County School System Continues Questionable Decisions About New Schools

In light of WMC-TV's coverage of Sunday's post about county schools, the following commentary from last month seems to be worth a repeat:


Why are these people smiling?

While Memphis City Schools is developing a national reputation for innovative school reform, Shelby County Schools seemed mired in a business as usual approach to public education.

This means that in the near future, the county school system will once again try to stampede approval of another questionable new school proposal despite its political drawbacks and racial overtones.

It’s “Southeast Shelby County High School Redux,” set to begin in a couple of weeks. Look for the manufactured sense of urgency that always accompanies a county school proposal, the near hysterical demands for immediate action and the political machinations designed to paint Memphis City Schools into a corner.

Perhaps, this time around, some people will have had enough. While Memphis City Schools ultimately went along with its county counterpart’s single-minded attitude on the selection of the single worst high school location in this community, it was not without some bruised feelings and battered political sensibilities. That’s why the fractious debate about the high school location may in time look tame when compared to the controversy to come.

Once again, Shelby County Schools (whose board is pictured here) will propose a questionable location – a vacant Schnuck’s store – with connections to a developer whose name has a familiar ring to it – Hyneman.

Once again, Shelby County Schools will push the proposed school despite any real need for it at this time. Like the southeast Shelby County high school, the number of students needed to justify a new school will not occur for five to 10 years.

Once again, there is little reason for this new school at this time and even less reason for Shelby County Schools to be making these decisions. By the time increased enrollment justifies a new school, the area will have been annexed into the City of Memphis.

The Shelby County Schools’ Board has set a town hall meeting in early February to discuss the proposal for the Schnucks school, but it seems an exercise in window dressing. The board has already voted to lease the grocery store at Riverdale and Holmes for $339,130 a year. Unaddressed is the cost of renovating the grocery store into a school, but even without this piece of the financial puzzle, Shelby County Schools is determined to proceed.

So what is the impact of these schools and why is the county district so determined to open them? While we hope that the answer to both questions is not the same, it’s hard to see any motivation except one - to move African-American students out of Germantown schools.

School board members and Germantown elected officials have acknowledged as much in their planning meetings and in terms that are anything but politically correct. When the Schnucks School opens, it will be more than 90 per cent African-American, returning the percentage of black students in Germantown schools to a level that officials can accept.

Just look at the facts about the new high school. The severe overcrowding cited by school officials to justify the new school amounts to a grand total of 79 students. In fact, with the new high school, the capacity of Germantown High School will drop below 50 percent. It will be 2012 before the growth in enrollment would justify a 1,200-student high school, much less the 2,000 warehouse being built by Shelby County Schools.

The county’s persistence on these new schools speaks volumes about the peculiar relationship that has existed for decades between Shelby County Schools and the mayors of the small towns of Shelby County. Although none of the towns dedicate a percentage of their property tax rates to the public schools which they tout so proudly, the opinions of their mayors are given more clout over county school decisions than officials of Shelby County Government, which foots the bill for the schools in the towns.

When Shelby County Government reinvented itself in 1976, it was to convert the sleepy, rural government into an active, urban one. It was a culture shift that has never been completely successful, but remains a work in progress. The Shelby County Schools, meanwhile, never budged, stuck in time and in a rural world view that produces ideas like these two new southeast Shelby County schools.

Most disturbing of all, this insular thinking runs the risk of being the spark that ignites an ugly controversy with racial overtones. Despite the political tinder box that is local politics, the board seems hellbent on pushing through its schools, whatever the cost to the overall peace of our community.

The answer this time is the same as it was last time. Shelby County Schools should bow out, and give the decision over to Memphis City Schools. After all, southeast Shelby County should be annexed into Memphis within five years, so why not just allow the city school district to make these decisions on future schools?

As short-term tenants of the schools, it makes little sense for the county schools’ policies to guide these decisions. In addition to the impending annexation, there are at least three other reasons Memphis City Schools should make these decisions.

One, Memphis City Schools does not share Shelby County Schools’ penchant for warehousing students in oversized schools. Two, Memphis City Schools does in fact build better schools, not the minimum security prisons erected by the county system. Three, there’s Superintendent Carol Johnson, whose leadership and new thinking are our best educational assets.

In the end, the new county schools' proposal shouldn't be called the Schnucks School as much as it should be considered the Snuckered School.

Memphis Doesn't Have To Be The Next Pittsburgh But It Requires Decisive Action Now

In December, the University of Pittsburgh Center for Social and Urban Research published a report called “The Roots of Pittsburgh’s Financial Crisis.”

It could just as easily be called “A Cautionary Tale for Memphis.”

The report is a post mortem on the city’s financial meltdown, which became so acute that the State of Pennsylvania stepped in to demand that Pittsburgh get its fiscal house in order. In that city, the verdict is still out on whether its strategies have worked, but in this city, the lessons from Pittsburgh should be instructive as city officials cope with Memphis’ financial problems.

Fundamentally, Pittsburgh failed to adjust its public services and employees despite falling population, rising budgets and a flawed tax structure. Without the benefit of strong annexation laws like those in Tennessee, the city saw its boundaries frozen and its population halved over 40 years. Despite the falling population, the per capita cost of providing public services was increasing and the workforce was not being reduced.

As for its population, Memphis has a sense of false security. Its population is artificially propped up by annexations that give the impression of population growth and stability. If Memphis were landlocked like most cities its size, it too would be in the midst of a population free fall. After all, from 1980 to 2000, the population of Whitehaven fell by 6,400; South Memphis fell by 9,200 people; North Memphis by 7,100; the Defense Depot district by 6,000; Midtown by 800; and downtown/Medical Center by 3,000.

It seems inevitable that there will be a point when Memphis doesn’t have the luxury of further annexations to bolster its population, and at that point, if past trends are any indication, its population will stall and to drop.

Like Pittsburgh, Memphis could then be a smaller city but with growing employment. It’s a curious phenomenon. Even now, with the exodus of people out of Memphis, 102,743 people flood back into the city to work each day. It’s a powerful reminder of the city’s place as the region’s employment hub.

This is particularly true in Pittsburgh. Memphis’ population swells 16 percent a day. In Pittsburgh, the daytime population grows 41 percent. Therein lies the problem, because Pittsburgh is also stuck with a tax system that is structurally unsound. Unable to tax commuters driving into the city to work and unwilling to abandon gratuitous political solutions, the cost of services fell to fewer and fewer property owners.

The shift in the tax burden was further complicated by the fact that a growing segment of the employment base was shifting to universities, hospitals and the public sector that do not pay any taxes.

Its most logical options: cut payroll and reduce services. Instead, it did nothing…for decades. And to compound things, it pretended that unfunded pension and health benefits obligations didn’t exist and made an agreement that dealt away its critically important assets – water and sewers.

As for payroll, Pittsburgh officials funded pay raises out of existing revenues, but never put enough revenues into reserve accounts to cover growing pension and health obligations. (That’s not a lesson lost on New York Mayor Michael Bloomberg, who is proposing that $2 billion of his city’s $3.3 billion surplus should be set aside to pay future health care costs for retirees.)

Rather than make the hard decisions, Pittsburgh went with the easy answers and political tricks. Pittsburgh issued $269 million in bonds to fund part of its pension liability, but the city bet on a loser - higher interests rates - and once the rates fell, the city was actually $450 million deeper in debt.

In another sleight of hand, the city concocted a complex reverse mortgage arrangement for its water and sewer in exchange for an infusion of quick money; however, in another show of political expedience, the system’s employees were made non-city employees, but they were allowed to stay in the pension system. In addition, the arrangement allowed the water and sewer authority to buy arguably the city’s most important assets at the end of 30 years.

And yet, the core problem wasn’t poor city finances. Rather, it was poor political courage.

“An important source of the city’s current difficulties was the unwillingness of past city administrations to address these structural deficits,” the report said. “…To keep the same workforce, despite expenditures growing faster than revenues, various city administrations resorted to a number of practices that shifted the financial burden of their current operations to future taxpayers.”

These days, the report says “the proverbial chickens are coming home to roost.” Now 20 percent of the city’s general fund revenues is earmarked for debt payments and financing the pension system.

The tone of the report is glum. Even with all the changes recommended by state government, the structural deficit is still $50-60 million a year. Pittsburgh may be too late to save itself.

“There is the fundamental maxim of tax analysis,” the report says. “Ultimately, whatever the legal basis upon which a tax is levied, the true burden of the tax is borne by those who cannot avoid it.” It is a cogent insight into tax policy, and it should be kept uppermost in mind as Memphis deals with its budgetary challenges. In the end, the answers must be compelling enough to convince those who can avoid city taxes to stay in the city and pay them.

People can move; property cannot. That’s why despite Mayor Herenton’s suggestion for his critics to go ahead and move out of Memphis, the overriding challenge for his financial experts is to craft financial solutions that entice people to stay. As the Pittsburgh experience proves, as many people as possible are needed to fight the decline of a city and its tax base. As the report says, it is property owners who will bear the burden of paying for the years that city government failed to get its house in order.

Perhaps that is the strongest signal that the Herenton Administration can send to the citizens of Memphis. Rather than invite people to leave, it can show that it is resolute and courageous in dealing with the crisis facing it. It can show that it has no interest in quick fixes and magic bullets. It can show that it has no interest in one of government’s most tempting tactics – shoving problems into the future for others to deal with.

As the Pittsburgh story proves, there is no time like the present.

County Schools' Rhetoric Often Leaves Reality Behind

As we pointed out last week, the rhetoric of Shelby County Schools officials often bears little resemblance to reality, whether the subject is growth, consolidation and academic achievement.

It’s a prime example of how if political rhetoric is loud and persistent enough, it often becomes reality. Frequently, no one, including the news media, bothers to determine the facts behind the rhetoric. While it is a political cliché that perception is reality, unfortunately, in the case of Shelby County Schools, perceptions drive decisions that increase the debt of Shelby County Government and continue questionable educational policies.

As we pointed out last week, the number of county students peaked in 1999 with 48,770 students. In fact, over a 10-year period, the enrollment of Shelby County Schools fell by 1.23 percent. In other words, county school enrollment is largely flat. Shelby County Schools’ fifth attendance period report puts enrollment now at 46,212.

Despite this, since 1999, Shelby County Schools has built 10 new schools and are lobbying for the money for even more. Already, it now has the Southeast Shelby high school and the Schnucks school under way.

There are a number of facts that will keep the county schools’ enrollment from growing as county school officials suggest. There are demographic trends like the aging of the Germantown population, movement of families outside of Shelby County, and in keeping with the agreements entered as part of the State Chapter 1101 process, county schools will be only those located within the various town limits.

The boundaries for 2010 result in Shelby County schools’ projected enrollment of less than 40,000. By 2015, enrollment will be about 35,000 and continue to decline to about 30,000 by 2020.

The impact on the ADA (Average Daily Attendance) funding formula will be profound. Now, Memphis City Schools has 73 percent of all public school students and Shelby County Schools has 27 percent. Therefore, funding for the two schools districts are split on the basis of their percentage of the total number of students.

By 2020, the breakdown will be about 82 percent city and 18 percent county. This means that if the present ADA formula is still in place, by 2020, $10 million needed for county schools will cost taxpayers $50 million, because city schools must get $40 million (because Memphis City Schools will have four times more students).

It is in this context that we predict that suggestions about school consolidation will become more and more seriously considered. While the idea triggers outrage from Shelby County Schools, it is hard to ignore the fact that every urban school district in Tennessee is now consolidated, except for Memphis City Schools and Shelby County Schools.

Among the many complaints leveled by county school officials, a favorite is that consolidation is more expensive. That’s not what a comparison of operating expenses for Tennessee urban counties shows.

In fact, it’s the unconsolidated school districts that have the largest increases in operating expenses over a 10-year period – 91.2 percent for Shelby County Schools and 94.7 percent for Memphis City Schools.

Meanwhile, increases for the consolidated urban districts are:

• Davidson County (Nashville) – 73.5 percent
• Hamilton County (Chattanooga) – 60.8 percent
• Knox County (Knoxville) – 64.9 percent
• Madison County (Jackson) – 50.2 percent

Roughly a year ago, Memphis Mayor Willie W. Herenton convened a task force to look into school consolidation, but it was essentially highjacked by county school interests, spending the intervening months writing a report on the intricacies of school funding. Statistics and experience indicate that consolidation is a policy option that now deserves serious study and consideration. Hopefully, the task force will now lead this process.

Also, a gap between rhetoric and reality is seen when county school officials talk about the performance of their schools. Repeatedly, county schools are held up as superior and high-performing. However, this conclusion is often reached as a result of a comparison of performance standards with Memphis City Schools.

Of course, the more pertinent – not to mention, fair - comparison would be for Shelby County Schools to compare itself with other suburban school districts characterized by two-parent, highly educated, higher income families. Lists of the best public schools in the U.S. regularly include schools from districts with the same profile as Shelby County Schools, but these lists never include a school from Shelby County Schools.

For example, just last week, the list of the top 1,000 U.S. schools was released, and they include schools from suburban districts outside Atlanta, Miami, Washington DC, Charlotte, and dozens of other major cities. But there’s not one school in the Shelby County School District among the 1,000 schools.

In Tennessee, there is the school in Brentwood (#339), in Oak Ridge (#360), in Franklin (#645) and Hillsboro School in Nashville (#812).

Shelby County has only one school. It’s in Memphis City Schools – White Station High, #621. In other words, in the school district with the highest expectations and greatest claims for student achievement, there is no school on the list.

But the list of 1,000 schools should not just be disturbing for Shelby County Schools. It should be a wake-up call for state government, too.

Hopefully, state education officials will not hold up five Tennessee schools among the 1,000 as indicators of successful educational policies. That’s because Florida has 20 schools in the top 100; North Carolina has 10 in the top 100; Texas has seven; and the #1 school in the U.S. is in Alabama.

Hopefully, someone in the Tennessee Department of Education will see these rankings for what they are -- a challenge to business as usual. If other Southern states can create educational systems that inspire high-achieving schools, surely Tennessee can do the same.

And as state educational officials begin their deliberations, here’s hoping they ask Shelby County Schools to join in.

Learning To Love Density: The Return Of Affordable Housing

From Otis White's Urban Journal at governing.com:

If ever there was a lost cause for cities, you’d think it would be affordable housing. After all, the average price of housing in the U.S. has increased by 73 percent in the last seven years, the Economist magazine reported recently. And resistance to affordable-housing projects remains fierce in many places. So it may come as a surprise to learn that some advocates are optimistic these days.

We know that because the Federal Home Loan Bank of Atlanta talked with some of the nation’s leaders in affordable housing recently and reported on what they see ahead. Two changes, they predict: a lessening in the NIMBY reaction against affordable housing and, perhaps as a result, greater success in integrating affordable units into larger market-rate projects.

First, though, the answer to a simple question: Why does housing cost so much? The price of building materials has risen over the years, as has the price of land in most places. But as economists who’ve studied the numbers have found, a big reason for escalating housing costs is land-use regulation. That is, governments make it so difficult and expensive to build housing, they almost demand that successful projects be only for the well-to-do.

Think about it: Local governments, the very institutions that wring their hands about the lack of housing for police officers and school teachers, are often the cause of the problem. Why would they make it so hard to build affordable housing? Because it’s what homeowners and neighborhood activists demand as a way of keeping their home values up. Their fear: If a few $200,000 homes are built in a neighborhood of $400,000 homes, it will bring down home values. Hence, the NIMBY reaction.

There’s another reason: To build cheaper, you usually have to build denser. Makes sense: The less land that’s used (by placing houses closer together or stacking them on top of one another in a mid-rise building), the cheaper the final product. But here, too, you run into the buzz saw of neighborhood politics: Homeowners furiously protesting any effort to change neighborhood scale.

Given this, what could possibly break the stalemate over affordable housing? Three things, the experts said: the aging of the population, a greater appreciation of density’s benefits, and better approaches by government to encouraging affordable housing.

First, the aging population: As the average age advances, there will be great demand for new modestly sized, modestly priced housing in cities and suburbs, experts say, and local governments will respond. To put it bluntly, the elderly will make affordable housing respectable — and less risky politically.

Second, density will become less of an epithet and more of an aspiration as politicians learn to appreciate the value to street life of having lofts atop stores and offices. (There’s a major opportunity for affordable housing, one advocate said, in downtowns, lifestyle centers and “pedestrian-scale communities.”) Another factor lessening NIMBYism, the report said: “Affordability is affecting a greater number of people with higher incomes.” Translation: More and more middle-class families are learning they can’t afford traditional, spread-out housing unless they’re willing to accept a brutal commute to work. As they clamor for housing closer to work, that too will lend respectability to affordable housing.

Footnote: One tactic that has helped greatly, affordable-housing activists say, is “inclusionary zoning,” which requires developers to set aside a portion of their major market-rate projects for low- and middle-income housing. This kind of zoning is now used in 107 communities in California, up from 64 a decade ago.

Lifestyle Centers Hamper Region's Growth Management

From AIA Oregon Newsletter:

By George Crandall, Crandall Arambula PC in Portland, OR

Lifestyle centers are cropping up across the country. Communities everywhere are jumping on the lifestyle bandwagon without questioning how these new developments will ultimately impact the long-term livability and economic vitality of their downtowns.

My first experience visiting a lifestyle center was not a pleasant one. I realized quickly that lifestyle centers are privately owned and operated businesses – not the publicly-owned retail main streets they impersonate.

When taking a few photos of the street environment, I was immediately surrounded by three security guards threatening to remove me from the premises if I did not put away my camera. Picture taking was prohibited, but they were not able to provide a reason for this edict.

This experience underlined a simple truth: owners of these faux public places are accountable to no one and are able to impose their personal code of conduct on visitors and shoppers alike.

Lifestyle centers are simply the latest incarnation of shopping malls cleverly masquerading as public town centers or public main streets. In fact, many developers incorporate the name “town center” or “village” into the development’s name and brand. They offer visitors shopping, dining and entertainment opportunities that are often marketed as urban, unique, historic and even European-style shopping experiences. The truth is that these centers are solely created to attract national chain stores and restaurants such as the Pottery Barn, Ann Taylor Loft and California Pizza Kitchen, anchor retailers that would better serve the community if located in downtowns or town centers.

Lifestyle centers draw anchor uses and ultimately shoppers away from the city’s core. This added competition for the limited retail market makes it difficult to revitalize our regional centers and create successful downtown shopping districts. For example, in Gresham (OR), the city’s traditional Main Street now competes with the Gresham Station lifestyle center.

Ultimately, lifestyle centers do not support Portland region’s 2040 growth management policies. They make it more difficult to revitalize downtown “main streets” by competing for the limited retail demand.

Recently, Crandall Arambula prepared a downtown revitalization plan for Lincoln, Nebraska. Working with an economic consultant, an interesting scenario unfolded. It was determined that there was a substantial additional demand for downtown retail. However, because of lack of available land and the fragmented retail environment, downtown retail revitalization would be difficult. It would be easier to build a lifestyle center on the edge of downtown that to revitalize the core with healthy retail along with a pedestrian-friendly main street. Lincoln wisely decided not to take the easy out and build a lifestyle center. Instead, thoughtful city leaders chose to reinvest in downtown and avoid the long-term negative social and economic impacts that would have resulted from creating a competing retail center.

Downtown Salt Lake City faced a similar problem and blinked. Mainly because of the city’s larger sized blocks, creating a successful, pedestrian-friendly shopping street would be difficult. Instead of facing the challenge, Salt Lake City developed “The Gateway,” a pseudo-Mediterranean lifestyle center on the edge of downtown that competes with the existing center city retail environment.

The suburban shopping malls of the past contributed to the decline of the city centers across the country. Lifestyle centers are no different. Although lifestyle centers may be economically successful in the short term, they compete with a city’s urban core, encourage automobile dependence and, in the long term, contribute to a city center’s economic and social decline.

Ironically, lifestyle center developers and designers understand what it takes to create a vibrant retail environment, while regional governments often do not. Development of lifestyle centers are an indictment of our government’s inability to create or adopt policies and plans that support true “main street” town and regional centers.

Simply put, lifestyle centers are merely props, “stage sets” and caricatures that are poor substitutes for authentic mixed-use town centers.

Historic Road Design Process Produces Historic Results

In light of the historic compromise highway plan that can end a generation of controversy about the Kirby-Whitten Road through Shelby Farms Park, we are revisiting our November 7 post about the "context sensitive design" process that produced this result.

Two main points about today's announcement about the road compromise:

One, Shelby County Mayor A C Wharton deserves major credit for orchestrating these positive resolution to this thorny issue;

Two, we can now turn our attention to what's really important: creating a nationally important park at Shelby Farms Park. For more than two decades, we've been distracted by the divisive arguments about the road. Now, the Shelby Farms Park Master Planning Committee can create a plan for the future - sans road - that the entire community can embrace.

Here's the slightly abbreviated earlier post:

For a generation, the proposed highway through Shelby Farms Park has been political quicksand that trapped county mayor after county mayor. Shelby County Mayor A C Wharton – with the considerable help of Tennessee Department of Transportation Commissioner Gerald Nicely - not only has escaped the trap, but he can now claim credit for the process that produced a solution that the entire county can embrace.

It seemed an unlikely outcome in February when Mayor Wharton launched yet another process to search for answers to the long-standing question of where and how the highway should be situated in Shelby Farms Park. And yet, the 17 people whom he appointed have hashed out their differences and found a road alignment and design that would resolve the 20-year battle between park lovers and development interests.

For the first time in the history of this controversial project, the committee appointed to look into this question was actually balanced with equal attention given to environmentalists, the public and development industry representatives. For the first time, it was not environmental interests that were grumbling about the process. Rather, the grumbling has come from developers who complained that the committee too quickly dispatched the design they had championed for years - a six-lane, high-speed highway just west of Patriot Lake.

The committee’s compromise proposal – which appears to give park lovers more than they gave up in the process – is a major achievement for the Wharton Administration as it looks for achievements to spotlight in campaign brochures for next year’s election.

To get an idea of the significance of this recommendation, just consider that there are children who entered kindergarten and have graduated from college and never remember a time when there was not a divisive dispute about the design and alignment of Kirby-Whitten Parkway Connector Road through Shelby Farms Park.

Conventional wisdom said that the battle lines were immutable. Yet new attitudes by Tennessee Department of Transportation, the Wharton Administration and Friends of Shelby County Park came together to create a new dynamic that gave birth to a “context sensitive solutions (CSS)” process that produced the new road recommendations.

Endorsing the use of this CSS approach for the first time in Shelby County, TDOT sent the strong message that road-building in Tennessee has fundamentally changed under the direction of Commissioner Nicely, the first non-roadbuilder to head up the department in recent memory. Instead of building roads, Nicely’s reputation was made as an advocate for public-private partnerships that revitalized downtown Nashville. His philosophy has predictably met with some bureaucratic foot-dragging, but slowly and surely, he has forced TDOT to see its constituency as more than the politicaly powerful road-building industry.

With this encouragement, Mayor Wharton appointed the special advisory committee that has now recommended a gently curving, four-lane highway that snuggles against the western border of Shelby Farms Park as much as possible. The shift westward – removing once and for all the intrusive wider, faster highway near the heart of the parkland – was the first indication that this time around, things would be different. When the road was reduced from a six lanes to four lanes and the speed limit set at 40 to 45 miles an hour, the hand writing was on the wall.

The entire process has been a stunning victory for environmental interests, which did not get everything they wanted but found room for compromises they could live with. Some “no roaders” remain unconvinced, but their number has dwindled as environmentalists stuck with the process and ended up winning most of the major issues.

Major credit goes to Friends of Shelby Farms Park, which shifted from a recalcitrant position opposed to any road to becoming a source of influence for a site-sensitive design. A key decision by the group was the hiring of nationally prominent engineer Walter Kulash, who evaluated every planned alignment and provided convincing evidence of why the six-lane, high speed highway with massive interchanges (proposed as recently as three years ago by county government) was simply unnecessary and would devastate the park.

The Context Sensitive Solutions process has been slow to get to Memphis. It’s been used for years by traffic engineers across the U.S. as they balanced the transportation needs and environmental needs of their regions. The road through Shelby Farms Park has been on local governments’ transportation plans for 36 years. What’s been missing during that time has been a single, simple element – sensitivity to the impact of the highway on the 4,500-acre park.

In the end, injecting this balanced approach into transportation decisions – for too long the province of development interests and government engineers – may be a legacy contributed by Shelby Farms Park that’s almost as important as its recreational assets.

There remains 24 to 27 new lanes of roads pointed directly at Shelby Farms Park and still on our community’s transportation plans, and it would be tragic if each of them results in the protracted, divisive debate that has characterized the Kirby-Whitten Parkway.

If the Metropolitan Planning Organization (chaired by Mayor Wharton) is smart, it would use this occasion to take more definitive action to ensure that the Context Sensitive Solutions process is not a one-time experiment, but a policy for every highway built in our community.

That’s an outcome that would make this committee’s recommendation more than copy for a campaign brochure, but a chapter for the history books.

The Present PILOTs Program Is All About Missed Opportunities

Sometimes, when the spirited defense of the current PILOT program begins, it seems to lose touch with reality.

In the consultant’s report recommending the overhaul of the current tax incentives program, this is what’s written on page 57 in defense of the $60 million worth of tax freezes:

“During the interviews, general benefits of the PILOT Program were discussed. Such benefits include the following:

“1 - FedEx Corporate Campus – fueling Memphis’ economy. The PILOT program helped make Memphis an attractive place to do business and help secure high paying professional jobs. In addition, FedEx campus has stimulated significant growth in the immediate area of the FedEx campus in terms of retail, hotel, and resident development.

“2 - PILOTs help fill vacant properties which, if left vacant, would simply ‘pull down’ the market values of surrounding properties. This could have a cumulative effect, which could ‘pull down’ the broader tax base, which could potentially require an increase in property tax rates to maintain local tax revenues at the same level.”

Amazing. Just amazing.

If there is a more striking indictment of the failure of vision in this community, it is the area of the FedEx World Headquarters. There, we had major expansion by the company that invented global commerce, by the company that is the state’s largest employer and by the company that is the hub of innovation for Memphis and Shelby County. We had the chance to transform the area into one of the nation’s premiere business centers - complete with technology centers, research firms and first class office space – by exploiting the interest of all the companies drawn by FedEx’s gravitational pull.

Instead, we chose to allow the area to become just another generic, derivative area unlike what is found off most exits of I-40 and Tennessee 385.

If defenders of the PILOT program can brag about how the FedEx corporate campus fueled Memphis’ economy, it can only serve as further indictment of the thinking that gave birth to the tax freezes program as it now exists.

The area around FedEx is all about missed opportunities. So is the PILOTs program.

Surely, if we should have seized just one chance to shape a singularly powerful economic anchor for our region, one that could have come to symbolize the vibrancy of Memphis, it should have been the area of Hacks Cross and Winchester Roads.

So what did our lack of vision bring us? A FedEx World Headquarters surrounded by suburban shopping centers; a concentration of big box retail – Costco, Wal-Mart, Target, Lowe’s, Sportsman’s Warehouse and Sam’s Town; at least 31 restaurants (we lose count), an impressive array of fast food and chain places; the hotel - a Holiday Inn Express; two cell phone stores; cash advance stores; an uninspired Starbucks; Michael’s; PetSmart; Walgreen’s; and, well, you get the picture.

In case you missed the big news, the Shelby County Board of Commissioners has paved (pun intended) the way for a new Nissan dealership to be added to the mix.

At the intersection that should have been Memphis’ prime location stands a drug store, a gas station and a bank.

Also, proponents of the PILOTs told consultants that the tax freezes help fill vacant properties. Again, it’s as if they don’t drive around in this county. While there is warehouse after warehouse in Southeast Shelby County (with most not paying taxes), there is nothing that the PILOTs program has done to revive the multi-modal centers that stand along I-55 between I-240 and Riverside Drive as sad reminders of the abandonment of the urban core.

These are the facilities that were once thriving hubs of activity for Memphis’ distribution industry, but instead of giving incentives to keep them healthy and to optimize the existing infrastructure already paid for there, PILOTs were used as incentives for green field development of the distribution business. These vacant rail and truck yards are stark proof that the PILOTs program, as it now exists, is all about real estate development, not economic development.

Changes For PILOT's Should Include Reporting Entire Cost To Taxpayers

Emily Trenholm must sometimes feel like the tiredest member of the Donner Party. If she dozes off, there’s just too much that can happen.

As executive director of Community Development Council of Greater Memphis, Emily is apparently the designated community representative on the 13-member Mayors’ Joint PILOT Review Committee. She is surrounded by people who make their livings off the tax freezes they are are now asked to objectively evaluate.

Apparently, the political pressure to protect the PILOTs (payments-in-lieu-of-taxes) is so great that there isn’t much pretense of assembling a representative group to evaluate the changes recommended to the PILOT program by consultants. The call for the overhaul of the tax freeze program comes at a time when yearly property tax increases are the norm, but these PILOTs continue to mount, now waiving $60 million a year in city/county property and personalty taxes.

On the Mayors’ Joint PILOT Review Committee with Ms. Trenholm are the people who head up the public agencies who dole out the tax freezes, there are people from the economic development agencies who defend the tax freezes at all cost, there are a couple of beneficiaries of the program’s largesse and whose companies each have more than $2 million in waived taxes, and people whose professions are closely dependent on real estate development (which seems to be the real purpose of the PILOTs in the first place).

Then, there is Ms. Trenholm, representing an agency that lists one of its roles as making sure that the interests of community development are considered in policy decisions. This one looks like the ultimate test for her organization.

Last week, according to the latest article in the fine coverage by The Commercial Appeal’s Amos Maki, the PILOT consultants who recommending the reinvention of the tax freezes program finally were invited to present their findings.

Central to their recommendations is the belief that the PILOTs have become entitlements given to any one who can complete the application form. Michael Laube, principal of Nex Gen Advisors, said in the article: “You don’t need a program that’s one size fits all. Let’s change the system around where the key measure is what is needed for that development, how much is needed and when it is needed.”

That makes such eminently good sense that it would seem that it could be adopted by acclamation. But that’s never the case when the subject of tax freezes come up.

While it’s difficult to imagine why this committee appointed by the mayors was needed, especially since the authority to grant tax freezes rests with Shelby County Board of Commissioners and Memphis City Council, but when faced with a politically volatile situation, the appointment of a committee is always a reflex.

In the end, what is most needed in city and county governments is a new attitude. Their officials need to quit seeing themselves as supplicants and instead, see themselves as investors. That’s because in truth, that's what they are. They represent a partnership between the taxpayers of this community and a business. Because we place a value on a company and its presence in our community and its positive impact, we choose to invest in it. Until officials see the difference in being an investor and being an beggar, we will continue to pursue low-wage, low-skill strategies that in the end will drag our region down.

The most interesting suggestion made by the consultants last week was that until land use decisions must be tied to economic development decisions. Now there is no connection, and as a result, we are constantly taking one step forward and two steps back.

That’s because PILOT decisions are made in a vacuum. Without an overall land use plan, companies simply choose to locate anywhere they please, including in areas where there is no transportation to link the employment base with the new jobs, where the infrastructure is inadequate and where public transit is nonexistent. This is seen in areas like Holmes Road and Hickory Hill, where essentially every warehouse in sight has a PILOT and is paying no taxes, but before the tax freezes were approved, there was no thought given to this being the best land use, to whether the area has adequate public transit or to whether there were sustainable transportation plans for the future.

Put simply, amazing as it sounds, there was never an effort that connects the decisions governing PILOTs to a more comprehensive, overall plan and to waive taxes in places where the existing infrastructure had already been paid for by local taxpayers. Too often, as a result of PILOTs approved by the Memphis and Shelby County Industrial Development Board, city and county governments then have to spend more money to build roads, bridges and sewers, but these factors weren’t considered in the evaluation process.

While changes are being considered to the PILOT process, here’s a recommendation from us. Every PILOT should have a fiscal note that tells not only the amount of taxes being waived, but any costs that will have to be incurred by the taxpayers through their local governments as a result of the PILOT. Tax freezes don’t operate in isolation, and if we are to act as investors, we need to know the size of the entire investment that we are making in each company.

The Myth Of The Growing County Schools' System

It’s an immutable law of modern politics that no matter what else you do as an elected official, you have to keep your base happy. No matter what.

Sadly, in recent years, this inviolate belief has grown to obsession, spawning an epidemic of robotic talking points aimed at solidifying “the base,” regardless of whether they are backed up by facts or not.

On its worse days, it produces a pandering that undercuts confidence in the entire political system. On its best days, it is merely comical, as politicians of various stripes merely ignore the facts of the debate and repeat ad nauseum the same tired bullet points.

It’s as if many politicians have become prisoners of their base, ignoring any hint from the broader public that their rhetoric and their actions should at least have passing acquaintance. And most amazing of all, when politicians do this most masterfully, news reporters even pick up their rhetoric as if it is fact.

We thought of all this as we read recent coverage of the attempt to get Shelby County Schools some quick money - $3 million, to be precise.

Two paragraphs in The Commercial Appeal coverage caught our eye.

The first was one in which reporter Michael Erskine stated as a fact, without any attribution, the following: “County school leaders are in line to get funding for a new elementary school next fiscal year, which would provide much-needed capacity.”

The second: “‘The need is extremely apparent,’ said (Commissioner David) Lillard, who said the county system simply can’t keep up with the growing number of students.”

It’s amazing how many phrases, such as “much-needed capacity,” find their way into news articles, although they are essentially opinion. In this case, the reporter endorses the viewpoint of Shelby County Schools, but of course, doesn’t offer a scintilla of information to back up his statement.

This brings us to Commissioner Lillard’s comment. In proposing the “emergency” funding for county schools, he continued his “no matter what” support for Shelby County Schools. After all, he advocated the Arlington High Schools, county government’s latest Valentine to sprawl. It’s in the wrong place and won’t be needed for years, if ever. Later, he was cheerleader for the Southeast Shelby High School, which has the distinction of being at the fatal intersection where politics and logic collide with the inevitable fatality, logic. This high school is to be built at the worst possible location, based on worst possible justification and using the worst design capacities.

What makes this even more confounding is the fact that as a lawyer, Commissioner Lillard has the reputation for having the best nose for the facts of a business deal of any one in his profession. That’s why it’s so surprising to hear him make the argument that it is growth that demands that the county district gets more funding and more schools.

This argument is made although the website of Shelby County Schools puts its enrollment in the 45,000-student range, and the Memphis Tomorrow study of school funding – led by county schools’ officials – set enrollment in the range of 46,000 students. In other words, using its own numbers, Shelby County Schools acknowledges that its enrollment peaked in 1999 with 48,770 students, a fact pointed out in various independent studies about growth patterns in Shelby County.

And yet, county school officials are allowed to trot out their time-worn argument about overcrowding, as they have done most recently with their latest educational innovation, the proposal to open the so-called Schnucks’ School in an abandoned grocery store south of Germantown.

Ironically, areas characterized by sprawl and the derivative development it produces are represented by county commissioners who tend to vote against tax increases and argue for cuts in government expenses, while it is their district that is largely responsible for the county’s climbing debt. This is especially true any time the subject turns to county schools.

But Commissioner Lillard is not alone in being deaf to the truth and blind to the facts. That’s because the county school district’s core contention that its schools are overcrowded appears questionable.

In the end, it’s possible for any school district – including Memphis City Schools – to paint a picture of overcrowded schools. All it needs to do is to adjust its classroom capacities. For example, to produce overcrowded schools, Shelby County Schools calculates capacities at 15.5 students for each elementary school classroom; 18 students for each middle school classroom; and 20 students for each high school classroom.

Meanwhile, Memphis City Schools bases its capacities on 20 students per elementary classroom; 24 students per middle school classroom; and 28 students per high school classroom.

In other words, by adjusting the classroom capacity, a school district can essentially determine whether it’s overcrowded or not. In fact, Memphis City Schools could simply adopt the county district’s equation and then no schools would be closed under Superintendent Johnson’s Five-Year Comprehensive Plan.

What’s most disturbing is that so many of the positions of Shelby County Schools seem rooted in simply, old-fashioned manipulation – political, religious, financial and racial. And as is often the case when politicians serve a narrow political base so dutifully, it’s all the taxpayers who end up paying a price.

How About Hiring The RDC To Clean Up Downtown?

Walking through downtown Memphis, memories of Tokyo often come to mind.

In one of the largest cities in the world, regardless of the neighborhood or part of the city, the streets are immaculate and the sidewalks are clean. That’s because each morning, in a wholly Japanese sense of the collective, store owners sweep off the sidewalks and clean the gutters in front of their businesses.

Meanwhile, buses unload volunteers who come to the center of the city to clean the gardens of the Imperial Palace.

Looking out the windows of a corporate boardroom in a skyscraper overlooking the Imperial Palace and the Ginza, one Memphian commented: “The city is always so clean. You must have some really tough fines for littering.”

“We don’t have any laws against littering at all,” came the answer.

“Then why don’t people litter?” asked the Memphian.

“Because they’re not supposed to,” the Japanese host explained incredulously. “It’s our obligation to the community, because we live so close to each other, and the city needs to look as good as it can for all of us.”

It’s a civic ethos taught to even the youngest member of the community in Japan, and walking through downtown Memphis, it’s easy to wonder if we’re instilling just the opposite.

On our walks, we regularly pick up trash, ranging from dog excrement to broken beer bottles to what appears to be kitchen garbage. Sometimes, as an experiment, rather than pick up the trash, we leave it there, curious to see how long it will be before any city crews clean it up.

About a month ago, someone appeared to dump a small garbage can near Union and Front. We walked by it every day, and finally, convinced that it might stay there until summer, we picked it up.

It’s often confusing to most downtowners to know who is responsible for cleaning up our city’s common ground. The Center City Commission has responsibility for most of the downtown footprint and city crews are responsible for areas that border the footprint.

Whatever the division of labor is, it’s not working, so here’s our suggestion.

Hire the RDC to do it.

Regardless of your opinion about the Riverfront Development Corporation’s plans for the downtown riverfront (and we are enthusiastic supporters), there can be no debate that the riverfront has never been cleaner or more attractive.

RDC staff members are firm believers in “management by walking around,” and there is little that escapes their attention, from planting and weeding the landscaped medians to cleaning up rights-of-way and riverfront parks.

It seems a good time to entrust the cleaning and maintenance of all of downtown to the RDC, because its track record proves that it is up to the task.

Ethics Reform Should Begin With Nonpolitical Legal Opinions

Sometimes, it’s the petty corruptions accepted as part of the every day workings of government that are the most amazing.

We thought of that yesterday in light of the way that one assistant county attorney surfaced in a variety of ways that sabotaged the prospects for a payroll tax and the commissioner who proposed it.

First, you have to understand that unlike their Memphis City Council counterparts, county commissioners don’t have their own lawyers who look out solely for their interests. Rather, commissioners are told that assistant county attorneys (all of whom serve at the “will and pleasure” of the county mayor, not the commissioners) represent them as well as the mayor’s administration.

It probably didn’t help that the commissioner in question had criticized the size of the retainers paid to assistant county attorneys regardless of how much or how little work they did.

So, here was Shelby County Commissioner John Willingham. To have his best chance at making his arguments about the fairness of a tax on income, he needed the help of a legal advisor in the county attorney’s office. He didn’t get it.

It’s not that we didn’t expect the outcome. As we wrote previously, it seemed more than passing strange that when Willingham asked a fundamental question that would be critical for the future of his tax reform proposal, the question wasn’t sent to a constitutional scholar whose impartiality was beyond question. Instead, his request for a legal opinion was farmed out to an assistant county attorney who happens to be a Republican Party leader in the “anybody but Willingham” wing of the party.

As a result, it was no surprise at all when the assistant county attorney wrote the expected legal opinion shooting a hole in Willingham’s main campaign platform, which was aimed at taxing the 88,000 non-residents of Shelby County who work here. His plan proposes to end the wheel tax, reduce the county property tax rate by 25 percent, end the local option sales tax, produce an overall reduction in the amount of taxes paid by most taxpayers and forbid any increases in any taxes for 10 years and only then by referendum.

The importance of the payroll tax issue in the upcoming election had already been foreshadowed in a telephone poll almost masquerading as a push poll, asking voters loaded questions such as, would they support Willingham if they knew he was trying to raise their taxes, etc.

Although Willingham has labored for two years to get the fair hearing that his proposal seemed to deserve, most political forces lined up against him. The political hierarchy of his own political party painted him as a kook, despite his days as an appointee in President Richard Nixon’s Administration and his dozen patents, and in truth, his tendency to see conspiracies made him a frequent, and easy, target.

Remember the old Alexander Haig joke that ended with the punchline: “Even paranoics sometimes have reason to be paranoid.” Well, it seems that even conspiratorially-minded people have reason to see conspiracies sometimes.

So, first, the legal opinion on Willingham’s seminal campaign issue was assigned to an assistant county attorney with a well-known political hostility to him. Second, the legal opinion has the power to rip his main issue out of his hands. Third, the damning legal opinion was delivered the day before the qualifying day for candidates.

But there’s more.

The same day that Willingham received the legal opinion fatally wounding his “Tax Fairness Proposal,” the county building received a number of newly printed brochures from Willingham’s opponent in the upcoming commissioner’s race. There, listed prominently among his opponent’s supporters was the name of that very same assistant county attorney.

Over the years, the appointments of assistant county attorneys, assistant public defenders and assistant divorce referees – yes, there are dozens and dozens of them - have been plum political appointees, and unsurprisingly, they are filled with men and women with uncommon political instincts. Perhaps it’s time to select these people solely on their legal acumen, rather than on their contributions and connections.

A good start in that direction would be to enact policies that prevent these public lawyers from endorsing any county elected officials or any candidates for county office. At a time when government is trying to remove the impressions of insider influences and special rules for special people, this would be a good place to start.

Wanted: The Young And Restless

From the Washington Post:

By Carol Coletta and Joseph Cortright
Monday, February 13, 2006

Recent headlines about the latest census data on U.S. cities have had city leaders --most notably D.C. Mayor Anthony Williams -- fretting. According to the new numbers, Washington has lost about 20,000 residents over the past five years at a time when Williams very publicly pledged to add 100,000 people by 2010.

While these reports should certainly be cause for concern, city leaders would be wise to shift their attention to another set of data that points to a positive trend occurring in cities: the preference among 25- to 34-year-old college-educated workers to live in neighborhoods within three miles of a city's center.

Why is this demographic -- and its geographic preferences -- important?

Over the past four decades, we've enjoyed rapid growth in the quantity and quality of the U.S. workforce. But the three decisive forces that drove this growth -- the sizable baby boom generation, the dramatic economic impact of women entering the workforce and the impressive increase in college graduation rates -- will run out of steam or shift into reverse in the next two decades.

In response, cities must focus their energies on attracting and retaining a group we call "The Young and Restless": young, mobile, college-educated workers. They are a key indicator of the economic success of cities in the knowledge economy, where prosperity hinges on the ability to come up with new ideas.

A recent study by the organization CEOs for Cities ("The Young and Restless in a Knowledge Economy") revealed that this demographic is roughly 34 percent more likely to prefer close-in neighborhoods than people in other age groups (up from 10 percent in 1980 and 12 percent in 1990). This was true in every one of the top 50 metropolitan areas in the United States.

Metro areas with vital centers will fare better in attracting talented young adults.

To continue with the example of Washington, data from the 2000 Census show that this city's close-in neighborhoods have a higher level of college attainment than in most other close-in neighborhoods in large U.S. metropolitan areas -- higher than Atlanta and much higher than fast-growing Phoenix or Las Vegas.

More than 65 percent of the 25- to 34-year-olds living within three miles of the center of the region (measured from the White House) have a four-year degree or higher level of education, a rate only slightly lower than for close-in San Francisco (67 percent) and significantly higher than hip Seattle (56 percent).

City planners in the District clearly appreciate the significance of vibrant neighborhoods, showcased by the new theaters and shops downtown as well as the city's marketing campaign "City Living, D.C. Style." Walkable destinations, lively commercial districts and interesting streets are attractive to the Young and Restless. Good public services, including transit and parks, can also make close-in neighborhoods more appealing.

The ability to capture these young people is already playing an integral role in some cities' economic success. Booming metro economies such as Charlotte, Austin, Atlanta and Portland, Ore., have increased the number of college-educated adults about five times faster than the nation as a whole. Cities that are losing young college graduates, such as Hartford, Conn., and Rochester and Buffalo, N.Y., are struggling.

So whether the census numbers are right or wrong may not be as important to cities as it used to be. What's clear is that cities will succeed or fail depending on how much they appeal to this talent-rich pool. And if the number of cranes dotting the D.C. skyline and the still-hot housing market are any indicator, the city continues to position itself well in the race for talent.

Joseph Cortright is an economist with Impresa Inc. Carol Coletta is president and chief executive of CEOs for Cities, a network of urban leaders committed to strengthening America's cities.

The 10 Regions of Tennessee, Part 2: Tax-Sharing

Some major cities, notably Portland, OR, and Minneapolis, have traced much of their competitive success to their multi-county taxation authority. In these places, rather than joint taxing being a divisive force, it is a unifying force that led local governments to work together, rather than see themselves as enemies and competitors.

If such taxing authority here could include the North Mississippi counties of the Memphis MSA, it would be truly revolutionary (it would take the help of the Mississippi Legislature), attracting national attention for its creative thinking on funding public services. Most of all, to the delight of workers living outside of Shelby County, it would take off the table the payroll tax as the preferred funding source for regional services and replace it with multi-county taxing that gives North Mississippi a voice in what the revenues are used for. It’s a much more politically palatable option for non-Shelby Countians.

The existing tax system is hopelessly outdated, because it is set up in a way that presumes that every jurisdiction is self-contained and its interests are walled off from its neighbors. But in the real world, things work altogether differently.

In truth, the entire region is a functioning whole. As we’ve written before, as a result, the activities that produce tax revenues – and the needs for them – have little geographic relevance to the distribution of those taxes. That’s why we’ve advocated more rationality in the current tax system to define once and for all what’s a municipal service – whether we live in Memphis or Millington – and what’s a regional (or county) service, and to put the services on the appropriate tax base. For example, if schools are countywide, all educational costs should be placed on the countywide tax base, that of Shelby County Government, cutting the tax rate of Memphians by a significant amount. Also shifted to the regional tax base are services funded now by the City of Memphis but enjoyed by the entire region -- museums, the zoo and downtown amenities.

What happens when there is no rationality and no imperative for regional cooperation is the competitive attitude that exists here today. Regional economic development officials may repeat all the platitudes about regional cooperation in op-ed pieces printed in The Commercial Appeal, but behind the smiles is a cutthroat competition on all sides that lies at the heart of the relationship that no amount of rhetoric can gloss over.

The consequences of multiple jurisdictions competing over a finite tax base as it does today – such as Collierville’s pursuit of another huge shopping center that is unjustified in the marketplace – ends up as a net loss for the region. It results in zoning of commercial and retail property designed to create optimal taxes, rather than the optimal community, and in the end, it inevitably erodes the overall quality of life for the region.

There is no such thing as winners and losers in such a competition. It is only about “today’s winners,” because such policies eventually will result in shopping centers springing up somewhere else and choking off the one booming in Collierville today. And of course, the biggest loser is the urban center. In the end, it’s the flight of revenues that most devastates Memphis, and in the end, this leads to public policies that see public subsidies like PILOTs as the answer to thwarting more financial loss.

This vicious cycle can be broken with a regional way of pooling taxes, which are then reallocated throughout the area. This helps break the mismatch that exists between the social needs and the taxes to address the needs, it helps to remove the incentives that spur on sprawl and it helps to end the intergovernmental fight for scarce public revenues.

When it comes to tax-sharing arrangements, conventional wisdom should be set aside. In Minneapolis-St. Paul, while the suburbs subsidized the central cities 30 years ago, it reversed later when older suburbs were in decline and needed help.

The Metropolitan Council in the Minneapolis-St. Paul seven-county region uses its tax-sharing authority to reduce the disparity between rich and poor jurisdictions. The revenues for the Council come from all governments placing 40 percent of the growth of their commercial and industrial property tax base into a regional pool, and this amount is then redistributed on a per capita basis.

From the pool, several hundred million dollars a year is redistributed, and in some years, Minneapolis – with a strong downtown and residential areas – is a net contributor to the fund, which focuses on regionwide priorities like public transit and light rail, parkland, water quality and smart growth.

Meanwhile, in Portland, the Metropolitan Regional Government administers programs in a three-county, 24-city region. Born from the region’s environmental ethos, the government today coordinates land use and transportation. However, equally important, it helps to pay for regional services like the convention center, performing arts center, stadium, exposition center and regional parks.

The innovative tax policies of Portland and Minneapolis/St. Paul did not just happen. They both came about because of entrepreneurial leadership by state government, which passed the legislation that allowed this unique approach to regional problem-solving to exist in the first place. But first, state officials need some leadership from here, and it would seem that Shelby County Mayor A C Wharton - as chair of MPO, as head of the Homeland Security region, as the head of the largest regional government and as the untiring proponent of new tax policies - would take up the mantle for a new look at taxes. As we've said before, the energy of the mayor and our community would be better spent restructuring our tax system than chasing new revenues sources such as development fees that are merely band-aids on a system that is bleeding to death.

It’s now been pointed out to state officials that Tennessee has 10 regions. It’s time for their help, and a first step is to give each region the authority to set up a regional tax-sharing system that inspires regional thinking and action. Now, who has the political courage to try to get it on the public agenda?

The 10 Regions of Tennessee

Forget the out-of-date notion about the three grand divisions of Tennessee – West, Middle and East. According to the University of Tennessee Center for Business and Economic Research, there are actually 10 distinct regions in our state.

Now, the real challenge if for state government to frame its policies, especially taxing authority, within the reality of these regions.

Region 1 is comprised of Shelby, Fayette, Hardeman, Haywood, Lauderdale and Tipton Counties. Other regions are divided similarly with a cluster of counties bound together in a region by economic and demographic similarities that lend themselves to shared economic growth strategies.

In the profiles of the 10 regions, our region has the flattest population growth between 1990 and 2003 – 11.1 percent. Meanwhile, the Nashville region recorded 31.2 percent; Knoxville saw 21.3 percent growth; and Chattanooga had 14.6 percent. To put it into perspective, our population growth was well below the state’s average of 20 percent and the U.S. average of 17 percent.

Therein lies a serious problem. It is not population growth for growth’s sake. It is Memphis’ lack of success in attracting talent that is needed to compete and succeed in the knowledge economy. With population growth that is essentially births over deaths in Shelby County, we are on an economic bubble unless we can attract new, young, technologically-savvy workers to the Memphis region.

The news was also bad in the category of employment growth between 1993 and 2003. Of the regions centered around one of the state’s major four cities, Memphis was the lowest performer. The 13.9 percent rate of employment growth is below the Tennessee average of 14.9 percent and well below the national average of 17.2 percent. As a frame of reference, the Nashville region recorded 24.7 percent employment growth.

The glimmer of good news was found in our place as second highest percentage of people with bachelor’s degree and per capita personal income. In the Memphis region, 23 percent of the people older than 25 years old have college degrees. Only Nashville is higher – 26.2 percent. The state average was 19.6 percent, but the national average was 24.4 percent.

As for per capita income, Memphis trailed only Nashville - by $1,150, but we were well ahead of Chattanooga and Knoxville – by an average of about $4,100. The Memphis region is higher than the state per capita income, but less than the U.S. average.

The development of this new regional context for Tennessee was a welcome development, because it’s based on a more rational approach to economic development. In the past, state government simply dealt with the three “grand divisions of Tennessee,” or the 95 counties of Tennessee, but both were based on geographic boundaries that had nothing to do with shared economic factors and a shared economic future.

While the report about regions makes for an interesting look at the way the state’s economy really works, the test is for state government to now apply them to economic development and public policy development. Already, the Tennessee Department of Economic and Community Development refers to the 10 regions in its plans, but as we know from past experience here, it’s much easier to adopt the language of regionalism than create the reality of regionalism.

The ultimate test lies in ECD’s ability to rally the various city and county jurisdictions within each region around a shared vision and shared plans for the future. Rather than just reconfigure already existing state programs around the new 10 regions, state government should do something really visionary, such as passing the authority for regional tax-sharing authorities for each region.

Now, that would be a breath-taking in its leadership.

Tomorrow: Lessons From Other Cities

New Market Tax Credits Underpin Bass Pro Megastore

New market tax credits, a little-known development tool for low-income areas, is making a high profile appearance in Memphis as part of the Bass Pro Shop financing package at The Pyramid.

That revelation was made to the Memphis City Council this week, although financial details of the package are yet to be revealed. However, it was announced that rent based on sales would be a minimum of $1 million a year.

It is a political bonus for elected officials to have the chance to announce that rent is being paid by Bass Pro Shop, and while the final computation of rental rates in the contract may make the federal tax code look simple, if $1 million is paid to local government each year by Bass Pro Shop, that amount would cover around half of the annual debt service still being paid by Memphis and Shelby County Governments on the cost of the signature building.

As for the new market tax credits themselves, they were created by Congress in 2000 as an incentive to make projects in low-income areas more attractive to private investors. Applicants vie for the credits in a highly competitive process.

In the first three rounds of allocations of the tax credits, which began in 2003, the demand for then has oustripped supply by 10 to 1. While the incentives can be used for business development, the majority are used for commercial real estate because of the way the program was structured in the “Community Renewal Tax Relief Act of 2000.”

Across the U.S., the credits have been used for the rebuilding of shuttered manufacturing companies, new business incubators, public markets, mixed use arts districts, charter schools and a community center. The credits can be used for virtually any business, with the exception of liquor stores, golf courses, country clubs, massage parlors, hot tub and suntan companies, racetracks and gambling facilities. In several cities, it has been the financial foundation on which downtown redevelopment plans were built.

The credits can only be used in low-income communities, which are defined as census tracts with a poverty rate of at least 20 percent or with median income not exceeding the greater of 80 percent of area median or statewide median income and, for a non-metro census tract, 80 percent of statewide median income.

Got it?

With the tax credits, investors pay lower taxes and the savings are passed along to the community through lower rent per square foot. Total disbursements so far have been $8 billion. The firms or investors who receive the market tax credits have five years to use them to attract private investment, or they are withdrawn and shifted somewhere else.

The New Market Tax Credit law has developed a cottage industry of advocacy groups and banks lobbying for its reauthorization in 2007, and since the program was expanded to help with the rebuilding of New Orleans and the Gulf Coast following Hurricanes Rita and Katrina, prospects are good for renewal.

According to the Initiative for a Competitive Inner City, while inner city consumers represent $100 billion in buying power, unmet demand exceeds 25 percent in many inner city neighborhoods. Previously, the research of University of Memphis has shown that these neighborhoods are underserved with retail and can support more and varied businesses.

Ironically, when The Pyramid was opened, it was supposed to spark significant investment in The Pinch District and to create a lively district known for its restaurants, mixed uses and retail. In truth, The Pyramid did just the opposite, leading to the demolition of a number of buildings simply to make way for a more profitable revenue source -- parking lots.

When the legislation creating the credits was passed, President Clinton said it was to expand economic opportunity to distressed communities. The area around The Pyramid is now the poster child for such distress, and hopefully, the introduction of New Market Tax Credits in such a highly visible way will encourage their use in inner city neighborhoods in desperate need of an infusion of capital for economic development.

And What Is The Memphis Brand?

From the CEOs for Cities blog:

Simon Anholt was a recent guest on "Smart City." Simon, perhaps the world's premier place branding expert, has just launched the Anholt-GMI City Brands Index, a measure of the brand strength of 20 cities around the world.

Here's what Simon told "Smart City" about the value of city brands...

"Cities just like countries, just like regions, just like tiny villages, all have a reputation. They are all perceived in a certain way by people near and far.

"That reputation may be broadly true, up to date, accurate and positive. Or more likely, it could be confused, out of date, prejudiced and negative. A city's reputation has a direct and profound impact on the way people behave toward the city.

"If a city with a great, positive, powerful reputation, it will act like a magnet, attracting investors, tourists, business visitors and talented immigrants and all the other kinds of things that cities need in order to prosper.

"If it has a bad image and a bad reputation, you won’t get any of those things or will have to try twice as hard or pay twice as much.

"I would like to quote J.P. Morgan, because he said the wisest thing ever really about branding (although I don’t think he realized at the time he was talking about branding). He said, 'A man always buys things for two reasons: a good reason and the real reason.' The way I see it is that brands are all about the real reason. It’s the heart rather than the head."

Danger Is A Metropolitan Risk

To follow up the last post, Memphis has been ranked the third most dangerous of 330 metropolitan areas, following Detroit and New Orleans. In an interesting footnote, as a city, Memphis ranks 16th among 369 cities. It's as a metro area that it really moves up the list. By the way, the Jackson, TN, metro is ranked as the 18th most dangerous metro area. So much for rural bliss.

A Campaign For Well-Reasoned Crime Policies

We have now officially entered the political season.

The attorney general’s office has expanded its “No Deals” program just in time for the election, and press conferences are being held that treat garden variety drug dealers as if a Columbian drug ring has been crushed.

Of course, it’s impossible to have an election cycle without a flurry of law and order pledges and crackdowns on crime. Because no one wants to be seen as “soft” on crime, the local budget spent on law enforcement is as sacrosanct as the Defense Department’s budget in Washington, D.C.

These days, the total amount spent by Memphis and Shelby County Governments for law enforcement, prosecution and incarceration exceeds $400 million a year, and in the space of about five years, county government saw its funding for prosecutors, law enforcement and jails increase by 50 percent.

You’ll hear a lot about crime during the next few months as candidates out law and order each other, but there’s two things you won’t hear: 1) all of these much vaunted crime-fighting ideas don’t have nearly as much impact on the crime rate as demographic trends, and 2) we’re wasting millions of dollars chasing marijuana offenders.

First, demographics. Remember those grim predictions about 15 years ago that the 1990’s would have an epidemic of juvenile crime as violent and drug-crazed teens took to our cities’ streets. The Northeastern University academician with Memphis ties, James Fox, foretold of a time when superpredators would ravage society and capsize America’s cities with a coming crime storm.

So, what really happened? The teen crime rate plummeted. The predictions flopped.

It turns out that what passes for crime forecasting most of the time is similar to what passes for city budgetary planning. It’s a straight line theory; predictions were essentially trends extended along a straight line until they reached the stratosphere.

It turns out the real convergence isn’t teens and crime. It’s political self-interest and hysterical crime scares. Law enforcement officials routinely overstate crime waves, particularly those involving youth crime, because of the political benefits of conjuring up politically raw images of marauding teens terrorizing neighborhoods.

This isn’t to make light of the problem that exists in some parts of Memphis. It’s only to suggest that more reason should be injected into the conversation, reason that looks at the seedbed conditions causing crime, not merely the symptoms themselves. It’s only to suggest that if we are willing as a community to spend more than $15,000 a year to keep someone in jail, perhaps we should consider spending a fraction of that amount to deal with the conditions that contribute to problems in the first place.

Because most of the crime trends and alarming reports spring from political systems, there is no urgency to correct the record. Once crime didn’t take off as predicted (although it did accomplish the goal of getting the funding for prosecutors and law enforcement increased dramatically), what was the explanation for no increase in crime rates? Why, tough new legislation and strict law enforcement of course.

Amazingly enough, when the political smoke is removed and you drill down into FBI reports, you learn that juvenile arrest rate has been largely flat for years. (There’s the Freakonomics connection between abortion rates and lower crime rates, but we won’t get into that.)

Second, marijuana. In the past few years, the drug war has moved from hard drugs to marijuana, which now accounts for almost half of all drug arrests in the U.S. Here, the West Tennessee Violent Crime and Drug Task Force proudly reports that it has seized about two tons of pot.

It is striking that at a time when most Western countries are treating marijuana use as akin to alcohol use, the U.S. has ramped up another drug war focusing on it. A study of FBI data concluded that the percentage of heroin and cocaine cases has dropped from 55 percent of all drug arrests in 1992 to less than 30 percent. Meanwhile, marijuana arrests rose from 28 to 45 percent of total arrests.

It’s no surprise that the increased focus on marijuana produced a dramatic rise in drug arrests, which apparently was the objective all along. Drug arrests climbed by almost 35 percent, and of that increase, 80 percent stemmed from marijuana charges.

It would seem logical that the “war on terror” would make the “war on drugs,” or at least the war on marijuana, less of a priority. Even the American Enterprise Institute asked last year in a report, “Are We Losing The War On Drugs?” if “criminal punishment of marijuana use does not appear to be justified,” and conservative icon William Buckley of course has long railed against it.

The liberal group, the Sentencing Project, estimates that one in four people in state prisons for marijuana offenses are low-level offenders, and that the U.S. is spending about $4 billion a year on arresting and prosecuting marijuana crimes. It should also come as no surprise that while African-Americans make up 14 percent of marijuana users, they account for nearly one-third of all marijuana arrests.

Faced with U.S. Attorney General Alberto Gonzales’ formation of a committee to prosecute violent drug gangs and crack down on methamphetamine manufacturers, it seems like we’re well past the time for a reevaluation of our drug policies regarding marijuana and our over-amped law and order rhetoric.

Timely Wisdom From Our Rabbi

A little over a year ago, United States Supreme Court Justice Antonin Scalia spoke at the oldest Sephardic synagogue in New York City, Shearith Israel. He noted that in Europe, religion-neutral leaders almost never used the word “God” publicly. And then, as a panel member of a forum on matters of government and religion, he asked, “Did it turn out that by reason of the separation of church and state, the Jews were safer in Europe than they were in the United States of America? I don’t think so.”

Scalia told his audience that the presence of the word “God” on U.S. currency, the use of chaplains in the military and legislature, the real estate exemption for houses of worship, and the phrase “under God” in the Pledge of Allegiance, all mean that our government is not “neutral” on religion. And then he added, “None of this is compatible with what we say when we express the so-called principle of ‘neutrality.’”

Contrary to the Justice’s claim, Europe does not inherit a history of church-state separation. Perhaps Justice Scalia forgot about the medieval domination of European politics by the Church and its dire consequences for “non-believers,” as evidenced by the Crusades, the Inquisition, and pogroms led by the “faithful followers” of Christian doctrine.

Surely, Scalia could not have forgotten that even Adolf Hitler himself invoked God on numerous occasions and firmly believed that his murder of Jews was required by God, as he stated directly in Mein Kampf, “...I am acting in accordance with the will of the Almighty Creator: by defending myself against the Jew, I am fighting for the work of the Lord.” The belt buckles of the German Army were inscribed with the words, “Gott mit uns” (“God is with us”). On July 14, 1933, Hitler merged the Protestant church into the Reich and gave the Reich the legal authority to ordain priests. So much for the separation of church and state in Europe!

Justice Scalia is correct that Jews were safer in America than in Europe, but not because Europe had secular governments and the United States had a religious one. Jews flourish here because the United States has a secular government that protects the rights of all people to practice their own religion, or not practice one at all.

Perhaps the most definitive statement on church-state separation in America was President James Madison’s letter to Edward Livingston in 1822 in which he wrote, “I have no doubt that every new example will succeed, as every past one has done, in showing that religion and government both exist in greater purity the less they are mixed together.”

Madison had earlier vetoed a bill that authorized government payments to a church in Washington, D.C. to help the poor. Caring for the poor, according to Madison, was a public and civic duty - a function of government - and must not be allowed to become a hole through which religious institutions could reach and seize political power. Funding a church, he argued, would break down the wall the founders had put between church and state to protect Americans from religious zealots gaining political power. So much for current “faith-based initiatives!”

The ongoing campaign to get government funding for religion may bring a sparkle to Justice Scalia’s eyes. In the eyes of Madison and the founding fathers, however, there must be a tear. The issue isn’t whether religious values inform our currency or our lives. The issue is that when government mixes with religion, both suffer.

Faithfully yours,
Rabbi Micah D. Greenstein

Fishing For A Tenant For The Pyramid

Perhaps Bass Pro megastores are the downtown aquariums of this decade.

Once again, cities can’t seem to stop the unrelenting chase for a magic bullet, a quick fix, a simple solution to revitalizing downtowns. It was the attitude that gave birth to a handful of successful aquariums which in turn inspired dozens of other aquariums long after it was clear that the track record of aquariums was spotty and the market was long since saturated.

Now, downtowns like ours now bait the hook for the latest in economic development – fishing megastores like Pro Bass Shops and Cabela’s, the #1 and #2 hottest stores in a retailing sector whose sales exceeds $75 billion a year.

Of course, here, the chase for the latest in downtown redevelopment has special irony. That’s because it’s this decade’s answer to dealing with the last decade’s answer, The Pyramid.

Of course, we’ve suggested that the best course of action would be to level The Pyramid and use the land as new festival grounds stretching from the visitor’s center to Auction Street.

Instead, we chase a future as a pilgrimage site for the bass fishermen among us, joining cities like Buffalo, New York; Broken Arrow, Oklahoma; and Buda, Texas, which are giving away millions in public money to consummate deals to bring megastores to their cities. Here, negotiations for Pro Bass Shop to become the headliner tenant for The Pyramid have entered a pivotal stage, and based on the company’s attitude in Buffalo, it may require a significant investment in public money to close the deal.

In Buffalo, the “incentives package” for Bass Pro Shop is estimated to cost government about $70 million. Faced with a sweeping urban redevelopment plan for the Buffalo Inner and Outer Harbor, city and state officials turned to the bass shop as the centerpiece for its big plans.

The financing package in Buffalo even included one of those notorious hard earmarks targeted for extinction as part of the ethics reform campaign in Washinton, D.C. -- $34 million in federal funds to pay for projects that will “enhance” the Pro Bass megastore.

The Buffalo plans may sound familiar. The city had a large, abandoned building on its waterfront – the Memorial Auditorium – and it had grand plans for it reuse to anchor a key part of downtown redevelopment. Of course, there were promises of tens of millions of dollars in economic impact, thousands of new jobs, hundreds of thousands of tourists and, well, you get the all too familiar picture.

To give you an idea of how out of control the political rhetoric became, New York Governor George Pataki not only delivered up about $20 million in state funding for the Buffalo project, but called it a key accomplishment of his administration.

Pro Bass Shop has said it is investing $66 million in the Buffalo project, whose 250,000 square feet makes it the third largest megastore in the chain. It’s unclear how much space the retailer plans to use in The Pyramid, but there is roughly 350,000 square feet on the main floor, the two levels on the north and south sides of the building and 10,000 square feet at the apex.

Not to be outdone, Cabela’s is demanding government concessions before it agrees to build its megastores. For a 185,000 square foot store between Austin and San Antonio, the company negotiated $40 million in bonds from tiny Buda, Texas, whose annual budget is $4.5 million. As Cabela’s has done in other cities, it then bought the debt in exchange for a sales tax exemption. Meanwhile, the chain got a $600,000 enterprise grant and about $20 million in highway improvements from Texas state government.

The fishing retailers say each megastore attracts millions of visitors, and Cabela's claims the Buda store is a magnet for four million customers. Opponents assail the incentives as corporate welfare gone amok and question why government is a willing partners with a retail company. A Cabela’s official – in a moment of candor – said that the company does best in wringing concessions out of smaller cities because they are anxious for answers for their economic growth.

Lured with the prospects of a signature building in the heart of hunting and fishing territory, expectations are that Pro Bass Shop will to come to The Pyramid. Hopefully, Memphis isn’t the one being reeled in.

Tying Up Two Loose Ends

In response to Tuesday's post on the need for Tennessee Department of Transportation to change its approach to sound barriers to make them more appealing, State Commissioner Gerald Nicely emailed that he "agrees completely" and that he and his staff are working to improve the appearance of the eyesores.

In response to Monday's post about whether the Memphis MPO is biased because of the disproportionate weight given to suburban members, we were asked what it would take to change the MPO membership so that it would be more representative of the overall population of the area. To make this change, it would require the current members - with their suburban preponderance - to amend their rules to give the urban core fairer representation. Don't look for it to happen.

Democrats See Success In Their Future

On the political front, there are developments that can hearten Democratic supporters – or at least those interested in the city mayor and state governor’s offices.

While the anti-Herenton faction works to amass the daunting 70,000 signatures required for a recall vote, a number of people who support Mayor Willie W. Herenton are keeping a low profile, because to them, this feels like a “no lose” proposition.

That’s because first, they believe (and polls would tend to lend credence to the position) that Mayor Herenton cannot lose a recall vote. Inevitably, the theory goes, it will be a racially charged vote and will motivate his base like no other issue could.

Second, with the large-scale voter turnout to defend Mayor Herenton because of his special status as Memphis’ first African-American mayor, some observers see a benefit in the recall. By firing up the Democratic base and getting out an unusually high percentage to the polls, some see the potential of defeating every Shelby County Republican elected official who holds a fulltime office.

In addition, they see the turnout triggered by a recall vote as benefiting Governor Phil Bredesen and making his re-election a shoo-in. That said, lately, the governor seems to moving in the right direction without any such help.

In the wake of the ethics scandals in the Tennessee Legislature, he’s seen as the “grown up” in charge. When the controversy began to unfold, Governor Bredesen’s poll numbers were anything but impressive. His favorable rating was 46 percent and his unfavorable rating was 48 percent. As the revelations of the “Tennessee Waltz” continued and he called a special session of the Legislature to deal with ethics legislation, his numbers swung dramatically -- to 57 percent in favor and 37 percent opposed.

His favorable rating has dropped off slightly since peaking in December, perhaps reflecting the slight traction of the Tennessee Highway Patrol controversy, but he’s still favored by 55 to 38 percent (with the remainder undecided).

In the pantheon of U.S. governors, he’s dead center in the pack. He’s ranked 25th in the ranking of highest approval ratings, tied with neighbor, Mississippi Governor Haley Barbour. He’s also 25th in net approval rating, this time one notch behind neighbor, Arkansas Governor Mike Huckabee.

Bredesen’s shows broad political strength, regardless of ideology, party affiliation, abortion position, and geography. Interestingly, Republicans like him even more than Democrats – 62-31 compared to 52-40. Independents favor him 52-41.

The Democratic numbers result from his only weaknesses at this point -- 18-34 year-old voters (who don’t usually cause too much concern because of their lower voter turnout), and black and Hispanic voters. In these categories, his average negative rating outpaces his average positive one by seven per cent, and his soft support by black and Hispanic voters produces mild concern for strategists at this point.

By the way, the highest rated governor is West Virginia’s Joe Manchun with a remarkable 80 percent approval rating, benefiting from his strong leadership to improve coal mine safety in his state. At the other end of the spectrum is Ohio Governor Bob Taft at an almost unbelievable 18 percent as a result of his refusal to leave office despite corruption allegations.

Disenfrachisement of Ex-Felons Gaining Attention

Sometimes, we’re so busy asking the wrong question that we never get to the real answer.

For example, remember all the media coverage about unsafe day care vans. And yet, no reporter ever bothered to ask why we needed to be transporting these kids in dozens and dozens of vans all over Memphis every day in the first place. What were its public policy benefits?

Now, we come to the contested election of Ophelia Ford as state senator. State investigators are looking into whether ex-felons voted in violation of state law. But no reporter is bothering to ask why Tennessee is not part of the national move to reform felony disenfranchisement laws.

In the U.S., about 5 million people – about one in 43 adults – have lost their voting rights as a result of felony convictions. That includes 13 percent of all African-American men, at a rate seven times the national average. About 2 million whites cannot vote and about 600,000 military veterans.

There is no rhyme or reason to state laws governing this issue. Three states deny the right to vote to any ex-offenders while two states even allow inmates to vote. Of course, the disenfranchisement of ex-felons catapulted to the front pages in the 2000 presidential election when George W. Bush won Florida (and ultimately, the election) by about 550 votes although 600,000 ex-felons in Florida were unable to vote.

In Tennessee, the number of disenfranchised voters is about 100,000 -- 14.5 percent of all African-Americans and about 2.4 percent of the total population. General demographic data for Tennessee would indicate that the percentage of African-American disenfranchisement in Memphis is higher than the state average of 14.5 percent.

In an analysis in Atlanta, disenfranchisement was seen as contributing to a vicious cycle. “In citywide decisionmaking regarding spending for schools or social services, residents of certain neighborhoods will have considerably more political influence than others, solely because ‘one person, one vote’ is distorted through the loss of voting rights.”

As an example, the study cited the disproportionate impact of drug policy on minority neighborhoods. The higher rate of prison for offenders in these neighborhoods and tough on crime campaigns that target these neighborhoods skew the percentage of ex-felons who cannot vote. As a result, while many elected officials of these neighborhoods are concerned about the social costs of drugs and call for a balanced approach to prevention and enforcement, the fewer number of voters in the area gives them less impact on public policy, the report said.

In addition, sociologists writing in the Columbia Human Rights Law Review point out that there is a “consistent difference” in the rate of arrest, incarceration and criminal behavior between voters and non-voters, leading them to conclude that disenfranchisement marginalizes ex-felons and encourages them to see themselves as apart from society.

A number of states are considering the reform of their laws. The trend is bolstered by the American Bar Association’s endorsement of the principle that “persons convicted of any offense should not be deprived to the right to vote” and the National Commission on Federal Election Reform – co-chaired by former Presidents Carter and Ford – unanimously recommending that voting rights be restored upon completion of a sentence. Even the American Correctional Association has approved a similar position.

Already, Alabama, Connecticut, Delaware, Maryland, Nevada, New Mexico, Texas, Virginia and Wyoming have taken steps to reform their disenfranchisement laws. A new bill is pending in Alabama that will unrestrict voting even more, making it automatic. Utah senators voted last week to broaden the ability of its citizens to have their voting rights restored. Meanwhile, in Maryland, the legislature is now considering a bill to restore voting rights for ex-felons. Maryland is one of 11 states that disenfranchise some felons for life (along with Tennessee).

As proponents of the measure point out, no other democratic nation disenfranchises ex-felons who have completed their sentence. No serious attempt appears to be under way in Nashville to reform Tennessee’s laws, but clearly, it’s an idea whose time is coming.

It’s an interesting footnote unrelated directly to this issue that while lawmakers are slow to restore voting rights, they are often anxious to have prisons and prisoners in their districts. That’s because prisoners are counted in the total population of the community where the prison is located.

This means that the location of some prisons, especially federal ones, are sometimes heavily influenced by political factors, because the addition of the prisoners into a city’s population can have an impact on the drawing of Congressional districts or even the addition of another Congressman for a state.

Also, numerous federal programs appropriate money to cities based on their populations, and cities with prisons in effect receive money for prisoners, who in turn receive no city services from them.