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News News Feature

Gifting a Roth IRA?

When it comes to giving thoughtful gifts, financial security may not be the first thing on your mind. However, giving a Roth IRA can be a meaningful way to start your loved ones on a path toward financial security.

A Roth IRA is a type of individual retirement account that offers tax-exempt growth and tax-exempt withdrawals in retirement, which make it a powerful tool for building long-term wealth. Contributions to Roth IRAs are made with after-tax dollars, and qualified withdrawals of assets are tax-exempt and don’t increase your taxable income. In contrast to traditional IRAs, they aren’t subject to required minimum distributions (RMDs) during the owner’s lifetime, which means assets in the account can continue growing tax-exempt throughout the account holder’s life.

There are several benefits to giving a Roth IRA.

1. Tax-Exempt Growth

One of the primary benefits of Roth IRAs is that they allow contributions to grow on a tax-exempt basis. This means any earnings, such as interest, dividends, and capital gains, aren’t subject to federal income taxes while held within the account. Over time, this can add up to significant savings, especially for younger investors who are able to let their assets grow over many years before withdrawing them in retirement.

2. Retirement Savings

Establishing a Roth IRA for a loved one can be a great way to help them save for retirement. Many young people struggle to find extra money to set aside for retirement planning. Funding a Roth IRA can help remove some of that financial burden and allow your family member to focus on other financial priorities, such as saving for a home, paying down student loan debt, starting a business, etc.

3. Financial Literacy

Giving a Roth IRA can be a great opportunity to educate loved ones on multiple financial topics, such as saving early and often, the power of compound interest, the basics of investing, and the importance of planning for retirement. With a Roth IRA, not only are you helping your loved ones financially, you’re also teaching important financial strategies.

4. Estate Planning

Not only are Roth IRAs not subject to RMDs during the account holder’s lifetime, but they can also be passed on to heirs tax-free following the account holder’s death. Roth IRAs are a tax-efficient way to transfer wealth to future generations because they allow heirs to receive assets without having to pay income taxes on the distributions (unless the Roth IRA is less than 5 years old).

In addition, Roth IRAs don’t count toward the taxable estate of the account holder, which means they can help reduce the size of an estate for tax purposes. By giving a Roth IRA as part of an estate planning strategy, the account holder has the potential to reduce their heirs’ estate tax liability, which helps preserve more assets for future generations.

5. Compound Interest

By giving a Roth IRA to a younger family member, you offer the opportunity to take advantage of compounding interest over the individual’s lifetime. The impact of this cannot be overstated.

Suppose you contribute $1,000 to a Roth IRA on behalf of your granddaughter every year, beginning at age 20. By the time she reaches 40, you would have invested $20,000 on her behalf ($1,000 x 20 years). Assuming an average annual return of 10 percent, the investment would be worth $63,773.40 after 20 years.

On the other hand, if your granddaughter began contributing $2,000 per year to a Roth IRA from age 30 to 40 ($20,000 total), her investment would only be worth $36,934.83 after 10 years (again assuming an annual average return of 10 percent) because she has less time to take advantage of the power of compounding.

Contributing to Roth IRAs should not exceed the amount actually earned in a year by the account owner — or the maximum contribution limit, if the owner earns more than that amount.

The gift of a Roth IRA to young family members has the potential to significantly improve their long-term financial outlook and be a cornerstone of their nest egg now and in the future. Roth IRAs can truly be the gift that keeps on giving. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
Cover Feature News

Bright Ideas

Every great innovation starts with a seed of an idea. To that end, we asked nine Memphians this question: If you were given carte blanche to make whatever changes in Memphis you thought were needed, what would you do?

They talked about education, race relations, music, poverty, and crime, but, most of all, they talked about the possibility of what could be.

Rachel Hurley

Local blogger and Internet radio host

WUMR 91.7 FM is the radio station run by the University of Memphis. At present, it has an all-jazz format. I may be going out on a limb here, but I have doubts that the station is very popular among the school’s students.

If I had the power, I would change WUMR to a station with a more eclectic format. I would keep some of the programming but would update the majority of it to music genres more popular with the school’s student demographic.

I’ve been told time and time again that the lack of a college radio station with any kind of finger on the pulse of the local or national independent music scene hinders us, not only in bringing acts to the area (college radio playlists are often used to forecast the popularity of musicians before they book their tour), but it leaves the entire region to be influenced only by the bland, uninspiring, over-programmed corporate radio that crowds our dials now. Shouldn’t we expect a little bit more from our university station?

This city screams to the world at every opportunity that we are the “birthplace of rock-and-roll” and “home of the blues,” but it rarely works toward instilling the pride that should come along with that into its own citizens.

Maybe our student population is a good place to start. Every time I come across a Daily Helmsman (the U of M’s student newspaper), I see 18 stories about the Tigers, but rarely do I see three words written about any type of music going on in Memphis. The median age of the people I come into contact with at local rock shows is 30. The 18- to 24-year-olds who should be filling these shows seem to be uninformed about the great venues and local talent that flood this city.

There was a study released not too long ago that revealed three major growth markets in Memphis. One was distribution, another was biotech, and the last was music.

A well-programmed, well-connected station run by students with a passion for our homegrown music could have an exponential effect. When it comes to the business of music in our fair city, Memphis needs to go back to school.

Mario Lindsey

Assistant category manager, AutoZone

I think it would be a good idea to have affluent people, especially those who move back into the inner city — Uptown, South Bluffs, Harbor Town — send their children to public neighborhood schools.

If they put their kids in public schools, maybe it would influence other children who go to those schools and increase test scores. I talked to a friend about this, a parent of a middle-schooler, and she said you’d be asking parents to sacrifice their kids and put them in bad elements.

I agree that it may initially have a negative effect on their child, but at some point you have to realize the only way to improve these failing schools is to improve the students who go there. One of the ways to do that is bringing in better students, who can influence the other kids. We also need a requirement to teach basic financial education. We don’t do enough to teach kids in school about bank accounts, balancing a checkbook, credit reports.

Schools also need to teach kids how to be a parent. If you have a young mother who never learned how to be a mother, when her children have kids, are they going to know how to be a parent?

Finances, parenting, and household upkeep were once taught at home, but these days, children aren’t receiving these things.

I believe we need consolidation, but if the city cannot get the suburbanites to agree, the city should withdraw from Shelby County.

Something else we need is a cause. I mean that on two different levels: The black community needs a cause. Once upon a time, when black folks were treated like second-class citizens, we were forced to work together to overcome injustice.

Though we have many problems now, there is no unifying cause that brings the black community together. You could say the same thing for the whole Mid-South.

I don’t have that many white friends that I can call up and say let’s go hang out. When I was working on the Herman Morris campaign, I met some folks I could probably have created friendships with, but I didn’t pursue it. That’s just human nature. I understand it, but we have to overcome our prejudices to learn from people from other cultures. I just wish there was something we could talk about, because we’re all on the same side of something as Memphians. This city is a city of division, and that’s a shame.

Something that might work is if the Grizzlies were making a championship run. The Grizzlies have a rare opportunity that no other one entity in this city has. Grizzlies crowds are the most diverse in the city. It’s amazing to see.

It’s like a rare moment where we come together as a community. I want the Grizzlies to do a better job of marketing, and hopefully, they’ll make the right choice in the draft.

A lot of affluent white folks, they were big fans of Shane Battier. Shane Battier wasn’t as popular with black fans. We liked Bonzi Wells, Stromile Swift, Jason Williams, and James Posey. We need a player that everybody can get behind, kind of how Derrick Rose, CDR, and Joey Dorsey were for the Tigers.

I think that everybody is concerned with the Grizzlies moving away and hating on the owner. The fact is, if more people went to the games, it wouldn’t matter who the owner is because they would spend money on the team because they’re making money.

Richard Janikowski

University of Memphis professor,

criminologist behind MPD’s Blue Crush initiative

Across the nation, including in Memphis, concern is increasing about a rise in violent and gang crime involving young people. Law enforcement is actively responding with new proactive initiatives, including the Memphis Police Department’s Blue Crush strategy, creation of the Real Time Crime Center, and implementation by the Shelby County Sheriff’s Office of Data Smart policing.

by Justin Fox Burks

Rachel Hurley

However, while we must address criminal conduct through aggressive, focused law enforcement, we must also take care not to assume that law enforcement can by itself “solve” the problem of crime. Policing initiatives may suppress criminal behavior in the short-term, but long-term crime reduction requires a comprehensive strategy targeting community building and the healthy development of our youth.

Juvenile crime is not an isolated event. Most often, the roots of crime start during a child’s early years. When it happens, it is the culmination of a process that has gone on for a long time — a process rooted in our families, schools, neighborhoods, and society.

As my colleague Leon Caldwell has observed, we often look at a child as something needing fixing, when we should instead be looking at our “village” and trying to understand what in it needs fixing. The young people committing crimes are the same youth who are failing in school, truant, experimenting with drugs and alcohol, hanging out with antisocial peers, and alienated and isolated from the values and institutions of society. The conditions that foster these behaviors, including neglect, abuse, and poverty, are our responsibility. Children can’t fix the village, but we can.

All children are born equal, but all children are not born with equal opportunities. We can and must do something to rectify this inequality.

We must make a commitment to every child having strong early years by ensuring access to parenting, education, home visitation, early childhood education, nutrition, health services, and a safe home and community. Research by Syracuse University on a comprehensive program providing these services to pregnant mothers and children to age 5 revealed that by age 15, only 6 percent of the children in the group receiving these services had juvenile records. In contrast, of a comparison group of children not having access to the program, 22 percent had juvenile records and 10 percent had become chronic offenders by age 15. Additionally, we know the intervention programs that are needed: after-school activities, youth development, wraparound case management, prevention of child abuse and domestic violence, and good jobs and decent housing for families.

Almost 50 years ago, John F. Kennedy reminded us to not ask what your country can do for you, but what you can do for your country. Today, the first day of our future, the question is: Will we make a comprehensive commitment for the sake of our children to take the steps necessary to fix our village?

Martavius Jones

Memphis City Schools board member,

president and financial adviser of Jones Wealth Management Group

The first thing I would do to move Memphis forward would be to consolidate the governments and school systems of Memphis and Shelby County. Once consolidation is achieved, I would levy a commuter tax on the residents of neighboring counties who enjoy the amenities of a major city, but whose property taxes and sales taxes benefit surrounding counties instead of Memphis and Shelby County.

I would then charter a bus for the 132 members of the Tennessee General Assembly from Nashville to Tunica, Mississippi, and West Memphis, Arkansas, on any normal weekend to give the members an idea of how much Tennessee money is benefiting our bordering states. Having a first-hand account should motivate the legislators to allow gaming in Memphis.

Because gaming and other “sin industries” (namely, alcohol and tobacco) consider taxes a customary cost of doing business, I would tax casino revenues at 30 percent and mandate that 10 percent of the 30 percent is earmarked for education. The state of Tennessee would receive 10 percent, and the remaining 10 percent would be rebated to residents of Memphis and Shelby County in the form of a reduction in property tax rates.

The first priority for additional education funds would be to lower the pupil-to-student ratio by hiring more teachers and increasing teacher pay. I would extend the school day and provide more extracurricular activities.

For endorsing the plan, all citizens of Tennessee would benefit, because 10 percent of revenues would go into the state’s coffers.

Tom Jones

Smart City Consulting,

primary author of Smart City Memphis blog

At the risk of being branded for civic heresy, I’d like Memphis to adopt Nashville’s attitude. I admit that I’ve never really “gotten” Nashville, but I nonetheless grudgingly admire something imbedded in its civic culture — ambition.

I was in Nashville shortly after its school district was placed on the state’s “high priority” list. There was a palpable outrage among city leaders that such a thing could happen there, and they vowed to do something about it. Here, more than 100 of our city schools do not meet state benchmarks, but there’s a pervasive sense that that’s just the way things are in Memphis.

In Nashville, better decisions flow from this ambition and sense of purpose. Its political and business leaders simply refuse to accept second best or any suggestion that they shouldn’t set national standards. It’s hard to imagine a Bass Pro Shop inhabiting a signature building there.

When Nashville wanted to build a symphony hall, it did not append one onto a convention center so it could finagle hotel-motel taxes. Instead, it built a symphony center that is a monument to its cultural commitment. When it came time to build a new central library, it built it as a reminder of the importance of urban design — and downtown.

The magic in Nashville isn’t the result of consolidated government. Rather, the magic is found in a special strain of leadership that brings all civic resources, public and private, to the table to solve problems. And yet, Memphis needs consolidation, not because of promised savings that are unlikely to materialize, but because we need to do something to shake up the status quo and send the message to the rest of the nation that things are changing here.

We begin by being brutally honest, because troubling national indicators should inspire a new sense of urgency and a new way of thinking. We need action on all fronts. We need Highway 385 to be a toll road. We need to attack teenage pregnancy by getting serious about handing out birth control. We need to eliminate all tax incentives for low-wage, low-skill jobs. We need to find the best urban school superintendent and pay whatever it takes to get that person here. We need to get more city school students to college graduation, because they are the best predictor of our future economic success. We need to transform our riverfront from a stage set trapped in time to a vibrant magnet for talent.

We need to rationalize our tax structure. It’s simply not right that the less you make in Memphis, the more you pay in taxes as a percentage of income. It’s intolerable that city taxpayers pay a disincentive to live here and pay for programs and amenities that are regional in nature. If we move regional services to the regional (Shelby County) tax base, the Memphis tax rate can be comparable to Germantown’s.

These things don’t require that much money. They do, however, require ambition.

Phyllis Phillips

Program manager for MIFA emergency services

Maybe we need to develop a program to empower people here to help with their self-esteem and make them want to live better.

So many of the people I encounter through my work feel like they need to stay stuck in a job at McDonald’s. We need a way to make them want to get a better job, even if it means going back to school or learning life skills.

It could be a training program or an empowerment class. We could do it through churches, just to give people that extra get up and go.

Working here at MIFA, I see a lot of people who are going through a crisis because they aren’t able to pay their bills. I see a lot of hopelessness. They’re depressed. They often say they don’t know how they’re going to make it tomorrow. They need some positive reinforcement.

My other thing is high taxes. We have all this surplus money from the lottery; why can’t we use some of that surplus money for schools and taxes? The taxes are killing us here in Memphis.

by Justin Fox Burks

Richard Janikowski

My husband used to work in New York, and they had tolls. Maybe we could have a toll for those people coming into Memphis to work. If you live in Mississippi or Arkansas and you come to Memphis to work, you pay a toll.

Lucia Heros

Owner, Café Las Flores coffee

Giving children access to a great education, enriching programs, and emotional and spiritual support should be a priority for this community. So much depends on the core family unit, and yet the stability of family life seems to be more at risk than ever in our society. Taking care of our little ones now is the best guarantee to help them grow into responsible, caring, and successful adults who will in turn make this city a better place for future generations.

I am amazed by the many worthy organizations that struggle on a day-to-day basis to keep their programs afloat. Identifying these nonprofits and helping them meet their financial goals should be the responsibility of every citizen and our government. Especially in these times of economic crisis and cutbacks, let’s not lose sight of those doing the important work of helping our kids get a better head start in life.

Take the Children’s Museum of Memphis, one of the few places where families from all walks of life can bring their kids for a few hours of fun, play, and learning. Wouldn’t it be great if the museum could have greater access to funding, which would allow it to bring in more national exhibits and speakers, expand its facility, events, and programs, and bring their brand of fun learning to our schools?

Another organization changing the lives of kids in Memphis is the Exchange Club Family Center, dedicated to breaking the cycle of child abuse and teaching families how to heal from these dysfunctional patterns. What if the center had more money to provide counseling for more families and the professional support that these kids need in their time of emotional crisis? Dealing with abuse and healing those wounds as early as possible teaches kids important values of respect and safety and stops the cycle of violence that often begins at home.

Let’s be cheerleaders for our kids by supporting the dedicated leaders and organizations that are already doing this work every day. We can supplement and enrich our kids’ lives with safe and positive diversion and the programs that they need to help them have a more nurturing childhood experience. We have nothing to lose and only happy, well-adjusted children to gain!

Andrew Couch

Executive director, West Tennessee Clean Cities Coalition

When I think about Memphis, I think of a city that is okay. If you leave education, leadership, and crime out of the discussion, we’ve got a mostly all right place to live.

Our air quality isn’t perfect, but it isn’t that bad. Our water is clean(ish) when compared to other cities. Our commute times are not that bad. We’ve got loads of open space nearby, loads of parks, a giant river, easy access to great food and live music, and we’re not very far from larger cities like Chicago, Atlanta, and New Orleans. So what needs to change?

If I could change anything about Memphis, it would be this: I would ever so politely ask the majority of my co-inhabitants here to take another look. There is a problem with our way of life, and it has nothing to do with global warming, hippies, environmentalists, terrorists, or the president.

This city is becoming a dirty, sprawling, and increasingly homogenized Anytown, USA. Why do we need so many Walgreens, so many lousy identical strip malls, and so many poorly and inefficiently built homes so far out into what was once perfectly pleasant woodlands?

Why do we need these giant vehicles to lug our overweight and malnourished bodies all over the once-beautiful town that we are ruining with such lousy and culturally neutral garbage? Why is there so much litter on our streets? To quote my favorite writer, J.P. Donleavy, we’re “teaching the landscape an ugly lesson it will never forget.”

Here are a few extraordinarily simple ideas that I would like to share:

1) Stop building crap. By crap, I mean cheap, ugly, inefficient buildings that age poorly and look worse than the building you tore down.

2) Stop tearing down old buildings to build crap. See above.

3) Stop building so many parking lots. If you have to build a parking lot, put it behind the building.

Once the building is required to bear its regrettable face to the street without a parking lot to bear the brunt of the offense, you may just decide that your building looks like crap and subsequently redesign.

4) Get out of your car every once in a while. Take a bus, ride your bike, or ride in someone else’s car for a change. The Health Department has a wonderful ride-share program that works great.

5) Stop throwing trash on the ground.

My wish and vision for Memphis is one that is simple and attainable in the near-term: a town that has preserved its identity, stopped being so wasteful, and cleaned up its mess.

Divine Mafa

Owner, Divine Rags

I think the important thing is to retain young folks. They don’t see Memphis as a place they can realize the American dream, so as soon as they graduate they are thinking about leaving the city to go to Chicago, New York, Los Angeles, or Atlanta.

by Justin Fox Burks

Lucia Heros

We need a government that understands how to create good jobs by bringing in the right companies and rebranding the city not just as a distribution center. When you do that, you are telling folks that we are here to ship boxes. To advertise that as the fabric of our economy is a travesty.

We could be known as the retail center of the Mid-South, where people from the whole Delta region come and do their shopping. That creates a lot of tax revenue. We’re already known for distribution; we could capitalize on that aspect.

Because the dollar is so low, I believe Memphis and Shelby County should establish its own currency to build its own micro economy and shield itself from a failing economy. Restaurants and retail businesses will accept this concept because it increases spending, pride, and awareness of the efforts of local businesses.

Faces of local legends and natural wonders of the county can be on the local currency. Local artists and students could design the currency. This is also a great way of making our resources known to tourists.

When investors come to Memphis — for whatever reason — they see dilapidated buildings. We don’t have anything that attracts people to say, “I want to invest in Memphis,” because all they see is blight.

Any city that is successful has a nucleus. It has a downtown that is functional, and then its energy begins to radiate to the surrounding areas.

We should have a homeless meter. People will always give to the panhandler, but the money goes to booze and drugs. The solution? Parking meters, in high-foot-traffic areas where panhandlers frequent. Educate Memphians and tourists to put loose change in the meter instead of handing it over to the panhandler. The money collected from the “homeless meter” will then be distributed to charities and organizations that assist with homelessness and hunger prevention.

And make sure that people who own vacant buildings have to do something to make them occupied. If you are keeping a building undeveloped in an area that’s economically depressed, you need to be accountable to some extent.

Memphians continue to be dependent on other people to come in and save them. We need to get up sometimes and do it ourselves. I’ve been in the medical field for the past 15 years. I said, I need to do something positive. I want that building. It’s a corner space. I said, I’m going to turn it into a clothing store.

Three months later, it was a clothing store. It was idea, talk, then action. Done. Now I see another vision: transforming the South Main district into a fashion district.

It doesn’t take long to transform a building. Three months from now, Memphis could be looking beautiful enough to attract investors if people are willing to do something about these ugly buildings that are sitting around here.

Categories
Editorial Opinion

Rethinking Education

It was not quite a year ago that a modest rebellion was mounted in the Tennessee General Assembly against the imposition of a 42-cent increase in the state tobacco tax, earmarked for education. The tax, pushed by Governor Phil Bredesen, went through but not without

opposition from some unexpected sources. Two of the holdouts were Shelby County Democrats Larry Turner and Mike Kernell, both House members of the governor’s own party but both determined to route the proceeds of the tax to health care. The idea was that money spent that way would have a more measurable effect than it would if channeled, as was finally the case, into the relatively amorphous agenda of the state’s Basic Education Plan.

This mini-rebellion might be regarded as the first faint sign of a political skepticism toward educational log-rolling that has since grown to heretical proportions. For generations, no cow has been more sacred than that of public education, a fact highlighted by the somewhat desperate 2001 proposal by former governor Don Sundquist for a state “reading program” as a backdoor means of getting the state income tax he felt the times required.

Now the revolt against indiscriminant educational spending has moved onto the agendas of cash-strapped local governments. While the Shelby County Commission listened sympathetically on Monday to county schools representatives who sought increased funding, mainly for mandated increases in teacher salaries, the commission, which has been deliberating on serious reductions in county government itself, put off a decision. Moreover, even commissioners who have favored educational spending in the past expressed resentment of the two local school districts’ support of what some called an “end run” in the legislature, where a bill to strengthen existing “Maintenance of Effort” legislation is pending. That legislation, if successful, would counteract the commission’s efforts, beginning last year, to curtail new capital construction.

The City Council, meanwhile, is considering the unprecedented step of withholding some or all of the almost $100 million it annually contributes to Memphis City Schools. While such a step would have seismic consequences on the MCS budget, it would be a catalyst toward the long-overdue consideration of single-source funding for the city and county schools and other administrative changes sought by a study headed a decade ago by Memphis businessman Russell Gwatney.

What Gwatney foresaw, even in rosier economic times, was the financial crunch that now afflicts both city and county schools, and he provided a recipe that involved both greater collaboration between the two local school systems and greater autonomy for each in responsibility for capital construction.

Perhaps it is time, as Tom Jones of the “Smart City” blog has suggested, to dust off that proposal. Perhaps it is time for new and even more innovative remedies. In any case, it seems certain that, at a time when property taxes have maxed out and declining property values are destined to result in shrunken revenues, something or somebody has to give — besides the already overburdened taxpayer.

Categories
Opinion

Auctioning Memphis

From South Memphis to Southwind, Memphis is losing value. Two people who ought to know say so. Both are professionals, and neither is an alarmist or a naysayer.

One of them is Shelby County asssessor Rita Clark, whose job is putting a dollar value on houses, buildings, and land for tax purposes. The other is auctioneer John Roebuck of Roebuck Auctions, one of the leading real estate auction firms in the South.

They calculate value differently. Clark and her staff use computer models, comparables, sales histories, and first-hand “windshield” inspections. Roebuck wields a microphone and a gavel and stands in front of a group of buyers and opens the bidding.

But they’ve come to the same conclusion: Real estate prices are declining, which reverses a long trend of increasing values.

“Memphis is a strange city that does not dip and rise like other parts of the country,” Roebuck said. “Right now, Memphis is down about as far as I can remember in 30 years.”

He said people are leaving the city, demand for housing is low, and there is a surplus of new homes and condos. Even the owners of some million-dollar homes are turning to auctions as a way to unload their property.

“Auctions get a bad rap,” Roebuck said. “An auction typically brings the true market value that day. Appraisals are just one man’s opinion.”

He expects to see “a substantial reduction” in home values in the next countywide reappraisal in 2009, leading to an overall decline in the tax base.

Clark doesn’t disagree with that evaluation.

“Absolutely,” she said, when asked if the tax base in Memphis could be shrinking, although she declined to put a number on it at this time. “We follow the market. We don’t predict the market.”

Clark will leave office next September after serving 10 years. In the 1998, 2001, and 2005 reappraisals, the total value of assessed property in Memphis increased an average of 14 percent each period. The suburbs were up even more, led by Collierville (up 24 percent in 2005) and Lakeland (up 30 percent in 2005).

Higher property appraisals are an indication of a healthy economy and provide a cushion for Memphis and Shelby County governments, which operate primarily on property taxes and sales tax. If housing prices continue to fall, lower appraisals will mean lower tax collections and less money for schools, police and teacher salaries, sports facilities, parks, and debt service.

There is also the prospect of no tax collections at all from some property owners. Memphis is one of the top foreclosure markets in the country. Foreclosures are expected to get worse in 2008 as subprime mortgages are reset at higher rates.

The usual way to balance the budget in Memphis and Shelby County is with a tax increase, but Memphians already pay the highest property tax rate in Tennessee. The smell of scandal is in the air. Houses aren’t selling. Values are declining. Mayor Herenton got only 43 percent of the vote. The 2008 City Council will have nine new members. And they’re going to increase taxes? Don’t think so.

Other signs point to a stagnant city that is getting poorer, not richer. In banking as in real estate, it looks like the big money has been made for a while. This has been an awful year for banks. The stock price of First Horizon, the last of the big Memphis-based banks, is $21 a share compared to $43 a year ago. The share prices of other regional banks with a big presence in Memphis, including Regions, Renasant, Trustmark, and Cadence, are all down at least 30 percent this year and are at or near five-year lows. FedEx, our corporate jewel, is off 15 percent so far this year.

At the risk of piling on, there is an unsettling tone in the public relations campaign to “liberate” the National Civil Rights Museum from “corporate interest domination.” Unsettling because it sounds like the preelection rhetoric of our soon-to-be fifth-term mayor who as much as wrote off the white vote. So much for public-private partnerships.

The $30 dinner entrée, the $570 a night hotel suite, the $140 Grizzlies ticket, the $45,000 SUV, the $40,000 a year college tuition, and a $30 million public boat landing look like relics of a golden age. Let’s hope Memphis can still support them a year from now, but I wonder.

Categories
News The Fly-By

Sign Up?

Billboards are made to be seen. But some outdoor advertisers might not be happy with the Memphis City Council setting its sights on the signs.

The City Council is currently reviewing its billboard and sign ordinance, especially as it relates to

electronic signs. In a recent report to the council, consultant Eric Kelly said that it was “absolutely essential” that a new sign ordinance address full-motion electronic billboards.

“They may say full-motion videos are allowable anyplace in the city, but you need to decide because otherwise it’s going to turn up randomly,” Kelly said. “One might go in front of an apartment complex and keep people up all night. They’ll be asking, how did this happen?”

Already in Memphis, several electronic billboards have been erected, with at least one full motion sign — depicting the spinning reels of a winning slot machine — off Bill Morris Parkway.

“There are a number of things to be alarmed about in my opinion,” said council chair Tom Marshall at a recent committee meeting. “I don’t think it’s appropriate to watch video while you’re driving down the street.”

More than likely, some electronic signage will be allowed, but the council could choose to limit the size, brightness, and locations of the billboards. Marshall indicated that he felt there is a place for some electronic signage.

“I was outraged at first,” he said. “Then I thought, this looks better than what was there.”

Electronic signs with changeable copy — the type consumers might see advertising paper towels at area Walgreens — are considered safer and more attractive than their traditional counterparts, which require an employee to change the sign by hand.

“That may, however, open the door to scrolling and other rapidly changing signs,” Kelly’s study noted.

Currently, the ordinance doesn’t address motion on signage. “All the ordinance says now is that signs can’t flash,” Kelly said. “Whether this applies to video, it’s not clear.”

Full-motion billboards might have a place in Memphis the same way they are used in Times Square or the Vegas strip. “Personally, I’d love to see 12 of these signs on Beale Street,” Kelly said. “They build excitement and vitality in an area.”

The billboard report also suggested that the City Council review its rules on political signs and real estate signs, especially those erected off-premises by developers.

Currently, political signs cannot be put up more than 90 days before an election and cannot be placed on utility poles or in public rights-of-way. However, time limits for political signage have been deemed unconstitutional. The ordinance does not allow for political signage not related to an election, such as signs supporting a living wage or the war in Iraq.

“People ought to be able to express their opinions,” Kelly said. “I don’t think either the city or the county is enforcing it, but it’s weird to have an ordinance on the books you’re not enforcing.”

Legal issues could also arise with real estate signs that direct drivers to new housing developments. Typically, non-commercial signs have more freedom than commercial signs.

“Once you allow commercial signs in the rights-of-way, you have to allow noncommercial signs in the rights-of-way,” Kelly said. “It’s going to be some weird group that tests the ordinance.”

In Missouri, that group was the Ku Klux Klan. Though the state attempted to bar the KKK from participating in its “adopt a highway” program and erecting a related sign, the court rejected the effort as unconstitutional.

Traditionally, the council has taken a strong position on signage, only allowing new billboards to be erected along interstates and highways. Smaller signs on utility poles and in medians are also not allowed. Existing billboards on city streets have been grandfathered in under the ordinance, but if they fall down, they are not allowed to be rebuilt. And the council hasn’t determined yet if those existing signs can be converted to electronic billboards.

But Memphis isn’t the only city struggling with its sign ordinance.

Kelly is probably more known to Memphians as the consultant who gave the City Council the dirty details on area strip clubs in a $38,000 study.

“When you look at sex businesses in Memphis, it’s worse here than in other places,” he said. “But with signage, Memphis is in the same boat as everybody else.”

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News The Fly-By

Police State

Don’t expect to see more police officers hitting the streets anytime soon.

Last month, Mayor W.W. Herenton announced a proposal to add 650 new officers to the Memphis Police Department, a move that came in response to an FBI report ranking Memphis the second most dangerous metro area in the country.

But if the City Council approves the 50-cent property tax hike needed to hire more cops, it may still be a few years before the extra officers will be able to make a dent in Memphis’ high crime rate.

It could take as long as two years to get officers from the first batch of recruits onto the streets as full-fledged officers, according to public information officer Vince Higgins.

“You have to recruit the first group, get their background checks and physicals, and get them pre-screened for the job,” says Higgins. “They’ll be at the police academy for 21 to 24 weeks, and they have a year of probation.”

Higgins says the first class would probably include 150 potential officers. Generally, only about 10 percent of applicants qualify for the academy.

The recruitment process — background checks, interviews, physicals, etc. — for the first 150 officers could take anywhere from three to six months. Then, the officers would attend the police academy for five to six months.

“Keep in mind there’s attrition in the class. Some fail the academics. Some fail the firearms. Some are injured during training,” says Higgins. “At the end of six months, we might end up with 125 officers graduating.”

Those who complete the training will enter a year-long probationary period, during which they’ll ride with a partner for nine months and continue to be monitored for another three.

City councilman Ricky Peete says the mayor’s proposal to hire 650 officers within two years is unreasonable given the time it takes to recruit and train.

“It’s highly unrealistic,” says Peete. “I think a much more manageable number is somewhere in the neighborhood of 100 new hires a year.”

Herenton’s proposed 50-cent tax hike includes funds for officer salaries, as well as necessary equipment: cars, uniforms, weapons, and electronic PDA systems.

Last week, the City Council asked the Memphis Shelby Crime Commission to review the mayor’s proposal.