Existing Facility and Consolidation in Shelby County Capital Investment


The below company pursued thoughtful for profit motives by leveraging its existing HQ facility and consolidating in Shelby County from remote locations with their capital investment avoiding the hefty cost of significant HQ operational disruption, employee and distant relocation costs. These thoughtful for profits motives would still have been served without the benefit of a retention tax abatement for existing jobs and with a tax abatement offered outside of Shelby County equal to the locally offered EDGE retention abatement. Given at the time, the existing remote geographic operation options of Evergreen, a retention probability of 50% is applied to the below quantitative analysis without the benefit of a retention tax abatement for existing jobs while assuming a locally extended expansion PILOT abatement for new jobs. When responsible accounting is applied to economic modeling for a retention existing jobs PILOT, complete and responsible tax revenue accounting starts with EDGE Reported Revenue (ER) less a probability of retention times reported revenue (RP) less remaining workforce upon company departure as a percentage of retention probability (RP) less forgone tax revenue impact for local investment in jobs and resources that directly serve the local community (LI). In the below EDGE Company Retention Profiles, the previously mentioned accounting equation is applied to arrive at an estimated Memphis/Shelby County tax revenue figure for a given company PILOT. The assigned grades are evaluating the Retention PILOT; not the company. See below EDGE Company Retention PILOT profiles for this capital investment category:

EDGE Company Retention/Expansion PILOT Profile:

Evergreen – Grade A: The Evergreen PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant HQ operational disruption and consolidated operations into Shelby County from remote locations. The EDGE Board reported $7.1M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Evergreen: (ER $7.1M) – (RP $3.5M) – (RW $1M) – (LI $1.5M) = $1.1M gain less $700k retention tax abatement results in a $400k gain or $26k per year Memphis/Shelby County taxpayer gain. Estimated overstated EDGE generated revenue: $6M

Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/Evergreen+Packaging%2C+Inc.