Tuesday, June 16, 2015

What's on the Council Agenda for June 16th? A rent control and home price control code to be developed, 2015-16 budget and tax levy. (update)

The Metro Council meets tonight June 16th. To get your own copy of the agenda and council staff analysis, follow the links indicated.

There are a couple appointments to boards and commissions but they are to the non-controversial agencies and it wouldn't matter anyway as there has only been one appointee rejected in over eight years and the appointees are routinely confirmed without serious questioning.

There are 25 resolutions on the agenda, at this time all on the consent agenda. Here are the ones of interest:

RESOLUTION NO. RS2015-1517, RESOLUTION NO. RS2015-1518,  and RESOLUTION NO. RS2015-1519 are all part of pay plans for Metro employees. Almost everyone gets a 2.5% raise, those who are in positions with automatic increment pay raises will get the increment plus the across the board raise. About 700 police and fire personal who missed incremental pay raises in the past will get a bigger raise to make up for the lost increment raise when pay was frozen.

The mayor's salary will be raised to $180,000.  Currently, the mayor is paid $136,500, so that is a 32% salary increase.  Given the candidates who are seeking the office of mayor, I suspect a salary of $180K would be a pay cut for most of them. None of them are running for the job for the money.  David Fox is putting a million dollars of his own money into the race and Bill Freeman is putting in more; "what ever it takes."  People don't serve as mayor for the salary. Still, with employees getting only a 2.5% raise in most cases, a 32% increase seems like a lot, however this will be the first increase in the salary of the mayor since 2003. For a top executive $180,000 does not seem excessive.  Several employees of Metro earn more than the Mayor.  As a means of comparison, here are some salaries of the mayor of some other cities: New York City, $225,000; Chicago, $216,000; Atlanta, $147,000; Charlotte, N.C., $245,000; Indianapolis, $95,000; Louisville, Ky., $110,000; Memphis, $171,000; San Antonio, $355,000; St. Louis, $132,000, and Austin Texas, $82,387.

I have no principled objection to raising the mayor's salary to $180,000 but it I were in the council and someone made a good argument to why it should only be raised about half as much, maybe to match Atlanta's mayor, I could be persuaded to raise it a lesser amount.

RESOLUTION NO. RS2015-1520  adopts Pension Funding Policies for the Metropolitan Government. Don't panic! It really doesn't do anything but formalize what we are currently doing in order to conform with a new state law.

Several resolutions approve contracts for building sidewalks along some major corridors such as Lebanon Pike, Harding Place, Dickerson Rd and Gallatin Rd. These projects will be 80% funded by federal dollars and 20% local money.

There are several resolution to approve intergovernmental agreements to improve signalization on a bunch of intersections.

There are eight bills on First Reading, but I don't read them until they are on Second Reading.
There are 12 bill on Second Reading. The staff analysis only analyzes the resolutions and no explanation is given as to why bills are not analyzed. Here are the bills of interest:

BILL NO. BL2015-1129  would establish a Codes Offender School, much like we have a traffic violations school or a "John's School" for those arrested for solicitation of a prostitute. I don't yet have an opinion on this bill and do not know the pros and cons. My first thought is, is that codes violations is different than these other type offenses. I own a rental unit and had a tenant who created a situation that violated codes.  I was given adequate time to correct the violation and the codes inspector worked with me to bring my property back into compliance.  Some people who routinely run afoul of codes do so as a calculated business decision. I am not sure they would benefit by a codes school. I would be open to persuasion but I do not really see this as beneficial.  Will it cost the taxpayer's?

BILL NO. BL2015-1147  is "An ordinance requiring the Metropolitan Planning Department to prepare an amendment to the Metropolitan Zoning Code to require affordable and workforce housing units as part of residential developments, and to establish rules and regulations pertaining to the implementation of such requirements."  In other words, the Planning Commission is to draft an inclusionary zoning code.  Inclusionary zoning is a form of price control, that may say something such as that in a condo development with 100 units, 10% of them must be sold so they can be affordable to a person making 80% of the area medium income.  So while 90 of the units may sell from $500,000 to $1,000,000 for the penthouse with the view,  ten of the units would have to sale for about $180,000. (The math works like this: 80% of Area median income is $53,500 for a family of four, x 31%= $16,585 for housing /12 months = $1,382 monthly house payment. Assume taxes and HOA fees and MIP = $482 a month = $900 for principal and interest and the assume interest rate is 4.5%, that buys a $180,000 house.)  Of course if the house must be affordable for a family of two or a family earning only 60% or the area median income then the set aside units would have to be sold at an even lower price.e

So, what happens with this form of price control?  The market rate unit must have their price increased to subsidize the below market rate units.  The result may be that fewer total units get build and total housing cost increases for everyone. Some inclusionary zoning codes applies to only rental and some to rental and units for sale. Some inclusionary zoning codes requires the unit to remain affordable for thirty years.  In the case of the situation described above, if after a few years, the person who purchased one of the set aside units decides to sale and prices in the development he purchased had significantly increased in value, he would still have to price his home so it was affordable for a person making 80% of the area median income and would not benefit from an increase in value. He could only sale is house for more than he paid for it if the area median income had increased. 

In a case of a condo as described above, much of what one is buying is the amenities, such as flowers in the lobby, a doorman and a roof top tennis court and a swimming pool. Questions arise, if the set aside units get all of the condo amenities? Some controversy has arisen because in some developments, the residents of the set aside units were required to use a different entrance than the market rate residents.

For more on the topic of inclusionary zoning, follow this link. In some cities with inclusionary zoning, it has resulted in very few additional units. In some places builders can choose to pay a fee into an affordable housing fund instead.  Whether being required to build the affordable units or pay the penalty for not building the units, it increases the cost of housing. The Council should defeat this bill.

Bills on Third Reading:

BILL NO. BL2015-1122 is the budget. There will be a substitute that gives more money to the Election Commission allowing the Election Commission to continue early voting. There may be a few other modest changes, but nothing major. The dollar amount of the budget will not change.

BILL NO. BL2015-1123 is the tax levy to fund the budget. Taxes are not increasing.

BILL NO. BL2015-1124 is the Tax Relief Program for low-income elderly. It always passes.

BILL NO. BL2015-1127 is a tax give-away deal to benefit American General.

BILL NO. BL2015-1128  is the Asurion tax give-away.

There are three Memorializing Resolutions on the agenda. These two are of interest: 
 RESOLUTION NO. RS2015-1498 by Charlie Tygard request the  Metropolitan Civil Service Commission to consider and recommend an amendment to the General Pay Plan to partially base the compensation of Members of the Metropolitan Council upon Council and committee meeting attendance.

Recently, Channel 5 did an investigative piece and revealed that some Council members almost never attend committee meetings.  This is just not right! As Tygerd said, "It's not fair for certain council members to do all of the homework and others to get the same rate of pay and do nothing of the work.”

With a large council, the council must have a strong committee system.  It is in committee where the real work of the Council is done. It is in committee where the council can ask hard questions and get answers.  There is no way a councilmember can know all there is to know about the  bills on the agenda. Some of the Councilmen said they had regular jobs and could  not take off work to attend committee meetings. In my view, if a councilmember does not have flexibility in his job to attend to his council duties, he should not run for council.  If he cannot attend Council committee meetings he should resign from the council. The worst offenders were Emily Evans, who missed 83 committee meetings since 2013, Robert Duvall, who's missed 93 committee meetings in that time period, and Sean McGuire, who's missed 132 committee meetings since 2013! Among the top twelve members with the worst attendance records was Council member-at-large and Mayoral candidate Megan Barry. This resolution was on the agenda the last two meetings and was deferred both times.

RESOLUTION NO. RS2015-1515 by Charlie Tygard requesting the Davidson County Delegation to the Tennessee General Assembly to introduce and support the necessary legislation to require full-time Davidson County elected officials to submit an annual report to the Comptroller detailing the dates they worked.  The Tennessean recently did some investigative reporting, and got the records of the access card swipes of various elected officials.  These elected officials carry a unique card that records every time they enter a certain office or building and some of them have very poor records of showing up for work. This has also been on the agenda the last two meetings and deferred.

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