C’mon Man ! Don’t give a Memphis Tomorrow initiative $3M upfront ! Memphis Tomorrow is down in every category over 20 years while their initiatives use your federal, state and local tax dollars. Recently, Memphis Tomorrow botched the workforce development system over five years. This particular initiative involves the Memphis Riverfront Parks Partnership (MRPP)

This is not an objection of MRPP or even against public funding for riverfront improvements. It is about scrutiny when both Memphis Tomorrow and Pitt Hyde are creeping around. And sadly, the product the Shelby County Commission passed on Monday related to MRPP is legislative slop.

Its legislative slop because there is not even an attempt in the grant contract to define a framework of scheduled deliverables for $3M in taxpayer money ! There are quarterly reporting requirements mentioned but MRPP is getting all of the money upfront and due to lack of defined deliverables there is no performance standard to report against. MRPP is effectively free to report whatever regarding an unmeasurable $3M taxpayer funded appropriation.  

In section 1.6 of the passed grant contract, where there seems to be some attempt to define deliverables, verbiage from the University of Memphis Natatorium project is mistakenly used while referring the reader to “Exhibit A”. The mistaken verbiage in 1.6 is no big deal and can be cleaned up but when the reader gets to Exhibit A, there is nothing. It only states in Exhibit A,  “Memphis River Shoreline in Tom Lee Park – $3,300,000”.  Huh ???

For a $3M public-private partnership award, taxpayers are at least entitled to have a projected schedule of deliverables with completion dates and estimated cost with estimated public and private contributions noted. Thankfully, Commissioner Edmund Ford, I believe, moved a while back to break up the original ask of $10M into 3 annual contributions. This will at least allow for some degree of annual progress monitoring.

At any rate, the TIFNI philosophy to public private measurement would require a measurable set of deliverables. But the philosophy under Memphis Tomorrow is seemingly no measurement when it comes to taxpayer funds. Oh well, maybe next time.

But there is some good news, at least Commissioners in Braford, Mills, Wright and Sawyer voted against the grant contract in its current form. Again, this is not about being against public funding for Riverfront improvements but more about legislative slop that contributes to an unmeasured Memphis Tomorrow public-private complex. C’mon Man ! Sloppy, Sloppy, Sloppy…..

Public measurement of the public-private complex is the only solution for Memphis. Runaway elitism has taken its toll on Memphis and Shelby County. The former occurs, as small business and the taxpayer shoulder the burden of elitist corporate/real estate interests through increased fees and a competitively declining ecosystem. 

Meanwhile, its Ground Hog Day in Memphis with Mayor Strickland announcing yet another workforce development initiative. The announcement of the “Public Service Corps” to also support a cleaner Memphis comes on the heels of the failed workforce initiatives in GMACW and ACT WorkKeys.

Additionally, the cleaner Memphis need comes with the existence of other similar initiatives in Clean Memphis and City Beautiful. All of these failures could have been avoided with reliable public measurement and oversight to support implementation of taxpayer funded initiatives. This absence of measurement brings me to my meeting with Richard Smith some time ago. 

Meeting With Richard Smith

About 2 years ago, I sent out broadcast email alerting a local audience that the Memphis Tomorrow CEO organization was down in all categories over 20 years as their initiatives use your federal, state and local tax dollars with an openness to meet with anyone interested in learning more. Surprisingly, Richard Smith responded and agreed to meet. 

Richard and I met for about 90 minutes on Friday March 2, 2018. This meeting followed the March 1,  joint City Council/County Commission meeting where local legislators voiced their displeasure with the Economic Development Growth Engine (EDGE). In the meeting, now City Council Chair, Patrice Robinson said, “We need to just stop incenting those low wage warehousing jobs”. As a note, since that event, Robinson never has moved any legislation to address her concern. But the publicly administered TIFNI measurement solution would provide Robinson with a basis to curb excessive incentives for low wage jobs as they are losers for the taxpayer. 

As far as the 90 minute meeting with Richard, it was a professional exchange of ideas with productive agreement and disagreement here and there. But where there was strong agreement was on Smith’s exclaimed point in “There is no measurement generally or [specifically] push back on EDGE incentives !”. Richard was right, at the time, the Brookings FOCUS economic development plan, led in part, by former FedEx Chief Counsel Christine Richards, was unmeasured and failing while EDGE used bogus projection accounting to justify excessive incentives. 

The disconnected workforce development system was also discussed where I shared with Richard an employer, data-driven approach to workforce development. In that exchange, I discussed ACT WorkKeys as a career readiness assessment and the fact that “Customer and Personal Service” was the #1 area of in demand knowledge across all occupations while recommending its thematic inclusion in the academic curriculum. To which, Smith replied as he enthusiastically took notes, “That’s a great idea !”. 

When Richard and I met, Richard was new to the scene and I had been observing oddities in the Memphis public-private complex for almost 2 years.  After having worked throughout the country, I knew there were massive deficiencies in the Memphis Tomorrow leadership complex and with implementation generally. At the time, I attributed those problems to the hack elitist Pitt Hyde and thought at the time of the meeting that Fred Smith and FedEx were mere bystanders. 

Little did Richard and I know at the time, that both Fred Smith and Pitt Hyde were resolute in stifling my small business which addressed connecting the workforce development system. But from the top of the ecosystem, that is the culture in Memphis, with historically lagging small business vitality that dismisses the taxpayer and the local small business community. 

The Monday after our meeting, Richard started his “disruptive” campaign chronicled in part in a recent Memphis Business Journal article. Richard’s disruption, which involved confronting the Memphis Tomorrow crowd, of which FedEx is actually heavily involved, would soon soften to that of a  whimper with only the creation of yet another entity entitled the “Shelby County Regional Economic Development Agency”. There were no changes to EDGE or measurement implementation as disconnected workforce development and excessive corporate/real estate incentives continued for the benefit of the small few in a Memphis community in need.  

What Memphians need to know, is that throughout the country, communities announce a grant and then start implementing 6 months down the road with supporting measurement, oversight and course correction when needed. Course correction, strangely, does not happen in Memphis. Instead, maybe some joke report appears a year down the road with implementation, probably never happening. There is effectively no measurement or oversight. This is why the FedEx/Memphis Tomorrow complex is down in all categories over almost 20 years with still a disconnected workforce development system after 5 years. 

The elitist FedEx/Memphis Tomorrow complex has no idea who the customer is in taxpayer funded initiatives. But there are available LOSB  solutions to confront runaway elitism and the decline of the Memphis ecosystem. 

TIFNI Measurement and Trustee Report

The tax incentive fiscal note impact (TIFNI) measurement platform is a taxpayer centric solution that confronts runaway elitism and Memphis ecosystem decline. TIFNI also provides a measurement platform for the public-private complex while recognizing the taxpayer as the customer in publicly funded initiatives. It delivers on Richard Smith’s voiced concern while rebuking runaway elitism with measurement and a fiscal note for each abatement that everyone can understand. 

Currently, and thanks to the Trustee’s office, the only reliable tool that is available for tax incentives is the Shelby County Trustee Report. The report, while helpful, in isolation, is inadequate to measure return on taxpayer investment of tax incentives. This is why the Trustee has repeatedly called for an integrated database in the annual Trustee report and why Trustee Regina Newman has shown favor toward TIFNI. 

For example, in digesting the multiple section report, I concluded that there were underpayments on PILOTs. While I await clarification from the Trustees office, this does not appear to be the case. What one must do to see the full PILOT payment is to add the owner section to the debt service section. Additionally, there is no direct relationship between many of the PILOT parcels and PILOT projects which causes further confusion. The PILOT owner is often a landlord and not the PILOT project owner. 

At the same time, while offering 75% abatement or more to everyone and with 431 PILOT parcels in existence compared to the other municipalities in the State at 50 or less, one can safely conclude that corporate/real estate PILOTs are excessive in Memphis. 

Given this, TIFNI provides a consolidated database for tax incentives with return on investment analysis to right size PILOT awards. With TIFNI:

Taxpayers will know the return on investment (ROI) of economic development investments 

Policymakers will understand economic development modeling to project future tax revenue

Policymakers will understand and apply the assumptions used in economic development modeling to project future tax revenue

Taxpayers will better understand the effectiveness of public-private initiatives with access to a measurement platform

Without TIFNI local leaders cannot practice oversight and the taxpayer is in the dark. 

Conclusion

Through LOSB innovation, TIFNI delivers needed customer taxpayer centric measurement to the public-private complex to support the evolution of the Memphis ecosystem. And it also delivers on Richard Smith’s concern of needed measurement.

Without TIFNI, runaway elitism continues with local small business and the taxpayer shouldering the burdnen in a Memphis community in need. 

So where does institutionalized runaway elitism come from ? Handed down from Boss Crump himself, it comes from the leading Memphis institutions in for example Memphis Tomorrow, FedEx, AutoZone and The University of Memphis.

Institutional elitism is collectively enabled by lacking public university thought leadership, press and legislative oversight. The former results in a rigged system. Rigged systems don’t grow and evolve; they stagnate. Consequently, sheltered from anything else, other than runaway elitism, ignorance emerges in leadership and within the educated population. 

Elitism is the belief or attitude that individuals who form an elite—a select group of people with an intrinsic quality, high intellect, wealth, special skills, or experience—are more likely to be constructive to society as a whole, and therefore deserve influence or authority greater than that of others. But elitism has not worked in Memphis based on local outcome data. 

Elitism goes unnoticed and is happening all the time in Memphis. Resident taxpayers are routinely dismissed by unmeasured taxpayer funded initiatives that fail to deliver results to include excessive corporate/ real estate incentives for the benefit of the small few in a Memphis community in need.

Elitism occurs in other forms as well to include local realtors getting beat out of commission on the FedEx Downtown project based an the false assertion that no one in Memphis is sophisticated enough to negotiate a lease with FedEx. Or, the 5 year botching of the workforce development system by Fred Smith and Pitt Hyde while locally owned small business solutions are dismissed and work is shipped off to Canada and Boston. 

But anyway, now that we have elitism defined, we can show that runaway elitism has been going on unchecked for a long time in Memphis. Using public documentation accessible over the Internet, we will show leading Memphis institutions in Memphis Tomorrow, FedEx, AutoZone and The University of Memphis practicing and protecting runaway elitism. We will show the existence of elitism through the existence of excessive tax incentives and lack of public measurement.  

Macroanalysis

Using the 2018 Comptroller of the State of Tennessee Report, we can determine that the use of payment in lieu of taxes (PILOT) programs have been going on much longer in Memphis than in the other 3  municipalities in the State.

Based on an examination 2018 State PILOT Report, the use of PILOTs goes back in Shelby County to 1974.  In Nashville Davidson County, PILOTs began in 1999, Chattanooga Hamilton County – 2002, and Knoxville Knox County -2006. As a result, Shelby County has an excessive number or parcels under PILOT contract when compared to the rest of the State. Memphis Shelby has 431 parcels under PILOT contract, Davidson – 23 parcels, Hamilton – 35 parcels and Knox – 51 parcels. What is up with that ? Runaway elitism….

Memphis Tomorrow and AutoZone

As everyone knows Pitt Hyde founded the Memphis Tomorrow CEO organization almost 20 years ago. But the problem is that Memphis Tomorrow is down in every one of their selected categories over almost 20 yrs as their initiatives use your federal, state and local tax dollars. You have probably also heard that Pitt Hyde is responsible for pioneering the rebirth of Downtown Memphis by locating AutoZone Headquarters  to Downtown. So with flat property tax revenue, what is the taxpayer benefit of Hyde’s pioneering work ? 

Well, according to the 2018 Shelby County Trustee Report, AutoZone was provided a 40 year PILOT that ends in 2033 where they are currently enjoying a 95% tax abatement. And just recently, under Bill Rhodes, on the AutoZone expansion, AutoZone will pay only 25% of their taxes over the next 15 years as $700K  in existing taxes is abated on real property.

But that’s not all, recently, the existing 40 yr PILOT and the approved expansion PILOT were not enough for Rhodes and AutoZone where they requested and received an increase in their recently approved  EDGE expansion PILOT. This resulted in a decreased $750K net impact for Memphis/Shelby taxpayers over 15 years. 

And so it goes, elitist Boss Edward Hull Crump begat elitist Joseph Reeves “Pitt” Hyde III and Hyde begat elitist William Rhodes…

FedEx

As everyone knows, Fred Smith was one of the primary architects of the recent federal corporate tax cut. But that big tax cut was not enough. As soon as Smith finished the former, he sprinted back to Memphis to get $66M in state and local tax abatements for the FedEx Downtown and hub expansions. Of the $66M, Memphis-Shelby taxpayers, in a community in need, will shoulder $39M of the tax abatements. And there has been no economic impact study published to justify the $66M in tax abatements !!!

Memphis/Shelby taxpayers will participate in 0% of the FedEx Downtown real property capital investment where FedEx will get a 100% tax abatement on the new real property investment. But FedEx will pay taxes on $12M of the planned $60M in real property value resulting in a net 80% tax abatement over 22 years.  

On another matter, based on a review of the 2018 Shelby County Trustee Report, FedEx is getting a 99% real property abatement for their FedEx World Trade Center property located at 60 Bailey Station originally approved for 20 years. But the PILOT appears to have been extended for at least another year beyond the original approved 2017 end date before they go on yet another new 20 yr 75% abatement PILOT. 

And so it goes, elitist Boss Edward Hull Crump begat elitist Frederick Smith and Smith begat elitist Richard Smith…

The University of Memphis

Since the new local FedEx/Memphis Tomorrow University of Memphis Board of Trustees was installed, the taxpayer funded UofM has been on a successful quest of local incentives and grants racking up $26M in awards with more in the pipeline. Some of this perhaps is in order, but $26M on top of being a publicly funded university?

And to make matters worse, the public UofM has a formal partnership with EDGE. That partnership never looked quite right. And when the UofM followed up with ending their economic development measurement effort versus peer cities on their Memphis Economy project for no stated reason and the economic outlook study using select survey data – it seemed elitist institutionalization was on under the new FedEx/Memphis Tomorrow UofM Board of Trustees. This apparent institutionalization robs the local community of public university thought leadership on matters of economic and community development. 

I am a UofM supporter and kudos to Dr. Rudd and team for improving athletics, holding the line on student costs and a solid public university student product. But Rudd has demonstrated the UofM is not going to practice thought leadership in questioning anti-business runaway elitism that has stagnated Memphis growth over the last 20 years. That work will be for another UofM administration, if it ever occurs. 

And so it goes, the elitist Crump Machine begat the elitist FedEx/Memphis Tomorrow complex and the Complex begat the UofM Board of Trustees….

Conclusion

Memphis is like an organism that feeds on itself and cannot figure out why it does not grow. At the same time, you have elitist feeling entitled to botch publicly funded initiatives while not paying taxes in a nationally low business cost environment.

From the top of the Memphis ecosystem its runaway elitism and a design for ecosystem decline.

Public education and measurement are the solutions while the alternative of leaving the hack elitists unchecked will result in more of the same…..

Away from the hype of artificial intelligence, TIFNI stands to redefine economic development in Memphis through a reintroduction of human intelligence and measurement. The tax incentive fiscal note impact (TIFNI) platform promises to effectively measure public economic development investments with the customer taxpayer in mind. 

For years, the Memphis economic development system has operated on artificial intelligence of the type that projects massive taxpayer windfalls on the back of excessive tax incentives. All the while, the UofM has stood beside the author of such artificial intelligence and partner, the Economic Development Growth Engine (EDGE), while  scooping up incentives for themselves as excessive incentives explode for the benefit of the small few in local corporate/real estate interests.

EDGE was born out of the corporate elitist FedEx/Memphis Tomorrow complex, a hold over from the Fonzie/Crump era rigged system days. As a result of a rigged system, lacking human intelligence and system measurement, the primary drivers of any local economy, in small business and workforce development have been dismissed. The former has led to declining small business vitality, a disconnected workforce development system and increasing poverty rates in Memphis all of which TIFNI proposes to correct through smarter economic development investments.

TIFNI Economic Development Measurement and Check on Elitism

The locally owned small business (LOSB) TIFNI solution provides a fiscal note for every tax abatement. With TIFNI, economic development investments are measured based on the benefit to the customer taxpayer using reliable economic and fiscal impact analysis.

Further, TIFNI analyzes economic investments while considering opportunity costs that would otherwise make the community less attractive for economic investment if community investments are forgone. As a result of the implementation of the publicly administered TIFNI platform:

Taxpayers will know the return on investment (ROI) of economic development investments 

Policymakers will understand economic development modeling to project future tax revenue

Policymakers will understand and apply the assumptions used in economic development modeling to project future tax revenue

Taxpayers will better understand the effectiveness of public-private initiatives with access to a measurement platform

TIFNI can be obstructed from implementation but can’t be beat. Unfortunately, the hack elitist may very well attempt to obstruct TIFNI and reliable measurement of the public-private complex. They have been obstructing common sense measurement for years. In many ways, it seems that the UofM is becoming the bureaucratic center of the rigged Fonzie/Crump era elitist complex. The Memphis elitist have consistently revealed they know how to rig the system but not how to competitively evolve the ecosystem. 

The UofM and Obstruction of Ecosystem Evolution

First, lets give credit to the UofM for improving athletics, managing student cost increases and a solid public student university product. But what the UofM is not is a community economic development thought leader.

I have tried on multiple occasions to deal with the UofM and their partners. Its been a closed system for me as a local UofM graduate.  Once was with Ted Townsend in the Summer of 2018 regarding solutions for stalled workforce development efforts and nothing happened. At the time, local workforce development efforts were 4 years behind schedule. The UofM meeting was followed by a Summer meeting in 2019 with Epicenter on the same subject. Nothing happened as small business was dismissed and more work was then shipped out of town to Burning Glass located in Boston. As a result, while being 5 years behind on connected workforce development, there still is no published labor market information to guide connected workforce development efforts. 

Problem in Memphis, there is no sense of urgency while the elitist dismiss local small business and the taxpayer. Just this week, in an article in the Daily Memphian, regarding a learning grant received by the UofM, Dr. Vasile Rus said “In 10 years, it’s possible that we could have an institute here that would be helping Shelby County Schools and beyond”. Given the local needs, 10 years ??? No sense of urgency ! Why even say that ? Sounds like a page out of the Memphis Tomorrow playbook promising a better tomorrow. 

On another occassion, I met with Marc Perrusquia who is over the new UofM  “investigative” journalism department on the topic of economic development measurement. Perrusquia seemed to want to do a story on my work but it never materialized. Instead, the UofM terminated Shelby County peer economic development measurement with their Memphis Economy project during the City of Memphis election season. That to me was stunning, just to stop measurement for no reason. And then the rosy UofM/Paragon economic outlook study using a select survey group appeared later this year. 

The economic challenge in Memphis is small business and workforce development. But the elitist partnership bureaucracies erected by the UofM end up starving out small business which sets small business up to have their ideas ripped off. There just is not a spirit of increasing transactional velocity in Memphis with LOSBs when good ideas arise that address community challenges. Instead, there is a new bureacracy that says all the right things while obstructing small business through bureaucracy. 

Besides, it seems, based on press accounts, UMRF/Epicenter goals are more around growing small businesses into corporations as opposed to just building out a vibrant small business economy. The rigged Fonzie/Crump era culture is why Memphis only has 22 business establishments per 1,000 population leaving Memphis at the bottom of its peer group. Rigged systems don’t grow. 

And then you try to meet with the likes of Allie Prescott, Dr. Rudd, David Waddell or Leslie Smith, they won’t meet with taxpayers with concerns or questions, even though they are publicly funded. 

Conclusion

TIFNI checks an elitist establishment with reliable measurement. Public officials need to reject runaway elitism with fundamental measurement while recognizing the taxpayer as the customer in publicly funded economic development work. And policymakers need to know that there are public universities throughout the country that attract funding by just being independent thought leaders and not kowtowing to an elitist establishment.

But based on their track history, policymakers can’t rely on the UofM as an independent thought leader in community economic development matters. Nor can they rely on the UofM to have a sense of urgency in expediting innovation for community betterment. 

At the same time, all is not lost. The UofM is steadily improving on the athletic front while keeping student costs down and producing a solid public university student product. But expeditious innovation for community betterment is probably not going to originate from the UofM……

Implementation of Fred Smith’s public policy vision for America is that of runaway elitism resulting in stagnation, broken promisies and growing income inequality. After all, that is what has materialized in Memphis after 20 years of the FedEx/Memphis Tomorrow CEO organization policy implementation under Smith and Pitt Hyde. Taxpayers in Memphis and throughout the country, unknowingly, wake up and carry the elitist hack Smith around on their back all day long. Smith is a national embarrassment on the public policy front. 

Just look at policy implementation in the last couple of years where Smith went to Washington to lobby for corporate tax cuts during an economic expansion. With increasing Federal debt levels, the corporate tax cut paves the way for the increased likelihood that Americans, promised otherwise, will probably be paying much more for Medicare in their retirement years.

And following the Federal tax cut, Smith then runs back to Memphis and bullies a local Memphis community in need out of $39M in excessive local incentives – without any published economic impact justification – all while botching the workforce development system over 5 years and shutting out small business costing local business and taxpayers millions. 

Meanwhile, Smith’s son, Richard Smith, as Chamber Chair engages in the theatrics of fake disruption in economic development reform where nothing changes. Supporting Smith’s efforts, FedEx employees chair theatrical Economic Development Growth Engine (EDGE) reform efforts that end up protecting the status quo in an EDGE organization that:

Awards $250M+ in excessive corporate/real estate tax incentives while using bogus projection accounting for justification

Botches the workforce development system over 5 years, costing local business and taxpayers millions while stifling local small business solutions

Leads the implementation of a failed and unmeasured Brookings FOCUS economic development plan, authored in part, by FedEx’s former chief counsel, Christine Richards.

Misuses $1.7M in Depot funds that should have come back to the taxpayer for re-appropriation

Implements payment-in-lieu of taxes (PILOT) programming that does not even result in collecting minimum publicly approved PILOT payments in addition to the excessive abatement awards based on a review of the 2014-18 Shelby County Trustee reports.

And Smith wants to debate The New York Times in Washington DC ??? Whatever…. Smith doesn’t need to go to Washington DC for a debate. I will debate him anytime in Memphis, TN where he will subsequently be publicly destroyed. 

Runaway Elitism: TIFNI and The Trustee’s Report

First, EDGE Board approved job incentives can be shown to be $250M in excess. The tax incentive fiscal note impact (TIFNI) platform project proposes to fix excessive incentives while providing a centralized database for 13 abating boards by providing reliable economic and fiscal impact analysis with a fiscal note for every abatement. EDGE represents just one of those 13 abating boards.

But concerning, after receiving the benefit of an excessive EDGE abatements, corporate/ real estate beneficiaries are not even paying the publicly approved minimum payment. This is based on a review of Shelby County Trustee reports. Using the 2014-18 Shelby County Trustee Reports, a survey of 21 companies was conducted for PILOT contracts from 2014-18. The survey reveals the following:

Only $2.1M of $9.8M in PILOTs approved were billed for Shelby County real and personal property taxes resulting in a $7.7M shortfall for the 21 companies. The PILOTs $9.8M PILOTs approved due amount was calculated by multiplying the EDGE Board approved project summary “% of taxes paid” percentage (pg 5 and 7)  obtained from the EDGE website by the “Assmt Taxes” found in the 2014-18 Trustee’s reports to derive a PILOTs due amount for 2014-18. What might the shortfall be for all companies ?

Scheduled PILOTs totaled $16.5M compared to $9.8M. The $16.5M amount was derived by adding “taxes paid after abatement” for corresponding years 2014-18. Some shortage can naturally come about by a decreasing tax rate down from what was originally approved. But given the amount of difference, 1 of 2 issues seems to be occurring in 1) planned capital investments did not occur or 2) under assessment. Under assessment occurred with Electrolux as locally reported. See spreadsheet here. 

The Trustee Report states the following: ” This report is generated to assist in fact–based discussions as to the effectiveness and future direction of Shelby County’s PILOT programs. The ultimate value of these  PILOT incentives should be measured by the PILOT boards and our local governments in terms of real economic impact to our community and the returns gleaned from these investments.”

But other than on the topic of delinquent PILOTs, report discussions never occur. In fact, the Shelby County Commission has never scheduled the review of all abating boards as was resolved in their EDGE Task Force work 1 year ago.

The TIFNI project, which proposes a consolidated tax incentive database and reliable measurement platform for all Shelby County abatement boards, as advocated for by the Trustee’s office, helps insure this work is scheudled. TIFNI also includes a measurement platform for public-private initiatives. This would resolve the measurement that never occurred with the Brookings FOCUS economic development plan. 

Data and Measurement Problems

As was shown with this exercise, to evaluate what is happening with tax incentives, one must navigate between multiple sites in the Trustee and abating board sites, convert pdf documents to excel and perform calculations. Further, provided the documentation can be found, recalculations must be performed using responsible assumptions to derive defensible economic impact and then fiscal impact must be applied.

All of that to say both measurement and data problems exist in trying to evaluate return on taxpayer investment all while excessive corporate/real estate incentives roar for the benefit of the small few. Its an implementation of  anti-business corporate socialism. Memphis #1 problem is an implementation of corporate socialism of the type that undermines ecosystem investments that support commercial evolution and competitive economic growth for all.  

Its a national embarrassment and a design for ecosystem decline under Smith, Hyde and the FedEx/Memphis Tomorrow cartel…..

On Wednesday, AutoZone went in and got an increase on their already excessive EDGE abatement from $11M to $13M while reducing the net taxpayer benefit from $3M to $2M. When fiscal impact analysis is imposed, the projected abatement return on investment for taxpayers is –17.4%.

AutoZone is led by Bill Rhodes who also sits on The Memphis Tomorrow and Hyde Foundation Boards. We decided to invite Bill for a fireside chat to which he hopes he accepts. Here are some advance questions:

Bill, in your private and public leadership positions, we hope that people such as yourself can see the nexus between an evolving publicly supported ecosystem and private profitability. What was the thought process at AutoZone to decrease the net taxpayer benefit of the AutoZone EDGE project from $3M to $2M in the midst of flat public revenues ? 

Bill, did you know at a $9M abatement, the Memphis/Shelby taxpayer could have broke even at the end of the 15 year term? Do you see the public-private benefit of achieving at least taxpayer breakeven over a 15 year term with the AutoZone project ?

Bill, now we know our tax rates are high in Memphis. In Nashville, your abatement would have been about $3M. Double that for the high tax rate in Memphis and make it $6M and then kick in another $1M for Nashville being a hotter city and you have an abatement of $7M. Don’t you think $9M is business friendly while the taxpayer breaks even after 15 years ?

Bill, with the AutoZone project, we abated $1M in already existing property taxes. With flat local public tax revenues, does that really seem like it would help AutoZone profitability while risking the possibility that AutoZone growth might not be adequately publicly supported  ?

Bill, we abate 75% in taxes for existing companies. Where did that thinking come from ? It reeks of anti-business corporate socialism and elitism. What ever happened to the partnership concept of say 50% for an existing local corporation in AutoZone operating in a nationally low business cost environment in Memphis ?

Bill, so how did the Memphis Tomorrow CEO organization pull off being down in all categories over almost 20 years as their initiatives use Federal, State and Local taxpayer money? 

Bill, what was the deal with the unmeasured Brookings FOCUS economic development plan that came out of the Memphis Tomorrow Fast Forward initiative and the botched workforce development effort over 5 years while excessive tax incentives roared for the benefit of corporate/real estate interests ? It seems to be a prescription for ecosystem decline. Is there another way this can be viewed ?

Anyway Bill, contact us if you would like to schedule the fireside chat. And here is the new fiscal note for the AutoZone project. 

What is good for the taxpayer is good for business. AutoZone abatement should be $9M. Taxpayers will get their money back by the end of the abatement term. 

Just for kicks, since I go to a bunch of EDGE meetings, I thought I would try to reconcile what the EDGE Board approves with the 2018 Annual Shelby County Trustee’s Report.  First before I get started, I know the Shelby County Trustee is NOT in charge of reconciling EDGE Board approvals with EDGE contracts. But who is ? 

The Shelby County Trustee only bills and collects taxes based on legal requirements, and for this discussion, an authorized industrial development board payment-in-lieu of taxes (PILOT) contract. With that stated, based on what is EDGE Board approved and what is showing up in the Trustee’s report varies widely unless I am misinterpreting something, which is entirely possible and why I am writing this blog. 

RE-CON-CILE

First, the EDGE Board typically approves an excessive 75% city-county tax abatement for a 10 – 15 year period or a payment-in-lieu of taxes of 25% of property taxes due. But this is what the 2018 Shelby County Trustee Report reveals based on contract amounts regarding County property taxes:

For real property, $3,434,440 is billed based on PILOT contracts instead of $25,627,065. That is 13.4% instead of 25%. Had 25% been billed that would mean $6,406,766 in billings or $2.972,326 more in PILOT revenue.

For personal property, $246,809 is billed based on PILOT contract instead of $12,269,542. That is 2% instead of 25%. Had 25% been billed, that would mean $3,067,385  in billings or $2,820,576 more in PILOT revenue.

The total estimated variance between what is typically approved in a 25% PILOT and what is showing up in PILOT contracted billings in the 2018 Shelby County Trustee Report is an estimated  $5,792,902 PILOT revenue shortfall. 

Other Questions

Also in trying to reconcile EDGE approvals with The Shelby County Trustee Report, is the “Owner” the property owner or the entity that EDGE awards the abatement ?

And if something is drafted in contract that is significantly different from what is publicly EDGE Board approved, shouldn’t the revision of what was originally approved come back for public hearing and approval ?

Anyway, here is my spreadsheet work. 

Please advise if I am analyzing this reconciliation in the wrong way. Thank you.