An implementation of economic development reform is needed to reverse years of backwards anti-business economic policy authored by hack “visionaries”. Over the past 8 years, Memphis has suffered in an anti-business economic policy environment that has promoted corporate/real estate interests over the primary drivers of any local economy in small business and workforce development. Implementation is key to reversing Memphis ecosystem decline.
Plans to reverse decline are being birthed from organizations such as the Greater Memphis Chamber and Memphis Interfaith Coalition for Action and Hope (MICAH). But, again, plan IMPLEMENTATION will be key as ecosystem decline is evidenced in slow economic growth, inadequate public transit, struggling small business and workforce development efforts all occurring amidst positive talking points and promises of a better tomorrow for all.
Creative deliberation, to solve community problems, seems, at times, to be making its way into local legislative chambers. Creative deliberation in public chambers to support economic development reform has often been viewed by the establishment as a form of blasphemy as it confronts the status quo. If this is the case, political blasphemy is good !
One item in reform plans concerns payment-in-lieu of taxes (PILOT) reform which involves reducing future tax abatements for corporate/real estate interests while tapping expiring PILOTs for funding. PILOT reform seems most often mentioned when identifying contributing funding sources to support needed community development in for example, a $30M adequate public transit price tag.
But given all the talk on reform, only talking points exist. There are no specific PILOT reform models being proposed by either Mayor, local legislators, Chamber or MICAH to support needed reform. Specific PILOT reform models are needed to course correct and implement economic development reform.
Often, hack “visionaries” attempt to label those that express concern over excessive PILOTs as anti-business. This could not be further from the truth as excessive PILOTs are anti-business as they erode the societal foundation on which commerce thrives and new small businesses emerge as confirmed in the data.
Proposing a specific PILOT reform model will, with a capital “D”, DESTROY the anti-business labeling of the hack “visionaries”. To that extent, this blog and the social media group Memphis Raise Your Expectations (MRYE) have been, over the past year, the local economic development reform thought leaders while advocating specific reform models on the record.
Given this reality, this blog proposes the following thought leading Economic Development Growth Engine (EDGE) job incentive reforms, while promoting an easy to understand formula, balance and being sensitive to the competitive economic development climate with a rebranded “PartnerForward” model. The model confronts the fiscal liberalism that has been exercised over the last 8 years having occurred under the label of “economic development” with a more fiscally conservative pro-business approach that supports community investment to attract economic development.
- Wage PILOT – 1% of total projected wages for NEW direct jobs will be annualized and abated in property taxes. Multipliers will not be used in economic modeling and higher wage jobs will be recognized with larger wage PILOT incentives.
- Capital Investment PILOT – 50% of new capital investment in property taxes will be abated. Taxes on existing property will not be abated.
- Abatement term will be determined by the EDGE PILOT Evaluation Matrix (pg. 13) which can include community reinvestment credit for existing property to qualify for increased abatement term.
- Existing EDGE Capital Investment minimums will remain in effect
- Assessor will have direct reporting administrative oversight over PILOTs and tax revenue forecasting responsibility generated from PILOTs with Commission legislative oversight
- Fee revenue to EDGE will revert back to local government and EDGE will instead be funded through annual appropriation. This fee revenue will fund above Assessor oversight.
- New EDGE Board
Applying the above model would have reduced the total EDGE PILOT award amount by approximately 40% or by $210M+ over the past 8 years. The model would have awarded PILOTs twice as much as Nashville on a per job basis while still awarding all 88 EDGE PILOTs. And as another matter for comparison, the number of allowed job PILOT awards, under this model, would also well surpass Nashville for years 2011-17 with 63 PILOT awards for Memphis/Shelby and 25 for Nashville. See spreadsheet here from which the analysis was conducted. Proposed PILOT reform can be found in the green shaded areas of the spreadsheet.
Another implementation example would have been the recent Pandrol PILOT that was recently touted as an exemplar by this blog. The Pandrol PILOT remains an exemplar under this proposed implementation model and relatively unaffected.
This model provides balanced reform while remaining sensitive to the competitive economic development climate all while incenting higher wage jobs at an increased abatement amount within a more fiscal conservative framework.
Implementation is key to reversing Memphis ecosystem decline. While plan talking points are circulating, a completed economic development reform plan with defined measurement remains outstanding after 1.5 years. A completed plan is needed to support implementation and accountability measures are needed to insure plan implementation to reverse economic imbalances.
Next blog will be on the mysterious and systemic dismantling of the Assessor’s office which may rise to #1 on the Botch Report. Stay tuned….