INGRAM: Day in the Life
UTILITY BILL COMPARISON
FORD: Don’t Get The Memphis Benefit
With all of the Greater Memphis Chamber celebration, one would think that the Ford plant was locating in Shelby County. But it’s not. The Ford plant will be located 50 minutes away in Stanton, Haywood Couty, TN.
Meanwhile, discussions are beginning to occur about light rail from Memphis to Stanton to facilitate workforce transportation. But wouldn’t such light rail just be a temporary need? Won’t those Memphis workers just move closer to Stanton once they sustain higher incomes for a time?
At this point, based on the above logic, I just don’t get the benefit of the Ford plant for the City of Memphis. So, I looked into it further based on a similar plant deployment with Kia in West Point, Troup County, GA and near the larger population center of Columbus, Muscogee County, GA.
Kia opened in 2006 in West Point, GA and employs approximately 2,700. Ford will employ 6,000 drawing from a larger population base in Shelby County than what exists in this particular Georgia region. Given the population of the TN and GA regions, a proportional similarity exists between respective projected occupational demands and regional populations in both TN and GA.
To that extent, the following observations can be made from the BLS sourced data chart above regarding the Kia economic impact on County total wage growth. In this example, West Point’s Troup County is Haywood County, Columbus’ Muscogee County is Shelby County and Georgia is Tennessee. See below:
In 2006, when Kia production started, West Point, GA’s’ Troup County (Green) emerged from negative total wage growth when benchmarked against 2001 total wages.
In 2006, the population center of the region in Columbus GA’s Muscogee County (Orange) growth accelerated briefly only to fall off at the beginning of the great recession along with the State of Georgia (Blue) and Troup County, GA (Green).
In 2009, when visibility began to clear from the great recession, Muscogee County’s percentatge total wage growth exceed the State of GA, while Troup County’s percentage total wage growth exceeded both the State and Muscogee County. In this way, Troup County’s percentage growth overperformance is expected and unsurprising given the new Kia plant location in Troup County.
In 2012, Troup County’s total wage growth sustained exceeding the percentage wage growth of Muscogee County from 2012-19, while decelerating below the State of GA in 2015 but remaining competitive with the State through 2019
In the end, Columbus GA’s Muscogee County and the population center for the remotely located Kia plant, was not competitive with GA statewide percentage total wage growth. Could this be the future of Memphis and Shelby County with the Ford plant deployment in remotely located Haywood County ?
Here is the question. Is there a Memphis/Shelby County economic development plan at all ? An economic development plan is needed to help insure that Shelby County has competitive percentage total wage growth with that of the State of Tennessee.
Given this need, a Ford plant in Haywood County does not appear to be the answer. The answer is a local economic development plan that emphasizes Memphis and Shelby County small business and workforce development…..
North Mississippi ED Monster
Sparked by this Daily Memphian article, this blog digs into North Mississippi tax incentives, using only the information on the Desoto County Economic Development webpage.
So much has been made of the economic development monster, to the South, in Northern Mississippi. At the same time, several existing local companies have leveraged that scary monster, to garner local tax abatements, also known as a retention payment in lieu of taxes (PILOT).
Retention PILOTs and abating existing real property taxes for low wage jobs is where the excess resides in local job PILOTs. At any rate, the following analysis has been conducted to help inform the local conversation around job PILOTs.
Since taxes are calculated differently in Mississippi than in Tennessee, this analysis standardizes on a grouping of commercial property values taken from this Desoto County Economic Development webpage and pertaining to Olive Branch, MS. The analysis also standardizes on a 13 yr abatement term, as that is the approximate average term for EDGE job PILOTs, when dollar weighted.
As shown in the table above, those property values are $300K in land, $1.5M in a building (real property) and $700K in personal property such as machinery. Using the aforementioned property values, while referencing information found on the Desoto County webpage regarding tax abatements, the above table analysis reveals the following observations:
Over 13 years, Memphis/Shelby County abates $486K, while the new recruited corporation pays $258K in local commercial property taxes.
Over 13 years, Olive Branch/Desoto abates $151K, while the corporation pays $514K in local commercial property taxes.
Memphis/Shelby can provide the same tax liability, as Northern Mississippi abated projects, for new corporate recruitment, by abating 63% for 10 yrs and not 75%. Mississippi limits local tax abatements to 10 yrs.
For retention PILOTs, Memphis/Shelby could have provided existing local corporations, with approximately the same tax liability as Northern Mississippi on unabated projects, with an estimated 25% tax abatement, while also helping corporations avoid relocation costs. Using the numbers above, 10% would have accomplished the previously mentioned goal, but it is assumed that the property tax differential was greater in the past than now. Within job PILOTs, retention PILOTs and abating existing property taxes for low wage jobs is where the incentive excess locally resides.
Corporations with significant personal property investments, may have lower tax liabilities in Tennessee, as Mississippi assesses personal property at approximately 33% more. Please see the personal property full taxes column in the table above.
While it is not part of this analysis, if not exempted, Mississippi taxes finished goods inventory. This puts upward pressure on commercial tax liabilities in Mississippi. Manufacturers appear to have less flexibility, as there appears to be fewer tax exemptions for raw material inventory.
As one can see, there are some structural local tax advantages to operating in Memphis vs Northern Mississippi.
While Mississippi calculates property taxes differently, the above tax rates were converted to Tennessee commercial tax rates based on the commercial property values used above. In this way an apples to apples comparison can occur.
All that to say, more than anything, companies are going to locate where they can find an available site and a community that meets their needs. Tax abatements are just a small portion of the overall decision, which provides no reason to undermine the tax base with excessive tax abatements.
After all, even Mississippi excludes education taxes as well as localities excluding other taxes from their economic development programming…..
NOTE: Only local economic development funded programming was part of this analysis. State economic development programming, that includes income tax rebates in MS., was not part of this analysis. In my opinion, our Tennessee economic developers in Nashville, view no income tax vs income tax rebates to corporations as a net benefit to Tennessee. At worst, I believe it is a wash.
Violent Crime Chart
HIERARCHY OF COMMUNITY ACTUALIZATION
EXTRAVAGANT: $5M Park Enhancement but for Parking???
Is Vance Park destruction and redevelopment, right outside Pitt Hyde’s PITTCO-Hyde Foundation Compound a parking project ? Don’t think so. Let’s dig in.
Some time ago, before Carol Coletta said that every community is entitled to a “glamour project”, I adopted that belief, and for the most part, accepted the Riverfront boondoggle. I did publicly object to a County Commission appropriation of $3M due to the fact that the resolution contained no deliverables.
At any rate, that has now changed after I have learned more. For starters, the recent reduction of parking, promised in City mediation, is concerning. Memphis Riverfront Parks Partnership (MRPP) claims to have the authority to modify a City mediated parking agreement. But after seeing various entities get access to local funding and then dramatically modify the deliverables, I believe opponents of MRPP on the Riverside parking matter.
And then there is the extravagant $5M Cut Back Bluff project that was sold by the Downtown Memphis Commission’s Downtown Mobility Authority (DMA) and JenJen Oswalt, to local legislative bodies, under the heading of a $62M public parking project. The $62M project included the public endorsement of AutoZone’s Bill Rhodes.
Again, I had not been focused on the Riverfront boondoggle. But from the presentation materials of the $62M DMC PILOT extension fund project, I was always wondering what was going on with the Wagner Place project that added 35 parking spaces for $6M.
That’s $171K per parking space, with above ground parking garage spaces costing $25-30K per space. So I wondered, are they putting all of the Wagner spaces under ground or what? Then I referred back to the DMC Commission presentation materials and this is what I discovered.
Extravagant Park Project
First, even with $6M in DMA parking funds, the Cutback Bluff project has nothing to do with automobile parking. Its an extravagant Vance Park enhancement project bordering Pitt Hyde’s downtown compound. (Refer to the above graphics, when reading the following).
This $6M in local funds, comes in addition to $30M in state and local funds for Riverfront development. Vance Park was a beautiful park before hand, with stairs to the river. But the park is being redeveloped under the name of Cutback Bluff. The project extends Tom Lee Park’s current boundaries by engulfing Vance Park as Cutback Bluff.
The language used in the legislation to enable access to $6M of $62M in parking funds was parking “connectors” from Riverside and Tom Lee Park to DMA parking. The connector is an extravagant landscaped switchback sidewalk being built, on the bluff of the once Vance Park, to connect a sidewalk at the top of the bluff to Wagner place parking. Cutback Bluff itself does not generate direct parking revenue for the DMA.
In fact, parking is being removed at the bottom of the hill on the east side of Riverside Drive in apparent violation of the City mediation agreement. As far as the top of the bluff, a cost effective connector, could have been, connecting Wagner Place parking to an unimproved Vance Park. But Nooooo, the elitists have to gig the taxpayer, for another $6M to fund extravagant landscape improvements bordering the PITTCO compound.
Given the DMA’s local funding, they have the potential to be a local game changing board by investing in true economic development. The DMA should curtail the mobility center and recover $6M from MRPP for Cutback Bluff. Or if not the former, curtailing the Brooks Museum by $6M for Cutback Bluff. This will result in about $70-80M in taxpayer savings to be redirected to targeted economic development investments.
PUBLIC PARKING: Coletta’s Paris Standard
Memphis Riverfront Parks Partnership’s (MRPP) Carol Coletta recently articulated a new “Paris” standard. And that standard is 15 minutes walking or by bike to meet one’s daily needs. Given that standard, and with a virtually an empty 250 Peabody Place garage, during peak 11am-1pm weekday time, much of the planned Downtown public parking garage expenditures need to be curtailed.
As evidenced in the Downtown Parking Study, before COVID, Downtown public parking is plentiful. Curtailing the Downtown Mobility Center and Wagner Place projects will save taxpayers $70-80M over 25 years. After all, we already have a mobility center at 250 Peabody Place with bike racks and electric charging stations.
Additionally, all of the much less expensive than garage to build, promised MRPP curbside parking, per mediation agreement, needs to be built, on both sides of Riverside. This will help maximize public riverfront access, use and investment.
Recently, the Downtown Memphis Commission released their 2021 year end financials and my observational conclusion of a virtually empty 250 Peabody Place Garage was confirmed, with the garage generating $209K in revenue and a $869K cash loss. 250 Peabody Place has approximately 1,000 available spaces which, at $10 per day, results in annual revenue potential of $3.6M. This means the occupancy rate of 250 Peabody Place sits at about 6%.
The improved financials, that operationally breaks out each garage, were produced by DMC’s Penelope Springer under the new DMC leadership of Paul Young. See page 10 of the financials:
Significant opportunities exist to improve public economic development return on investment. And per the TN Attorney General’s opinion, that is often locally cited as the authoritative legal source on PILOT Extension Fund use (PEF), the PEF can fund virtually anything related to economic development, to include needed workforce development.
Given this flexibility, the DMC’s Downtown Mobility Authority and Paul Young have the opportunity to be heroes on the local economic development front with $70-80M, in away from parking garages, targeted economic development investments. But what about walkability and the Paris standard?
Walkability and Empty Garages
What’s weird is everyone is talking about walkability, but no one wants anyone to walk. The former, while spending $100M on public garages, with empty garages and plenty of parking during peak time. If the Carlisles need a garage, they should build it; not the taxpayers after all of the lavish incentives provided to the Hyatt/One Beale Development.
So given Coletta’s Paris standard, as an old fat white dude, while not jaywalking at all, I clocked my walking time to various locations around Downtown. Keep in mind, the Paris standard is 15 minutes walking or by bike. Here are my pleasant walking times, from the virtually empty 250 Peabody Place garage during peak time:
- AutoZone Headquarters – 6.25 minutes
- Riverfront – 10 minutes
- City Hall / Shelby County Bldg – 15.5 minutes
- National Civil Rights Museum – 12.5 minutes
- Central Train Station – 16 minutes
- FedEx Forum – 3 minutes
- AutoZone Park – 5 minutes
- Future Union Row / The Walk – 2 minutes
- Peabody Hotel – 4 minutes
- Beale Street – 2 minutes
Given the Paris standard, empty garages and plentiful parking, there is no need to spend $100M on public parking garages. But there is a big need for targeted economic development.
Let’s get started, with the new and improved DMC under Paul Young….