In the nationally low cost Memphis business operation center, through a range of public “economic development” programs, Memphis excessively subsidizes corporate/real estate interests while small business and workforce are left behind. As one would expect, this misguided policy landscape, creates imbalances that result in deficient economic development outcomes.
A few years back, after paying $29 for retail downtown public garage parking in Philadelphia, a day later in Memphis, I found garage parking for $6 ! Upon discovering this, I became breathless, while sweating profusely, thinking I had been warped back in time.
Recently, I learned that public parking is highly publicly subsidized in Memphis, which helps to explain my experience just a few years pack. Public parking is subsidized largely for the benefit of corporate and real estate development interests. This has resulted in an oversupply of downtown public parking and subsidized corporate parking rates for the likes of First Horizons and ServiceMaster.
For example, First Horizons pays $3.50 per day, not even the $6 cost of a Big Mac and Fries, for daily public garage parking, At the same time, the taxpayer, through the Office of Planning and Development, pays $8.25, which based on analysis, would be about the daily rate that is needed to cover public parking costs.
Meanwhile, ServiceMaster pays nothing, for 1,000 spaces, as a result of an economic development subsidy awarded in 2016. This subsidy is not publicly quantified anywhere, as is common with a tax abatement, but should be. The value of this ServiceMaster parking subsidy, over 15 years, is approximately $32M. And First Horizons parking gets subsidized, even though the bank, over its 150+ year history, only knows as home, Downtown Memphis.
So why not course correct and subsidize areas of need like workforce development ?
Progressive Vision of Course Correction
Paul Young, the new Downtown Memphis Commission (DMC) CEO, could provide the progressive course correction the City of Memphis needs. After all, Young did not create these imbalances and he must know that the bulk of economic development improvement, resides in workforce and small business development.
Think about it. Young has plenty to work with. Either shutting down the $138M PILOT Extension Fund (PEF) or redirecting its future excesses to workforce development, would be a major progressive course correcting step, to serve local economic development needs.
With including interest cost, approximately $92M of $138M of the PEF committed, that leaves $46M for workforce over the next 25 years. And getting First Horizons and other corporate parkers, to at least pay the super business friendly $6 cost of a Big Mac and Fries for daily corporate parking, would result in more effectively covering public parking costs.
After all, with $77M committed on top of $75M already spent, Memphis is set to have the best public parking in America, with a $152M total scheduled public spend over 40 years. This will result in a massive annual $3.8M subsidy, for downtown public parking over 40 years, which for the most part, should typically be a self supporting enterprise.
And don’t forget about the opportunity Young has to reduce downtown PILOT term lengths to the more common 10 yrs, while disallowing PILOT extensions, all for the benefit of the taxpayer and public general funds.
So with significant resources in hand, there is hope for course correction. We shall see……