The Shelby County Regional Economic Alliance (SREA) looks to be a cheerleading platform, early failure and more of the same. The FedEx/Memphis Tomorrow complex is notorious for lowering expectations enabled through a lack of measurement. In this environment, the prevailing Memphis economic development competition in a global economy is Northern Mississippi and Eastern Arkansas as stated by the Chamber’s Beverly Robertson at a recent Orange Mound gathering. This is much like the University of Memphis declaring the Arkansas State Red Wolves of Jonesboro, AR. its chief football rival. By default, it lowers the expectation and performance standard.
At the last SREA meeting, the lack of shovel ready sites arose as a local challenge. But that was addressed over a year ago by Dexter Muller in EDGE County Commission hearings with nothing seemingly have progressed since then. Muller said in that meeting the State does not send Memphis manufacturing leads anymore due to the lack of available sites. That should have lit a bonfire under someone. But apparently it did not.
Here’s the thing about the governing FedEx/Memphis Tomorrow complex. They don’t course correct. They make a mess and just leave it there like with workforce or having fake EDGE oversight hearings that resolve nothing. I’m convinced if FedEx/Memphis Tomorrow visited the home of the taxpayer for dinner, they would dump their food in the floor and walk right through it.
Memphis lacks the courage to face its problems and real competition which in a global economy is North American Cities not North Mississippi. The SREA could have discussed real measurement and tax incentive reform involving the EDGE Scam. But it appears to have been mostly a cheerleading meeting and rehash of an old topic in the lack of shovel ready sites with no forward progress over the past year.
The EDGE Scam
The EDGE scam was born out of the bully hack FedEx/Memphis Tomorrow complex soon after the great recession under the heading of “government efficiency”. The great recession was enabled largely on the false assumption by financial engineers that real estate values would never fall. FedEx/Memphis Tomorrow followed that up with some local financial engineering through a new “government efficient” agency called EDGE.
The EDGE Scam is based on the following false assumptions with their own version of financial engineering to justify excessive incentives for the benefit of corporate/real estate interests and the small few:
Falsely assuming the entire direct and indirect tax base associated with a given entity disappears from Memphis/Shelby on a company operational relocation to N. Mississippi or elsewhere
That 75% abatements are required on new CapX and most egregiously at times existing property in an already low business cost environment for economic development retention and recruitment.
After promising government efficiencies to avoid politicization of tax abatements, EDGE is explicitly and overtly incented to side with corporate/real estate interests over the taxpayer.
That tax abatements have a vastly superior economic multiplying impact to employ people that serve global audiences over publicly administered labor and expenditures that serve the local community.
Further, at today’s EDGE meeting, they voted for a project in Cherry Tree that is a direct taxpayer loss. A direct taxpayer loss results when approving the transaction, costs taxpayer money which is far worse than a taxpayer shortfall which results in excessive abatements while needed tax revenue growth falters.
Here is why the Cherry Tree transaction is a direct taxpayer loss. Some $1.7M in existing property taxes are abated over 10 years for 25 low wage $13 per hour jobs. This is real estate deal not an economic development deal. North Mississippi or Eastern Arkansas would not have this dog while it loses Memphis/Shelby taxpayers almost $1M. Forget about our real competitors in North American cities. See full Cherry Tree Analysis here.
The Cherry Tree PILOT follows the same taxpayer losing path as F8 Zone and Mark Anthony. The FedEx/Memphis Tomorrow complex apparently thinks this stuff is Tuff n Cool and good for business while undermining the societal foundation on which commerce thrives. Its not good for business !
And if that is not enough, the Memphis Business Journal reported on a tax incentive for Coca Cola in West Memphis, that based on the article, would total $675k for 60 jobs at $50K for a $33M capital investment. EDGE would abate $3.7M for that project or perhaps more. What’s up with that ?
At the same time, all was not bad at the EDGE meeting as it was revealed that some creative collaboration had resulted in the recruitment of Bluff City Law to Memphis. But overall, elitist feeding on a community in need will never result in economic prosperity and community evolution.
Conclusion and SREA
It seems if the SREA were serious about any type of oversight they would have flagged these recent Cherry Tree and F8 Zone PILOTs for opposition. But its more of the same. It was remarked at the EDGE meeting about a continuation of incentives until workforce is addressed. That regards a workforce development system botched by the FedEx/Memphis Tomorrow complex which includes the Chamber and EDGE.
The FedEx/Memphis Tomorrow complex can’t continue to feed on a community in need and expect to improve the Memphis economic development product. This occurs as new more forward thinking corporate community leadership emerges from the medical device industry in Smith & Nephew and Surface Dynamics out of Bartlett who are investing locally without any incentives. They both know workforce is the #1 challenge in Memphis by far and not lowering business operating cost where Memphis is a national low cost leader.
If the SREA is to compete in a global economy, they need to have the courage to acknowledge the real competition while establishing a measurable definition for economic development and implementing a real plan. Real estate development is not economic development and bullying and feeding on a community in need will never work. But thus far, the SREA has been an early failure while resulting in more of the same…..
And oh yeah, dont forget that $1.7M in Depot funds that should come back from the taxpayer.