flood wall last year, I was busy campaigning, but I never understood the project. With that one, it made sense that it was removed from the CIB and was therefore not eligible to be funded at all. But with the Sheriff’s headquarters, I am ok with the project being in the CIB – consolidating the Sheriff’s administrative functions somewhere makes sense to me. I just don’t want money to be appropriated for the project at this time – that’s why I think it should be removed from the CSP (even if the project remains in the CIB and eligible for funding at some point).

I’ll keep trying to share my observations about the Metro budget process as it unfolds.

Amending the Capital Spending Plan

On June 7, the Council will consider the proposed $475 million capital spending plan.  I expect this resolution to be deferred to allow it to track with the capital improvements budget ordinance. I plan to file two amendments to the capital spending plan. One would remove the $20 million for the Criminal Justice Center, and the other would remove the $20 million for a new Sheriff’s Office headquarters. You can see my draft amendments here and here.

The way the capital spending plan works is that the Council approves an “Initial Resolution” that authorizes Metro to borrow money for certain listed projects.  The Initial Resolution is RS2016-245.  You can see the listed projects here.

My logic is simple. The end user of these buildings (the Sheriff) is vocally and publicly complaining that the executive branch of government in Davidson County is not qualified to take the “lead” in designing and constructing these buildings. Those of us in the legislative branch (the Council) typically have two tools – we can pass laws and we can appropriate money. To me, where there is a disagreement like this, the Council should stop appropriating money for the projects and make sure that the disagreement gets ironed out first.

If this were pretty much any other department in Metro complaining that their building was going to be a non-functional mess, the solution would be easy.  On the Metro organization chart, you would find that the complaining party reports directly or indirectly to the Mayor. In that situation, it would be easy to see that the boss, the Mayor, would always win that disagreement.

Here, there is more to think through. The Sheriff holds a position that is created under the Tennessee Constitution. So, the Mayor is not the Sheriff’s boss, and the Sheriff does not report to the Mayor. However, the Sheriff does depend completely upon the Mayor’s office and the Council for funding. Back in the early days of Metro, the Mayor and Sheriff had a disagreement that had to be settled by the Tennessee Supreme Court. In Metro v. Poe, 383 S.W.2d 265 (Tenn. 1964), the Tennessee Supreme Court held that “..the Sheriff, as an officer of the Metropolitan Government is…bound by the budgetary and purchasing provisions of the Charter.” The bottom line is that the Sheriff doesn’t have a boss (other than the voters), but the Sheriff can’t do much without funds being appropriated by the Council and being spent by the Mayor. This is a political check and balance that was intentionally built into the Metro Charter.

So – back to the current complaints raised by the Sheriff. To me, three things are true: (1) as a legal matter, there is no question that the Mayor, as leader of the executive branch under the Metro Charter, wins this disagreement every time; (2) the Sheriff, as a separately elected official of Davidson County, has the right to complain about who is leading the construction projects; and (3) when the Sheriff makes that complaint, it is a political complaint, not a legal one. Listen, calling the Sheriff’s complaint a political one is not meant to demean it. The fact is that the Sheriff thinks the Mayor is exercising the power of her office poorly and he wants people to know about it. The reality is that, given how clear the law is, if a mutual agreement is not an option, apparently the only alternative is to make a political complaint alleging that the Mayor is doing a bad job with these constructions projects.

The goal of my two proposed amendments is to address the political disagreement. Having the Council walk into this fight probably won’t be fun; but it is the responsible thing for the Council to do.  Leaving the disagreement unresolved might lead to poor teamwork, lost opportunity, and wasted dollars. The citizens of Nashville should demand that the Sheriff be on the same page as the Mayor before we spend another $40 million. The citizens of Nashville don’t want to toss a $40 million log onto a blazing political fire; they deserve better. When everyone is on the same page, the money can be appropriated then.

 

 

Air Quality Ordinance on 3rd Reading

I’m hearing a lot of community support in favor CM Bedne’s proposed air quality ordinance. There is also a concerted state-wide lobbying effort by interests opposed to the bill.

I wrote about the original version of the bill on May 13.

Since then, it has been substituted once and I expect it to be again before the Council meeting on June 7. I think CM Bedne is doing a good job of collecting comments from the Health Department (who implements Nashville’s air quality regulations) and also a good job of working to reduce any unintended consequences.

I haven’t seen the changes that I expect CM Bedne will file tomorrow. But, if the core thrust of the bill remains in place, I will support it. As I wrote a month ago, “The proposed ordinance simply puts the ball in the court of the State Air Pollution Control Board for them to decide whether our existing zoning law will be included in our state air quality standards.” To be more specific, if we pass CM Bedne’s bill, the state then will have to decide whether Nashville’s zoning regulations will become part of Tennessee’s State Implementation Plan (SIP) about air quality standards.

The Metro Council’s lawyer, Mike Jameson, agrees.  In the Analysis (p. 26) for this week’s Council meeting, he writes:

“The proposed ordinance reflects an attempt to amend this portion of Tennessee’s SIP for Davidson County… If this substitute ordinance is passed, subsequent approval by the state’s Air Pollution Control Board would be required for inclusion within the SIP. If approved, the amended SIP must then be submitted to the EPA for approval. The amendment would not be federally enforceable until those two steps were completed.”

If we pass CM Bedne’s bill, it won’t be a negative impact on business and it won’t create another fight between Nashville and the State of Tennessee. It is 100% clear that Nashville is already subordinate to the State of Tennessee and the federal government when it comes to air quality regulation, and it is 100% clear that Nashville has the right to ask to change the regulations that apply inside Nashville.

The bottom line for me is that I do not see where there could be a negative financial impact on Nashville from simply asking the State of Tennessee’s Air Pollution Board to consider a change to Tennessee’s air pollution standards.

 

Helpful Metro Websites

Councilmember Kathleen Murphy has put together a list of helpful Metro websites. Here’s her list.

I appreciate her putting this list together.  It pulls together a variety of links about development, zoning, Metro Codes, and Public Works. She also links to some helpful maps. Thanks, Kathleen!

More about Nashville General Hospital

On May 27, 2016, the Mayor, Dr. Joseph Webb, Dr. James Hildreth, and Councilmember Erica Gilmore announced a plan for an independent third party assessment of the financial and governance structure of Nashville General Hospital. The goal is to strengthen the long-term viability of this important Nashville institution.

I am glad that this project is going to happen. I want to share some of my thoughts about what I think will happen.

To start, though, I think it is important to acknowledge some of the difficulties in talking about the hospital. This is a topic where the words we use matter. For example, while Nashville General Hospital does serve a significant number of indigent patients, calling it a “hospital of last resort” suggests an inherently poor quality of service. And, while Metro has been budgeting $35 million for the hospital’s operating budget, calling it a “subsidy” suggests the money is a handout. Unfortunately, in the context of historical racial segregation in our nation and state and city, these word choices can sometimes send a conversation in a bad direction almost immediately.

I believe that Nashville General Hospital is an important institution in Nashville. I believe we can take care of all Nashvillians with high quality health care. I believe that the money Metro pays is an investment in all of us, not a handout.

With all of that said, here’s what I think I know:

  • There is at least one media outlet that has called this an “independent audit.” It is not an audit. The term used has been “financial assessment.” I have said previously that I would like to see the hospital have more resources to help with its budgeting and cash forecasting.
  • I have worked with KraftCPAs and Kevin Crumbo on projects before. They are good at what they do. They won’t come in with preconceived notions. They will have their hearts in the right place. Kevin never sought attention for it, but he was instrumental in re-working the Contributor’s business plan a few years ago (when they increased price and publication frequency). He donated his time and expertise then to help the Contributor survive and thrive. His work with the Nashville Symphony is also well-documented.
  • This financial assessment is consistent with Dr. Webb’s goals. To accomplish major change, you have to be very good at the fundamentals. The hospital just hired a new CFO, and Dr. Webb is still pretty new himself – now is the perfect time for this project. If there is a strong finance function to provide strong financial reporting, then the hospital will be able to make strong decisions.
  • I have one Council colleague who tweeted yesterday that, with “an entity that is subsidized $35 million a year,” it is important to know more. I have another Council colleague who replied, “what will this…tell us that we already don’t know?” These are both legitimate sentiments – but I think the limited phrasing available in 140 characters on Twitter creates the risk of possibly stumbling over the language problems I mentioned. We have to see the money as an investment in critical health care infrastructure. That re-frames everything. And we have to acknowledge that facts are our friends – more facts lead to better decision-making.
  • It is important to avoid the blame game as more facts are learned. If the facts show that there are improvements that might be made, that doesn’t mean someone has done a bad job. Seriously, look around your own workplace – most of us work in a place where most everyone is hard working and good at what they do. But there is always room to grow, to get more competitive, to turbocharge your organization. Nashville General Hospital is no different – having ideas for improvements does NOT necessarily mean anything about how good a job any single individual is doing. Embracing and empowering ideas for improvement is how the best change happens. I believe Dr. Webb shares this view and that’s why he is a partner in this new financial and governance assessment.

Finally, I want to thank Mayor Barry, Dr. Webb, Dr. Heldreth, and Councilmember Gilmore for collaborating on this project. This is the right time for everyone involved to have a fresh assessment of the hospital’s finances.

Air Quality Ordinance

This morning, Council members have received a few emails from industry groups talking about the alleged horrible consequences if we pass CM Fabian Bedne’s proposed Air Quality Ordinance.  That ordinance is BL2016-234. The emails are much too dismissive about the legitimate safety and quality of life concerns expressed by many citizens in Joelton and Whites Creek, and in Antioch, about having new high volume gas compressor pumping stations in those parts of Nashville. I would encourage everyone to read Council Director Mike Jameson’s analysis of this ordinance – which starts on page 14 at this link.

Mr. Jameson provides a thoughtful and fair analysis. I won’t repeat it all here. But, in summary, there are two main parts to the proposed ordinance. One part (which would create a new permitting requirement for projects like a gas compressor station) is likely too broad and may need to be amended or deleted. (This doesn’t bother me because I understand that the Health Department already has the power under existing law to regulate or refuse to allow any new pollution source that would push Nashville over applicable air quality standards.)

The second part of the proposed ordinance (which would require gas compressor stations to comply with local zoning laws) is NOT damaging to anything. As Mr. Jameson points out, if we enact the second part, there is a well-established state/federal procedure that would allow the State’s Air Pollution Control Board to decide whether to include our new local law as part of Tennessee’s air pollution control standards. If the State Board says no, I suspect that our ordinance might then have no impact or enforceability.  But if the State Board says yes, then it would be the State of Tennessee and Metro both agreeing that gas compressors need to meet local zoning laws. Even then, the federal EPA would also have to give its approval.

Everyone should agree that Nashville has an interest in having gas compressor stations only where it fits our zoning code.  I am sure all of us would agree that we shouldn’t have a gas compressor station in the middle of downtown.  They just can’t go anywhere. Not only that, we already have an existing zoning law that says we want gas compressor stations only in areas that are zoned industrial. The proposed ordinance simply puts the ball in the court of the State Air Pollution Control Board for them to decide whether our existing zoning law will be included in our state air quality standards.

I guess the bottom line is that this ordinance (once amended to carve back the scope of the permitting part) is not a magic bullet to stop gas compressors, but it definitely is not some sort of existential threat to our economy.  It is simply Nashville giving the State Air Pollution Control Board an opportunity to include a “comply with local zoning laws” requirement in our state air quality regulations.  I am in favor of that.

 

(If you want more information about the concerns our neighbors have, you can look go to this page and click on the PDF by “Project 1. Field Study”.)

FY2017 Budget Ordinance

Here’s the FY2017 Budget Ordinance, BL2016-232. I believe the Mayor’s Office filed it with the Metro Clerk on April 29.

This is the proposed operating budget. The Mayor is expected to propose a capital improvement budget on May 13. And, there will be a “budget book” out (I don’t know when) that has more details on all of this.

Pre-Budget Process Thoughts

As we enter the Metro budget season, here’s where my thoughts are:

$121 million in expected new revenue: Metro is projecting that its revenue will grow by 6.1% in Fiscal Year 2017. That’s an increase of $121 million. You can see some high level details in the Budget Presentation that Finance Director Talia Lomax-O’dneal gave the Council on Friday afternoon. These next observations are not in any particular order – just some thoughts on my mind after seeing the presentation slides. Also, all the numbers (except one) are from the slides.

Keep in mind that the budget proposal is for the city’s operating budget, and does not include any capital improvements. The capital improvements budget is expected to be released on May 13.

While the city’s overall debt load in Fiscal Year 2017 is expected to be 10.85% of the budget (as compared to 10.49% in FY2016), the Mayor proposes that $18.6 million (15.4%) of the $121 million of new revenue will go toward debt service. For me, while I think these numbers are all in the zone of reasonable for a city, it is at least interesting to see a record-breaking $121 million increase in revenue AND also see our debt load increase as a gross number and as a percent of the budget.

You would like to think that if you absolutely kill it on the revenue side, the percentage of your budget that goes toward debt might go down?  If one were a cynic, one would observe that record-breaking revenue increases can’t go on forever, and ask whether we will be able to anticipate when our revenue increases inevitably recede well enough to also pull back on large increases in new long-term debt. If not, when the economy ultimately downgrades from “record-breaking” to “good” or “eh”, we risk seeing that percentage paid to debt bump up a half percent or more in just one year. (To illustrate this, I did some rough math – if our revenue increase for next fiscal year was the same as what we saw in FY15, revenue would go up $51.9 million instead of $121 million next year. If this were the story, the percentage of the budget paid toward debt next year would be 11.2% instead of 10.85%.)

The budget also suggests that $33.3 of the $121 million of new revenue go toward our schools, and $29.6 million for salary increases for Metro employees. (I have a meeting scheduled with MNPS personnel this week to hear more about their budget.) In the proposal, that leaves $39.5 million of new revenue to go toward Metro providing additional or new services.

For that $39.5 million, from looking at several different slides, the Budget Presentation shows us how about $24 million of this new revenue is proposed to be spent. Here’s a list of the spending proposals I saw in the presentation, along with some thoughts about several of them:

  • Barnes Housing Fund, $10 million (This is a lot of money, which is good. At present, though, the legislation that created the fund is barely a page and a half long. I think we need some additional structure and oversight to be created. I trust and like the current Metro Housing Trust Fund Commissioners, but it isn’t good for anyone to have $10 million per year to go to a commission that has almost no formal structure under existing law. To be clear, I think this investment is a good one, but we need more structure for the Barnes Housing Fund.)
  • Youth Programs and Services, $2.6 million
  • Fire Department, $1.5 million
  • Police Department, $2 million
  • Metro Transit Authority, $2 million (This is an increase that, I believe, is smaller than each of the last few years. At first blush, it seems incongruous that we would be squeezing down on increases for MTA when we need more and better transit so badly. I am guessing that the thought is to not provide a dramatic increase before the nMotion plan is done?)
  • Codes and Planning, $492,100 (Our Codes department is so swamped that this number could be twice as high and it would still be reasonable. If someone were to check staffing levels, I think they’d see that Codes is trying to operate with the same size staff they had when the city was a third smaller.)
  • Parks, $1.6 million
  • Public Works, $1.2 million
  • Library, $975,300
  • Health Department, $780,100
  • PIPs (Public Investment Plans), $1 million (I believe that individual departments found out on Friday who won the PIP money. I don’t know of any public announcement about this yet, though. I did see Judge Calloway late Friday afternoon and she was excited that the Juvenile Court PIP was being funded in full.)

I am looking forward to the upcoming budget hearings to learn more about the proposed budget.

Don’t have the actual budget yet: As part of my continued learning curve as a new Council member, I learned that the Budget Presentation doesn’t include a copy of the proposed budget. I have what the public has – the 39 slide PowerPoint presentation. This week, I’ll need to figure out when we see the actual budget.

Election Commission follow-up: In my April 20 blog post, I commented on the supplemental appropriations resolution that the Council considered and passed on April 19. Before the Council meeting, the Election Commission withdrew their request for a supplemental appropriation. I said in my April 20 post:

At the last minute yesterday, the Election Commission withdrew their request for a $314,000 supplemental appropriation. I still need to learn more, but the first report I’ve heard indicates that they didn’t really need any supplemental funds?!? I’ll be curious to hear more about this.

It’s been a few weeks, and I’ve still only heard second-hand information. But that information is that a Council member scheduled a meeting with someone at the Election Commission to learn more details about the need for the supplemental appropriation. And, then, before meeting could take place, the Election Commission withdrew their request for funds. I am probably not going to try a lot harder to figure out what happened, but it will be hard to take the commission seriously when it comes to funding requests. I hope a new director gets their business operations squared away.

Wrap-up: As the budget process moves forward, please feel free to send me whatever ideas and questions you have.

Update From 4/19 Council Meeting

Here’s a quick update of the highlights from last night’s Council meeting:

RESOLUTION NO. RS2016-172: We approved a supplemental appropriation for approximately $3 million to various Metro agencies and departments. This had been deferred from the April 5 meeting.

Metro Finance was very helpful is getting Council members to understand which supplemental appropriations were completely appropriate (e.g., funding a new program) and which ones weren’t (e.g., failure to properly budget income and/or expenses).  The agencies that got the most attention were the Farmer’s Market and the Municipal Auditorium.  For the Farmer’s Market, nearly all of their shortfalls are due to the State taking back the North Shed – that’s going to be hard for the Farmer’s Market to deal with economically.  As for the Municipal Auditorium, they had less revenue than they expected and more expenses than they expected.  I expect that Council members will have some hard questions for them during the upcoming budget process.

Another interesting note is that the original resolution asked for $3.3 million in supplemental appropriations. At the last minute yesterday, the Election Commission withdrew their request for a $314,000 supplemental appropriation. I still need to learn more, but the first report I’ve heard indicates that they didn’t really need any supplemental funds?!? I’ll be curious to hear more about this.

RESOLUTION NO. RS2016-205: This resolution approved a $2 million lawsuit settlement.  You can read the Council Analysis here (starting at page 6) for lots of details about this. Although we approved this, CM Pulley raised the question of whether we should be approving settlements for $2 million on 5 days notice to the Council. I thought we knew enough and voted in favor — you’ll see that the Council analysis indicates that the settlement was reasonable given the alternatives.

But, due to CM Pulley’s concerns, I think we’ll be seeing some new legislation soon requiring Metro Legal to provide the Council with a quarterly report listing out significant litigation matters and the amounts being sought from Metro for each case.

These were the important non-zoning measures that we passed yesterday.

Let me also give you a quick update about the Council’s Ad Hoc Affordable Housing Committee. We had a very productive meeting on April 15. We managed to get most of the Committee to meet from 4 to 6 pm on a gorgeous Friday afternoon. The Committee agreed in principle at that meeting on several items of new legislation. In the coming weeks, I hope to see several new proposed ordinances and resolutions filed to address a wider range of affordable housing issues than just inclusionary zoning. I’ll talk about these in greater detail once the new measures are filed, hopefully within a few weeks.

State Legislature + Confirmation =

This was inspired by the combination of two events today: (1) the unjust actions of our State legislature; and (2) my 8th grade daughter asking, as part of her preparation to receive her Confirmation in a few weeks, “Why is Justice important?” Here’s my answer:

 
Justice is important because it serves as the foundation for civil and social fairness in human society.

The Church teaches that every person has a right to life and to the necessities of life. When our nation was founded, this core principle was written into the Declaration of Independence with the famous words:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and pursuit of Happiness.”

In this way, “Justice” is the bedrock principle of our faith and our country.

With our faith, Jesus calls on us to act with justice and fairness in every interaction we have with others. In Matthew 7:12, Jesus said, “So always treat others as you would like them to treat you.” In Luke 6:29, Jesus said, “To anyone who slaps you on one cheek, present the other cheek as well.” And, in Luke 9:48, Jesus said, “The least among you all is the one who is the greatest.” The lesson is that, to lead a just life, you must always give others every benefit of the doubt, and you must love others the way you would like to be loved.

Our country is built on the same principles. For example, in the Fifth and Sixth Amendment to the United States Constitution, people who are accused of crimes — often, these are the least among us — are entitled to a fair trial where they are presumed innocent, are entitled to an effective legal defense, are entitled to a jury of their peers, are entitled to see and hear all of the evidence against them, and are protected from being tried more than once for the same charges. In the First Amendment, our rights to express ourselves freely are protected, as well as our right to religious freedom. In the Fourth Amendment, everyone (including people who are not citizens) is protected from arrest without probable cause.

Justice is more than a lofty goal. Justice is a work-in-progress. We know that the Bible teaches that we are imperfect creatures. We are called to make a daily effort at the hard work of living the Gospel truly and authentically. Our civil society is also a work-in-progress. When our Constitution was enacted in 1789, women could not vote and slaves were considered property to be owned and sold. Our country is still working today to overcome these and other historic injustices. Just as we must work every day to personally lead a more just life, as citizens we need to know that our work as a society is not done either.

Update From 4/5 Council Meeting

I passed my first ordinance last night. I am probably over-happy about that. I’ve written about it before here and here. This ordinance changes the way Metro handles tax increment financing in three key ways – Metro will get its property tax revenue back more quickly, Metro will have more say in what projects get tax increment financing, and there will be greater transparency to show us how our tax revenues are being used by MDHA. The ordinance also authorizes MDHA to use the proceeds from the sale of 3 parcels of property in the Rutledge Hill Redevelopment District as part of the Cayce Place Redevelopment Plan.

Here are the other items of interest from the meeting:

Planning Commission Nominees: The Rules Committee was 10 minutes late for our 6:30PM Council start time because we asked so many questions of the Planning Commission nominees, Brenda Diaz-Flores and Brian Tibbs. I found both nominees to be well-informed and articulate about a wide range of planning, development, and housing issues.

For Ms. Diaz-Flores, we asked about her relationship with the Planning Department, where she used to work. We wanted to know whether she’d be able to transition to possibly voting against things that her former employer, the Planning Dept., was recommending. She was able to walk us through some specific positions that the Planning Dept. had taken while she was an employee that she would have voted against as a Commissioner. I liked that show of independence.

For Mr. Tibbs, who is an architect, we asked about the types of clients his architecture firm represents. He told us that his firm sometimes represents developers with matters before the Commission, and also does work for MDHA. Mr. Tibbs told us that he would recuse himself from votes where he or his employer had a financial interest in a project, or where his firm does work for an applicant before the Planning Commission. The Committee told Mr. Tibbs that we appreciated that he was sensitive to this issue. I’m glad he committed to recuse himself when he or his firm has an interest.

Though we had to run late to do it, the Rules Committee recommended approving both nominees. The Council approved both.

BL2016-133 (Inclusionary Zoning): This was on first reading. The Council deferred first reading for two meetings, to May 3. From my perspective, the two main camps – the housing advocate community and the development community – are engaged in the classic negotiating tactic called anchoring. That’s where you stake out an extreme position in the hopes of pulling the ultimate compromise position closer to you than to the other side.

On the housing advocate side, there is a significant subset that are arguing hard to just kill the inclusionary zoning bill and start over again. This is counter-intuitive, of course, since the same groups are the ones who initially pushed for inclusionary zoning last year. The “anchor” they have dropped is to argue that the current bill is so weak that it should just be trashed and, instead, the city should focus on creating a comprehensive affordable housing plan. We’ll see how this pans out. In my law practice, when you decide to anchor, you should be willing to accept the risk that everyone else comes to believe that you’ll never compromise and they choose to continue the conversation about compromise without you.

To me, the way forward is not an “either/or” situation. We can and should commit to have Nashville create a comprehensive affordable housing plan. But I think that we should also go ahead and pass some of the legislative pieces that we know we’ll need once a full plan is crafted.

The next step is that the Planning Dept.’s consultant is working on refining his proposals for the financial incentives that are need to make inclusionary zoning work. And, the Council’s Affordable Housing Committee has meetings set, I believe, on April 18 and 25.

RS2015-76 (Fairgrounds and Firearms I): CM Glover had a resolution that would have asked the Fairgrounds Board to rescind its decision to not have gun shows past 2016, and would have forced Metro to cut-off all capital projects funding for the Fairgrounds if the Board didn’t comply. CM Glover has said several times previously that his goal was to keep Metro from getting sued.

Unfortunately, about 30 minutes before Council Committee meetings started, a gun show vendor did sue Metro. I didn’t see a point to passing a resolution that was supposed to prevent litigation that now has already started. The Codes, Fairgrounds, and Farmer’s Market Committee saw things the same way and voted 3-2 to indefinitely defer the resolution.  That was Coleman, Shulman, and Rosenberg in favor of indefinite deferral, and Huezo and Swope against.

BL2016-161 (Fairgrounds and Firearms II): This was CM Glover’s bill that would have required the Fairgrounds Board to set aside 17 weekend days in 2017 for gun shows. This was deferred indefinitely at our last meeting.  For this meeting, CM Glover was using his one-time right to ask for the Council to place his bill back on the agenda. We voted against that – so that bill is now permanently defeated. For better or worse, the Davidson County Chancery Court is now going to be where the next chapters of this story unfold.

RS2016-172 (Supplemental Appropriations): This is a request for about $3.3 million in supplemental appropriations. At the Budget & Finance Committee meeting yesterday, it was clear that some of the supplemental appropriation requests are fully reasonable and are needed for positive, good reasons. And, some others are needed because there is a department or component unit of Metro that really isn’t performing financially as expected. This has been deferred to the next meeting in order for the Council to get more information about which supplemental appropriations require us to exercise additional oversight of a struggling department or unit.

RS2016-170 (Starbuck’s on West End where traffic backs up): Nashville is at the front end of multiple Starbuck’s locations seeking permission to sell beer. We approved one in Green Hills at the last meeting, and two more were up this time – including the one on West End near Vanderbilt across from Bricktops. If you are familiar with the location, that’s where there are always cars spilled out onto West End waiting to get in the drive-thru and often blocking buses and other traffic. This was deferred indefinitely to allow the store to work with Traffic & Parking to improve how that drive-thru interacts with traffic.

BL2016-140 and 141 (Carrolton Station, Men of Valor): With these two bills in CM Vercher’s district, the Planning Commission disapproved the changes to infrastructure and zoning that were being proposed. Metro Legal and Mike Jameson both advised that these two bills would be completely unenforceable if passed. Metro Legal had already advised Codes to disregard the bills if they were passed. Despite these strong legal admonishments, I think the whole Council really, really wanted to pass CM Vercher’s bills because they address serious traffic and density problems in this neighborhood. Because they were disapproved by the Planning Commission, these would have needed a two-thirds majority to pass. That didn’t happen and the bills failed despite CM Vercher’s strong, tenacious efforts.

I did not vote for either of these bills. I truly appreciate and agree with what CM Vercher was trying to accomplish, but with Metro Legal and Mike Jameson advising that the bills were simply not enforceable, I couldn’t vote in favor. It’s a longer story for another day, but the problem with this situation (and with CM Hagar’s quarry situation) is that the State of Tennessee changed the law about “vesting” property rights in January 2015. Nashville is going to have to figure out a way to adapt to that change in the state law, which allows property rights to be vested sooner than was possible previously.

That’s it. If you made it this far, thanks for reading. I appreciate it!

 

Bob

Update From 3/15 Council Meeting

My TIF ordinance passed 2nd reading last night. Two veteran Councilmembers told me (nicely) that I made a rookie mistake by not taking the opportunity to talk about the ordinance so that constituents in the audience and watching on tv would have a better idea of what the new law will do.  My bad – I’ll try to talk more…

At the March 1 meeting, the Rules & Confirmation Committee deferred the appointment of Dr. Feng Li as the County Medical Examiner. The main issue was that he didn’t live in Davidson County, and the Committee wanted to know more about the efforts to recruit a qualified doctor who would live in Nashville. After the March 1 meeting, Dr. Li decided to move into Davidson County. The Committee was pleased with this commitment and approved his appointment yesterday.

At yesterday’s meeting, the Rules & Confirmation Committee deferred two nominees for the Planning Commission for one meeting. These might be the most important appointments that we consider all year, and they deserve careful consideration. I expect the nominees to appear before the Committee at our next meeting. If anyone has questions they’d like us to ask the Planning Commission nominees, please let me know.

The media covered two bills.  One was CM Glover’s ordinance that would have required the Fair Board to reserve 17 weekend dates per year for gun shows until there is either a court ruling or Attorney General’s opinion about whether the Fair Board legally can stop having gun shows.  This ordinance got indefinitely deferred under the Council’s new “Rule 24.”  Under this rule, a committee can indefinitely defer a bill – this effectively kills a bill (with a one-time chance to bring it back to life.)  To bring it back, CM Glover would need to make a written request of the Clerk to place it back on the agenda.  If he gets a majority of CMs to vote at the next meeting to bring it back, it goes back on the agenda for further consideration.

Honestly, I was surprised that the indefinite deferral procedure was used. Practically, I am not sure it makes much difference. If there hadn’t been an indefinite deferral, CM Glover would have needed a majority vote to pass the bill on 3rd reading.  And, now that it has been indefinitely deferred, it still needs a majority vote to bring it back to life.  Either way, if a majority of CMs like it, it will become law.  But setting aside the practicality, using the procedure yesterday definitely stirred up some raw feelings. I’m not sure we need that…still processing…

The other bill that got media coverage was the Lifeway incentive package.  Other than the headline, I think the Scene did a nice job of capturing the difference in perspectives.  CM Cooper was pretty bothered by the developer getting paid to provide additional park space.  His view was that Metro is paying the developer for what is essentially an amenity park largely for their future residential owners.  CM O’Connell, who represents downtown, felt strongly that the incentives were appropriate and that downtown needs green space badly. I liked what CM O’Connell said in the Scene about the Council needing to focus on long term strategy because that will create more change in the long run that trying to re-negotiate individual deals that the Mayor’s office has already made.

(The Scene headline said that this measure “sailed through Council.” I bet the folks pushing for the incentives didn’t feel that way. There was a specially called Budget & Finance Committee meeting about this on March 7 to address a list of concerns raised by multiple CMs in addition to CM Cooper. And, there was also a Council site visit on March 11 to see the site of the proposed park land purchase.)

I voted in favor of this package. It had a $2.5 incentive that went to benefit Lifeway, a 125 year fixture in Nashville that provides lots of high quality jobs and is a good corporate citizen. Compared to what Metro has done for other significant corporate moves, this is not a large incentive.  And, regarding the additional $990,000 to the developer for the park land – it has been reported that the developer told everyone, “We already gave Metro more than an acre of land for green space…we are selling this additional land to Metro at a discount because Metro has asked to get more land…we will not donate it.”  Given this, the Council either could approve the purchase of discounted park land, or play a game of chicken with the developer to find out if the developer would donate the land even though they said they wouldn’t.  I didn’t think daring them to not sell the land for a downtown park was the right choice.  This whole analysis brings me back to what CM O’Connell said in the Scene.  Citizens win the incentives game by setting the long term ground rules, and not by haggling over individual deals that have already been negotiated.

I typed this update pretty late in the evening…please forgive any typos…

“Debt Service Taxes” In Proposed TIF Ordinance

I was approached this week by a lawyer who told me he is working with one of the bidders on MDHA’s Rolling Mill Hill property. He wanted to talk about how one aspect of my proposed TIF ordinance would work. You can read more about the proposed ordinance here.

The developer’s lawyer was asking whether the “debt service taxes” part of the ordinance would be an inappropriate “curtailment” of tax increment financing. I told him no – there is no “curtailment.” This is a slight adjustment that allows Metro to better meet its own debt obligations.

What is TIF again?

To see how slight the adjustment is, we need a brief recap of how TIF works.

A developer proposes a project. Typically, the developer will tell MDHA, “We have a great project, and we can almost make the financing work, but not quite…can you help us with some tax increment financing?” If TIF is provided, MDHA will borrow money from a bank, and the developer uses the money for the project. Once the project is built, it creates new, additional property tax revenue.  The new, additional property tax is the “increment.”  The developer (or owner) then pays the full property tax bill to Metro each year.

When the Metropolitan Trustee collects the property taxes, Metro gets an amount equal to the pre-development taxes, and MDHA gets the increment.  MDHA then pays the bank loan. If there is a shortfall, and the increment is not enough to make the loan payments, it is typically the developer who will pay the shortfall; the bank that made the loan will usually demand a guaranty from the developer.

What is this new “debt service taxes” provision?

One of the knocks on Nashville’s use of TIF over the years is that, by paying all of the increment to support a small number of developments, Metro is cutting into the tax revenue that would otherwise be available to pay its own long term debt obligations. As a reference point, about 15% of what Metro collects in property taxes is used to pay Metro’s own debt. Up until now, when there has been a TIF loan, that 15% goes to pay the TIF loan instead of paying Metro’s own debt.

You can see how, if Nashville were directing a high enough amount of property taxes into paying TIF loans, it would impact the amount of revenue available to pay Metro’s own debt. We don’t have to debate whether the impact is large of small – it is undeniable that using property taxes to support TIF loans means there is less revenue available to pay Metro’s own debt.

The new “debt service taxes” provision would allow Metro to keep the portion of the increment that is ordinarily used to pay Metro’s debt. The language require that, “All TIF loans authorized by [MDHA] after the effective date of [the law] shall include provisions stating that the debt service taxes shall be retained by the metropolitan government…” At our current Metro debt service levels, this means that after the new ordinance is passed the first 15% of increment will be retained by Metro on new TIF loans.

Does this matter?

There are two perspectives to look at.  From Metro’s perspective, I think that this new provision should reduce or eliminate the potential risk that paying for TIF loans could ever erode Metro’s ability to service its own debt. We’ll be setting aside the proper portion of the increment to pay Metro’s debt. This is fiscally responsible and, in the long run, will support a strong bond rating for Metro.

It is important to look at it from the developer’s perspective too. This will include a lot of numbers – I’m sorry about that. I’m going to use the project that lawyer called me about. In the call, he suggested it would be a $400 million project. I also know that the total amount of TIF that remains available in the Rolling Mill Hill redevelopment district is approximately $31 million. Let’s assume that MDHA were to decide to use the entire $31 million for this project.  (I can’t imagine that they would ever use ALL available TIF dollars on one project…but let’s pretend.)

In order for the developer (who will have to guaranty the loan) to want that large a TIF loan, the developer would have to feel like the expected property tax increment after the project is built will be large enough to make payments on a $31 million loan. When the lawyer who called me suggested my ordinance is a “curtailment”, he was making the point that, because we’ll now set aside the first 15% of the increment to pay Metro’s own debt, there will be less money to pay that TIF loan. There’s no question that this is correct.  But if there is 15% less increment to pay the TIF loan, logic tells us that the size of the loan the tax increment can support should also be 15% less.

That would mean that instead of the increment supporting our hypothetical $31 million loan, the increment might only support a loan that is 15% smaller, or $26.35 million.  This decrease of $4.65 million would lower the overall size of the project from $400 million to $395.35 million. I think we can agree that a 1% decrease in the size of the project shouldn’t kill any deal worth doing.

Remember, I’ve used outlandish numbers and assumed MDHA would put all of its Rolling Mill Hill TIF dollars into one project. More realistically, this wouldn’t happen. My guess is that, by choosing to pay Metro’s own debt first, we are making the choice that a $400 million project might have to get done on $397 or $398 million.

For me, TIF loans are a critically important tool for redevelopment. The proposed ordinance accomplishes two important goals – we are still committed to using tax increment financing for redevelopment, while also making the choice to be sure to pay Metro’s own debt obligations first.

CORRECTION (03/10/2016): An earlier version of this post said that the Tax Assessor collects property taxes. That’s not right. The Tax Assessor assesses the amount of taxes, and then they are collected by the Metropolitan Trustee.

Notes from 3/1 Council Meeting

I want to share three things from this week’s Council meeting.

County Medical Examiner Appointment: The Rules Committee was asked to consider the appointment of Dr. Feng Li as County Medical Examiner. The Committee voted to defer its decision for one meeting. The issue was that, while Dr. Li seems highly qualified, he does not live in Davidson County.

Metro has a contract with Forensic Medical Management Services, PLC, to provide forensic pathology services for Davidson County. Dr. Li is the CEO of FMMS, and they apparently do not have any employee pathologists who both live in Davidson County and are qualified for the County Medical Examiner position. State law allows for a doctor outside the county to serve in this position if it is “not possible” to find someone in the county to accept the position.

FMMS ran a job opening announcement for 22 days on the leading national medical examiner organization’s web site, and was unable to find an interested, qualified candidate.

The Committee voted to defer because it wanted to learn more about the search for a qualified candidate who lives in the county. Also, since Dr. Li is the CEO of FMMS, I am asking for Dr. Li to comment on the April 2015 Metro internal audit of the Medical Examiner’s office. I expect that Dr. Li’s appointment will most likely be approved by the Council, but these are questions that should be answered first.

BL2016-149: Infrastructure for Lifeway Project:  This ordinance would obligate Metro to spend up to $3,490,000 for the construction of public infrastructure improvements in the area around a new Lifeway building in the North Gulch area. As part of the deal, Metro will get a 1+ acre park that is supposed to connect to our greenway system. You can see more details in the Council Agenda Analysis, at pp. 10-11. This ordinance passed on second reading after an extensive discussion.

On the one hand, I think there was widespread agreement that Lifeway is a wonderful 125 year citizen of Nashville. We were told that Lifeway provides 1,100 jobs that have an average annual compensation of $53,000, and that Lifeway generates tens of thousands of room nights of hotel bookings each year. So, this isn’t like Dell swooping into town with no track record here. Lifeway is a legit long-time interested and engaged Nashville employer.

Also, there is no tax increment financing. Metro’s obligation would be to build water, street, and other infrastructure.

On the other hand, there was several Councilmembers who expressed frustration over why this particular infrastructure project should have priority over other projects, and over why building this new park should have priority over other new parks around the city. There were also questions about whether Lifeway would really move out of the city if Nashville were to decline to pay for this infrastructure.

These are all good and fair questions, and I’m glad that Lifeway and the administration promised answers to all of them before this ordinance gets to third reading.

As I see it, there are really two issues going on here.  One issue is a completely legitimate long-term complaint – you really can’t find a prioritized list of water infrastructure projects, or park projects, anywhere. So, for example, if any district councilmember has a piece of land in her district that has been acquired to become a park, she really has no earthly idea whether it will be actually built into a park in 2017 or 2018 or 2019 or whenever.

Coincidently, at a Budget & Finance Committee meeting this week, the administration described how they intend to create such a prioritized list that would address this problem. They described that it will take maybe as long as two or three budget cycles to turn what is currently a wish list of projects into a prioritized list that will reliably let people know when a project will happen.  For now, until Metro develops this prioritized list, we will be subject to criticism whenever a new project seems to just pop up.

The second issue is whether Nashville thinks it is a good idea to pay for this infrastructure.  Is Lifeway a good investment for Nashville? Is paying for this infrastructure a better use of $3+ million than something else? I plan to keep an open mind as we receive the rest of the promised information, but my instinct is that this is a really nice opportunity to get needed infrastructure at the base of our important Charlotte corridor, obtain an important greenway connection that otherwise will not be available to us, and help build the inevitable connection between the North Gulch and Germantown.

I think there will be another long discussion about this on third reading on March 15.

BL2016-157: Tax Increment Financing:  This is the ordinance that Councilmember Gilmore and I filed to change the ground rules for tax increment financing. (previous post here)  This passed first reading yesterday. Second reading will be on March 15. I’m thankful that the feedback on this has been very positive, and that we have more than 20 co-sponsors. I’m looking forward to seeing become law.

New TIF Ordinance

The new TIF ordinance that Councilmember Erica Gilmore and I filed will be considered by the Council for first reading on March 1, 2016. Both MDHA and Metro Legal agreed on the text of the ordinance before it was filed. If passed by the Council, the ordinance would change the ground rules for tax increment financing in Davidson County in three important ways, and also allow MDHA’s Envision Cayce plan to proceed as scheduled.  The three changes are that Metro will get its tax revenue back more quickly, Metro will have more say in what projects get tax increment financing, and there will be greater transparency to show us how our tax revenues are being used by MDHA.

Metro will get tax revenue back more quickly

There are three provisions that will help Metro get its property tax revenue back more quickly.  First, going forward, for every TIF loan, MDHA will no longer receive the tax increment for the property after the loan is paid. Instead the tax increment will go to Metro after the loan is paid.  Second, for any new TIF loans going forward, Metro will be able to retain the portion of property tax revenue that is meant to pay Metro’s own bond debt obligations.  I think that this should reduce or eliminate the potential risk that TIF financing could ever erode Metro’s ability to service its own debt.  Third, if MDHA refinances a TIF loan to reduce its loan payments, the amount of tax increment funds it receives will also decrease – with any excess tax increment going back to Metro.

Metro will have more say in tax increment projects

There are three provisions that will allow Metro to have more control over some types of projects funded by tax increment dollars.  First, going forward, tax increment funds may not be used to support projects outside of the specific redevelopment district where the property is located without prior Council approval.  Second, going forward, if MDHA is selling land it owns in a redevelopment district, and it got that land from Metro (as opposed to federal funds), absent Council approval, the land sale proceeds must be used in the same redevelopment district or returned to Metro.  The third change is technical.  For redevelopment districts created after 2006 (i.e., Cayce Place, and Bordeaux), MDHA currently has the power under state law to collect tax increment funds for every parcel of property in the entire district.  MDHA has never exercised this power.  The ordinance would establish that Metro will only allow tax increment funds to be used by MDHA for properties that actually are being redeveloped (as opposed to all properties in the district regardless of whether they are redeveloped).

We’ll have greater transparency

Under this ordinance, MDHA will provide annual reporting about each TIF loan, including the current loan balance, the estimated maturity date, the amount paid in the last year on the loan, the parcels whose tax revenues are pledged to support the loan, and the amount of tax increment funds received by MDHA from each of those parcels.  The first report would be due 90 days after the ordinance is passed.

The ordinance will approve the Rutledge Hill land sale

In the ordinance, the Council would be specifically approving that MDHA may use the proceeds from the sale of 3 parcels in the Rutledge Hill Redevelopment District as part of the Cayce Place Redevelopment Plan.

During the mayoral and council campaigns last summer, people all over the county wanted to talk about tax increment financing, and whether it has been used fairly, or if it has been a giveaway to developers. My response was always that I didn’t think we, as citizens, had enough visibility into how our property tax dollars have been used for individual economic redevelopment projects.  My sense from the start has been that I might not have any complaint about the vast majority of Nashville’s economic redevelopment decisions over the last ten years – but I simply couldn’t tell because there hasn’t been enough readily available information for a reasonably well-informed citizen to make sense of what has been happening.  My goals with this ordinance are to help Metro get its tax revenue dollars back sooner, to give voters (through their directly-elected Metro Council representatives) more authority regarding tax increment projects, and to create thorough annual reporting about how these property tax dollars are being spent.

I want to thank the Mayor’s office, Councilmember Gilmore, the more than 20 Councilmembers that have agreed to co-sponsor this ordinance, Jim Harbison from MDHA, and Jim’s leadership team for being willing to not only talk about these issues, but agree on all of these important changes.  I am hopeful that the Council supports this ordinance.

 

Mayor’s press release (Feb. 24, 2106)

Tennessean (Feb. 25, 2016)

Nashville Business Journal (Feb. 25, 2016)

Coverage on WTVF-News Channel 5 (Feb. 24, 2016)