FedExForum Money Shuffling Prompted State Investigation

FedExForum Money Shuffling Prompted State Investigation

Last month, the state comptroller issued the city a stern warning: fix your finances or a crisis could be looming. What caused the state to start looking in the first place? A financial account connected to FedExForum was negative $4 million.
MEMPHIS, TN (localmemphis.com) - Last month, the state comptroller issued the city a stern warning: fix your finances or a crisis could be looming. What caused the state to start looking in the first place? A financial account connected to FedExForum was negative $4 million.

While fishing on the banks of the Mississippi, Al Bonano tries to stay cool, but he heats up when you ask him about a recent transaction at city hall. "There should be accountability," he said.

In 2002, Memphis spent $12 million for part of the arena construction. None of the money was supposed to come from property taxes, it was supposed to be paid for through hotel/motel taxes.

Fast forward more than a decade to this February, when the State of Tennessee sent the city letter saying that the new Memphis arena fund was negative more than $4 million. That's a violation of state law.

"We fixed it because it needed to be fixed, and technically when you are out of compliance you have to get in compliance," said Brian Collins, the city's Chief Financial Officer.

He says the prior administration fronted the construction money for the arena but never filed the proper paperwork and documents to make the deal legit on the city books.

Collins said, "There should have been, technically, a loan agreement that would have gone between the new Memphis arena fund and the general fund saying that we're going to borrow this $12 million and it's going to get paid back."

To fix it, last month the city took money out of the general fund to pay the negative arena fund. The general fund is where your property tax money goes.

That concerns Shelby County Commissioner Heidi Shafer. Back in 2002, Shafer led the crusade to prevent property tax money from being used to fund FedExForum.

"Things can get done inadvertently that aren't honoring to the original agreement, and all I want to do is make sure it's all on the up and up and the original agreement is upheld."

Collins says it's not an issue because more than just property tax ends up in the general fund. "As long as there is more than $4 million of non property tax in the fund, well then that's what financing it, not property taxes."

Shafer added, "I just want to make sure that in the shuffle as they are moving money hither and thither, that the taxpayers are still protected and their property taxes are not touched for this because that was the agreement."

"It's all about public trust," said Bonano. "When I mess up, it just affects me and my family. When they mess up, it affects hundreds of thousands of people, so there is a difference."

Collins says in the end, hotel/motel taxes will be used to pay back the $4 million taken from the general fund. So essentially, for now, you paid for it - but consider it just a loan.

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