2009 CIP budget – RDC requests

The RDC is asking the City Council to approve $33.4 million dollars for their capital projects in the years 2009-2012. The projects are Beale Street Landing, the Cobblestone Landing, Mud Island Maintenance, and a new Confederate Park – Law School project.

Click here to see the RDC’s CIP budget request.

To pay for these and other capital projects and to pay for operating expenses, the Administration has said they will need to raise taxes. The City Council currently is reviewing the budget. If you would like to contact Councilmembers, contact information is given at the end of this article.

The CIP budget is how the City pays for big projects: a) the equipment or tools to do a division’s work, like a new police training station, b) rehabilitation and maintenance of facilities, like rehabing a library, and c) new construction, like Beale Street Landing. The City raises this money by issuing bonds that are paid off at a later time. The debt service on the bonds must be paid each year.

Funding for these projects is requested by the Administration and approved by the Council for a particular year. If it is not spent that year, it goes into a category called reprogram money. Each year that reprogram money must be reevaluated and a resolution passed by the Council for it to actually be spent. The Council is being asked to reconsider and approve $14.6 M in reprogram money and an additional $7.3 M this year for Beale Street Landing.

The total amount of money requested in the CIP for 2009 is $241 million. That amount plus the total requested over the next five years (including reprogram money, which has not yet been appropriated) makes up the CIP budget request. It is currently for $1.5 billion of debt financing.

According to Roland McElrath, the City’s Chief Financial Officer, the City tries not to issue more than $100 million in debt each year.
The debt is issued as commercial paper or as general obligation bonds to provide cash for the projects. It’s like borrowed money and the debt service or interest has to be paid out of the City’s operating budget. Today 20% of Memphis’ operating budget goes to pay the service on the City’s debt.

Mr. McElrath explained the process of determining which projects are included in the CIP budget requests.

Each division presents their budget requests for capital expenditures for the next 5 years to the Administration in April.
They are evaluated by a committee which looks at the necessity of each item. This committee is made up of division directors plus a few others. They look at the cost, cash flow, legal obligations, leverage of funds associated with project, operating budget impact, useful life cycles, and community service impact.

This process was started in 2007 when the City needed to pare back debt to highest priorities and those projects most critical to the City, i.e. funding for the most needed projects.

Councilman Strickland asked how Memphis’s debt compares with cities of comparable size. Mr McElrath answered that the bond rating agencies say our debt is slightly higher than comparable cities, but that it is manageable.

The City Council is currently reviewing the CIP budget division by division. Although the RDC is not a division of city government, it operates on a contract basis and its budget must be reviewed and approved by the Council.

Review of the RDC CIP budget request is scheduled for Wed., May 21 in the City Council committee hearing room on the 5th floor of City Hall. The public is not allowed to comment at the hearing, but you may send your comments to the Councilmembers by letter, e-mail, or phone call.

BILL MORRISON P O Box 281297 Memphis, TN. 38168 576-6786;576-7011; bill.morrison@memphistn.gov

BILL BOYD 125 N Main Memphis, TN 38103 576-7012; bill.boyd@memphistn.gov

HAROLD COLLINS 1314 Singing Trees Dr. Memphis, TN 38116 576-6786; 332-3691; harold.collins@memphistn.gov

WANDA M. HALBERT 3506 Barron Dr. Memphis, TN. 38111 576-6785X5; wanda.halbert@memphistn.gov

JIM STRICKLAND 267 Ridgefield Rd. Memphis, TN 38111 527-0255; 576-6786; jim.strickland@memphistn.gov

EDMUND FORD, JR. 917 Summer Shade Ln. Memphis, TN 38116 396-1555; 576-6786; edmund.ford@memphistn.gov

BARBARA SWEARENGEN WARE 1636 Sydney Rd. Memphis, TN 38108 458-9406; 576-6786; barbara.ware@memphistn.gov

JOE BROWN 1384 Jackson Memphis, TN 38107 576-6786; joe.brown@memphistn.gov

JANIS FULLILOVE 3320 Morningview Dr. Memphis, TN. 38118 205-4593; 291-1266; janis.fullilove@memphistn.gov

MYRON LOWERY 128 Harbor Isle Cir. S.Memphis, TN 38103 576-6786; 521-4300; myron.lowery@memphistn.gov

SCOTT MCCORMICK 8895 Hickory Trail Cordova, TN 38018 753-6014; 569-7127; scott.mccormick@memphistn.gov

SHEA FLINN, III 275 Goodwyn Memphis, TN 38111 324-5532; 576-6786; shea.flinn@memphistn.gov

REID HEDGEPETH 125 N Main Memphis, TN 38103 576-6784; reid.hedgepeth@memphistn.gov

ADDRESS: Councilman or Councilwoman or The Honorable--
SALUTATION: Councilman, Councilwoman, Mr., Ms., or Mrs.