Last night’s passage of HB779 by the Tennessee House brought to light some features of the bill that I was previously unaware of, and some problems that will most certainly result if the bill is passed.
Here’s Rep. Carter speaking on two features of the bill that haven’t gotten a lot of play in the media.
Ed. Note:The clip is about 3 minutes long, but the video doesn’t stop on its own for some reason.
A couple of thoughts about the sunset provisions:
First, it is a good thing that this bill sunsets in 3 years. That certainly does reduce the amount of time that Memphis and other cities would have to be in a holding pattern while neighborhoods organize to leave the city.
Second, the ‘one and done’ provision is also a good thing. This basically gives the organizers of any de-annexation effort one shot to get it done. If, for instance, an effort were to fail in November, the city would know that area is safe from being de-annexed (theoretically).
Unfortunately, there’s nothing stopping a future legislator from writing a bill that would change those provisions in the future. If they can change nearly 200 years of standard land use practice, they can sure as hell change 3 years without even giving it a second thought.
I understand that all legislation is subject to change at any time, but these sunsets give a false sense of security to the impacted cities.
What that means is areas that are part of the city don’t have to be lined up one after another. This is kind of a hard thing to visualize, so I have a picture of a neighborhood (I removed all the identifying factors because I don’t know if this neighborhood can de-annex or not, its just for illustration).
Lets say, this neighborhood was part of an area that de-annexed itself. Under Rep. Carter’s bill, the City could end all services on the effective date, and still tax the property for the debt accrued while in the city.
But there’s another piece. If some homeowners didn’t want to leave the city, they have a certain timeframe (I think 30 days from the effective date) to petition the city to come back in.
That all seems well and good until you visualize what that might look like, which I have done below.As you can see in this example, just a few of the plots of land in this image have asked the City to accept them back in. The City doesn’t have to, and it might be in their best interest not to.
Here’s why: Providing police, fire and trash pickup for these few plots of land in an otherwise unserviced area would be a very inefficient use of resources for the city. The property taxes and fees collected would never pay for the services. Its only when the city provides services to everyone in a neighborhood that it comes closer to being efficient.
Which means that if the people in these plots of land want to still be in Memphis, they would have to move, because it wouldn’t make good sense for Memphis to annex just their homes, and not the whole neighborhood.
This is one of those provisions that gets stuck in bills to make it seem really Democratic. “If they want to stay in Memphis, let ’em”, says Rep. Carter. He says this, knowing full well that Memphis will have to say no if there’s not enough demand (we might be wise to say no if its not unanimous).
What’s more, this is just one neighborhood of a larger area that de-annexed. It may be that City services have to traverse over miles of County roads just to provide services. There’s no way the City could, in good faith, allow that to happen either.
So this ‘pot sweetener’ is really a red herring. Rep. Carter knows the City could never make a few exceptions for select people. It would be fiscally irresponsible.
At this point, we don’t know if the Senate will vote on this bill this week or next. The House calendar says its ready to be sent over to the Senate, which means it could be any day now.
This afternoon Mayor Strickland met with the Memphis City Council (they were still meeting as I wrote this). Strickland says de-annexation could add between 30 and 70 cents to our already highest in the state tax rate.
Last night Rep. Larry Miller warned the Tennessee House of Representatives that by voting for the bill they were voting for a tax hike. He was right.
I guess Republicans aren’t opposed to tax hikes for some people.
The bill if approved, would allow as many as 10 previously and lawfully annexed areas of Memphis to petition for a referendum, which if approved by a majority of the voters in the area, would remove them from the City.
I watched the debate from the safety of my home here in Memphis. There was some impassioned debate, especially from Shelby County Representatives Joe Towns and Raumesh Akbari, though others including Larry Miller, G.A. Hardaway spoke against the bill, while Mark White, one of the bills sponsors, spoke for it.While the debate was robust, there are still a bunch of questions that were left unanswered. Notably, whether or not residents who would leave Memphis would be liable for long-term costs associated with annexing their neighborhoods that aren’t included in City debt. Representative Carter, a former General Sessions Judge from Hamilton County, seemed confident that these questions were answered. But when questioned about future refunded debt (debt that cities refinance for lower interest rates or other benefits) Carter was vague, as if he didn’t really understand the question, or perhaps he was purposely trying to avoid the question.
The bill now moves to the Senate where, two of Shelby County’s five members are sponsors.
There were some 17 amendments offered on the bill, only one, that didn’t “make” the bill was approved. This amendment was offered by Minority Leader Fitzhugh.
One amendment sought to remove the word ‘egregious’ from the bill.
Egregious was the word of the night. Rep. Carter used it repeatedly to make a process that for decades had been otherwise routine seem like some kind of assault.
Rep. Carter argued that keeping the word in created a legal standard for the kind of annexation the bill dealt with, and the kind it did not. This all seems unnecessary to me, since the bill spells out exactly what kinds, in fact, which specific annexations were offensive based on when and where they happened.
I didn’t know if egregious had some kind of special meaning in a legal sense, so I looked it up on FindLaw. Here’s their definition:
extremely and conspicuously bad.
That doesn’t sound like a rock solid legal foothold to me. I mean, who determines what’s a ‘bad’ annexation?
We’ll have to see what happens in the Senate with this bill. Hopefully, it will be held up, but I’m not holding my breath.
The allegation was that Memphis has been running a 70 to 90 million dollar deficit every year, and paying for it with additional borrowing.
Now, I’ll be the first to admit that I haven’t been following Memphis’ budget hearings as closely as I once did in the past few years, but I’m pretty damn sure that if there had been a deficit that amounted to 10% to 14% of the City budget, I’d have heard about it.
The City has refinanced a great deal of debt over the past few years, taking advantage of their good credit rating, high values, and low interest rates. You can see all of Memphis’ General Obligation Debt here.
It may be that the City has used some of the savings, or even the high premiums that were paid by bondholders above and beyond the refinanced debt for operations, but that’s not borrowing to keep the lights on. That’s borrowing to get rid of old debt and coming out of it ahead.
I’m still not certain that this is what happened, but I know that doesn’t make it ‘deficit spending’, since, you know, Memphis has to have a balanced budget each year by state law.
Rep. Carter also questioned Memphis Mayor Jim Strickland’s numbers on the overall financial impact of the bill.
Carter says the City only mentioned $27 million dollars of financial impact in previous discussions.
That may be, but one has to wonder what version of the bill those numbers came from. See, this bill came before the House last year. At that time, the number of areas that could vote to de-annex was less, which means less financial impact.
I know from talking to people in and around the debate, that until very recently, the areas that were to be included stuck with last year’s bill. Its only in the last few days that anyone’s known about the new expanded version of the bill according to these sources.
So perhaps those numbers came from a prior version of the bill and Rep. Carter is ‘misremembering’. Or maybe he’s just following Rep. Todd’s lead and lying outright.
I can’t say.
Now it seems like we’ll just have to wait on the Senate to act…or perhaps, not act.
Earlier today, Governor Haslam questioned the constitutionality of the bill as well as what the impact might be on cities like Memphis, and Knoxville, where he served as Mayor.
All of that remains to be seen.
There’s one thing that’s sure. If this bill gets passed, it represents a two decade reach back in public policy. There’s no question its not fair, and a lot of question as to how constitutional it is.
Remember, two areas recently annexed into the city had been fighting their annexation in court, and lost. The courts have consistently upheld a city’s right to annex based on the rules of the game at the time. One has to wonder if those rulings will be overturned when this is litigated.
If so, no city in Tennessee is safe to plan for its future. The whims of the Tennessee General Assembly will be too great for any city to bear. And that will have a negative impact on their citizens, their ability to grow naturally, and their financial health.
But first, some housekeeping. We now know what areas would be impacted by the bill, as seen in the image to the left.
We also know that the members of the Shelby County Delegation that are sponsoring the bill, include one member who could be directly impacted by it… Senator Reginald Tate who lives in Southwind.
Finally, the cost of de-annexing all the areas brought into the city since May of 1998? It could be as much as 10% of the current city tax revenue. I can guarantee, the City won’t let that go without a fight.
See, de-annexation is a breaking of a partnership…a divorce, if you will, or perhaps better yet, a splitting off of a business unit, ala what HP did recently.
But its much more than just the splitting. There are assets and liabilities to be divided. There are lawyers to be paid. Make no mistake about it, de-annexation will be more than a referendum, it will be a heavily litigated split that makes Kramer vs Kramer look like Love Story.
In this post I’ll explore more of why Lt. Gov. Ron Ramsey says the idea of de-annexation may be more of a false hope than a real solution for the people who feel aggrieved by their annexation…which in some cases, happened nearly two decades ago.
Section 5a(1) of the amendment that makes the bill says the following:
SECTION 5. Tennessee Code Annotated, Section 6-51-204(a), is amended by deleting the subsection and substituting instead:
(1) Except for responsibility for general obligation debt issued during the
annexed period, all municipal jurisdiction shall cease over the territory excluded from the municipality’s corporate limits on the date of certification of the results of the election. The municipality may continue to levy and collect taxes on property in the excluded territory to pay the excluded territory’s proportion of general obligation debt issued during the annexed period.
What this means is, any debt issued by the City of Memphis for any purpose in the ‘de-annexed’ area would have to be paid proportionally by the departing residents of said area.
That debt could have paid for parks, streets, streetlights, police and fire houses, and any of a number of other things.
So even after an area chooses to ‘de-annex’ they will still be liable, and can still be taxed for covering the debt for the benefits they received while inside the city limits.
But those benefits don’t live there on their own, they come with other costs.
Police and Fire houses mean specialized equipment and the hiring of more personnel. By removing part of the area these men and women were hired to protect and serve, the City may find they need fewer of them, which could mean layoffs.
Conversely, the County could decide to contract with the City to provide police and fire, and then assess a special use tax on the former residents to cover the difference of their decision to leave an area that had services already budgeted.
Further, there are other costs associated with the hiring of personnel…namely pension, healthcare, and OPEB. While the bill specifically spells out that the folks leaving the City would be responsible for the debt, nothing is mentioned about other costs associated with being a city in an area. So we’d most likely have to litigate whether or not the folks in the de-annexed area would be responsible for their proportion of these long-term costs.
Gets complicated doesn’t it?
While the City will lose tax base and population, the County will gain more responsibility in a de-annexation.
As I mentioned before, the County, now responsible for providing services to these newly de-annexed areas, will have to tool up to provide services. That means perhaps buying City of Memphis assets, like Fire and Police stations. Don’t think that gets you out of your proportion of debt, because the way bonds work, they might have to be held to a predetermined date (maturity or call) and that date could be a long way away, since the city has done a good job of refunding (refinancing) a lot of its debt and taking advantage of low interest rates.
The County, which is also strapped for cash much like the city is (though you’d never know it from the media) would have to pay for this some way some how. And that would mean a tax hike, likely for everyone in Shelby County.So newly de-annexed area, you get the joy of several things:
1. Paying your part of the debt for a city you’re no longer a part of.
2. Paying a higher County Property tax rate because now the County has to provide more services.
3. Being responsible for everyone else in the County having a higher County tax rate.
These are innocent bystanders who pay their taxes and go about their own business…now strapped with the cost of your selfishness.
I can tell you, we won’t be happy with you.
Way to go Private Pyle.
When I first saw this floated in the Commercial Appeal I cried alabaster Schadenfreude tears that tasted like the sweet nectar of sweat from Odin’s furrowed brow.
For all your efforts to separate yourselves from Memphis, you could be stuck with us anyway.
That’s right folks, you get us anyway, and all of these valuable prizes:
• The spending of time and money organizing for a ballot initiative,
• The ruinous tens, maybe hundreds of thousands of dollars spent on attorney’s fees,
• The taxes for a City you no longer belong to,
• The new taxes for a County that thinks you’re a selfish dick because now everyone’s taxes are higher to pay for your services.
All of these prizes could be all for naught, if you break the City of Memphis. Because that could set into motion a scenario where the County becomes effectively consolidated (not a metro government) and the whole damn thing falls apart at the seams.
Actions have consequences. De-annexation is not something to throw around like a tennis ball…its a grenade that can hurt everyone in the process.To his credit, Mayor Strickland has said that he’s open to a discussion about decreasing the footprint of the city. I think that’s a pretty brave position to stake out considering the fiscal challenges that face us, and the generally nasty taste that a ‘shrinking city’ leaves in the mouths of people.
There is a way to do this. Just like there’s a way to have a divorce where the kids don’t suffer, and there’s a way to split up a business that ultimately adds value for the shareholders.
This bill ain’t that. Its ill conceived, and based on a personal beef the two primary sponsors of the bill have with a former Mayor in Hamilton County.
Perhaps theres another way. A way where we could avoid all this by starting a discussion instead of (spoiler alert) ending up on the floor, shattered, like the Roses.
Just a thought.
That’s not to say their disdain for Memphis has diminished any, just that they’ve been too busy fighting the United Nations, Affordable healthcare, and and closing down rural hospitals as a result, and fighting for the right to dump pig shit in rivers and streams.
In short, its been the same as it ever was up on the Hill in Nashville. They’ve mostly left us alone…too busy posturing to propose something truly ruinous, and with just enough sane people to keep that really bad legislation from getting too far or being too effective.
Its kinda like free range parenting…keep ’em off the highway and out of the bear traps and most everything else will work itself out.
In all seriousness, our General Assembly consistently does stupid stuff. So much, that there’s no way I could keep up with all of it. And if I did, I’d be so depressed about the state of our state, I’d need to open a hospital to deal with it.
The De-Annexation bill, or as I like to call it, the “Safe Haven from Majority Minority Cities Act”, or the “Those folks who moved to DeSoto County had it right act”, or best still the “We’ve been in the City for nearly 20 years, but we’re still racists and still want to leave ASAP bill”, would create a way for people who don’t like the city they live in to leave it, without having to go to all the trouble of moving (certain restrictions apply).
No matter what you call it, this bill is designed to purposefully kick Memphis, Chattanooga, and Knockville in the dainty bits.
Carter and Watson also helped pass the 2014 bill that basically made it impossible for a city to annex an area without approval of a majority of the people to be annexed.
This is their crusade…a crusade that began a long time ago, but seems to be centered around the tenure of former Chattanooga Mayor Ron Littlefield, though there’s probably more to it that neither you nor I actually care about.
The bill sets the arbitrary date of May 1, 1998 as the deadline for people wanting to leave their city without actually leaving. Why is that? I dunno. I guess they thought going all the way back to the 70’s…the 1870’s was just too far.
While this seems to be centered around something particular to Chattanooga, it also has an impact here in Memphis. As you can see from the map above, there are areas that would have the right to vote themselves out of the city if this bill passes. And some of those areas are the home to some big time commercial real estate. Losing them would hurt the city both in property tax and sales tax collection.
So it shouldn’t come as any surprise that Mayor Strickland is worried about this. Its a legitimate concern…but one that’s largely out of his hands.
The best case scenario is that this bill quietly dies, like it did last year. But that’s not a sure thing.
What this bill does is make it hard for cities like Memphis, Knoxville, Chattanooga, and strangely enough tiny Connersville, TN to have any say in their destiny. Much like the strict forced annexation law of 2014, this bill would make it impossible for cities to plan for the future. Any area covered under the legislation could spend years organizing to leave a city, despite services being delivered, then with one stroke, go their own way, regardless of the investment the city put into the area.
One of the things that came out of the Commercial Appeal article is the statement made by Mayor Strickland that he’s ‘open to the discussion of shrinking the footprint of Memphis.’
This isn’t a new idea. Its something that the Wharton Administration considered, though no one knows how seriously. And its something Smart City Memphis blog has openly discussed.
The area that makes up the Memphis City Limits is enormous. The size of Memphis has grown exponentially since the 1990’s with no real increase in population, which leads to a net decrease in population density. That means it takes more dollars per person to provide the service that a city needs to deliver…which in turn, contributes to higher property tax rates.
The argument goes, that by de-annexing some parts of the city, we could reduce our cost per square mile, and by extension, reduce our tax burden. I’m not saying this is an argument I completely buy, but its one that’s been put out there. I still haven’t seen hard data that supports these claims, just theories.
Personally, I’d rather focus on making those areas that aren’t that ‘productive’ in terms of revenue, more productive so they’re less of a drag on city resources (this would also mean the people living in these areas would have better jobs, which is something Memphis desperately needs). But that’s not something that happens over night. It takes a lot of time and planning…which is not our forte around here.
As for the bill, its in Calendar and Rules in both the House and the Senate, which is the final step before being moved to the floor. We’ll just have to see if the bill moves from there. Considering how opaque the General Assembly is on what gets out of Calendar, we might not know about it until the last second.
But I don’t want to get into the specifics of the issue. I think others have captured what’s going on there better, and with more detail than I could.
The events of last Tuesday set off a lot of complicated thoughts that have lingered in the background of my mind for some time. Those thoughts were stirred up by the following two Facebook posts. One, from Memphis Mayor Jim Strickland, posted just minutes after the City Council’s action:
And this reaction from friend and local organizer, Brad Watkins:
For a week now, I’ve been thinking about these two statements, and what they mean for Memphis. And for a week, these thoughts have been disorganized and jumbled like the sounds of an orchestra warming up before a performance…with moments of clarity, like a melody that sings over the noise of the musicians for a moment, then is overtaken in a wave of disorganized dissonance.
That dissonance became more quiet after reading this article: Memphis Burning: Housing and Inequality.
There’s a lot to unpack in the article, but through it all there’s a consistent theme:
That in Memphis, political power is used as a blunt object to defend the powerful few, rather than a positive transformative power to lift up the many.
Last Tuesday’s Kabuki Theater serves as a prime reminder to Memphians that if you’re a well placed individual or group, like the people serving on the Zoo board, you can get the City Council to act swiftly and decisively on your behalf.
If, however, you are not, you can expect little more than words. Which is all the 300 families soon displaced from the Warren and Tulane Apartments, received on that same night.
With all that said, not everything is all gloom and doom. The passage of the resolution gifting the Greensward to the Zoo has ignited more interest from the people who live in the area…working to spare the space from the indignity of becoming a parking lot. One can only hope the fire doesn’t diminish over the coming months, as winter turns to spring and summer…and the continuing crush of cars descend on the zoo, complete with a new attraction, but with no corresponding infrastructure to deal with the additional visitors.
And hope springs eternal as the City waits, with baited breath, for the Mayor to release some sort of plan addressing the “crime, blight, litter, creating jobs, minority and women-owned business development, and the significant financial issues in front of us” for “hipster activists” to coalesce around.
In his defense, Mayor Strickland is on board with a short-term plan to revamp public transportation, though the impact of those changes to actual riders isn’t currently known. We’ll have to wait and see if the concerns of actual bus riders are dismissed as freely as the supporters of the Greensward were.
Over the past 12 years I’ve watched as citizens who show a little too much interest in local affairs have been derided. Hell, I’ve been one of those derided citizens. We’ve been dismissed, by both the powers that be and the media. We’re characterized as malcontents trying to sow dissent, and we all know, in Memphis dissent is something to be violently squashed.
Our politicians hate dissent so much the City Council wanted to do away with public comments a few weeks ago because they couldn’t take the heat of being public officials.
And dissent is messy. Too messy or the local media to report on regularly…even though its a fixture of local politics everywhere. I mean, its hard to drill down a story to a 45 second VOSOT or a 200 word bullet point when you’ve got to tell both sides of the story…with more detail than a he said/she said.
And when the reporters don’t even understand the basic civics of the area, all that noise of people with good intentions makes it too hard. Better to talk about demonic weaves than…you know, real shit.
And consequences? What consequences? I mean, this one elected official said it would be good… isn’t that enough?
So while the city faces the loss of 300 low income housing units with the closing of the Warren and Tulane Apartments, there are still plans to demolish 900 more when Foote Homes comes down, with no idea of where those people will land, and no chance of even trying to ensure that where they land will be more suitable than what they have now.
I’ve only seen one person talking about that, and it ain’t a politician or any person in the media.
We just don’t plan for those things, much less report on them, or hear from people who don’t wear $1000 suits. I mean, what about the developers feelings?
And so the people most impacted by these decisions, the working poor, are an afterthought in Memphis. A group to be blamed for not Horatio Algier-ing themselves into success while carrying the crush of history that is both summarily ignored and dismissed from our fair leaders.
In the end, I keep going back to one passage in that Memphis Burning piece:
To this day, many believe that King’s death coincided with the death of Memphis, that it marked the beginning of a half century of decline. It’s a convenient notion, but it doesn’t ring true. The assassination merely punctuated events set in motion decades earlier, when Boss Crump suppressed Bob Church’s dream of social equality and economic justice.
And every time I read it, I think about our elected leaders in Shelby County, and I laugh a little. Because who, of those people, have the stones to really talk about social equality and economic justice with any authority, credibility and political ability to get any of it done? Who is going to be the point-person that gets the City Council, County Commission and the County School board on board with social equality and economic justice?
No one…that’s who.
Its not funny, its comically tragic.
Because when it comes down to brass tacks…social equality and economic justice will always be framed as too financially expensive…when in reality, we’re going broke trying to ensure it doesn’t happen.
The truth is, social equality and economic justice are too politically expensive for our political leaders to bear.
And while what happened last week with the Zoo resolution may not be the ‘social equality and economic justice’ issue of our time. You can bet your ass that anyone who advocates for such policies will be dispatched, derided and dismissed with as much, if not more haste than the folks standing up for the Greensward.
Because, as Boss Crump says, “This is Memphis”, and that kind of justice ain’t how we do things around here.