Dear Mayor Strickland, 

Can you please update us, at the end of this week, with your Weekly Update, on the following 2 items:

1 – An update on procedures to collect, including interest, approximately $1M in Nike back PILOT payments. Based on the last EDGE 2019 Nike Compliance report, Nike had not been paying their 10% PILOT payment to the City. And further, would you also let us know, if you intend to advocate to hold Nike in Default of their $58M PILOT agreement due to no MWBE spend in 2017-19 while also leaving almost 1,200 low wage workers without subsidized healthcare?

2 – Shucks, anyone can make a mistake. Below, I correct a few inconsequential mistakes I made in my previous PILOT blog, regarding the favorable Aesthetic Management and RDX PILOTs. Within the spirit of course correction and getting it right, can you please correct your current Weekly Update in the next Weekly Update, to reflect the actual pre pilot taxes currently being paid on the Poplar Plaza PILOT parcels?

After pulling the City and County real property tax bills, the annual pre pilot amount is $466,508 and not $113,335, as shown in your Weekly Update. Links to the property tax bills are under the below table. Also, your annual PILOT payment for the project appears inflated at $376,489. The annual average PILOT payment should be $331,670, based on public documentation as provided in the EDGE Poplar Plaza Project Summary.  Also, a minor typo appears in your Weekly Update for the Poplar Plaza PILOT. The correct address for the parcel is “3485 Plaza Avenue” as opposed to the “3585 Plaza Avenue” that appears in your update. 

As you know, the University of Memphis recently announced, yet another, local “systemic racism” initiative, and then went in Deep to support the excessive Poplar Plaza PILOT, that resides in their development district. Based on the corrected amounts, the Poplar Plaza PILOT is scheduled to generate $2M less in property tax revenue than is currently being generated, based on public documentation. And this tax revenue loss, is unloaded on a Memphis majority Black community in need, as the UofM embarks on it’s “systemic racism” initiative. Go figure. See below table:

The above figures were taken first, from your Weekly Update for the “Strickland Weekly Update” row. And the below public documentation was used to compile the above figures for the “Actual” row. From the EDGE Poplar Plaza Project Summary, “Annual PILOT Payments” average $331,670, per year, over 15 years as opposed to $376,489 as contained in your Weekly Update.  

“Annual Pre PILOT” revenue is calculated by adding up all of the City and County tax bills below, for the two parcels in the Poplar Plaza PILOT. Those four annual tax bills total $466,508; far more than the $113,335 in your Weekly Update. The annual average net impact on commercial property tax revenue is -$134,838 when using the corrected figures. 

Over a period of 15 years, the annual -$134,838 equals -$2,022,570 in property tax losses that come as a result of the $14.7M Poplar Plaza PILOT abatement. That is $14.7M more in abatement than would be approved in any other Tennessee county,  as Shelby County is the only county in the state administering residential PILOTs. See below public documentation:

• Mayors Letter and EDGE Term Sheet
• EDGE Poplar Plaza Project Summary
• City Tax Bill for 3486 Poplar / Parcel# 04405200001c
• City Tax Bill for 3485 Plaza / Parcel# 04405200002
• County Tax Bill 3486 Poplar / Parcel# 04405200001c
• County Tax Bill for 3485 Plaza / Parcel# 04405200002

MCCLM Corrections:

From my previous blog, the following overall inconsequential corrections, as shaded in light green, were made for the favorable RDX and Aesthetic Management PILOTs. My RDX pre pilot mistake came as a result of calculating it using a 15 yr term as opposed to the correct 6 yr term. And the Aesthetic Management correction was due to the fact that I incorrectly assumed it was in the City, and it has been corrected, to only include County taxes. Additionally, the other pre pilot figures were only slightly corrected to reflect the exact amounts on the pulled tax bills. 

In the current environment, both Aesthetic and RDX are reasonable PILOTs and work for the taxpayer. See corrected table and previously published table below:

As originally appeared in previous blog. 

Mayor, I look forward, hopefully this week, to the corrected weekly update. Thank you. 

Shelby County Chief Financial Officer, Mathilde Crosby, sounded the alarm in County Commission testimony on Wednesday. Crosby testified that property tax revenues were down from 2019, yet again, this time in 2020 by $7.1M. Meanwhile, back at the ranch, EDGE is approving $38M in new tax incentives. 

The most excessive PILOT of the day, in relationship to net taxpayer benefit, was the University of Memphis (UofM) supported, Poplar Plaza PILOT. Over the term of the PILOT, Poplar Plaza will generate $2M less in property tax revenue than it currently generates.

True story, in a letter (pg. 11) endorsing the Poplar Plaza PILOT, Ted Townsend, UofM Chief Economic Development Officer, said the following:

“The project [Poplar Plaza] is not located in the current Highland Revitalization TIF Boundary, however our support of a PILOT incentive remains the exception rather than the rule.”

Here is the real deal. Based on the UofM’s partnership with EDGE, they systemically support a culture of excessive incentives and corporate elitism, while coincidentally ending their peer city economic development measurement research project, without stated cause. Such a platform would reveal that excessive incentives are not working as an economic development policy. 

The exception is that the UofM writes formal letters, when PILOTs directly benefit UofM area development plans. That’s all. The UofM endorsed two PILOTs at the EDGE meeting that effectively extends their current tax incented Highland development district. 

Two UofM area PILOT approvals follow $26M in local tax incentives and grants benefitting the UoM, since the installment of the new local UofM Board of Trustees in 2016. This $26M includes, $3M for an elitist $19M tennis center, that City of Memphis taxpayers were bullied into funding, without hearing competitive proposals.

This UofM supported PILOT comes, right on the heels, of a newly announced UofM local “systemic racism” initiative. Stomach churning and weird ass timing for an Elitist and excessive PILOT, to say the least. 

Analysis 

EDGE approved 5 PILOT projects on Wednesday in Aesthetic Management, RDX, DHL, University Apartments and Poplar Plaza totaling $38M in abatements.

Based on an application of Dr. Timothy Bartik’s tax incentive research, these approvals are in excess by 102% or $19M. The former occurs as EDGE is projected to collect $804k in fees for awarding these excessive incentives. Bartik research collectively considers the tax revenue impact of wages and capital investment. 

EDGE is doing what they are financially incented to do; award excessive incentives. See the problem ?

The Aesthetic Management and RDX PILOTs work for the taxpayer, while University Apartments, DHL and Poplar Plaza are excessive. See below summary taxpayer benefit analysis ranking, from best to worst by the “Excess” column, for a busy EDGE day. Bartik research is applied under the “Right Abate” column:
But there is more. EDGE gets help from the local press. 

Unreliable Daily Memphian

Beyond slant, the anonymous donor led Daily Memphian, is an unreliable news source for a variety of reasons. Here is an example. The Daily Memphian led with the following in their EDGE story:

“Five companies received a combined $37.6 million in local property tax breaks in return for making capital investments totaling $162.5 million, creating 318 jobs and still paying $38.3 million in Memphis and Shelby County property taxes during the terms of the tax reductions.”

In this attempted Daily Memphian analysis, regarding only commercial property tax revenue, $38.3M is not even close. The 5 PILOTs approved, will generate $15.1M in PILOT payments over the term of their abatements. Further, in exchange for $37.7M in tax abatements, only $5.5M in net new commercial property tax revenue will be generated over the abatement terms. See below table analysis:
And if the above is not enough, The UofM has an investigative news partnership with The Daily Memphian. Go figure…. 

Conclusion

Runaway corporate elitism is the chief problem; not systemic racism. Dr. M David Rudd, President of the UofM, said in the Commercial Appeal, “It is clear that Memphis needs us.” No they don’t ! 

Memphis does not need a public University, that has a corporate Board of Trustees, without thought diversity, that enables runaway corporate elitism on the back of a majority Black community in need. 

And, after 20 years of them, Memphis does not need, yet another, elitist “systemic racism” initiative…..

3

UofM plans to extend its already dominant local public-private journalism reach with a joke “systemic racism” narrative. Its impossible to advocate a “systemic racism” narrative, in a majority Black community in need, without calling out the locally dominant “corporate elitism” doctrine. This effort is an old timey Memphis Tomorrow sham. Why its a joke UofM narrative, will be fully documented later. 

Based on the recent Commercial Appeal article, The UofM will leverage their public funding to advance its “systemic racism” message through their Institute of Public Service Reporting/Radio partnership  with the anonymous donor led Daily Memphian, as previously reported . 

In the CA article, UofM President Robot Rudd said, “It is clear that Memphis needs us”. Hello Robot ! Memphis does not need a joke UofM Board of Trustees that lacks in thought diversity. The UofM Board of Trustees, has 3 board members with direct relationships with FedEx, while the other representatives are more of the same companies that serve on all local boards in First Horizon, International Paper, Sedgewick and Methodist.

This lineup, offers the community more of the same, in no thought diversity that would accommodate independent public university thought leadership on economic and community development matters. The Board is just an extension of the rigged and elitist Crump era Memphis Tomorrow corporate machine. 

Meanwhile, the UofM and donor led Daily Memphian (DM) already collectively hog the public-private journalism space. The UofM’s status quo Quotis Sanford is an opinion columnist for the Daily Memphian. Quotis writes slightly left of center on political matters and has recently discussed, on more than one occasion, symbolism and confederate era statues. Quotis does not broach the topic of corporate elitism. 

The DM further partners with the UofM’s Institute for Public Service Reporting for “investigative journalism”. Its an investigate partnership that hatched the misdirected story of  claimed City of Memphis obstruction in police “use of force” data.

The correct target was the Memphis Tomorrow Memphis Shelby Crime Commission that partners with the UofM Public Safety Institute. The Crime Commission was tasked, years ago, with “data driven policing” by local government. The unquestioned Crime Commission were the ones that should have had the data compiled and ready to go, years ago ! 

Then there is the local non-reporting of an apparent EDGE PILOT default by “social justice” Nike. The UofM contracts exclusively with Nike for sports apparel. And the DM has a show, Behind the Headlines, on the publicly funded WKNO.

Through its vast public-private media alliances, the UofM has demonstrated itself to be s joke, on matters of community and economic development, in confronting corporate elitism that plagues a majority Black Memphis community in need.  

Why a Joke ?

Since  the installment of the UofM Board of Trustees, The UofM has been a purveyor of corporate elitism, on the back of a majority Black community in need, while devouring through significant local funding. The worst example was taking the last available $3M in City of Memphis funding for an elitist $19M tennis center on City provided property.

The City Council approved tennis center funding occurred without hearing competitive proposals. This funding comes on top of $2M in funding for a UofM pool renovation project and the $21M Highland TIF tax incentive. Mind blowing !!

Below, are some additional jokes precipitated by lacking thought diversity coming from the UofM Board of Trustees: 

Joke #1 – Sparks Bureau of Business and Economic Research. While in partnership with EDGE, Sparks abandoned their Memphis Economy peer economic development research  measurement platform without stated cause. This is unheard of and shows lacking public university thought leadership. And Sparks never advocated, in local chambers, any economic development public policy positions.

Joke #2 – The Benjamin Hooks Institute for Social Change. They speak in platitudes while not advocating any specific policy positions, in chambers, that confronts the corporate elitism that plagues a majority Memphis Black community in need. 

Joke #3 – Public Safety Institute. While working in partnership with the Memphis Tomorrow Memphis Shelby Crime Commission, when the need for police “use of force” data arose, the partnership had no data after being locally charged with the work years ago.

Joke #4 Institute of Public Service Reporting. Fails to investigate the corporate elitism that oppresses a majority Black community in need. 

Conclusion 

Typically, one will see the UofM in legislative chambers lobbying for local funding for themselves and not advocating policy positions for the community. The new local Board of  Trustees appears to have robbed the Memphis community of independent public university thought leadership. 

Advancing “systemic racism”, in a majority Black community in need, while authoring corporate elitism, is a sham. Besides, the elitists feel safe with the local systemic racism agenda. After all, currently, the agenda is nothing more than renaming streets and blaming the police for all of society’s ills. 

In the end, your basic redneck, prone to racial slurs and flying the rebel flag, has a greater sense of fair play than these “social justice” Elitists……  

F#ck Loews. I hope Townhouse Management Company (THM) kicks Loews’ Ass in their lawsuit , as local leaders are completely blinded by brand and runway elitism.

Its stunning how the Downtown Memphis Commission (DMC) would abandon one of their core charges, in eliminating blight, just to work with Loews Hotels. And THM, had to be operating on the assumption that the City and County would not leave the City holding the bag, with the largest piece of blight in Downtown, in the 100 N. Main Building, while sacrificing open space to incentivize a new Loews Hotel with TDZ money and a 30 year $90M PILOT. THM had to think, in addition to the Loews assurances made to them, that local government would look out for the taxpayer. Not in Memphis!

Has anyone ever seen that ugly ass blighted 100 N. Main Building on a national TV shot ? Its disgusting ! And Loews is not the only brand local leaders are blinded by. Nike is another brand that has blindsided everyone with an apparent default on their PILOT. The apparent default is based on Nike’s most recent EDGE PILOT compliance report that revealed lack of proof of 2018 City PILOT payments, no 2019 MWBE spend and almost 1200 low wage workers kicked off subsidized healthcare coverage pre-c0vid. 

Meanwhile, there are local brands like EDGE, DMC and Memphis Riverparks Partnership (MRP) that have an accepted brand leading to rubber stamped proposals. 

While using taxpayer money and getting local government funding without contract deliverables, MRP is charged with riverfront development. The former occurs as Mud Island is left without a development plan, justified with a $20M deferred maintenance price tag, asserted by MRP. Has anyone ever asked MRP to document the $20M in deferred maintenance ? And if that is not enough, MRP regularly closes Riverfront Drive for public use, making riverfront access more cumbersome for many to include the disabled. 

And finally, DMC is planning to bring back Union Row, now The Walk, for a 30 yr PILOT while asking for TDZ funds. When Union Row was last approved, 2 years ago,  it was like, “we gotta hurry and get this done”, preventing in depth study by the County Mayors’ office. With construction never having started, DMC is bringing Union Row, now The Walk, back almost 2 years later for legislative reconsideration.

Conclusion

F#ck Loews, F#ck DMC, F#ck MRP, F#ck Nike and F#ck EDGE. 

True story, Nike is Not a social justice company. Let’s see if the following gets any local media coverage. After getting a $58M PILOT in 2012, in 2019, while Nike sat on the National Civil Rights Museum (NCRM) Board, 1169 low wage Memphis Nike workers lost subsidized health coverage. And there is more.

After being part of botching the local workforce development system, why would “social justice” Nike’s Willie Gregory want to be Chairman of the Memphis Chamber ? Its baffling, and Gregory recommended Beverly Robertson for Chamber CEO. Wonder what Robertson, formerly NCRM CEO, thinks about what has happened with Nike’s Memphis operations ? 

This question comes after Nike was granted a $58M PILOT in 2012, that was scheduled to transfer, on average over 15 years, $3.9M per year from one of the most impoverished areas of the country in Memphis, to one of the least impoverished areas in Portland, Oregon.

Based on Nike’s pre-COVID and most recent 2019 EDGE PILOT compliance report , the following can be concluded:

Nike apparently made no 2018 City of Memphis PILOT payments (pg.2). Based on the EDGE Board approved project summary (pg. 6), Nike was scheduled to pay only 10% of their City property taxes. Nike has no record of a 2018 City of Memphis PILOT payment.

No 2019 MWBE spend. Nor has there been any reported for 2017 and 2018, per EDGE compliance reports, against a $60M MWBE spend commitment. (pg. 6).

1,169 Nike workers lost their subsidized healthcare benefits in 2019 from 1918 which is not compliant with EDGE PILOT requirements. Nike reports 749 employees with healthcare benefits, which is well below their PILOT commitment of 1912, while also reporting 1949 employed at the Nike Northridge facility (pg. 4). It further appears that wages offered through Adecco temporary services, headquartered in Zurich Switzerland, for Nike positions, have fallen below $12 per hour

Again, with Memphis in need of increasing wages with benefits, improved workforce development and  increased spending with MWBEs, why would Willie Gregory want to be Chamber Board Chairman?  Nike clearly has no passion for the needed work in Memphis. But Nike does have a passion for reducing wages and benefits on the back of a majority Black Memphis community in need, while touting social justice, through public relations. Let’s take a look. 

Analysis – 2019 Nike PILOT Performance

After also championing taking a knee with Kaepernick and the discontinuation of the Betsy Ross sneaker, the above video description states:

“We [Nike] will continue to stand up for equality and work to break down barriers for athletes* all over the world. We will do and invest more to uphold longstanding commitment in supporting the Black community and partnering with world-class organizations dedicated to ensuring racial equality, social justice, and greater access to education.”

After reviewing Nike’s public relations videos, the following PILOT performance analysis is concerning. 

Based on Nike’s 2012 application, Nike estimated employee benefits at a cost of $7k per employee (pg.9).  Based on the committed benefits of $7k per employee for 1912 employees, an $8.1M cost reduction in annual employee benefits occurred in 2019 with 1163 Nike workers without healthcare benefits.  

Extrapolating that against their project summary, using an economic impact multiplier of 1.9564 (pg. 3) , that would result in an economic impact reduction of $15.8M per year. Lower economic impact, in wages, contributes to neighborhood decline as recently documented and found in Orange Mound. 

Being generous here, and using the 1949 reported employees for 2019 and adding back the additional 47 employees over 1912 committed employees, without benefits, at $12 per hour, would add $2.4M to economic impact resulting in $13.5M in economic impact losses from $15.8M (pg 4). The $13.5M in lost economic impact, results in $456k less in annual Memphis/Shelby tax revenue from wages. 

Additionally, Nike is short on their PILOT capital investment $28M in real and $17M in personal property ($45M). At the same time, Nike claims to be making an undefined, $36M capital investment that is not part of the PILOT (pg. 3). Perhaps they are making the investment, but it does little to soften the blow of 1163 low wage Nike workers without subsidized healthcare benefits. 

And finally, no MWBE spend and not paying City PILOT taxes in 2018 is indefensible. The wealth transfer is on with Memphis/Shelby taxpayer money being transferred back to the much more affluent Portland Oregon area. 

Conclusion

Right sizing the original Nike PILOT would have reduced it by $38M from $58M to $20M and that reduction assumes Nike is compliant. The case has been and is clear for PILOT reform. Besides, Memphis economic development challenges are rooted in small business and workforce. The former are the casualties of local “economic development” policy.

And finally, “social justice” Nike, from the top of the Memphis ecosystem, has lowered the Memphis corporate community performance standard, yet again, on the back of a majority black community in need. In this case, the problem is not “systemic racism” but again, unchecked runaway elitism…

County Commissioners are waking up to the fact that the loss of quality instructional time costs money. On Wednesday, Commissioner Michael Whaley stated in Education Committee, while referencing a World Bank article, that due to COVID, loss of quality instructional time will cost $10 trillion around the world. 

But unfortunately, due to the local Memphis investigative news and public measurement blackout, Commissioners have no idea how much it costs when the idiots from Memphis Tomorrow botch the workforce development system.  

First, lets reference the World Bank article. The article states: 

Without remedial action when students start returning to school, a new World Bank report estimates a loss of $10 trillion dollars in earnings over time for this generation of students, and countries will be driven off-track to achieving their Learning Poverty goals.

Now, to locally contextualize $10 trillion, lets equate the cost to Shelby County, using its population of 950K and world population of 7.8B. Based on the article, the credible cost estimate to Memphis/Shelby will be $1.2B in wages and $36M in lost Memphis/Shelby tax revenue over a generation of 20 years. At the same time, using highly conservative estimates, the cost of the local disconnected workforce development is more that 5 times more !

Analysis  

One can blow up the numbers to say what they want. Given that, the following is a highly conservative analysis. First lets state a few facts. When adjusted for population and using pre-COVID data, Shelby County’s post secondary completions trail the average of their peers by about 6k per year and local annual employment gains trail by approximately .5% or 2,500 filled jobs resulting in a 20,000 filled job deficit since 2010. 

This analysis uses a connected workforce development system to conservatively increase post-secondary completions, to fill the employment gap by 2,500. The analysis is conservative because, after the employment gain of 2,500 is achieved in year 5, it is held constant over the generational term. 

In this model, completions are increased by 500 per year with accompanying annual wage increases of $15k that comes with a completion. Over 20 years, annual wages cumulatively increase by $6.6B and local tax revenue by $194M due to a connected workforce development system. Based on the World Bank article, COVID costs are $1.2B in wages with tax revenue losses of $36M or 5x less than that of a disconnected workforce development system.

See conservative analysis below:

Currently, Shelby County is in year 6 of a sabotaged workforce development system with disconnected conditions persisting. The current annual cost of that disconnect, highlighted above and independent of COVID, is 10,000 filled jobs, $413M in deficient wages and $12M in deficient local tax revenues from a disconnected workforce development system. 

With no multipliers used, this is a conservative analysis and the modeled results, when converged with Bureau of Labor and Statistics data, are credible. In year 6, the modeled results show a disconnected workforce development system accounting for 50% or a deficit of 10,000 filled jobs against a 20,000 filled jobs deficit since 2010 when compared to the peer growth average.

The remaining 10,000 filled job deficit can easily be accounted for based on a culturally unsupported and stifled small business sector. The local economic development challenge is rooted in workforce and small business. 

Conclusion

COVID was/is out of everyone’s control. But the botched workforce development system, was and is an expensive and costly self-inflicted wound by the elitist Memphis Tomorrow idiots…. 

What’s up with the Shelby Regional Economic Alliance (SREA)? While “Crump era” Fonzie is still around, not much. With upcoming consideration for a part of Poplar being renamed “Black Lives Matter”, progress with economic development is just not happening, 1.5 years after the establishment of the SREA. 

There is no SREA website or economic development plan. And meeting notices for the public body, just don’t seem to happen. With an increased emphasis on small business development, the most simple economic development plan solution was/is merely just to measure, implement and evolve the 2014 Brookings FOCUS plan that was never implemented. But that has not even happened, as excessive corporate/real estate tax incentives roar for the benefit of the small few and public structural revenue problems persist.

While prioritizing workforce development, the FOCUS plan set out to industrially diversify beyond logistics and more into professional technical, advanced manufacturing and agriculture. 

Additionally, small business and workforce development remain the primary pain points for local economic development. And the SREA has no Board representation exclusively focused on small business, workforce or areas outside of Memphis within Shelby County. 

Isn’t it strange how the local press has failed to substantively follow up on the SREA? Anyway, this blog will explore current SREA Board representation to provide potential clues for a lack of economic development progress.

Shelby Regional Economic Alliance (SREA) Board

The SREA is made up of representatives from the City, County, EDGE, Memphis Chamber and Downtown Memphis Commission. 

City of Memphis. At one point, former Councilman and real estate developer Kemp Conrad served as one of the City’s designate Board members. Conrad’s firm, Cushman and Wakefield, has recently been involved in some of the most excessive and egregious PILOT applications before the EDGE Board. These approved PILOTs in Mark Anthony, LeSaint Logistics and DHL were all for low wage warehousing jobs while abating property taxes for both existing and new construction.  Combined, these PILOTs total $10M. When research is applied, these PILOTs are 365% in excess and should have totaled approximately $2M and not $10M. Clearly, Conrad wants more of the same as a local real estate developer.

As far as Mayor Strickland on the SREA, he robotically says “momentum” when economic development discussions arise. That’s about it.

Downtown Memphis Commission. Jennifer Oswalt represents the Downtown Memphis Commission (DMC) on SREA. DMC generates fee revenue, on total project costs of 1% for 10 yr or less PILOTs and 1.5% for PILOTs more than 10 years. DMC PILOTs, for urban renewal, are excessive when benchmarked against other cities, in term length. In this way, DMC excessive PILOT term lengths can, in part, be explained, through the DMC fee structure, that financially incents DMC to award more than 10 year PILOTs. Additionally, based on a review of DMCs audited financial statements, DMC has $33M in cash/liquid assets against only $9.2M in annual expenses.  DMC is financially incented for economic development policy to stay unchanged. 

Economic Development Growth Engine (EDGE). EDGE is represented by corporate lawyer, Al Bright on SREA. EDGE collects capped fee revenue on every PILOT awarded based on the total amount abated. In many cases, larger abatement awards, with the additional inclusion of the abatement of existing property taxes, increase EDGE’s PILOT fee. EDGE is financially incented for economic development policy to remain unchanged while justifying PILOTs with MWBE participation that can be shown to be an elitist sham. EDGE finished 2019 with $24.5M in cash/liquid assets against $9M in expenses. 

Memphis Chamber of Commerce. Beverly Robertson represents the Memphis Chamber on SREA. Robertson came up through the local corporate ranks of Holiday Inn with the Kemmons Wilson family and worked as CEO with Memphis Tomorrow’s Pitt Hyde for the National Civil Rights Museum nonprofit.

Robertson’s public comments tout a common talking point that Northern Mississippi is a major economic development competitor of Memphis and Shelby County. This talking point corresponds with the justification for a large number of local PILOTs to avoid operational departure for Northern Mississippi. This is unfortunate as North Mississippi is both a local competitor and a regional economic development partner. This, on balance, makes N. Mississippi a wash with respect to local economic development. In fact, the recent Google expansion into N. Mississippi should be locally celebrated. 

Shelby County Government. Shelby County Government, in part, is represented by Willie Brooks who works for corporate giant FedEx. Brooks’ EDGE Task Force authored the creation of SREA while effectively leaving EDGE unchanged. This would indicate that Brooks is content with current corporately driven local economic development policy. And Mayor Harris, the other County SREA representative, seems content with Reid Dulberger, Chief County Economic Development Officer, setting local economic development policy. 

Conclusion

With no small business, workforce or external to Memphis representation, the Shelby Region Economic Alliance Board is set up to produce more of the same.

The racially diverse SREA is, in many ways, a carryforward of Crump era Memphis Tomorrow elitism. Maybe that explains SREA inaction. After all, things haven’t changed much in 20 yrs under Memphis Tomorrow…..

Memphis Tomorrow is Butt Ass bad. And the local community is ignorant to that fact. Evidently, ignorance is why the City Council agreed to fund the controversial Tom Lee Park development with $10M, while at the same time, the Downtown Memphis Commission (DMC) owes the City of Memphis $10M. Nothing else can explain the action.

DMC, in many ways, is a component part of the overall Memphis Tomorrow “Government Efficiency” program. The “government efficiency” program effectively:

Botches taxpayer funded community betterment initiatives

Supports excessive corporate/real estate tax incentives for the small few using bogus accounting

Piles up cash reserves in quasi-governmental organizations like DMC and EDGE through fee revenue earned for administering excessive corporate/real estate incentives.

The above is a losing formula; even for local corporations. But for almost 20 years, Memphis Tomorrow has invested the community in ecosystem decline, enabled by ignorance, that occurs with the aid of a non -investigative press, lacking governmental oversight and new, absent public university thought leadership. 

Consequently, local officials believe that Memphis Tomorrow’s Government Efficiency program is “visionary”. Meanwhile, as local government struggles to have adequate cash reserves, this blog will focus on the excess cash reserves of DMC and EDGE using each of their 2019 audited financial reports.

DMC and EDGE Cash

Without consideration of DMC and EDGE expenses and based on their cash reserves, it is recommended that local government invoice DMC and EDGE $15M each, payable upon receipt. See the following analysis:

Downtown Memphis Commission (DMC) – As of June 30, 2019, the DMC had $33M in designated and undesignated cash/liquid assets (pg. 19) with $9.2M in annual expenses (pg. 14). With $33M in cash/liquid assets as of June 2019, DMC owes the City of Memphis approximately $10M based on a review of accrued interest of $5.1M (pg. 13) and principal debt of $5.1M (pg. 30) for the Peabody Place Garage. A note on page 30 states:

“No principal or interest is payable on this note to the City of Memphis, for the construction of the Peabody Place Garage, until its maturity on July 24, 2034. At June 30, 2019 and 2018, the accrued interest payable is $5,149,656 and $4,891,096, respectively, and is included in Long-Term Liabilities in the accompanying Combined Statement of Financial Position.” 

But why no principal or interest payments to the City of Memphis? At any rate, this would have been a great opportunity for local government to align a DMC City debt with the financing of the Downtown Tom Lee Riverfront project. At the same time, based on a helpful exchange during public comment at County Commission on July 13, it does not appear governmental processes are in place to review the audited financial statements of quasi-governmental bodies.

Meanwhile, the DMC has a steady revenue stream of approximately $2M for parking management (pg. 10) per year, to service the remaining parking garage debt, outside of the City of Memphis debt, of $4.3M and $2.2M through 2024 and 2032 respectively.

Solution: Local Government should invoice DMC for $15M, payable in full, upon receipt. Under this invoicing strategy, DMC will have approximately $10M in designated funds and $7M in undesignated funds to support $9.2M in annual operations which includes the support of a $2M parking management revenue stream.

Economic Development Growth Engine (EDGE) – As of June 30, 2019, EDGE has cash/liquid assets that total $24,462,782. Only $1,774 of those assets are restricted (pg. 16). Their annual operating and non-operating expenses total $8.4M (pg. 13).

Further, grants from the EDGE entity, Depot Redevelopment Corporation (DRC), of $834K and $315K to the Greater Memphis Alliance for Competitive Workforce and Municipal Chambers of Commerce respectively occurred in 2019. These grants fall outside of the narrow purpose local government established for the DRC, in countywide workforce and municipal chamber grant subsidies. The purpose of the DRC, which is not countywide workforce or chamber grants, is stated in the report as follows:

“The primary purpose of the DRC is to secure from the United States the land, building, and equipment of the Memphis Defense Depot (closed as a military base in 1997); enter into agreements to acquire, construct, improve, lease, operate and dispose of property; and to promote the redevelopment of the Memphis Depot for the citizens of the City and County”       (pg 18).

Of course, if local legislators fail to conduct oversight and review audited financial reports, as a matter of process, material violations to the taxpayer, in a majority Black community in need, are likely to continue. 

Solution: Local government should invoice EDGE for $15M, payable in full, upon receipt. EDGE will have $10M in cash reserves to fund ongoing operations.

Conclusion

Again, Memphis Tomorrow is Butt Ass bad. Butt, Butt, Butt !!!. Expectations for community leadership have been lowered to the floor, leaving taxpayers in a majority Black community in need holding the bag.

The elitist Memphis Tomorrow mindset is one of entitlement. They feel entitled to effectively carjack the taxpayer and small business, often disguised through planning, pageantry and new relabeled initiative rollouts.

Folks can protest police all they want, while legislators pass symbolic “racism is a pandemic” measures. But there will be no social justice until there is a meaningful measure of taxpayer justice. And that will only come when Memphis Tomorrow pays the taxpayer back $1.5B.  

Finally, $30M, in arguably, excess cash/liquid assets was found with just DMC and EDGE. At last look, the Memphis Health Education Facility Board had $5M in cash/liquid assets. What else is out there ???

The Elitist Memphis Tomorrow complex stifles commerce through a lack of transactions with locally owned small businesses. And this is especially detrimental to the Black business community. With a 54% Black Shelby County population, increasing transactions with locally owned Black businesses is paramount to countywide economic survival. 

Instead of increasing local transactions, the elitist put local firms on the non-profit hamster wheel of meeting space, business planning, expos and certifications. None of this is required to increase transactional velocity with small business. The elitist hamster wheel was eluded to in Jason Bolton’s excellent Memphis Business Journal (MBJ) piece.

Further, the former occurs, as the elitist hijack MWBE programming originally designed for supporting small businesses on the margin. This works for those getting hefty corporate/real estate incentives that just want the convenience of dealing with the type of firms they always have.

And that’s not the mention, the leading MWBE connector, in the Mid-South Minority Business Continuum only works with established companies with second layers of management and institutional processes. Stunning….

The elitists are wreckers of commerce. Through their hamster wheel, they dismiss locally owned small business, botch the workforce development system and award themselves lavish corporate/real estate incentives while public measurement goes out the window. Can’t make this stuff up. 

Commerce Off Generally and Black Business

Commerce is off generally in Memphis and Shelby County with 14 business firms per 1K of population. Using the same census data source used by the MBJ, but using countywide data for the same peer cities, Shelby County locally owned firms with employees, per 1K population, dramatically trails the peer group.

With a peer leading 54% black population, building Black business is vital to Shelby County’s economic survival. See below data tables:

Conclusion

Reform and rigorous oversight is needed for MWBE programming involving recipients of excessive corporate/real estate incentives. Given the results, MWBE requirements to justify future tax incentive awards needs to end. 

At the same time, dramatic incentive reform is needed to address the public structural revenue problem which will also provide local government funds to directly administer MWBE/LOSB programming for those small businesses that really need it. 

But even the above won’t come close to addressing the need. The real solution will come with just transacting locally outside of government programming….