Wednesday, October 15, 2008

Getting To The Point Of The Pyramid Plan

Some county commissioners are like the guy who doesn’t kiss his wife for 20 years, but gets mad when somebody else tries to.

That’s a relatively accurate version of how Memphis City Councilman Jack Sammons summed up some county commissioners “I don’t want her, but you can’t have her” attitude toward The Pyramid.

Mr. Sammons, completing the remainder of the term for the seat vacated by former Chair Scott McCormick, has always had a remarkable knack for summing up a complex issue with a pithy saying or story, but it seemed especially true on the occasion of the proposal for Shelby County Government to sell its interest in The Pyramid for $5 million (along with its interest in property at the Fairgrounds).


On its face, it seemed like an easy sale, but in point of fact, it’s created a strange political dynamic on the board of commissioners. Although the buy-out by city government would remove any risk to county government, which the commissioners have said is their ultimate objective, they at the same time just can’t let go.

Whether they like the idea of the retailer as marquee tenant of the building or not, Shelby County Government has not just taken a backseat to negotiations with the company. Most of the time, it’s not even been in the car.

Of course, commissioners – whose votes are necessary for any agreement to be consummated – have every right to ask questions, but this one is taking on all the characteristics of one of those political exercises that’s somehow become more about pot shots than political solutions. Rightly or wrongly, commissioners questions seem to be aimed at bedeviling the Herenton Administration for reasons that often seem to have little to do with the proposal at hand.


We admit to expressing skepticism about redevelopment of The Pyramid, preferring instead that it was razed. Even now, there are varying opinions here, but generally skepticism has morphed into pragmatism.

Here’s that journey: It became clear that there was no chance that The Pyramid was going to be demolished, it became equally clear that the only proposal with money was Bass Pro Shops and most of all, it had the least risk for taxpayers.

That’s because in the end, the $30 million in bonds for infrastructure, parking garages and street improvements are revenue bonds, so taxpayers are not on the line if something unforeseen happens, the private investment is 3:1 to public investment, and the primary funding source is sales tax revenues that would otherwise go to state government.

The Kicker

But here’s the clincher for us. Over the initial 20-year term of Bass Pro Shop’s contract, the retailer will generate about $160 million for schools. Meanwhile, in the same period, about $18.5 million will be generated for city and county governments’ hotel-motel taxes, which will be used to step up payments for the Memphis Cook Convention Center.

That’s why it seems like a no-brainer for county government. The buyout gets the county debt paid on The Pyramid. It doesn’t give up any property tax money because no Tax Increment Financing district was needed to fund the project as was commonly expected. It doesn’t give up any county sales tax, because it wouldn’t have received them anyway.

There is a lingering question about whether The Pyramid should be sold to Bass Pro Shops in order to receive property tax, but since $30 million in public improvements are being put into the asset, it seems logical that city and county governments should retain ownership. It seems largely academic anyway, because if Bass Pro Shops did own the building, surely there first task would be to receive a lengthy tax freeze that would mean it wouldn’t pay taxes for a couple of decades. Meanwhile, the rent payments of at least $1 million a year would be eliminated.

The Right Priorities

With a to-do list that includes school funding, functional consolidation, revenue shortfalls, budget challenges and a regressive tax structure, there’s plenty of issues that deserve attention from the Shelby County Board of Commissioners right now. In particular, at a time when so many people are talking about consolidation because it would increase government efficiency and accountability with streamlined decision-making, it seems a good time to do the same when it comes to the future of The Pyramid.

More to the point, it seems to make sense that city government takes charge of this project since city taxpayers paid twice for it – 100% of the funding for the city’s half and 70% of the funding for the county’s half.

If we’re lucky, maybe the growing consensus for single source funding by county government for schools will in the future result in single source funding for projects like this one. One, it’s fairer for Memphians who shouldn’t be paying twice for services or buildings, and two, it allows one government to be in charge and be held accountable.

That sounds like progress to us.


Anonymous said...

Wow, that was a really abrupt U-Turn on the Bass Pro proposal. I'm exceedingly curious what has changed beyond your anorexic claim that you finally realized they wouldn't raze the Pyramid. Something smells fishy.

It's pretty clear. It's either a good idea on it's face or the Bass Pro concept tarnishes the city's image without regard to the economic consequences. Once upon a time, I thought SCM was an independent voice, challenging Memphis to think big and not to buy into the bird in hand argument. Now, not so sure.

Smart City Consulting said...

It got down to leaving the building empty or seeing if there is something positive that it could create. As we said, there's no unanimity about Bass Pro here, but the salient new fact that wasn't apparent earlier is that it will generate about $160 million for schools and it will be revenue bonds (which had thought was impossible) so taxpayers aren't on the hook, so to speak.

The majority vote here is still to tear it down.

Anonymous said...

Here's the thing, anonymous. It's not a bird in the hand. It's the only bird in the sky. The option is to tell the world that we have another white elephant welcoming them to Memphis.

Anonymous said...

Resuming booking it is out of the question why?
Bookings were stopped why?