FedEx Forum

Well it looks like the the thinking that the FedEx forum is a clusterfuck and the city got screwed with the Grizzlies is reaching a critical mass. It was the big subject of Leon Gray's show today. The funny things is none of this information is new. In February of 2005, I was doing a paper about the funding of the FedEx Forum. I got the minutes from a county commission meeting about the parking garage in February 2005. Here they are. It makes for a fascinating read. You should check out the contingency fund scheme as well (but that's another posting).

February 23, 2005
Comm #7 - PUBLIC SERVICE & TOURISM
1:17 pm

Commissioners present:
John Willingham, Chair
David Lillard
George Flinn
Cleo Kirk
Walter Bailey

Guests: Willie Gregory, Sports Authority Board Chair
Lisa Daniels, financial advisor from PFM


Willie Gregory introduces staff.
Willingham asks to track where monies come from that are allocated to
Sports Authority, how they arrive at Wachovia, Wachovia to pay whomever
needs to be paid, then in lower right corner what happens to the county
if funds insufficient. Also hear mumblings that Grizzlies, if
city/county took over responsibility would allow Coliseum and Pyramid to be
used. Otherwise they refuse because they have full responsibility of
success or failure of Forum. However the parachute at lower right in case
sales tax is not sufficient, car rental, hotel/motel tax the PILOT from
MLGW, seat tax - if those become insufficient, then the county/city would
have to pay.

Gregory confirms the same understanding.
Willingham asks Gregory to explain the five categories, if receiving,
where it goes, how gets to Wachovia and where are we in the scheme of
things if we're on target, if PFM projections falling short, timeline,
sufficient funds.

1:20 pm
Gregory will put all in layman terms to fill categories.
Lisa Daniels, financial advisor from PFM will walk through those
questions.

1) PILOT is simplist. MLGW pilot comes in twice year, June and December
contracted amount, right on target $2.5 million annually approximately.

2) TDZ (tourism development zone)- city/county hotel/motel tax dollars,
comes to county to free up Convention Center money to pay to Forum,
comes in once per year from state to Trustee. All goes directly to
Wachovia, who is trustee for bond holders, goes into trust for access for
specific uses.

TDZ defined a perimeter around the city whereas a sales tax is greater
than growth in defined area is greater than growth in county, the
incremental difference is pledged to Convention Center which frees up $ to
pay for Forum. It is a direct one for one sales tax revenue.
Willingham asks where found. Gregory states it is in the indentures.
Kirk assures is in there.

Daniels continues relaying how the 3 revenues go into a senior revenue
fund along with 2 other revenue sources. Eventually in 2017 will be
Hotel/Motel taxes pledged.

3) Sales Tax Rebate dollars - rebate of sales tax on all Grizzlies NBA
events, collected at Forum, recorded on citus(?) number/code to state,
and state sends on monthly basis the sales tax revenue dollars directly
to Wachovia.

4) car rental tax - collected by county clerk and submitted monthly to
Wachovia, fiduciary.
At this point PBA has been paid all that is due to them, no more
construction dollars.
Left now is paying bondholders = eventually after going thru many
iterations falls down to surplus fund if anything left over.

Excess revenues get paid to redeem subordinate bonds.
Of the A/B and CDE bonds - county secures A & B series only. This was
$202 million and $20 million, in effect private investors who invested.
Once clause in 2021 if Grizzlies leave, can collapse series B bonds and
still be hopefully ok the way revenue streams work. The revenue streams
are designed if the two went away in future, could collapse bonds.

1:30 pm
Excess flows to Wachovia, stream to bond holders, balance to ***
First place funds go to a dedicated fixed stream, with excess to excess
subordinate.

If not enough revenues to pay senior A/B bond holders, Wachovia has
debt service reserve fund with $18 million, held by Wachovia. If not
sufficient money flowing , the money from reserve fund then pays bond
holders. City/county pledge on a 50/50 basis pledge to replenish debt service
reserve fund - bondholders are always paid right away and gives
city/county opportunity within a year to replace reserve.

With $10 million shortfall, would draw from reserve, then within one
year $5 million from city and $5 million county - which cannot be ad
valorem property taxes, such as wheel tax (any funds that go into General
fund are not ad valorem monies). This addresses the flow of funds to
some extent.

1:34 pm
Willingham comments on contingency funds being 2.5-3%. Willingham
concerned have no money/ understands Hotel/Motel is somewhat ***. Never
really known that the heck is going on. Willingham questions if someone
gets a bill, someone auditing H/M industry.
1:40 pm
Lisa states actual receipt of county Hotel/Motel dollars does not
affect this cycle. As long as there are Hotel/Motel tax dollars greater than
tourism development zone (TDZ dollars), the TDZ is only affected for a
project already in operation. To attach to Convention Center can
collect immediately and did in 2002. Had attached to Forum and could not
collect until 2004 and would not have the benefit of that 2 years. By
attaching to Convention Center, freeing up money to Convention Center to
go to Forum. Therefore, Hotel/Motel tax does not mean anything for
Forum, only for county.

1:43 pm
Lisa states was designed to build in cushion, but based on current
projections, after bondholders are paid in May, hopefully there will be
$180,000 balance, although do not expect to have to dip into those funds.

Bailey asks how much TDZ has increased by virtue of Grizzlies'
presence.
Lisa not sure possible to figure without diving into TDZ, whose balance
depends on MLGW. TDZ is affected by weather and county's use of MLGW
services, and not so much the intended design to be with Grizzlies.

Huntzicker states was originally slated for downtown, but rely on
countywide sales tax. As goes the sales tax with MLGW, so goes the TDZ.
Really just saying MLGW sales tax.
Lisa states more cyclical and volatile.

Willingham asks if for 25 years or $64 million - are one in same or
separate?
Recalls the number couple years ago that MLGW contribution to big
picture was $2.5 million for 26 years (separate from TDZ per Lisa). All they
have to do is raise utilities price to get their money.

Kirk states LGW borrowed money to make changes, about to be paid off
and just continued it over.

1:47 pm
Willingham asks some questions plaguing commission.
Original architectural scheme was to imitate to a degree the project in
Indianapolis (Conseco) but part of involvement of federal and state DOT
was parking garage and intermodal transportation system. Letter from
former Mayor Jim Rout to Governor Don Sundquist spoke to a 6 story garage
with 1800 spaces. We have 5 story with 1500 spaces with no office
building in plan. We have to come up with $5 million to complete garage and
aesthetics required by Beale Street and cultural environment design
requirements to maintain uniformity with Beale Street, somewhat New
Orleans style, and those things are gone. Who had authority to take out, who
approved and how do you change those things, where does the money go?
Wondering what we gave up.

Gregory states responsible for financing building; these are probably
PBA questions.
Willingham asking Gregory - was he ever asked about removing those
things? No. Sports Authority was not asked.

1:52 pm
Lisa states this May 2005 $5.2 million due and approximately $12
million per year to build to approximately $18 million according to growth.

Bailey asks about impact on sales tax rebate as well as rental tax, and
asks do we have experience with respect to Grizzlies' presence. Lisa
states all sales tax is from Grizzlies games.
Have received $8 million in sales tax rebates.

Bailey asks if meeting expectations?
No per Lisa, not meeting original budgeted numbers and based upon
season before this one, it's about $2.5 million short from original pledge.
Total aggregate is $2.5 million over a 3 year period.

Willingham thanks everyone.
2:00 pm
end


You see the Fed Ex Forum is fucked up. Maybe people should start thinking if the Forum was this screwed, what about the rest of downtown development? Between 1995 and 2009 a total of $3.8 billion will be poured into downtown. Was there ever really a debate about this? Anyone ask the people of Frayser, Raliegh, Whitehaven, and Hickory Hill if this was a wise plan. Maybe it's dawning on the people of Memphis and Shelby that the policy making for local government is not transparent and dominated by rich elites. None of this is a surprise. Just look at the Capital improvement budget of the city of Memphis. For FY2006, as of December 2005, it was $261 million. Over the next five years it was supposed to be $1.9 billion. That's an average of $380 million a year. Herenton anounces that the budget is fixed a month or so ago. All he did was cut the Capital improvement budget by $100 million. Yet we are only $8 million ahead? What about the next four years when the city was going to spend $260 million more per year on average? With the FedEx Forum so screwed up, what has the local government, especailly the city been doing with the money in capital improvement budget over the past 10 or more years? If you could cut $260 million, what were you spending it on? And this horseshit of county commissioners and city council members saying that they didn't know what happened is rediculous. I can only come to a few conclusions. Either you are incompetent, you are lazy and not willing to do the job of oversight, or you maybe getting kickbacks to look the other way. How can I come to any other conclusion.
Are you now kind of seeing we're screwed. We've left these people in charge of putting all the hopes of saving our city from becoming Detroit in the downtown redevelopment plan. While downtown has improved, what about the rest of city and even county? Median incomes dropping, property taxes rising, huge swaths of city falling into disrepair and poverty, not to mention the rising crime. When are people going to ask was pouring all the resources of city into downtown redevelopment good for the overall population or the elites?