Can Memphis grow in a bubble while its people are disconnected from reality in a global economy ? No Way !  Institutions across the board continue to fail Memphis/Shelby taxpayers. The press, university community and legislators on the left and the right refuse to confront the indefensible products of the FedEx/Memphis Tomorrow complex. So how does a community improve without needed checks in the system ? It doesn’t; it stagnates into a rigged condition.

That’s what has happened to Memphis after 20 years under the backwards and visionless FedEx/Memphis Tomorrow bully hack complex. The only checks on real power are coming external of Memphis institutions such as ProPublica, Beacon Center of Tennessee and from blogs such as this one.

Example checks on real power made by non-traditional media outlets include: Methodist Hospital, botched from the top workforce development system, bogus EDGE projection accounting, excessive EDGE abatement awards, deficient economic development growth as expressed through credible measurement and EDGE apparent misuse of Depot proceeds. The cost to taxpayers uncovered soars into the billions.

Without the above, the community is left blind in a rigged stagnant condition without the information to inform needed improvement, growth and evolution in a global economy.

See the Excess in PILOTs ?

One example of this type of information regarding excessive PILOTs is below. Memphis/Shelby taxpayers are not going to see information such as this anywhere else. This blog, whose rhetoric has been questioned states that the FedEx/Memphis Tomorrow complex feeds on a community in need. How else would one describe the information below where the five PILOT projects of existing companies in Nike, International Paper, Technicolor, FedEx and Valero that total $207M exceed the total job PILOTs each for Nashville and Indianapolis?

This is what happens when an elitist system is designed and incented to award large corporate abatements for the benefit of the small few in an already low cost business environment with Memphis ranking 13 out of 100 metroes. This is not economic development; its economic devolution and community disinvestment. See below table:

At the same time the proposed PILOT reform solution of this blog, would have still awarded the 5 above companies PILOTs based on their new capital investment and jobs, just not $207M. And that’s even though most of the companies are in reality going nowhere like Valero. The applied formula is 50% of new capital investment and 1% abatement on total wages for new jobs.

As for overall implementation, existing companies would likely get less than a 50% abatements to compensate for larger abatement packages exceeding 50% for new industry recruitment and operational relocation costs. In the end, the proposed system is designed to award 50% overall for new capital investment while maintaining EDGE investment and term requirements. The 1% abatement for new jobs would apply for new and existing companies.

To that extent, for example purposes only, 50% abatement amount was applied to show revised abatement amounts using the proposed reform model for existing companies mentioned above:

Conclusion

Memphis can’t grow in a bubble while listening to FedEx/Memphis Tomorrow propaganda. Legislators know that tax incentives are beyond excessive and that EDGE appears to have engaged in the misuse of $1.7M Depot funds. Legislators would be best served to send the FedEx/Memphis Tomorrow complex a $500M invoice payable immediately while getting to work and when needed engaging a new brand of corporate community leaders.

FedEx/Memphis Tomorrow lacks the capacity and vision to propel Memphis forward. Their vision has been realized over 20 years and it’s a Memphis community left behind in a global economy with massive imbalances. So sad as it was authored from the top of the Memphis ecosystem. Tuff n Cool Man, Tuff n Cool to feed on a community in need……

A beacon of hope has emerged locally in Smith and Nephew (S&N). S&N, the area’s largest manufacturer is investing millions and adding jobs without a tax incentive. Its big news in the practice of corporate community leadership away from the valueless FedEx/Memphis Tomorrow complex that has helped author an excessive corporate/real estate tax incentive policy environment on the back of a community in need.

But unfortunately, S&N’s leadership is not being trumpeted. In Mayor’s Strickland’s Facebook post on the story in the Daily Memphian, he did not mention S&N’s capital investment and new jobs without a PILOT. This is huge corporate leadership news. But since the Memphis culture is addicted to excessive tax incentives, trumpeting such a positive disruption may be off putting to the corporate culture.

In the Daily Memphian article, Kenneth Bly of S&N said, “We want to be a good neighbor. That includes showing up and setting a standard that maybe others follow. I don’t know that we were doing that. It’s about inspiring and retaining talent.” Memphis needs a new standard in corporate community leadership because there are no standards with the valueless FedEx/Memphis Tomorrow complex.

Somehow S&N conducted a cost/benefit analysis and concluded that its better to go without incentives in the heavily incentive burdened Memphis and Shelby County. Its not hard to get there. S&N is already operating in one of the lowest cost centers in the country and their problem is not lower costs but a need for a career ready workforce. As a “good neighbor” S&N must know that workforce development efforts have been seriously compromised by deficient corporate community leadership and excessive tax incentives.

S&N provides a needed beacon of hope with a new form of corporate community leadership. This is vital because the local insiders of the FedEx/Memphis Tomorrow complex just don’t have the value set to change the trajectory of the community as they have culturally invested the community in decline.

Lacking Legislative Oversight and Analysis

Legislative oversight does not occur in Memphis while surrendering to the bully hacks of the FedEx/Memphis Tomorrow complex. There is no vitality on the matter of excessive incentives as legislators seem robotically controlled by the bully hacks. This is a feature of a rigged system in lost growth vitality on matters of importance.  And if that is not enough, Memphians are in the dark, while as part of a rigged system, the press and public institutions like the University of Memphis do not inform the public of the excesses of the corporate socialists.

In the current environment, this blog has proposed a practical non idealistic PILOT reform solution. The PILOT reform model would maintain EDGE’s current investment and term minimums while abating a net 50% for new capital investment provided current job levels are maintained and abating 1% on total wages paid for new jobs. The proposed solution would have reduced historic job tax incentives by some $200M+ from 2011-18.

As for implementation it is a net 50% abatement being proposed. In this way, local companies that currently reside in Memphis would likely get less than 50% abatements and relocating companies, undertaking extensive relocation costs might get more than 50% abatements.

Unfortunately, the bully hack corporate socialists have convinced the public that because of high tax rates and their own botching of the workforce development system that massive corporate/real estate incentives are in order. This is not true as Memphis has one of the lowest business costs operations centers in the country. The fact is that Memphis has high property tax rates but not high property taxes due to low property values while at the same time providing a low cost business operating environment.

Based on the table below, if the proposed solution were idealistic and not practical, it would move to reduce abatements by some $400M and not $200M bringing them in line with $2.5K per job in Nashville and Indianapolis. To that extent, the below macroeconomic analysis is simple as it shows a massive data dislocation and Memphis abatement excesses.  Nashville and Indianapolis are paying approximately $2.5K per new employed job and Memphis $14.5K !

Applying the proposed practical PILOT reform solution to historical abatements, Memphis, with $300M in total abatements down from $500M, would still have paid well in excess of the $2.5K in Nashville and Indianapolis and paid $8.7K per new employed job.

See below table for current Memphis abatement excesses which accomodates a simple analytical platform for local legislators:

Conclusion

Memphis has a sick elitist corporate community leadership culture where its Tuff n Cool Man to feed on a community in need. So sick that true corporate leadership as exhibited by Smith and Nephew is for the most part squelched as it threatens the decline by design culture of the corporate socialist FedEx/Memphis Tomorrow bully hacks.

As exhibited for the last 20 years, the elitist FedEx/Memphis Tomorrow culture does not have it within them to change the trajectory of the City. Its so sad as everyone bought in and believed only to be robbed of progress and to have their community left behind in a global economy as the bully hacks fed on a community in need at a $500M cost to taxpayers from slow growth and excessive incentives. With the bully hacks, its Tuff n Cool Man, Tuff n Cool to feed on a community in need.

There is good news. There are local business leaders who do not believe in the use of incentives at all or at the very least reject excessive incentives. But they are scared to speak up as they feel threatened by the sick corporate socialist culture of the bully hacks. Hopefully, these voices will find ways to speak up with Smith and Nephew. Because without them, Memphis is left to more decline with the bully hacks of the FedEx/Memphis Tomorrow complex.

Please let me know if you need references by emailing me at jkent@pathtrek.net

EDGE is now shelling out $1.7M to their own special projects and beneficiaries using funding that should come back to the taxpayers for appropriation. But, whether legislative bodies will take up the concern is an open question in the valueless FedEx/Memphis Tomorrow decline by design complex, where its “tough and cool man to rip off a community in need” under the heading of “economic development”.

Per the EDGE website, established in 1997, the purpose and scope of the Depot Redevelopment Corporation of Memphis and Shelby County is to acquire and redevelop the former Memphis Defense Depot with approximately 4.25 million square feet of space.

As the Depot disposes of its property assets and closes out, that money should come back to taxpayers for appropriation. Instead of coming back to taxpayers, EDGE budgeted $1.7M in Depot funds per the EDGE 6/20/18 minutes on page 27 as contained in footnote 5 for the following pet projects and interests:

5 Based on the Service Agreement between EDGE and the Depot Redevelopment Corp [DRC]., EDGE also approves the following DRC funding during FY 2019:(1) a $900,000.00 grant to the Greater Memphis Alliance for a Competitive Workforce (GMACWorkforce) for operating expenses related to workforce development efforts; (2) $200,000 to help Improve rail service to industrial customers on Presidents Island through a new intermediary service provider; and (3)$600,000 total in grants to the Arlington, Bartlett, Collierville, Germantown;Lakeland and Millington Chambers of Commerce for local economic development initiatives. A Committee created by the EDGE/DRC Chairman will allocate funds to the individual chambers and approve disbursement of all funds. FY 2018 proposed projects will be evaluated and funded during FY 2019, along with the FY 2019 projects.

Analysis

First, its easy to see how Councilman Jones, Commissioner Brooks or even the EDGE Board itself would have missed the out of scope appropriations from Depot proceeds as they are buried deep in the footnotes of the budget document. But now, legislative bodies know about it. Legislative bodies should move to recover their respective proportions of the $1.7M for the taxpayers with leadership from Council Chair Kemp Conrad, Council Budget Chair Martavius Jones, Council EDGE Liason Worth Morgan, Commission Chair Van Turner, Commission Economic Development Chair Willie Brooks and Commission Budget Chair Eddie Jones.

It may be just a formality for re-appropriation just as EDGE budgeted the $1.7M, but at a minimum that should be done. At the same time, I cannot see legislative bodies allocating $900K to the Greater Memphis Alliance for Competitive Workforce (GMACW) who has not executed for taxpayers under deficient board leadership over 4 years and for a Board who as not met in over a year. And the municipal Chamber of Commerce appropriations would likely be reduced or taken back altogether. The $200K Presidents Island rail connection, would probably be reallocated as shown.

As far as the allocation of funds to GMACW and generally related to footnote 5 above, there never has been a committee set up by the EDGE/DRC Chairman, Al Bright. And besides, operating under the charge of the Depot, the Depot Board should be the Board that allocates the funding. Further, no public notice has been given for any Depot Board or committee votes on the allocation of budgeted funds as contained in footnote 5. At the same time, $834K  in funds were transferred from the Depot to GMACW in August of 2018.

The above activity suggests that EDGE Board members themselves were not comfortable being on the committee and voting for the allocation of funds that came from Depot proceeds for work outside the Depot scope of work. Nor, was there ever a vote by the Depot Board on the funding allocation found in footnote 5 and the Depot Board has not met since 6/20/18.

All of the above points to an allocation and distribution of funds without EDGE/DRC special committee or Depot Board approval. Reid Dulberger was especially concerned at the last EDGE Board meeting where the concern was brought up in public comment. Dulberger, spoke up out of order without Chair recognition, to shut down any potential discussion on the matter. And even with Depot Board and/or EDGE/DRC committee approval, the appropriation would be outside of the Depot scope of work where $1.7M should come back to the taxpayers.

Conclusion

In a FedEx/Memphis Tomorrow decline by design framework, legislative oversight does not occur. This works  to undermine true community and economic development work while making Memphis less attractive for external investment. Further, in this decline by design framework, local corporations and businesses are paying the price in various forms to include slower growth due to a workforce development system botched by Fred Smith and Pitt Hyde costing business and taxpayer millions. How business friendly is that? Remember, “Its tough and cool man to rip off a community in need”.

In the end, really, the only people that consistently win, is the seemingly ever expanding local tax abatement industry advocated for by the FedEx/Memphis Tomorrow complex. Again, its a design for decline where the corporate socialists will run themselves out of town while blaming taxpayer funded public entities for community decline.

EDGE often points to their authority as provided by state law but in the end local legislators have oversight and authority over EDGE. And if there is any potential for a legal standoff based on state law, local legislators have the leverage to mount that case, thereby bringing EDGE into compliance. To that extent, if local government needs to take EDGE to court for $1.7M, there is likely an additional opportunity to recover $800M based on EDGE’s use of a bogus accounting platform for 8 years that overestimated tax proceeds in order to justify excessive corporate/real estate incentives for the small few.

So how about some legislative oversight in a culture where its “tough and cool man to rip off a community in need”?

Fred Smith is an ecosystem hack and bully. The results are all over the place. Smith grew up during the rigged Crump era and is seemingly ignorant of anything else for Memphis. And what’s sad, this rigged condition perpetuates and is adopted throughout the Memphis culture. If it worked, it would show up in the data. But a rigged system won’t work in a global economy making Memphis closed for business.

Smith’s advocates claim that Smith is focused on Washington and China and he doesn’t have time to be concerned with what is going on in Memphis. But I don’t believe it. And why would that be true, when the FedEx corporate headquarters is based in Memphis ? Memphis has wholly adopted Smith’s mantra which is nothing more than the lies of archaic “trickle-down” thinking consisting of excessive corporate incentives for the small few.

Tough Guys – So Where’s the Proof ?

So without proof, terms like “bully”, “hack”, “closed for business” and “ignorant” are just name calling and empty rhetoric right? Well, let’s look at Smith’s and FedEx’s handy work to see if we can prove the rhetoric as fact:

While working with Memphis Tomorrow, Smith and FedEx completely botched the workforce development system while stifling small business costing taxpayers $30M per year and $150M since 2010 on the back of a stupid Canadian contract award

FedEx, as a $60B company, bludgeoned the Memphis/Shelby taxpayer and a community in need into a $31M tax break which can be shown to be $20M in excess for the new FedEx Downtown project while Memphis/Shelby serves as one of the lowest business cost operations centers in the country

In 2012, FedEx told Memphians that they were going to relocate a division out of Memphis if they were not awarded $14.6M tax abatement with no new jobs projected under the project while Memphis/Shelby serves as one of the lowest business cost operations centers in the country

Rigged for theater, the status quo and excessive corporate/real estate incentives, FedEx employees chaired the EDGE special oversight committees and nothing has changed. EDGE remains incented to continue to represent corporate/real estate interests and not the taxpayer while using bogus projection accounting to justify excessive corporate/real estate incentives which has been going on for 8 years.

FedEx along with Memphis Tomorrow companies took over the University of Memphis Board of Trustees neutering them into a state of institutional impotence on matters of investigative journalism and community economic development. Pitiful…..

Richard Smith, son of Fred Smith, is Chairman of the Greater Memphis Chamber of Commerce, an organization that won’t publish their bylaws, denies membership rights and kicks people out of the Chamber without cause. This email from Richard, apparently ignorant of anything else and learned behavior from his father, shows how he engages community dissent as Chairman of the Greater Memphis Chamber of Commerce while shutting people out further confirming the closed culture of Memphis under the Greater Memphis Chamber and FedEx. See Email Here . 

Under Richard Smith’s leadership, the Chamber has yet to publish an economic development plan or articulate a measurable definition for economic development in almost 2 years, while  the former has not existed for the last 8 years as corporate/real estate incentives roar and small business vitality plummets on the back of a community in need.

Stagnation under Fred Smith and FedEx

Additionally, another data source has been created to show cities that host only 1 of the top 50 public corporate revenue generators and their associated population growth rate. It is for sure that these public companies, with their dominant wealth in the community, have significant local clout in their communities. But somehow, companies find ways to allow their communities to grow while not botching the workforce development system, stifling small business growth and bullying the taxpayer. That’s because they are not hosting FedEx.

Its apparent, based on the data, that Fred Smith’s and FedEx’s bully approach has bludgeoned the Memphis community into a state of stagnancy. See below host cities, where the average population growth rate is 7.1% compared to Shelby County’s of .91%. Its also clear that the lower cost South showed the highest growth rates except for Memphis/Shelby based on this data listing.

Conclusion

When I returned to Memphis, I never thought that I would be confronting Fred Smith and Pitt Hyde. Never ! But having worked in other communities across the country and seeing here in Memphis the complete bully recklessness of an unchecked and unmeasured corporate community leadership complex, I had no choice but the speak up as witness.I have witnessed a Memphis community in need being consistently violated under the label of “economic development” by a bully and hack like Fred Smith and his Memphis Tomorrow friends.

From the top of the ecosystem, Memphis/Shelby taxpayers are dealing with, in my view, a punk mentality that feeds on a community in need. Under a rigged Fred Smith ecosystem, thoughtful dissent and creativity are shut out, people are forced into poverty, small business is stifled and people are run out town while excessive corporate/real estate incentives roar. Its all Fred Smith knows. And its not in the interest of the business community while making Memphis less attractive for business investment resulting in deficient total wage growth.

The currency in Memphis is hack worship within a closed  and rigged decline by design framework that won’t work in a global economy. Buying in, requires belief in a rigged system and decline that will never work. All of this occurs while costing taxpayers, since 2010, $500M and promising a better tomorrow for all. Fred Smith is an embarrassment to the term “corporate community leadership” while just ignorantly perpetuating all that he knows. So sad…..

Sick, sick, sick, elitist entitlement behavior. This blog addresses the lowering of expectations and general recklessness that occurs as a product of the FedEx/Memphis Tomorrow complex. Lowering of expectations consistently allows the same people to sustain themselves and claim victory when there is no real accomplishment and recklessness needs no explanation.

Expectations for a connected workforce development system have been unfortunately lowered to that of “job fairs”. While job fairs serve a purpose, in isolation, they do not represent a connected workforce development system. The absence of a connected Memphis workforce development system is a product of the hack elitists’ disregard for the customer taxpayer while strangling local business growth and starving the community for knowledge.

With the hacks blocking solutions from the public, sadly, no one in Memphis knows what a connected workforce development solutions looks like. Generically speaking, the following non-negotiable components get everyone on the same page thru common language development in policymakers, employers, educators, parents and students: 1) authoritative known and nationally recognized centralized job board 2) employer skills/knowledge supply/demand data 3) assessment to communicate local career readiness levels to the world 5) career pathways aligned curriculum and programming 6) professional development 7) implementation plan 8) convergent technology and 9) convergent events like job fairs.

But unfortunately, on workforce development, over the last four years, the hacks have been concerned with Canadian contract awards that don’t deliver for a community in need while paving the way for a deal to be had by a  billionaire in Nashville all while stifling local small business and leaving 100,000 students and a Memphis community in need without services. The cost of hack elitism to taxpayers for disconnected workforce development are estimated to be $150M+ since 2010 and recurring annually at $30M. Sick, sick, sick behavior….

And the Greater Memphis Chamber, who reported that some form of employer skills data would be available in the Spring, has produced no employer demand data resulting in a blind system. This occurs as the Greater Memphis Alliance for Workforce Board hasn’t met in over a year as everyone says that workforce development is the #1 priority. Authoritative employer demand data sets should have been published 4 years ago to inform a connected workforce development system.

But instead, the hacks have been incumbent on stifling local small business, strangling local business growth and the continuation of excessive corporate/real estate incentives within one of the lowest business cost operations centers in the country in Memphis. And, there has been no targeted plan or defined credible measurement for economic development in place for 8 years which allows the hacks to have their way. This includes, under the hacks, the construction of an abatement industry (EDGE, DMC) incented to represent corporate/real estate interests over the taxpayer which undermines the societal foundation on which commerce thrives. How sick is that behavior ???

In the end, an elitist agenda is no good for anyone to include corporations. As the elitist continue to try and solve a problem they don’t have in high business operations costs using tax abatements, corporations are not going to leave Memphis because of high operations costs. They are going to leave because of geography which is beyond local control or because of the workforce development system botched by the hacks.

The elitist hack culture drives people into poverty, starves out small business, stifles business growth and runs people out of town. Its been going on for 20 years under the elitist FedEx/Memphis Tomorrow complex.

And while much was promised with the University of Memphis (U of M) as a transformational force with investigative press partnerships and community economic development, The U of M has been neutered into a state of institutional impotence, apparently by the U of M’s FedEx/Memphis Tomorrow Board of Trustees. Sadly, the U of M’s economic development efforts have been rendered to running around town chasing pet projects and tax incentives for itself. So sad for the area’s leading public university.

Recklessness and Teachings of a Hack Culture

I was stunned at the last EDGE Board meeting and I have become accustomed to quite a bit. At the last EDGE Board meeting, only 1 of 4 tax abatement projects made sense in Patterson Warehouses which was still excessive based on benchmarking. Two others involved EDGE breaking their own rules to award 2 residential PILOTs which the U of M supported. Then another project involved, site selector, Mike Mullis and the EDGE Board, driving up the abatement for a startup from New York City to $2M while abating $1.1M in existing taxes to employ 41 people at an average wage of $33K. And as customary, all were unanimous votes as the EDGE Board gutted the public comment record, while refusing to answer questions in this case regarding a questionable $834K transaction between the Depot and GMACW. All of this recklessness occurred in one meeting !!! Stunning……

Its also unfortunate that the first EDGE abatement package for a startup, after 8 years, was reserved for a New York City entity. This is just an extension of a hack elitist culture that systematically dismisses their own people. What’s concerning is that everyone, including legislative bodies and the press, are afraid to question the cultural norm in a hack elitist culture, which by default invests the community in habits of further decline.

Its apparent, the hack culture teaches its subordinates as well as their children the following:

• Tell dissenters to stop crying and obsessing over $500M in taxpayer losses.
• Quit crying over leaving 100,000 students in a community in need with disconnected workforce development services
• If anyone ever questions the top establishment; tell your friends to block them
• Gut the public comment record if needed
• No competition is best in the community and economic development space. That way, if we run the city in the ground, we’ll still be in charge.
• What’s $834k in public funds ? Transfer it whenever you want and for whatever you want
• Trickle down baby, better tomorrow for all with excessive corporate/real estate incentives as a primary staple in a low business cost environment
• Make double sure that tax abating entities are incented to represent corporate/real estate interests and not the taxpayer
• Produce incomplete studies that document high tax rates but not low cost business environment to support the continuation of excessive incentives for the small few
• Public universities can be great partners for maintaining the status quo
• Abandon your research parameters at all costs if it threatens the status quo
• We’re socially driven. Don’t engage data driven dissent; stifle it !
• We don’t need credible defined economic development measurement; bogus projection accounting works just fine
• A positive, 3 point PowerPoint is all you need to ring the register at local government
• So, small business is locally decimated and population growth is not occurring; it will trickle down to small business and population will increase at some point. Its only been 20 years; give us a break !!!

Conclusion

Its all a reckless design for decline where no one can question the hacks. None of the mayoral candidates have mentioned or sustained any type of concern for Memphis Tomorrow’s injustice that has cost taxpayers billions. Nor has any of the advocacy organizations that you would expect like MICAH, NAACP, NCRM, Bus Riders Union or etc. questioned the hack Memphis Tomorrow complex.

Memphis Tomorrow and their agents are constantly tamping down dissent with philanthropic and campaign contribution dog bones which may be the root cause for the lack of sustained dissent against Memphis Tomorrow. Memphis is so rigged which is why it does’t  grow.

But those dog bones are just one component in an elitist decline by design framework that is not good for anyone to include corporations and the small few. Sick, sick, sick behavior…..

CORRECTION: Upthe901 from previous version of this article has questioned Memphis Tomorrow thru their network of partners. 

Dear Mayor,

I would like to ask the Mayor’s office look into a strange EDGE transaction. Its an $834k grant from the EDGE Depot to the Greater Memphis Alliance for Competitive Workforce (GMACW). The transaction occurred without Depot Board vote on the grant or GMACW Board grant acceptance in August 2018.

The Depot Board or GMACW Board has not met since the August 2018 transaction. It seems an $834K grant would require at least a Depot Board vote. And it would further seem that Depot proceeds from property sales should come back to local government for re-appropriation. Please see below documentation. Please advise if you need anything else from me to clarify approval process for this transaction.

Depot Minutes June 20, 2018

Depot Financials August 2018

GMACW Financials August 2018

The EDGE Board meeting today revealed the primary drivers of sizing local tax incentive awards. Additionally, a questionable EDGE Board transaction arose in public comment, and discussion was shut down, out of order, by non EDGE Board member and EDGE staff member, Reid Dulberger.

It is the view of this blog, that the overall size of the tax incentive packages were driven today by EDGE itself and highly sought after site selector, Mike Mullis and not the applicant company themselves. This conclusion comes after watching impressive presentations by applicant companies.

Matt Mulroy of Patterson warehouses presented first and articulated the company’s commitment to Memphis and how previous investments had worked out well for the community. Mulroy seemed committed to continuing the track record of success that Patterson had experienced in Memphis while seeking financial assistance for a meaningful $30M capital investment.

In approaching Mulroy after the meeting, I complemented him on his meaningful capital investment to Memphis and did not sense at all that he was fixed on a $3.7M abatement. In fact, if a lower market rate for abatements had been set, its my belief that the committed Memphis business in Patterson would have been content with a lower more responsible right size abatement –  such as the $2.6M this blog proposed based on benchmarking analysis – which would give Patterson financial recognition as they developed the undeveloped land that has already been acquired by company owners.

Mulroy struck me as a responsible corporate citizen wanting to be treated fairly while I am certain wanting the best for the community. But Mulroy/Patterson is not setting the market abatement rate. That is being driven by an EDGE Board incented to maximize incentive awards persistently thru 75% abatements. Of course, as a good businessman, Mulroy is not going to walk away from the market rate but this project would likely have closed with a more responsible abatement sized at 50% of new capital investments and 1% of total new wages for the abatement term ($2.6M).

After the U of M residential PILOT presentation, FR8 Zone, an exciting startup blockchain logistics company presented. The FR8 presenter seemed most concerned with the availability of a technical computer programming talent pipeline to grow the startup and a low cost business operation environment in the Central United States. And then there was site selector Mullis, who demanded the abatement package of $2M which included the abatement of $1.1M in existing taxes for 32 jobs that paid an average of $33k.

Site selectors are often commissioned on the size of tax incentive packages which incents them to seek large abatements. Mullis, further made it clear at the meeting, this was a small deal for him which would point to an additional need to further maximize the abatement. This happens to correspond with EDGE’s unfortunate incentive structure which results in a toxic combination for taxpayers.

At the same time, FR8 can be comforted to know that the U of M, that I am at odds with but who also gave me a great education, will deliver the technical talent pipeline that FR8 needs within a low cost business operations environment and in the heart of distribution country.

And thanks to EDGE and Mullis, it looks like Memphis/Shelby taxpayers invested in a startup without getting any stock. The right size abatement recommended by this blog for FR8 was $750K down from $2M.

All of this to say, in the cases today, its not companies that were driving the size of incentives but an abatement industry incented to represent corporate/real estate interests as Memphis/Shelby tax revenues are depleted away from true economic development work in public safety, transit and workforce development.

Questionable Transaction

On another matter, the EDGE Board was questioned about a transaction where the Greater Memphis Alliance for Competitive Workforce (GMACW) was granted $843K from the EDGE Depot Board. Problem is a vote to appropriate the grant does not appear in Depot Board minutes and GMACW has not held a public board meeting to accept the grant funds. What was the approval process for the grant award?

In questioning in public comment on the transaction, Reid Dulberger, who is not a board member, out of order, interrupted proceedings to shut down any discussion on the matter. The Depot Board was set up to manage and dispose of the old Army depot property. It seems the money should have come back to local government or resided in an EDGE fund and not allocated for workforce without a Board vote or local government re-appropriation.

Oh, and they gutted the public record minutes of previous meeting public comments but that’s standard operating procedure for EDGE.

Conclusion

It was an active day with the EDGE where I always enthusiastically greet the EDGE Board. We are always glad to see each other and I got to interact with two applicant companies which I enjoyed. Can’t wait for the next EDGE Board meeting !!!