Away from the hype of artificial intelligence, TIFNI stands to redefine economic development in Memphis through a reintroduction of human intelligence and measurement. The tax incentive fiscal note impact (TIFNI) platform promises to effectively measure public economic development investments with the customer taxpayer in mind. 

For years, the Memphis economic development system has operated on artificial intelligence of the type that projects massive taxpayer windfalls on the back of excessive tax incentives. All the while, the UofM has stood beside the author of such artificial intelligence and partner, the Economic Development Growth Engine (EDGE), while  scooping up incentives for themselves as excessive incentives explode for the benefit of the small few in local corporate/real estate interests.

EDGE was born out of the corporate elitist FedEx/Memphis Tomorrow complex, a hold over from the Fonzie/Crump era rigged system days. As a result of a rigged system, lacking human intelligence and system measurement, the primary drivers of any local economy, in small business and workforce development have been dismissed. The former has led to declining small business vitality, a disconnected workforce development system and increasing poverty rates in Memphis all of which TIFNI proposes to correct through smarter economic development investments.

TIFNI Economic Development Measurement and Check on Elitism

The locally owned small business (LOSB) TIFNI solution provides a fiscal note for every tax abatement. With TIFNI, economic development investments are measured based on the benefit to the customer taxpayer using reliable economic and fiscal impact analysis.

Further, TIFNI analyzes economic investments while considering opportunity costs that would otherwise make the community less attractive for economic investment if community investments are forgone. As a result of the implementation of the publicly administered TIFNI platform:

Taxpayers will know the return on investment (ROI) of economic development investments 

Policymakers will understand economic development modeling to project future tax revenue

Policymakers will understand and apply the assumptions used in economic development modeling to project future tax revenue

Taxpayers will better understand the effectiveness of public-private initiatives with access to a measurement platform

TIFNI can be obstructed from implementation but can’t be beat. Unfortunately, the hack elitist may very well attempt to obstruct TIFNI and reliable measurement of the public-private complex. They have been obstructing common sense measurement for years. In many ways, it seems that the UofM is becoming the bureaucratic center of the rigged Fonzie/Crump era elitist complex. The Memphis elitist have consistently revealed they know how to rig the system but not how to competitively evolve the ecosystem. 

The UofM and Obstruction of Ecosystem Evolution

First, lets give credit to the UofM for improving athletics, managing student cost increases and a solid public student university product. But what the UofM is not is a community economic development thought leader.

I have tried on multiple occasions to deal with the UofM and their partners. Its been a closed system for me as a local UofM graduate.  Once was with Ted Townsend in the Summer of 2018 regarding solutions for stalled workforce development efforts and nothing happened. At the time, local workforce development efforts were 4 years behind schedule. The UofM meeting was followed by a Summer meeting in 2019 with Epicenter on the same subject. Nothing happened as small business was dismissed and more work was then shipped out of town to Burning Glass located in Boston. As a result, while being 5 years behind on connected workforce development, there still is no published labor market information to guide connected workforce development efforts. 

Problem in Memphis, there is no sense of urgency while the elitist dismiss local small business and the taxpayer. Just this week, in an article in the Daily Memphian, regarding a learning grant received by the UofM, Dr. Vasile Rus said “In 10 years, it’s possible that we could have an institute here that would be helping Shelby County Schools and beyond”. Given the local needs, 10 years ??? No sense of urgency ! Why even say that ? Sounds like a page out of the Memphis Tomorrow playbook promising a better tomorrow. 

On another occassion, I met with Marc Perrusquia who is over the new UofM  “investigative” journalism department on the topic of economic development measurement. Perrusquia seemed to want to do a story on my work but it never materialized. Instead, the UofM terminated Shelby County peer economic development measurement with their Memphis Economy project during the City of Memphis election season. That to me was stunning, just to stop measurement for no reason. And then the rosy UofM/Paragon economic outlook study using a select survey group appeared later this year. 

The economic challenge in Memphis is small business and workforce development. But the elitist partnership bureaucracies erected by the UofM end up starving out small business which sets small business up to have their ideas ripped off. There just is not a spirit of increasing transactional velocity in Memphis with LOSBs when good ideas arise that address community challenges. Instead, there is a new bureacracy that says all the right things while obstructing small business through bureaucracy. 

Besides, it seems, based on press accounts, UMRF/Epicenter goals are more around growing small businesses into corporations as opposed to just building out a vibrant small business economy. The rigged Fonzie/Crump era culture is why Memphis only has 22 business establishments per 1,000 population leaving Memphis at the bottom of its peer group. Rigged systems don’t grow. 

And then you try to meet with the likes of Allie Prescott, Dr. Rudd, David Waddell or Leslie Smith, they won’t meet with taxpayers with concerns or questions, even though they are publicly funded. 

Conclusion

TIFNI checks an elitist establishment with reliable measurement. Public officials need to reject runaway elitism with fundamental measurement while recognizing the taxpayer as the customer in publicly funded economic development work. And policymakers need to know that there are public universities throughout the country that attract funding by just being independent thought leaders and not kowtowing to an elitist establishment.

But based on their track history, policymakers can’t rely on the UofM as an independent thought leader in community economic development matters. Nor can they rely on the UofM to have a sense of urgency in expediting innovation for community betterment. 

At the same time, all is not lost. The UofM is steadily improving on the athletic front while keeping student costs down and producing a solid public university student product. But expeditious innovation for community betterment is probably not going to originate from the UofM……

Implementation of Fred Smith’s public policy vision for America is that of runaway elitism resulting in stagnation, broken promisies and growing income inequality. After all, that is what has materialized in Memphis after 20 years of the FedEx/Memphis Tomorrow CEO organization policy implementation under Smith and Pitt Hyde. Taxpayers in Memphis and throughout the country, unknowingly, wake up and carry the elitist hack Smith around on their back all day long. Smith is a national embarrassment on the public policy front. 

Just look at policy implementation in the last couple of years where Smith went to Washington to lobby for corporate tax cuts during an economic expansion. With increasing Federal debt levels, the corporate tax cut paves the way for the increased likelihood that Americans, promised otherwise, will probably be paying much more for Medicare in their retirement years.

And following the Federal tax cut, Smith then runs back to Memphis and bullies a local Memphis community in need out of $39M in excessive local incentives – without any published economic impact justification – all while botching the workforce development system over 5 years and shutting out small business costing local business and taxpayers millions. 

Meanwhile, Smith’s son, Richard Smith, as Chamber Chair engages in the theatrics of fake disruption in economic development reform where nothing changes. Supporting Smith’s efforts, FedEx employees chair theatrical Economic Development Growth Engine (EDGE) reform efforts that end up protecting the status quo in an EDGE organization that:

Awards $250M+ in excessive corporate/real estate tax incentives while using bogus projection accounting for justification

Botches the workforce development system over 5 years, costing local business and taxpayers millions while stifling local small business solutions

Leads the implementation of a failed and unmeasured Brookings FOCUS economic development plan, authored in part, by FedEx’s former chief counsel, Christine Richards.

Misuses $1.7M in Depot funds that should have come back to the taxpayer for re-appropriation

Implements payment-in-lieu of taxes (PILOT) programming that does not even result in collecting minimum publicly approved PILOT payments in addition to the excessive abatement awards based on a review of the 2014-18 Shelby County Trustee reports.

And Smith wants to debate The New York Times in Washington DC ??? Whatever…. Smith doesn’t need to go to Washington DC for a debate. I will debate him anytime in Memphis, TN where he will subsequently be publicly destroyed. 

Runaway Elitism: TIFNI and The Trustee’s Report

First, EDGE Board approved job incentives can be shown to be $250M in excess. The tax incentive fiscal note impact (TIFNI) platform project proposes to fix excessive incentives while providing a centralized database for 13 abating boards by providing reliable economic and fiscal impact analysis with a fiscal note for every abatement. EDGE represents just one of those 13 abating boards.

But concerning, after receiving the benefit of an excessive EDGE abatements, corporate/ real estate beneficiaries are not even paying the publicly approved minimum payment. This is based on a review of Shelby County Trustee reports. Using the 2014-18 Shelby County Trustee Reports, a survey of 21 companies was conducted for PILOT contracts from 2014-18. The survey reveals the following:

Only $2.1M of $9.8M in PILOTs approved were billed for Shelby County real and personal property taxes resulting in a $7.7M shortfall for the 21 companies. The PILOTs $9.8M PILOTs approved due amount was calculated by multiplying the EDGE Board approved project summary “% of taxes paid” percentage (pg 5 and 7)  obtained from the EDGE website by the “Assmt Taxes” found in the 2014-18 Trustee’s reports to derive a PILOTs due amount for 2014-18. What might the shortfall be for all companies ?

Scheduled PILOTs totaled $16.5M compared to $9.8M. The $16.5M amount was derived by adding “taxes paid after abatement” for corresponding years 2014-18. Some shortage can naturally come about by a decreasing tax rate down from what was originally approved. But given the amount of difference, 1 of 2 issues seems to be occurring in 1) planned capital investments did not occur or 2) under assessment. Under assessment occurred with Electrolux as locally reported. See spreadsheet here. 

The Trustee Report states the following: ” This report is generated to assist in fact–based discussions as to the effectiveness and future direction of Shelby County’s PILOT programs. The ultimate value of these  PILOT incentives should be measured by the PILOT boards and our local governments in terms of real economic impact to our community and the returns gleaned from these investments.”

But other than on the topic of delinquent PILOTs, report discussions never occur. In fact, the Shelby County Commission has never scheduled the review of all abating boards as was resolved in their EDGE Task Force work 1 year ago.

The TIFNI project, which proposes a consolidated tax incentive database and reliable measurement platform for all Shelby County abatement boards, as advocated for by the Trustee’s office, helps insure this work is scheudled. TIFNI also includes a measurement platform for public-private initiatives. This would resolve the measurement that never occurred with the Brookings FOCUS economic development plan. 

Data and Measurement Problems

As was shown with this exercise, to evaluate what is happening with tax incentives, one must navigate between multiple sites in the Trustee and abating board sites, convert pdf documents to excel and perform calculations. Further, provided the documentation can be found, recalculations must be performed using responsible assumptions to derive defensible economic impact and then fiscal impact must be applied.

All of that to say both measurement and data problems exist in trying to evaluate return on taxpayer investment all while excessive corporate/real estate incentives roar for the benefit of the small few. Its an implementation of  anti-business corporate socialism. Memphis #1 problem is an implementation of corporate socialism of the type that undermines ecosystem investments that support commercial evolution and competitive economic growth for all.  

Its a national embarrassment and a design for ecosystem decline under Smith, Hyde and the FedEx/Memphis Tomorrow cartel…..

On Wednesday, AutoZone went in and got an increase on their already excessive EDGE abatement from $11M to $13M while reducing the net taxpayer benefit from $3M to $2M. When fiscal impact analysis is imposed, the projected abatement return on investment for taxpayers is –17.4%.

AutoZone is led by Bill Rhodes who also sits on The Memphis Tomorrow and Hyde Foundation Boards. We decided to invite Bill for a fireside chat to which he hopes he accepts. Here are some advance questions:

Bill, in your private and public leadership positions, we hope that people such as yourself can see the nexus between an evolving publicly supported ecosystem and private profitability. What was the thought process at AutoZone to decrease the net taxpayer benefit of the AutoZone EDGE project from $3M to $2M in the midst of flat public revenues ? 

Bill, did you know at a $9M abatement, the Memphis/Shelby taxpayer could have broke even at the end of the 15 year term? Do you see the public-private benefit of achieving at least taxpayer breakeven over a 15 year term with the AutoZone project ?

Bill, now we know our tax rates are high in Memphis. In Nashville, your abatement would have been about $3M. Double that for the high tax rate in Memphis and make it $6M and then kick in another $1M for Nashville being a hotter city and you have an abatement of $7M. Don’t you think $9M is business friendly while the taxpayer breaks even after 15 years ?

Bill, with the AutoZone project, we abated $1M in already existing property taxes. With flat local public tax revenues, does that really seem like it would help AutoZone profitability while risking the possibility that AutoZone growth might not be adequately publicly supported  ?

Bill, we abate 75% in taxes for existing companies. Where did that thinking come from ? It reeks of anti-business corporate socialism and elitism. What ever happened to the partnership concept of say 50% for an existing local corporation in AutoZone operating in a nationally low business cost environment in Memphis ?

Bill, so how did the Memphis Tomorrow CEO organization pull off being down in all categories over almost 20 years as their initiatives use Federal, State and Local taxpayer money? 

Bill, what was the deal with the unmeasured Brookings FOCUS economic development plan that came out of the Memphis Tomorrow Fast Forward initiative and the botched workforce development effort over 5 years while excessive tax incentives roared for the benefit of corporate/real estate interests ? It seems to be a prescription for ecosystem decline. Is there another way this can be viewed ?

Anyway Bill, contact us if you would like to schedule the fireside chat. And here is the new fiscal note for the AutoZone project. 

What is good for the taxpayer is good for business. AutoZone abatement should be $9M. Taxpayers will get their money back by the end of the abatement term. 

Just for kicks, since I go to a bunch of EDGE meetings, I thought I would try to reconcile what the EDGE Board approves with the 2018 Annual Shelby County Trustee’s Report.  First before I get started, I know the Shelby County Trustee is NOT in charge of reconciling EDGE Board approvals with EDGE contracts. But who is ? 

The Shelby County Trustee only bills and collects taxes based on legal requirements, and for this discussion, an authorized industrial development board payment-in-lieu of taxes (PILOT) contract. With that stated, based on what is EDGE Board approved and what is showing up in the Trustee’s report varies widely unless I am misinterpreting something, which is entirely possible and why I am writing this blog. 

RE-CON-CILE

First, the EDGE Board typically approves an excessive 75% city-county tax abatement for a 10 – 15 year period or a payment-in-lieu of taxes of 25% of property taxes due. But this is what the 2018 Shelby County Trustee Report reveals based on contract amounts regarding County property taxes:

For real property, $3,434,440 is billed based on PILOT contracts instead of $25,627,065. That is 13.4% instead of 25%. Had 25% been billed that would mean $6,406,766 in billings or $2.972,326 more in PILOT revenue.

For personal property, $246,809 is billed based on PILOT contract instead of $12,269,542. That is 2% instead of 25%. Had 25% been billed, that would mean $3,067,385  in billings or $2,820,576 more in PILOT revenue.

The total estimated variance between what is typically approved in a 25% PILOT and what is showing up in PILOT contracted billings in the 2018 Shelby County Trustee Report is an estimated  $5,792,902 PILOT revenue shortfall. 

Other Questions

Also in trying to reconcile EDGE approvals with The Shelby County Trustee Report, is the “Owner” the property owner or the entity that EDGE awards the abatement ?

And if something is drafted in contract that is significantly different from what is publicly EDGE Board approved, shouldn’t the revision of what was originally approved come back for public hearing and approval ?

Anyway, here is my spreadsheet work. 

Please advise if I am analyzing this reconciliation in the wrong way. Thank you.