City Budget Time

It’s budget time, so we’ve been taking a look at both the RDC’s operating and CIP budget requests. Here’s what we’ve seen plus a little background.

The City has two budgets: an operating budget and a capital improvements project (CIP) budget. Immediate needs and everyday operations are covered by the operating budget, and the money to pay for them comes directly out of tax revenues. Requests in the CIP are to cover big, long-term projects, and the money comes from federal and state grants and from bonds issued by the City with part of the principal and interest paid off each year by the operating budget. The Administration comes up with a budget for each division of city government and for bodies under contract with the City to provide services. That budget is then sent to the City Council for consideration and approval.

In 2001 the Administration signed a 5-year contract with the RDC to manage the parkland along the Mississippi River. That contract comes up for renewal this July. 99% of the RDC’s budget is public money.
Each year the RDC submits its operating budget request to the City Council. This year, like last, the RDC came to the Council with a request but without an itemized budget. This year the Council sent them home to do their homework and report back. Here’s the operating budget that the RDC Board has now passed and that will go to the Council for approval. As you see, they’re asking the City for $2,165,864 in operating expenses.

Big projects planned by the RDC are in the CIP budget. The Administration signed a second contract with the RDC in 2004, a development contract making the RDC the sole agent for development of the riverfront. Part of the land they plan to develop is the Public Promenade. Set aside in 1819 as a common space to be used and enjoyed by all the citizens of Memphis, this prime land on the Riverbluff, is slated by the RDC to be turned over to developers for private high-rise condos and offices. The City does not own this land but only holds an easement to it, so this part of the RDC Master Plan, as things stand, is not doable. Friends for Our Riverfront is committed to protecting and improving this space for public use. Nonetheless, it remains part of the RDC plan and is included in one of the four RDC long-term projects in the CIP budget.

Over the next five years, the RDC wants the City to issue $20,969,000 in new general obligation bonds for three of their four projects: Beale Street Landing ($17.5M), Cobblestone Landing ($602,000), and Riverfront Park Improvements ($2.8M). This year they are asking for $5M, next year for $13.5M.

The biggest ticket item in the RDC CIP budget, Beale Street Landing, is planned as a commercial boat dock with a ticketing and restaurant facility and underground parking. It is to be located west of Riverside Drive at the foot of Beale Street in the southernmost tip of Tom Lee Park and the northernmost part of the cobblestone area. This land is not part of the Public Promenade. The RDC CIP budget (click to take a look)
shows $29,759,026 for construction of Beale Street Landing. $9,258,026 in reprogram money, $7,735,000 in 2007, and another $12,766,000 in 2008.
The budget not only shows the amounts, it also shows where the money will come from:
1) $9,258,026 in reprogram money is from "federal and state grants CIP"
2) $2,500,000 of the money in the 2007 CIP is to come from "local other CIP".
3) The rest -- $4,793,000 in 2007 and $12,766,000 in 2008 ($17,559,000 total) -- is to come from issuing general obligation bonds, which are backed by our taxes.

No financial studies have been presented to show whether or not the boat dock will make money or pay for its maintenance and staff.

The second RDC project in the CIP budget seeks $3.1M for restoration, walkways, and underground utilities for the Cobblestone Landing area. Listed on the National Register of Historic Places, the cobblestone area is the only in tact wharfage on the Mississippi River. Of the $3.1M, $2.5M is to come from federal grants and $602,000 from general obligation bonds ($242,000 in 2007 and 360,000 in 2008).

The Riverfront Park Improvement Project request is for $2.8M to improve and maintain Crump and Chickasaw Heritage Parks, other riverfront parks, and Mud Island River Park. The amount is spread between 2008 and 2011 and is to come from general obligation bonds.

The fourth RDC project in the CIP requests $200,000 for Riverfront Planning, described as "funding to allow the continued planning of the Riverfront Master Plan, including such issues as the Promenade, Wolf River Harbor land use, Wolf River Trail, and other". This money is to come from a federal grant in 2007.

In toto the RDC is looking for approximately $35M in general obligation bonds, federal and state grants, and "local other CIP" for these four long term-projects over the next five years.

The RDC will present their CIP budget request to the Budget Committee on Tuesday, May 30th at 4:30 p.m. in the 5th floor conference room of City Hall. After that the budget is headed to the full Council.