Pigs have no rules and Memphis taxpayers pay for it. The reckless unruly nature of the Memphis Tomorrow corporate community leadership complex would threaten any ecosystem. So hats off to the resiliency of the Memphis people and Shelby County taxpayers.
Adding to the Electrolux headlines, a deeper dive into the Electrolux contract (pdf page 55), it can be determined, that EDGE did not follow procedural guidelines when it was discovered that Electrolux had made a $321M capital investment over and above the PILOT approved $195M investment.
The Electrolux contract allows for a reasonable 10% in excess capital investment of the originally approved PILOT to remain in compliance which would amount to $19.5M investment over the $195M PILOT approved abatement or a $214.5M capital investment. The EDGE reported $321M capital investment exceeds the allowable threshold by $106.5M and should have triggered increased assessments that would have resulted in increased tax revenue with additional abated or paid in full taxes on the increased capital investment.
But who cares about tax revenue ? Certainly not the Memphis Corporate Community Leadership complex ! To include the newly billed increased assessments, its estimated from 2014- 2018 there remains $1.8M in lost abated tax revenue based on EDGE not following rules and if that was unabated and not allowed to fall within the PILOT, the revenue loss is more like $7M.
While considering the allowable threshold for 10% and $19.5M increased investment , it appears total real and personal property taxes for Electrolux for their remaining 2019 and 2020 operational years should be approximately $3.3M per year which includes the maximum allowance for personal property depreciation.
Pigs Gone Wild
But, this blog has stated on numerous occasions that Electrolux is small potatoes overall when considering the damage of an overall reckless Memphis corporate community leadership complex. While Electroux will end up costing taxpayers around $30M+ when considering tax revenue from jobs and property taxes, it can be chalked up as a single occurrence bad front end deal that went bad.
This makes Electrolux small potatoes when compared to the systemic recklessness of an excessive socialistic corporate/real estate welfare culture imposed on Memphis/Shelby taxpayers promoted using the label of “economic development”. Here as some examples:
$8.6 Million in excess abatements when the Downtown Memphis Commission did not follow their guidelines for the FedEx incentive package. The FedEx deal works for taxpayers but it contains 6 years of excess incentives.
$1.2M excessive Mark Anthony PILOT award when the EDGE Board neglected to follow the rules of their “Tax Incentive Eligibility Analysis” while losing taxpayers $500K and pocketing $50K in fees. This demonstrates that EDGE Board does not represent taxpayer interests.
$100-200M over ten years in direct taxpayer losses from systemically ignoring any basic business rules for projection accounting in the EDGE retention PILOT program as reported on by this blog and the Beacon Center of Tennessee. This is the Shoney big boy locally unreported story by the non-reporting Memphis press.
$15M per year for persistent botched workforce development efforts over 4 years rooted in failed grant performance and not following rules of basic course correction away from a Canadian contract award. This is brought to taxpayers by the FedEx/Memphis Tomorrow complex while stifling local small business, a local cultural norm.
$47M in taxpayer revenue shortfalls from deficient wage growth while not following the rules of economic development planning and execution while prioritizing corporate/real estate incentives that recorded local wealth transfers as growth.
Anyway, the above total is about $75-80M per year with the $8.6M FedEx excess to arrive 16 years down the road. All total, the excesses approach $750M over the next 10 years which imposes a decline by design framework on the Memphis ecosystem with the $8.6M kicker by FedEx to start accruing for 6 years in 16 years. And, at this point, only 2 of the 10 tax abating boards are being scrutinized in the above analysis. This may be only the tip of the iceberg.
So what does $75M per year mean for Memphis/Shelby County ? $75M means fully funded adequate public transit, state of the art community centers, connected workforce development and top notch vocational programming, increased funding for public safety and site development for economic development.
Try to talk to local legislative bodies about some of this going on and its like talking to that brick wall. Approximately, 9 months ago, the new economic development thought leader in MRYE-Memphis Raise Your Expectations, presented in public comment, a research based framework for economic development that embraced the Amazon Road Map policy pronouncement of the University of Memphis. This advocacy was conducted knowing that a coherent economic development plan that has not existed for years was not going to emerge anytime soon.
And, while now, its known that MRYE was right, MRYE might as well have been talking to a brick wall. Its because, in Memphis its a closed Crump system that only considers the same groups of people that have been running the city into the ground for years while dismissing entire segments of the population. This dismission stifles the small business sector and economic growth as corporate/real estate and pet nonprofit interest thrive.
After all, the “big idea” for economic development is to reward and get the same cluster of folks in EDGE, DMC, Chamber and elected officials together twice a month. The very group that has recklessly disregarded the rules, not proposed thoughtful economic development policy solutions or practiced needed oversight required to implement the work of true economic development.
MRYE promotes a Balance Memphis agenda based largely on the Amazon Road Map that includes incentive reform and responsible tax incentives for remote industry recruitment and large local expansions. For example, at the July 2018 EDGE Board meeting, MRYE representatives spoke out in favor of the JNJ Logistics expansion and against the unneeded Poplar TIF that was justified with a baseless 7,000 job creation claim. Any such pro-business incentive reform advocacy is met with thoughtless “anti-business” labeling of the the local socialistic corporate welfare culture.
There’s a rumor that legislative bodies are going to convene some legislative committee to review some of this excessive recklessness but don’t hold your breath. If they do convene, its always softball questions to staff members of the corporate community complex. Just a note to local legislators, these staff members don’t have votes most of the time for many of these rule breaking approvals and excessive incentive awards. Maybe legislators should drag some of these abating board members into legislative chambers for inquiry that moves beyond a game of patty cake.
The only pathway for Memphis to rebound is through massive economic development reform and philanthropy to pay taxpayers back for past policy encroachments and excesses of Memphis Royalty while opening up the system and engaging those very people the system has shut out for years.
If you have questions about numbers used in this blog or in general, please email me at email@example.com