BASS PRO AND THE PYRAMID! IS IT A GOOD DEAL FOR THE TAXPAYERS?

I have been studying and reading about the Pyramid deal with Bass Pro until I have almost gone cross eyed. Please inform yourself about this deal and the whole area of what I call Stealth financing that is growing in Memphis and the whole country. Is this a good deal for the taxpayers or is it a good deal for Bass Pro and the downtown developers and landowners? Could it be good for all? Here is a link that will take you to the City of Memphis website that shows the proposed development agreement between the City, the County and Bass Pro.

 

http://www.cityofmemphis.org/pdf_forms/082508_PyramidPresentation0001.pdf

 

Also I have attached a copy of the Bass Pro meeting with the County Commission. Pay particular attention to the questions from Mike Ritz and Steve Mulroy who are trying to get answers to the inside workings of this complicated deal. Also look at the testimony of Charles Carpenter, a local attorney and good friend of the Administrations who has gotten a lot of bond work on all these deals and is remembered in connection with MLGW bonds and Larry Thompson. One last thing is an article I have attached talking about TIF (Tax Incremental Financing) deals in Texas involving a competitor of Bass Pro.

 

This whole area of TIF's in Memphis is growing and should be looked at closely. Politicians are selling TIF financing as a no risk way to development, that is, no risk to the taxpayer. In any deal like this you have to ask "Cui Bono", Who Benefits.

 

Clearly Bass Pro benefits. They put up very little money on the front end and they can pull out without paying very much. If the project goes forward, they get huge tax benefits through the New Market Tax Credits thereby paying much less in Federal Income Taxes on profits. The favored developers and landowners downtown benefit by increased traffic and business and possible increases in land value. The favored attorneys benefits through legal business and bond business, like Charles Carpenter.

 

Do the taxpayers benefit? Possibly, but the property does not pay any property taxes. Sales taxes will be used to pay off the bonds and due to the Tourist Development Zone agreements, additional sales taxes will go to pay off other downtown zone bonds. Looking at the latest City of Memphis Comprehensive Annual Financial Report, which I have attached, you will see that sales tax collections that go to the general fund revenues have decreased significantly over the last ten years. This is probably due to the diversion of these tax revenues to cover the downtown and other TIF and TDZ (Tourist Development Zone) projects. We need a complete accounting in one place for all the obligations put on sales taxes in these various TIF and TDZ areas so that we can know what our true bond obligations are and why sales taxes receipts for the general fund are dissapearing.

 

What about the other businesses in Memphis and Shelby County who sell products that are competitive to Bass Pro? They do not have the political clout of a Bass Pro, Target or WalMart and therefore they have to pay property taxes and if they make a profit, they have to pay federal income taxes at the full rate.

Finally, why are we in this situation? It is because of the ill conceived contract that the City and the County signed for the FedEx Arena. That contract made the Pyramid useless and a silver elephant. I remember Mayor Herenton saying that he had to sign the contract because Hoops was to be made responsible for the maintenance and possible losses of the Arena. But if anyone read the contract, they would see that the one of the hookers in that contract was in Section 8, Arena Repairs and Maintenance. Section (a) states that during the term of the agreement, the City and County will be responsible for and, at its cost shall make all Capital Repairs as shown in Exhibit B (Heating and Air Conditioning, roof, etc). In other words, the big ticket items are to be paid by the tax payers, not HOOPS. HOOPS is responsible for (1) making all minor repairs, (2) undertake normal and routine maintenance, (3) provide adequately trained janitorial, maintenance and support staff and keep the Arena in a safe, uncluttered, clean, sanitary and sightly condition and (4) provide security for the Arena Complex 24 hours a day, 365 days a year. In addition the City and County have to pay for all fire insurance policies and other perils. Also HOOPS has a way to get out of the agreement after 10 years if Memphians do not buy enough seats under Section 31, EARLY TERMINATION RELATING TO SHORTFALLS, and the clock is running. Also, of course, the contract did not allow any functions at the Pyramid. Some deal.

I ask that you look over this information and let me have your thoughts. Many of you have written me on other subjects and I am aware that you are a lot smarter than I am and I would appreciate your thoughts and expertise. I will hold your comments confidential unless you say otherwise.

Click here to see the Bass Pro presentation to the County Commissiion

Click here to read an article about TIF financing involving BAss Pro and a competitor in Texas

Click here to see how sales tax collections in Memphis have gone down and property taxes have gone up over the last ten years