watchdog

Sunday, February 25, 2007

February 26, 2007

WHY IS THE MLGW PILING UP YOUR MONEY IN VIOLATION OF STATE LAW REQUIRING THEM TO OPERATE AS A NON PROFIT?


It comes as no surprise to any taxpayers in Memphis and Shelby County that the MLGW has given a special deal to Edmund Ford. This is serious and those responsible should resign. However this is a small amount of money compared to the mountain of cash and cash equivalents that the MLGW is sitting on and continues to pile up each year out of the pockets of ratepayers who do pay their bills.

Consider that the MLGW only publishes their financial statements nine to ten months after they close their financial year on December 31. Looking at the 2004 and 2005 statements, the unrestricted cash reserves have increased from $177 million to $230 million. They say that they like to keep on hand 30 days of expenses, which is about $94 million so why do they need the extra $136 million? Could it have anything to do with financing the new proposed football stadium that the Mayor proposes? Actually the current cash after more than 13 months from the last published financial statement is probably over $270 million as they continue to pile up cash at the expense of the rate payers.

Tennessee law 7-34-115 (Operation of Utility Systems- Disposition of Revenues) states that “User charges, rates and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue for a government entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area served.”

Furthermore the law states that “Any surplus remaining, after establishment of proper reserves, if any, shall be devoted solely to the reduction of rates.”

The City Council should not only investigate the Edmund Ford affair but should investigate why the MLGW continues to pile up profits when it is supposed to operate as close to zero profit as is possible and why it does not return the huge excess cash to its customers in reduction of rates. I have attached the figures from the 2004 and 2005 statements.

Click here to see how the MLGW is piling up profits each year instead of operating as a non profit as required by state law

Thursday, February 22, 2007

February 23, 2007

DO AWAY WITH THE RDC, SAVE MILLIONS AND REQUIRE THE EX DIRECTORS OF THE CITY OF MEMPHIS TO LIVE ON THEIR GENEROUS PENSIONS

Watchdog read with interest the recent CA article by Jacinthia Jones entitled “Retired Directors Club' provides lucrative jobs”. We show below an article written and published on memphiswatchdog.org on October 18, 2005.

RDC had pegged the cost of the land bridge and related construction at $78 million, by far the most expensive item in its $292 million slate of outlined improvements. Although public capital funds would pay for the projects, RDC's master plan says a "significant portion" of the costs would be recouped through private development activity.
At last reality has begun to dawn on the Riverfront Development Corporation and they have temporarily killed the expensive, unwanted land bridge. Whether the current City Council will back this decision is unknown at this time as they continue to insist on their expensive, unneeded capitol improvement projects.

Memphiswatchdog.org has just obtained all the inside information on the riverfront Development Corporation and we publish it below for the general taxpaying public to study. Here are the important points.

• As of June 30, 2005, RDC had a net worth of about $1 million
• During the year ended June 30, 2005 RDC received a little over $6 million from the City.
• RDC (really the City of Memphis) lost a little over $2 million on the parks, mainly Mud Island.
• In July 2001, RDC signed a contract with the City of Memphis giving them management of all City of Memphis riverfront property paying them over $10 million to date.
• Benny Lendermon, the President of RDC makes a salary of $172,050 per year plus a bonus of $25,000. Also he and other employees get vacations, sick leave, health insurance, life insurance, short and long term disability insurance, and a retirement plan, all as shown on the attached information.
• Bounds & Gillespie, Architects, received a three month contract in 2004 for a Beale Street Landing design contract for $3,137,266.00.
• Hnedak Bobo Groups, Inc have a monthly Beale Street Landing Management contract of $34,000/month since 11/27/01. that is nearly $2 million to date.

The public needs to consider that the City debt has nearly tripled in the last ten years to over $1 billion. We do not need to spend money on these kinds of projects until we get our finances under control in the City and the County.

Now we have available the IRS form #990, Return of Organization Exempt From Income Tax, and it show that from June 30, 2004 to June 30 2005, the net worth of the RDC has increased from $1.8 million to $4.3 million. “WHY”

Watchdog takes some credit for the deletion in some of the long range and expensive programs and the reduction of the CIP budget from $52 million over the next five years to $35 million as shown on the CIP budgets attached. When the sunshine light of open records laws shines on some of these hidden projects, the roaches run for cover. Still I think Jacinthia Jones and the Commercial Appeal are correct in that the only real value that the RDC provides is the lush jobs and salaries that it creates for retired directors of the City as they collect their pensions out of the tax payers pockets. It is time to defund the RDC boondoogle. By the way, Lenderman’s salary as quoted in the CA article at $198,000 has increased from $176,609 at June 30, 2004 to $183,907 at June 30, 2005 to $198,000 in 2007. Nice work if you can get it.

Click here to read the IRS tax form 990 for the RDC for the year ending June 30, 2004

Click here to read the IRS tax form 990 for the RDC for the year ending June 30, 2005

Wednesday, February 21, 2007

THE MLGW HONEYPOT HAS ACQUIRED A NEW SMELL

February 21, 2007

As the mayor announces a new FedEx type project (a new football stadium) you are asked to believe that it will not cost the taxpayers any property tax increases. Are we asked to believe that this will be financed without the backing of the citizens of Memphis and Shelby County with full faith and credit guaranty backing up any other source of revenues? And now we have the investigation of the MLGW (long overdue) concerning special no payment deals given to Edmund Ford and who know who else. As we approach an election in October, expect many other proposals that are intended to enhance the Mayor’s reputation so he can get another term. However remember the following.

• The corruption in the City of Memphis and Shelby County is well entrenched and getting worse. Who knows who will be the next public figure to fall.
• The City Council, the City Administration and the MLGW are changing fast as people run to secure a higher salary or pension as they are unsure who will be the next figure to fall. Look at the deal (a $40,000 raise and a $28,000 a year pension starting immediately) Gale Jones Carson got at the MLGW.
• The only thing that is in relatively good financial shape in Memphis and Shelby County is the MLGW. As of December 31, 2005, they were sitting on $192 million in unrestricted cash and cash equivalents as compared to $151 million as of December 31, 2004. They have stated that they only need cash to cover 30 days purchases and this would be an average of $94 million. Why do they not return this $98 million dollar excess in lower rates?

But you have to ask yourself why are they in such good shape? The obvious answer is that they are a monopoly and they can charge whatever they and the City Council choose. They always look good in their statements because they have ghost positions in their budget which they do not fill and therefore they come in under budget. If they make a mistake in gas purchases, they simply pass the mistake along in their purchased gas adjustment (PGA). A recent analysis shows that the gas rates in the last five months are running up to 65% higher than the Henry Hub Natural Gas Price index used as a standard for spot gas purchases rates. But you will only be able to know late this year if you have been ripped off because the MLGW is always very late in publishing their annual financial statements and they do not publish their annual budgets on their website as the City and the County do. WHY do they hide this information?

According to the law the MLGW is supposed to operate at a break even position with any profits returned to the rate payers in lower rates. Section 7-34-115 of the Tennessee Code states:

Operation of utility systems- Disposition of revenue. (a) Notwithstanding the provisions of any other law to the contrary, as a matter of public policy, municipal utility systems shall be operated on sound business principles as self-sufficient entities. User charges, rates and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a governmental entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area service. The law further states that “any surplus remaining, after establishment of proper reserves, if any, shall be devoted solely to the reduction of rates.”

Year after year they keep piling up profit when they should be returning these profits to the ratepayers in lower rates. Why do the City Council and the media not investigate this surplus? Could it be that the Mayor has his eyes on this surplus to finance his new stadium as he did with the Water Division of the MLGW which is required to pay $2.5 million per year for the FedEx Arena for over $60 million total. Time will tell but not before the election.

Monday, February 12, 2007

February 13, 2007

Watchdog sent an open records request to the Mid-South Minority Business Council (MMBC) back on April 28, 2006 asking for open records information about salaries, benefits and especially about the Uniform Certification Agency, the function that they perform for the City of Memphis to identify and certify those firms that are minority or women owned businesses. This certification opens the doors to these M/WBE firms to bid on and obtain millions of dollars of public business contracts.

Watchdog received a prompt return letter from MMBC stating that they were not subject to the open records laws because they were a non profit organization. They referred the open records request to the law firm of Burch, Porter and Johnson.

Later in the year, due to various revelations concerning minority preferences and contracts, watchdog began investigating the activities and finances of the MMBC. It was found that the formation of the UCA activity was as a result of City Ordinance #4388 and the function of certification was given to the MMBC. Also we requested and got copies of monies furnished to the MMBC from the founding organizations, the City of Memphis, the MLGW, MATA, the MSCAA and TVA. This amounted to $1.9 million dollars over the period for which we were able to get records.

• MLGW $285,990.93 1995 to 2006
• TVA $975,885.00 1993 to 2006
• MSCAA $189,400.00 1999 to 2006
• City of Memphis $279,125.00 1993 to 2006
• MATA $180,200.00 2000 to 2007
• Total to date $1,910,600.93

Also we were able to get the 2004 and 2005 #990 IRS report (Return of Organization Exempt From Income Tax) and the 2004 report showed a net worth of $623,000 and $820,000 in 2005 a jump of almost $200,000 in one year. This seemed strange for a non-profit organization.

All of this convinced watchdog that MMBC was subject to the open records laws because they were apparently a quasi government organization and had received millions of dollars in public money. We therefore filed a lawsuit (pro se) in chancery court in October 2006. We were answered by Burch, Porter and Johnson by a motion for summary judgment to dismiss the case.

Watchdog, not being a lawyer, decided to hire one as we were unsure how to answer such a high powered legal maneuver. We did hire one and filed a cross motion for a summary judgment based on our facts and investigation. The case was set to be heard on February 13, 2007 but a week before the hearing, we were approached by Burch Porter and Johnson asking for a settlement. MMBC agreed to give watchdog the information concerning companies that have been approved for certification but refused to provide the same information concerning companies that were turned down for certification. They also offered to pay all legal costs for watchdog.

We agreed with the proposal but whether we will file another suit to obtain more detailed information, particularly concerning the firms that were turned down for approval, depends on how forthcoming and open the MMBC is with their records. What watchdog wants is open up the certification process so that the public is assured that all M/WBE firms are being treated fairly and to find out the criteria upon which these critical decisions are made.

Watchdog has no problem with the stated purpose of the MMBC. Our concern is that all of these critical decisions concerning who get access to minority based contracts be fair and open to the public and that the taxpaying public knows what this process is costing the taxpayers. Watchdog has turned up a number of minority contracts which have been no bid contracts and contracts where the minority bidder was up to 30% higher than the lowest and best bid. We cannot afford this kind of excessive spending with our tax money.

Click here to see the watchdog open records letter to the mmbc in april 2006

Click here to see the mmbc letter of rejection of the open records request

Click here to see the IRS 990 report for 2004 for the MMBC showing a net worth of over $600,000

Click here to see the IRS 990 report for 2005 for the MMBC showing an increase in the net worth of nearly $200,000 in just one year

Wednesday, February 07, 2007

February 8, 2007

Watchdog sent an open records request on January 3, 2006 to Mr. Gregory Duckett of the Shelby County Election Commission requesting the following information.

The records and documents that show the names, yearly salaries, birth dates, job titles, years of completed creditable service towards retirement for all employees of the Shelby County Election Commission including the five board members.
The records and documents that show which of the above employees listed in item 1 receive car allowances and which receive cell phone services and the cost of car allowances and cell phone services (whether paid for by Shelby or by some third party other than the employee) for each person who receive these benefits.
The records and documents that show the benefits and perks, including life and medical insurance, that the members of the board receive.
The records and documents that show the operating budget for the Shelby County Election Commission for the fiscal years 2004 and 2005.
The records and documents that show all legal fees paid for the above fiscal years showing who they were paid to and the purpose of the legal expense.
The records that show any and all consulting contracts and agreements between the Shelby County Election Commission and all consultants for the above two fiscal years and any that are in effect as of December 31, 2005.

Watchdog got busy with other matters and did not follow up until April 11, 2006 requesting an answer. Still no answer. Finally watchdog followed up with the County Attorney, Mr. Brian Kuhn and as a late Christmas present early in 2007 we finally started getting answers. It seems that Mr. Duckett does not answer open records inquiries. We list below the answers that we have to date.

#1, 2 and 3 are answered and shown on the attached spreadsheet. All full time employees, including the commissioners, receive, in addition to their salaries, health and life insurance benefits as well as well as optional employees paid benefits. Concerning cell phones we did find that the Election Commission does not get permanent cell phones but that during an election they get hundreds of them from the IT department of the county and then they are returned after the election. We received a copy of a Verizon bill for a two month period that amounted to $11,207.86 for some 200 cell phones. The IT department did say that the Election Commission does get 6 blackberrys for general use.

#4 The 03-04 proposed budget expenditures is $4.3 million ($2.51 million is salary and benefits) and the 04-05 budget expenditures is $3.52 million ($2.13 is salary and fringe benefits).

#5 The legal fees paid were $19,610.11 to Walter Bailey et al at the firm of Baker, Donelson, Bearman while Walter Bailey was on the County Commission.

#6 There were three consulting contracts given out by the Election Commission during this period as listed below.

A contract with Watkins Uiberall, PLLC and Banks, Finley, White and Company for a price not to exceed $49,000 with an option to renew for three (3) additional one (1) years. The services include auditing of votes and examination of voting machines and other security measures.
A contract with Small Planet Works, Inc (Janice A. Banks) for professional consulting services for $13,990. SPW was to provide professional services to provide the framework and development of the organizations strategic plan. Small Planet Works certified that it was a Minority Owned Female Business Enterprise. Small Planet Works also received $94,721.63 in other minority City contracts under the ACS/City contract during the period Nov. 03 to Feb. 06.
A contract with Urban Environmental Mapping Corporation (Dennis L. Campbell, President) for technical assistance for the Commission GIS system for $14,910.00

Watchdog must say that the Shelby County employees are very professional and much more forthcoming than the City and the MLGW. We present this information in our continuing effort to open up government to the taxpaying citizens of Memphis and Shelby County.

See what the Shelby County Election Commission employees are paid including the commissioners