County Commissioners are waking up to the fact that the loss of quality instructional time costs money. On Wednesday, Commissioner Michael Whaley stated in Education Committee, while referencing a World Bank article, that due to COVID, loss of quality instructional time will cost $10 trillion around the world. 

But unfortunately, due to the local Memphis investigative news and public measurement blackout, Commissioners have no idea how much it costs when the idiots from Memphis Tomorrow botch the workforce development system.  

First, lets reference the World Bank article. The article states: 

Without remedial action when students start returning to school, a new World Bank report estimates a loss of $10 trillion dollars in earnings over time for this generation of students, and countries will be driven off-track to achieving their Learning Poverty goals.

Now, to locally contextualize $10 trillion, lets equate the cost to Shelby County, using its population of 950K and world population of 7.8B. Based on the article, the credible cost estimate to Memphis/Shelby will be $1.2B in wages and $36M in lost Memphis/Shelby tax revenue over a generation of 20 years. At the same time, using highly conservative estimates, the cost of the local disconnected workforce development is more that 5 times more !

Analysis  

One can blow up the numbers to say what they want. Given that, the following is a highly conservative analysis. First lets state a few facts. When adjusted for population and using pre-COVID data, Shelby County’s post secondary completions trail the average of their peers by about 6k per year and local annual employment gains trail by approximately .5% or 2,500 filled jobs resulting in a 20,000 filled job deficit since 2010. 

This analysis uses a connected workforce development system to conservatively increase post-secondary completions, to fill the employment gap by 2,500. The analysis is conservative because, after the employment gain of 2,500 is achieved in year 5, it is held constant over the generational term. 

In this model, completions are increased by 500 per year with accompanying annual wage increases of $15k that comes with a completion. Over 20 years, annual wages cumulatively increase by $6.6B and local tax revenue by $194M due to a connected workforce development system. Based on the World Bank article, COVID costs are $1.2B in wages with tax revenue losses of $36M or 5x less than that of a disconnected workforce development system.

See conservative analysis below:

Currently, Shelby County is in year 6 of a sabotaged workforce development system with disconnected conditions persisting. The current annual cost of that disconnect, highlighted above and independent of COVID, is 10,000 filled jobs, $413M in deficient wages and $12M in deficient local tax revenues from a disconnected workforce development system. 

With no multipliers used, this is a conservative analysis and the modeled results, when converged with Bureau of Labor and Statistics data, are credible. In year 6, the modeled results show a disconnected workforce development system accounting for 50% or a deficit of 10,000 filled jobs against a 20,000 filled jobs deficit since 2010 when compared to the peer growth average.

The remaining 10,000 filled job deficit can easily be accounted for based on a culturally unsupported and stifled small business sector. The local economic development challenge is rooted in workforce and small business. 

Conclusion

COVID was/is out of everyone’s control. But the botched workforce development system, was and is an expensive and costly self-inflicted wound by the elitist Memphis Tomorrow idiots…. 

What’s up with the Shelby Regional Economic Alliance (SREA)? While “Crump era” Fonzie is still around, not much. With upcoming consideration for a part of Poplar being renamed “Black Lives Matter”, progress with economic development is just not happening, 1.5 years after the establishment of the SREA. 

There is no SREA website or economic development plan. And meeting notices for the public body, just don’t seem to happen. With an increased emphasis on small business development, the most simple economic development plan solution was/is merely just to measure, implement and evolve the 2014 Brookings FOCUS plan that was never implemented. But that has not even happened, as excessive corporate/real estate tax incentives roar for the benefit of the small few and public structural revenue problems persist.

While prioritizing workforce development, the FOCUS plan set out to industrially diversify beyond logistics and more into professional technical, advanced manufacturing and agriculture. 

Additionally, small business and workforce development remain the primary pain points for local economic development. And the SREA has no Board representation exclusively focused on small business, workforce or areas outside of Memphis within Shelby County. 

Isn’t it strange how the local press has failed to substantively follow up on the SREA? Anyway, this blog will explore current SREA Board representation to provide potential clues for a lack of economic development progress.

Shelby Regional Economic Alliance (SREA) Board

The SREA is made up of representatives from the City, County, EDGE, Memphis Chamber and Downtown Memphis Commission. 

City of Memphis. At one point, former Councilman and real estate developer Kemp Conrad served as one of the City’s designate Board members. Conrad’s firm, Cushman and Wakefield, has recently been involved in some of the most excessive and egregious PILOT applications before the EDGE Board. These approved PILOTs in Mark Anthony, LeSaint Logistics and DHL were all for low wage warehousing jobs while abating property taxes for both existing and new construction.  Combined, these PILOTs total $10M. When research is applied, these PILOTs are 365% in excess and should have totaled approximately $2M and not $10M. Clearly, Conrad wants more of the same as a local real estate developer.

As far as Mayor Strickland on the SREA, he robotically says “momentum” when economic development discussions arise. That’s about it.

Downtown Memphis Commission. Jennifer Oswalt represents the Downtown Memphis Commission (DMC) on SREA. DMC generates fee revenue, on total project costs of 1% for 10 yr or less PILOTs and 1.5% for PILOTs more than 10 years. DMC PILOTs, for urban renewal, are excessive when benchmarked against other cities, in term length. In this way, DMC excessive PILOT term lengths can, in part, be explained, through the DMC fee structure, that financially incents DMC to award more than 10 year PILOTs. Additionally, based on a review of DMCs audited financial statements, DMC has $33M in cash/liquid assets against only $9.2M in annual expenses.  DMC is financially incented for economic development policy to stay unchanged. 

Economic Development Growth Engine (EDGE). EDGE is represented by corporate lawyer, Al Bright on SREA. EDGE collects capped fee revenue on every PILOT awarded based on the total amount abated. In many cases, larger abatement awards, with the additional inclusion of the abatement of existing property taxes, increase EDGE’s PILOT fee. EDGE is financially incented for economic development policy to remain unchanged while justifying PILOTs with MWBE participation that can be shown to be an elitist sham. EDGE finished 2019 with $24.5M in cash/liquid assets against $9M in expenses. 

Memphis Chamber of Commerce. Beverly Robertson represents the Memphis Chamber on SREA. Robertson came up through the local corporate ranks of Holiday Inn with the Kemmons Wilson family and worked as CEO with Memphis Tomorrow’s Pitt Hyde for the National Civil Rights Museum nonprofit.

Robertson’s public comments tout a common talking point that Northern Mississippi is a major economic development competitor of Memphis and Shelby County. This talking point corresponds with the justification for a large number of local PILOTs to avoid operational departure for Northern Mississippi. This is unfortunate as North Mississippi is both a local competitor and a regional economic development partner. This, on balance, makes N. Mississippi a wash with respect to local economic development. In fact, the recent Google expansion into N. Mississippi should be locally celebrated. 

Shelby County Government. Shelby County Government, in part, is represented by Willie Brooks who works for corporate giant FedEx. Brooks’ EDGE Task Force authored the creation of SREA while effectively leaving EDGE unchanged. This would indicate that Brooks is content with current corporately driven local economic development policy. And Mayor Harris, the other County SREA representative, seems content with Reid Dulberger, Chief County Economic Development Officer, setting local economic development policy. 

Conclusion

With no small business, workforce or external to Memphis representation, the Shelby Region Economic Alliance Board is set up to produce more of the same.

The racially diverse SREA is, in many ways, a carryforward of Crump era Memphis Tomorrow elitism. Maybe that explains SREA inaction. After all, things haven’t changed much in 20 yrs under Memphis Tomorrow…..

Memphis Tomorrow is Butt Ass bad. And the local community is ignorant to that fact. Evidently, ignorance is why the City Council agreed to fund the controversial Tom Lee Park development with $10M, while at the same time, the Downtown Memphis Commission (DMC) owes the City of Memphis $10M. Nothing else can explain the action.

DMC, in many ways, is a component part of the overall Memphis Tomorrow “Government Efficiency” program. The “government efficiency” program effectively:

Botches taxpayer funded community betterment initiatives

Supports excessive corporate/real estate tax incentives for the small few using bogus accounting

Piles up cash reserves in quasi-governmental organizations like DMC and EDGE through fee revenue earned for administering excessive corporate/real estate incentives.

The above is a losing formula; even for local corporations. But for almost 20 years, Memphis Tomorrow has invested the community in ecosystem decline, enabled by ignorance, that occurs with the aid of a non -investigative press, lacking governmental oversight and new, absent public university thought leadership. 

Consequently, local officials believe that Memphis Tomorrow’s Government Efficiency program is “visionary”. Meanwhile, as local government struggles to have adequate cash reserves, this blog will focus on the excess cash reserves of DMC and EDGE using each of their 2019 audited financial reports.

DMC and EDGE Cash

Without consideration of DMC and EDGE expenses and based on their cash reserves, it is recommended that local government invoice DMC and EDGE $15M each, payable upon receipt. See the following analysis:

Downtown Memphis Commission (DMC) – As of June 30, 2019, the DMC had $33M in designated and undesignated cash/liquid assets (pg. 19) with $9.2M in annual expenses (pg. 14). With $33M in cash/liquid assets as of June 2019, DMC owes the City of Memphis approximately $10M based on a review of accrued interest of $5.1M (pg. 13) and principal debt of $5.1M (pg. 30) for the Peabody Place Garage. A note on page 30 states:

“No principal or interest is payable on this note to the City of Memphis, for the construction of the Peabody Place Garage, until its maturity on July 24, 2034. At June 30, 2019 and 2018, the accrued interest payable is $5,149,656 and $4,891,096, respectively, and is included in Long-Term Liabilities in the accompanying Combined Statement of Financial Position.” 

But why no principal or interest payments to the City of Memphis? At any rate, this would have been a great opportunity for local government to align a DMC City debt with the financing of the Downtown Tom Lee Riverfront project. At the same time, based on a helpful exchange during public comment at County Commission on July 13, it does not appear governmental processes are in place to review the audited financial statements of quasi-governmental bodies.

Meanwhile, the DMC has a steady revenue stream of approximately $2M for parking management (pg. 10) per year, to service the remaining parking garage debt, outside of the City of Memphis debt, of $4.3M and $2.2M through 2024 and 2032 respectively.

Solution: Local Government should invoice DMC for $15M, payable in full, upon receipt. Under this invoicing strategy, DMC will have approximately $10M in designated funds and $7M in undesignated funds to support $9.2M in annual operations which includes the support of a $2M parking management revenue stream.

Economic Development Growth Engine (EDGE) – As of June 30, 2019, EDGE has cash/liquid assets that total $24,462,782. Only $1,774 of those assets are restricted (pg. 16). Their annual operating and non-operating expenses total $8.4M (pg. 13).

Further, grants from the EDGE entity, Depot Redevelopment Corporation (DRC), of $834K and $315K to the Greater Memphis Alliance for Competitive Workforce and Municipal Chambers of Commerce respectively occurred in 2019. These grants fall outside of the narrow purpose local government established for the DRC, in countywide workforce and municipal chamber grant subsidies. The purpose of the DRC, which is not countywide workforce or chamber grants, is stated in the report as follows:

“The primary purpose of the DRC is to secure from the United States the land, building, and equipment of the Memphis Defense Depot (closed as a military base in 1997); enter into agreements to acquire, construct, improve, lease, operate and dispose of property; and to promote the redevelopment of the Memphis Depot for the citizens of the City and County”       (pg 18).

Of course, if local legislators fail to conduct oversight and review audited financial reports, as a matter of process, material violations to the taxpayer, in a majority Black community in need, are likely to continue. 

Solution: Local government should invoice EDGE for $15M, payable in full, upon receipt. EDGE will have $10M in cash reserves to fund ongoing operations.

Conclusion

Again, Memphis Tomorrow is Butt Ass bad. Butt, Butt, Butt !!!. Expectations for community leadership have been lowered to the floor, leaving taxpayers in a majority Black community in need holding the bag.

The elitist Memphis Tomorrow mindset is one of entitlement. They feel entitled to effectively carjack the taxpayer and small business, often disguised through planning, pageantry and new relabeled initiative rollouts.

Folks can protest police all they want, while legislators pass symbolic “racism is a pandemic” measures. But there will be no social justice until there is a meaningful measure of taxpayer justice. And that will only come when Memphis Tomorrow pays the taxpayer back $1.5B.  

Finally, $30M, in arguably, excess cash/liquid assets was found with just DMC and EDGE. At last look, the Memphis Health Education Facility Board had $5M in cash/liquid assets. What else is out there ???

The Elitist Memphis Tomorrow complex stifles commerce through a lack of transactions with locally owned small businesses. And this is especially detrimental to the Black business community. With a 54% Black Shelby County population, increasing transactions with locally owned Black businesses is paramount to countywide economic survival. 

Instead of increasing local transactions, the elitist put local firms on the non-profit hamster wheel of meeting space, business planning, expos and certifications. None of this is required to increase transactional velocity with small business. The elitist hamster wheel was eluded to in Jason Bolton’s excellent Memphis Business Journal (MBJ) piece.

Further, the former occurs, as the elitist hijack MWBE programming originally designed for supporting small businesses on the margin. This works for those getting hefty corporate/real estate incentives that just want the convenience of dealing with the type of firms they always have.

And that’s not the mention, the leading MWBE connector, in the Mid-South Minority Business Continuum only works with established companies with second layers of management and institutional processes. Stunning….

The elitists are wreckers of commerce. Through their hamster wheel, they dismiss locally owned small business, botch the workforce development system and award themselves lavish corporate/real estate incentives while public measurement goes out the window. Can’t make this stuff up. 

Commerce Off Generally and Black Business

Commerce is off generally in Memphis and Shelby County with 14 business firms per 1K of population. Using the same census data source used by the MBJ, but using countywide data for the same peer cities, Shelby County locally owned firms with employees, per 1K population, dramatically trails the peer group.

With a peer leading 54% black population, building Black business is vital to Shelby County’s economic survival. See below data tables:

Conclusion

Reform and rigorous oversight is needed for MWBE programming involving recipients of excessive corporate/real estate incentives. Given the results, MWBE requirements to justify future tax incentive awards needs to end. 

At the same time, dramatic incentive reform is needed to address the public structural revenue problem which will also provide local government funds to directly administer MWBE/LOSB programming for those small businesses that really need it. 

But even the above won’t come close to addressing the need. The real solution will come with just transacting locally outside of government programming….

In a Facebook Live video yesterday, Dr. Earle Fisher had it right. In summary, Fisher states that substantive  implementation is all that counts. And local economic development implementation has not been happening. Fisher’s  comments mostly had to do with police reform while he also mentioned minority contracting.  

Meanwhile, today on WMC-TV 5 , Joe Birch was asking Greg Akers, of the Memphis Business Journal, (MBJ) if there is a solution for locally increasing black owned businesses. Akers answered with what is heard so often, that there are allot of great groups doing great things but really no specific solution.

While MBJ is teeing the subject matter up, no one is exploring why, over the years, local minority women business enterprise (MWBE) implementation has not achieved desired results. After all, MWBE has been around for years. Why not more progress ? No one is asking.

Through this blog and as a locally owned small business (LOSB), I have for years now been proposing, through a range of tools, better public measurement. But the elitist complex dismisses their own local businesses choosing instead to go out of town to the likes of Canada, Boston, and Idaho, while local economic and workforce development implementation suffers.

While leveraging MBJ data, this blog will explore why MWBE has not achieved meaningful results and proposes specific solutions going forward. 

Why Not More Progress?

First, the reason for lacking progress with MWBE is due to, like so many other areas, absent public measurement and governmental oversight. Absent measurement stems from a racially diverse public-private complex that chooses not to measure or oversee the elitist Memphis Tomorrow complex.

At the last EDGE quarterly report, before the County Commission, legislators were given questions by the public regarding the Blues City PILOT award having less than 1% committed MWBE spend on a $50M project. But the question was never asked by Commissioners of EDGE. Instead, the EDGE quarterly report was rubber stamped as usual. No measurement + no oversight equals no substantive implementation.

Secondly, the area’s leading MWBE certification and connector, Mid-South Minority Business Continuum (MMBC), specializes in serving well established businesses with second layers of management and institutional processes. This would typically be longer standing businesses. See above graph with MCCLM additions to data sourced from MBJ.

In many ways, the Memphis MWBE leader, in the MMBC, connects established business, that don’t necessarily need the help, for business sustainability with local corporate contracts. See MMBC’s CEO, Jozelle Luster Booker, explain MMBC’s business model at 8:55 in the below video. 

MMBC’s model appears to be working for established local businesses. These are the types of local businesses that local corporations would likely seek to work with anyway. This flawed economic development design, by default,  dismisses bringing on line smaller in need businesses.

For example, with EDGE’s MWBE program, the average life span of the top 25 MWBE receipt recipients is 33 years (table below), signaling highly established businesses benefitting from MWBE. MWBE receipts are used, in part, to help justify excessive local corporate/real estate abatement awards. 

Next, it appears that the local elites have hijacked local MWBE programming with Kathy Buckman Gibson’s KBG Technologies, being the  #1 EDGE MWBE recipient, with $13M in receipts. Gibson also serves on the National Civil Rights Museum Board. Gibson doesn’t need the help. 

And finally, there are a number of companies, based outside of Shelby County that have enjoyed significant MWBE receipts while receipts for  women business enterprises have exploded. Black owned business receipt growth has, on the other hand, stagnated while LOSBs have barely participated in MWBE. See Complete MWBE Dashboard.

Conclusions and Solutions

For some time, Memphis’ chief economic development challenges have been small business and workforce development. With respect to MWBE programming, to support black business growth, these are some specific solutions: 

Implement public measurement and rigorous governmental oversight to support increasing black owned and small business development.

Do away with MWBE programming to justify excessive tax abatement awards, preserving public funding for small business and workforce development investments.

Leverage the Federal Definition for Disadvantaged Business Enterprises for MWBE / LOSB participation where the business owner cannot have net worth that exceeds $1.32M.

In the end, substantive economic development implementation, away from runaway elitism, will be the only solution for public structural revenue problems and a majority black Memphis community in need….