by Jim Coleman —
Neighborhoods across the Bluff City moved closed to much-needed investment after the Memphis City Council approved Mayor Jim Strickland’s proposed “Accelerate Memphis” plan on a 12-0 vote during the Tuesday (Feb. 2) council meeting.
The plan calls for a laundry list of capital improvement projects throughout the city. It includes $75 million to spur development in 34 neighborhood anchors, with each receiving $400,000 for improvements such as public Wi-Fi and installation or improvements to sidewalks, street paving and crosswalks.
Historically underserved neighborhoods and communities such as Soulsville, South City, Hollywood/Klondyke, Highland Heights, Oakhaven, Orange Mound, Raleigh and Whitehaven would receive more funding. Eight intersections, including Lamar and Kimball, would receive safety upgrades. An additional $7.5 millions would fund expanded high-speed Internet access and affordable housing.
Another $75 million would be used on improvements to city parks, playgrounds, community centers, golf courses and other amenities. Fifty-million dollars would be invested in repairs at AutoZone Park and FedExForum.
Vacant Melrose High School would be given new life as a library and housing for seniors. Mud Island Amphitheater would also receive upgrades, allowing it to host musical acts again.
Deferred maintenance projects – those long overdue for upgrade or repair – will likely be the focus of most of the work.
To pay for the projects the council approved a balloon debt plan. This will allow the city to complete projects and cover their costs within the next three years. The bill comes due in five years, with a 25-year payment plan.
“These are ridiculously low interest rate requirements. Even then, it still surprises me that the current payments for five years will only cost five percent of the principal,” said Councilman Worth Morgan.
Those payments become due the same fiscal year that the city debt drops precipitously. The resulting “debt cliff” will reward the city with $63 million in wiggle room.
“We’re finally coming to the end of – to make it kind of a common term – like a mortgage. Where almost every payment is entirely principal,” Morgan said. “So for the next five, six years we’re making majority principal payments rather than interest. That is how we get our total debt down from $1.35 billion down to around $800 million.”
The plan will head to the Tennessee State Comptroller’s Office for review. If approved, the city can use the $180 million in capital appreciation bonds that make up a large part of the financing.
Without a balloon payment – such as more conventional bonds – the projects would put the city at its debt capacity. With the financing, the city has a debt capacity of $689 million.
“Where we are right now, we really have only about $8 million of borrowing capacity – of additional debt service that we can take on if we were to go the traditional route,” said Councilman Martavius Jones.
The plan has already been presented to the comptroller’s office, which capped the plan at $200 million. The other $20 million that make up the total comes from conventional bonds, which don’t require approval from the state. The balloon payments top out just shy of $12 million annually. Combined, estimates put the total payment at $14.3 million per year.
“It seems to me that the only downside of doing this balloon note was we are reducing our borrowing capacity in the future from $726 million to that $689 million – or $39 million less borrowing capacity,” said Councilman Jeff Warren.
Same-night minutes were approved for both resolutions. Paperwork will be sent to the mayor’s office following council action in two weeks.
Voting for the items were councilmembers Frank Colvett, Jr., Rhonda Logan, Patrice J. Robinson, Edmund Ford, Sr., Michalyn Easter-Thomas, J.B. Smiley, Jr., Cheyenne Johnson, Chase Carlisle, J. Ford Canale, Morgan, Jones and Warren.
Councilwoman Jamita Swearengen was not present.