Councilman Chase Carlisle and Caissa Public Strategy’s Brian Stephens are supporting, yet another, old hat elitist public-private initiative and tactic in distraction. While requiring a complex referendum, the distraction is, wasted time spent, discussing the marginal benefits that might come, with the unlikely consolidation of City/County government. 

Meanwhile, local economic development efforts, that could be legislatively addressed today, are in disarray, while being functionally redundant and inefficient, costing taxpayers millions.

More interesting, is what this public-private effort does not advocate for in 1) consolidating and better measurement of economic development, 2) right sizing excessive corporate/real estate incentives to confront the structural revenue problem occurring on the back of a majority Black community in need and 3) MWBE / PILOT compliance. 

Don’t kid yourself. Memphis problems are a product of an archaic elitist design for decline, carried out by a racially diverse and unmeasured public-private complex, that feeds on the taxpayer, in a majority Black Memphis community in need.

And if that is not enough, the data on the benefits of governmental consolidation is inconclusive, with more unconsolidated than consolidated cities, outperforming Memphis/Shelby County in total wage growth. Maybe consolidated government is best, but it should not delay addressing improvement opportunities within legislative reach today.

So, why not get real and focus on consolidating the local economic development function ?

First Things First – County then Regional 

Louisville, a similar border, river and logistics hub city to Memphis, leverages a regional interstate collaborative, to achieve above peer average economic development outcomes. For example, per BLS data expressed in thousands, Louisville/Jefferson County, from 2010-18, achieved above average 40% total wage growth, compared to the below average, Shelby County at 26%.

Had Shelby County achieved Jefferson County’s 40% total wage growth, for the same 2010-18 period, that would have translated into $2.7B more in annual wages and $81M in recurring local tax revenues. Or, over the 8 yr period, cumulatively, approximately $10.8B more in total wages and $325M more in total local tax revenue would have resulted. 

But here is the problem. Before any interstate regional approach, Shelby County must consolidate the local economic development effort. Shelby County municipals, outside Memphis, remain unrepresented on the Shelby County Regional Alliance. What is that all about?!?!

And per the Shelby County Trustee website, there are 9 abating boards, performing the largely redundant function of abating taxes. The former occurs as EDGE and the Downtown Memphis Commission, have over $50M in cash reserves on their balance sheet, with only $17M in annual operating costs. C’mon Man ! With the former in mind, County economic development consolidation is paramount.

County Economic Development Functional Consolidation

Having the municipals represented on the Shelby Regional Economic Alliance, would seem to be a common sense slam dunk. And with the Port and workforce as distinct economic development functions from incentives, consolidation of the tax incentive function, is common sense too. 

Besides, with 9 abating boards, in the present unconsolidated state, taxpayers and public officials cannot easily measure or see what is going on with tax incentives. The lack of legislative curiosity, investigative press and public university thought leadership, further compound the problem. This reality leaves the Memphis taxpaying, majority Black community in need, holding the bag with over $100M in annual corporate/real estate incentives.  

At the same time, from an administrative staff perspective, the redundant tax abatement function can be easily consolidated, to serve multiple boards, with centralized web based administration, to facilitate public oversight, research based incentive sizing, compliance and measurement. 

In this model, some abating board staff, can be reallocated to compliance monitoring. With multiple reports of non-compliance, PILOT compliance monitoring is needed to fill the gap. To this extent, relying on corporate self reporting, EDGE, for example, has not conducted compliance audits since 2014. More onsite compliance monitors would address this gap. 

Further, abating board incentive fee structures need to be aligned with economic development and public revenue needs. Economic development is most commonly defined around increasing wages. Currently, EDGE is financially incented on maximizing corporate/real estate abatement awards and Downtown Memphis Commission is incented to offer more than 10 year abatement terms. These fee structures are unrelated to increasing wages or public revenue needs. 

And finally, while new abating Board appointments are desperately needed, beyond staff, some Memphis/Shelby Boards such as EDGE, Downtown Memphis Commission and Health, Education and Housing Facility Boards, may be ripe for consolidation as well. With fewer meetings, public officials could more easily participate on abating boards, ideally through voting participation.

Conclusion – Get Real

The current functionally redundant, inefficient and confusing economic development system is a design for decline. The confusion contributes to enabling a culture of corporate elitism while transferring wealth from a community in need to those who need it least.

And without a plan, the current local system is unaligned to real economic development measures which would precede more optimal and collaborative regional economic development efforts. 

Carlisle and Stephens should get real and focus on consolidating and aligning Shelby County economic development efforts with an eye on regionalism. As far as the elitist and wishful distraction of consolidating local government, if it were to occur, it alone would be much more difficult and much less prosperous than consolidating economic development….

Dear Mayor Strickland, 

Can you please update us, at the end of this week, with your Weekly Update, on the following 2 items:

1 – An update on procedures to collect, including interest, approximately $1M in Nike back PILOT payments. Based on the last EDGE 2019 Nike Compliance report, Nike had not been paying their 10% PILOT payment to the City. And further, would you also let us know, if you intend to advocate to hold Nike in Default of their $58M PILOT agreement due to no MWBE spend in 2017-19 while also leaving almost 1,200 low wage workers without subsidized healthcare?

2 – Shucks, anyone can make a mistake. Below, I correct a few inconsequential mistakes I made in my previous PILOT blog, regarding the favorable Aesthetic Management and RDX PILOTs. Within the spirit of course correction and getting it right, can you please correct your current Weekly Update in the next Weekly Update, to reflect the actual pre pilot taxes currently being paid on the Poplar Plaza PILOT parcels?

After pulling the City and County real property tax bills, the annual pre pilot amount is $466,508 and not $113,335, as shown in your Weekly Update. Links to the property tax bills are under the below table. Also, your annual PILOT payment for the project appears inflated at $376,489. The annual average PILOT payment should be $331,670, based on public documentation as provided in the EDGE Poplar Plaza Project Summary.  Also, a minor typo appears in your Weekly Update for the Poplar Plaza PILOT. The correct address for the parcel is “3485 Plaza Avenue” as opposed to the “3585 Plaza Avenue” that appears in your update. 

As you know, the University of Memphis recently announced, yet another, local “systemic racism” initiative, and then went in Deep to support the excessive Poplar Plaza PILOT, that resides in their development district. Based on the corrected amounts, the Poplar Plaza PILOT is scheduled to generate $2M less in property tax revenue than is currently being generated, based on public documentation. And this tax revenue loss, is unloaded on a Memphis majority Black community in need, as the UofM embarks on it’s “systemic racism” initiative. Go figure. See below table:

The above figures were taken first, from your Weekly Update for the “Strickland Weekly Update” row. And the below public documentation was used to compile the above figures for the “Actual” row. From the EDGE Poplar Plaza Project Summary, “Annual PILOT Payments” average $331,670, per year, over 15 years as opposed to $376,489 as contained in your Weekly Update.  

“Annual Pre PILOT” revenue is calculated by adding up all of the City and County tax bills below, for the two parcels in the Poplar Plaza PILOT. Those four annual tax bills total $466,508; far more than the $113,335 in your Weekly Update. The annual average net impact on commercial property tax revenue is -$134,838 when using the corrected figures. 

Over a period of 15 years, the annual -$134,838 equals -$2,022,570 in property tax losses that come as a result of the $14.7M Poplar Plaza PILOT abatement. That is $14.7M more in abatement than would be approved in any other Tennessee county,  as Shelby County is the only county in the state administering residential PILOTs. See below public documentation:

• Mayors Letter and EDGE Term Sheet
• EDGE Poplar Plaza Project Summary
• City Tax Bill for 3486 Poplar / Parcel# 04405200001c
• City Tax Bill for 3485 Plaza / Parcel# 04405200002
• County Tax Bill 3486 Poplar / Parcel# 04405200001c
• County Tax Bill for 3485 Plaza / Parcel# 04405200002

MCCLM Corrections:

From my previous blog, the following overall inconsequential corrections, as shaded in light green, were made for the favorable RDX and Aesthetic Management PILOTs. My RDX pre pilot mistake came as a result of calculating it using a 15 yr term as opposed to the correct 6 yr term. And the Aesthetic Management correction was due to the fact that I incorrectly assumed it was in the City, and it has been corrected, to only include County taxes. Additionally, the other pre pilot figures were only slightly corrected to reflect the exact amounts on the pulled tax bills. 

In the current environment, both Aesthetic and RDX are reasonable PILOTs and work for the taxpayer. See corrected table and previously published table below:

As originally appeared in previous blog. 

Mayor, I look forward, hopefully this week, to the corrected weekly update. Thank you. 

Shelby County Chief Financial Officer, Mathilde Crosby, sounded the alarm in County Commission testimony on Wednesday. Crosby testified that property tax revenues were down from 2019, yet again, this time in 2020 by $7.1M. Meanwhile, back at the ranch, EDGE is approving $38M in new tax incentives. 

The most excessive PILOT of the day, in relationship to net taxpayer benefit, was the University of Memphis (UofM) supported, Poplar Plaza PILOT. Over the term of the PILOT, Poplar Plaza will generate $2M less in property tax revenue than it currently generates.

True story, in a letter (pg. 11) endorsing the Poplar Plaza PILOT, Ted Townsend, UofM Chief Economic Development Officer, said the following:

“The project [Poplar Plaza] is not located in the current Highland Revitalization TIF Boundary, however our support of a PILOT incentive remains the exception rather than the rule.”

Here is the real deal. Based on the UofM’s partnership with EDGE, they systemically support a culture of excessive incentives and corporate elitism, while coincidentally ending their peer city economic development measurement research project, without stated cause. Such a platform would reveal that excessive incentives are not working as an economic development policy. 

The exception is that the UofM writes formal letters, when PILOTs directly benefit UofM area development plans. That’s all. The UofM endorsed two PILOTs at the EDGE meeting that effectively extends their current tax incented Highland development district. 

Two UofM area PILOT approvals follow $26M in local tax incentives and grants benefitting the UoM, since the installment of the new local UofM Board of Trustees in 2016. This $26M includes, $3M for an elitist $19M tennis center, that City of Memphis taxpayers were bullied into funding, without hearing competitive proposals.

This UofM supported PILOT comes, right on the heels, of a newly announced UofM local “systemic racism” initiative. Stomach churning and weird ass timing for an Elitist and excessive PILOT, to say the least. 

Analysis 

EDGE approved 5 PILOT projects on Wednesday in Aesthetic Management, RDX, DHL, University Apartments and Poplar Plaza totaling $38M in abatements.

Based on an application of Dr. Timothy Bartik’s tax incentive research, these approvals are in excess by 102% or $19M. The former occurs as EDGE is projected to collect $804k in fees for awarding these excessive incentives. Bartik research collectively considers the tax revenue impact of wages and capital investment. 

EDGE is doing what they are financially incented to do; award excessive incentives. See the problem ?

The Aesthetic Management and RDX PILOTs work for the taxpayer, while University Apartments, DHL and Poplar Plaza are excessive. See below summary taxpayer benefit analysis ranking, from best to worst by the “Excess” column, for a busy EDGE day. Bartik research is applied under the “Right Abate” column:
But there is more. EDGE gets help from the local press. 

Unreliable Daily Memphian

Beyond slant, the anonymous donor led Daily Memphian, is an unreliable news source for a variety of reasons. Here is an example. The Daily Memphian led with the following in their EDGE story:

“Five companies received a combined $37.6 million in local property tax breaks in return for making capital investments totaling $162.5 million, creating 318 jobs and still paying $38.3 million in Memphis and Shelby County property taxes during the terms of the tax reductions.”

In this attempted Daily Memphian analysis, regarding only commercial property tax revenue, $38.3M is not even close. The 5 PILOTs approved, will generate $15.1M in PILOT payments over the term of their abatements. Further, in exchange for $37.7M in tax abatements, only $5.5M in net new commercial property tax revenue will be generated over the abatement terms. See below table analysis:
And if the above is not enough, The UofM has an investigative news partnership with The Daily Memphian. Go figure…. 

Conclusion

Runaway corporate elitism is the chief problem; not systemic racism. Dr. M David Rudd, President of the UofM, said in the Commercial Appeal, “It is clear that Memphis needs us.” No they don’t ! 

Memphis does not need a public University, that has a corporate Board of Trustees, without thought diversity, that enables runaway corporate elitism on the back of a majority Black community in need. 

And, after 20 years of them, Memphis does not need, yet another, elitist “systemic racism” initiative…..

3

UofM plans to extend its already dominant local public-private journalism reach with a joke “systemic racism” narrative. Its impossible to advocate a “systemic racism” narrative, in a majority Black community in need, without calling out the locally dominant “corporate elitism” doctrine. This effort is an old timey Memphis Tomorrow sham. Why its a joke UofM narrative, will be fully documented later. 

Based on the recent Commercial Appeal article, The UofM will leverage their public funding to advance its “systemic racism” message through their Institute of Public Service Reporting/Radio partnership  with the anonymous donor led Daily Memphian, as previously reported . 

In the CA article, UofM President Robot Rudd said, “It is clear that Memphis needs us”. Hello Robot ! Memphis does not need a joke UofM Board of Trustees that lacks in thought diversity. The UofM Board of Trustees, has 3 board members with direct relationships with FedEx, while the other representatives are more of the same companies that serve on all local boards in First Horizon, International Paper, Sedgewick and Methodist.

This lineup, offers the community more of the same, in no thought diversity that would accommodate independent public university thought leadership on economic and community development matters. The Board is just an extension of the rigged and elitist Crump era Memphis Tomorrow corporate machine. 

Meanwhile, the UofM and donor led Daily Memphian (DM) already collectively hog the public-private journalism space. The UofM’s status quo Quotis Sanford is an opinion columnist for the Daily Memphian. Quotis writes slightly left of center on political matters and has recently discussed, on more than one occasion, symbolism and confederate era statues. Quotis does not broach the topic of corporate elitism. 

The DM further partners with the UofM’s Institute for Public Service Reporting for “investigative journalism”. Its an investigate partnership that hatched the misdirected story of  claimed City of Memphis obstruction in police “use of force” data.

The correct target was the Memphis Tomorrow Memphis Shelby Crime Commission that partners with the UofM Public Safety Institute. The Crime Commission was tasked, years ago, with “data driven policing” by local government. The unquestioned Crime Commission were the ones that should have had the data compiled and ready to go, years ago ! 

Then there is the local non-reporting of an apparent EDGE PILOT default by “social justice” Nike. The UofM contracts exclusively with Nike for sports apparel. And the DM has a show, Behind the Headlines, on the publicly funded WKNO.

Through its vast public-private media alliances, the UofM has demonstrated itself to be s joke, on matters of community and economic development, in confronting corporate elitism that plagues a majority Black Memphis community in need.  

Why a Joke ?

Since  the installment of the UofM Board of Trustees, The UofM has been a purveyor of corporate elitism, on the back of a majority Black community in need, while devouring through significant local funding. The worst example was taking the last available $3M in City of Memphis funding for an elitist $19M tennis center on City provided property.

The City Council approved tennis center funding occurred without hearing competitive proposals. This funding comes on top of $2M in funding for a UofM pool renovation project and the $21M Highland TIF tax incentive. Mind blowing !!

Below, are some additional jokes precipitated by lacking thought diversity coming from the UofM Board of Trustees: 

Joke #1 – Sparks Bureau of Business and Economic Research. While in partnership with EDGE, Sparks abandoned their Memphis Economy peer economic development research  measurement platform without stated cause. This is unheard of and shows lacking public university thought leadership. And Sparks never advocated, in local chambers, any economic development public policy positions.

Joke #2 – The Benjamin Hooks Institute for Social Change. They speak in platitudes while not advocating any specific policy positions, in chambers, that confronts the corporate elitism that plagues a majority Memphis Black community in need. 

Joke #3 – Public Safety Institute. While working in partnership with the Memphis Tomorrow Memphis Shelby Crime Commission, when the need for police “use of force” data arose, the partnership had no data after being locally charged with the work years ago.

Joke #4 Institute of Public Service Reporting. Fails to investigate the corporate elitism that oppresses a majority Black community in need. 

Conclusion 

Typically, one will see the UofM in legislative chambers lobbying for local funding for themselves and not advocating policy positions for the community. The new local Board of  Trustees appears to have robbed the Memphis community of independent public university thought leadership. 

Advancing “systemic racism”, in a majority Black community in need, while authoring corporate elitism, is a sham. Besides, the elitists feel safe with the local systemic racism agenda. After all, currently, the agenda is nothing more than renaming streets and blaming the police for all of society’s ills. 

In the end, your basic redneck, prone to racial slurs and flying the rebel flag, has a greater sense of fair play than these “social justice” Elitists……  

F#ck Loews. I hope Townhouse Management Company (THM) kicks Loews’ Ass in their lawsuit , as local leaders are completely blinded by brand and runway elitism.

Its stunning how the Downtown Memphis Commission (DMC) would abandon one of their core charges, in eliminating blight, just to work with Loews Hotels. And THM, had to be operating on the assumption that the City and County would not leave the City holding the bag, with the largest piece of blight in Downtown, in the 100 N. Main Building, while sacrificing open space to incentivize a new Loews Hotel with TDZ money and a 30 year $90M PILOT. THM had to think, in addition to the Loews assurances made to them, that local government would look out for the taxpayer. Not in Memphis!

Has anyone ever seen that ugly ass blighted 100 N. Main Building on a national TV shot ? Its disgusting ! And Loews is not the only brand local leaders are blinded by. Nike is another brand that has blindsided everyone with an apparent default on their PILOT. The apparent default is based on Nike’s most recent EDGE PILOT compliance report that revealed lack of proof of 2018 City PILOT payments, no 2019 MWBE spend and almost 1200 low wage workers kicked off subsidized healthcare coverage pre-c0vid. 

Meanwhile, there are local brands like EDGE, DMC and Memphis Riverparks Partnership (MRP) that have an accepted brand leading to rubber stamped proposals. 

While using taxpayer money and getting local government funding without contract deliverables, MRP is charged with riverfront development. The former occurs as Mud Island is left without a development plan, justified with a $20M deferred maintenance price tag, asserted by MRP. Has anyone ever asked MRP to document the $20M in deferred maintenance ? And if that is not enough, MRP regularly closes Riverfront Drive for public use, making riverfront access more cumbersome for many to include the disabled. 

And finally, DMC is planning to bring back Union Row, now The Walk, for a 30 yr PILOT while asking for TDZ funds. When Union Row was last approved, 2 years ago,  it was like, “we gotta hurry and get this done”, preventing in depth study by the County Mayors’ office. With construction never having started, DMC is bringing Union Row, now The Walk, back almost 2 years later for legislative reconsideration.

Conclusion

F#ck Loews, F#ck DMC, F#ck MRP, F#ck Nike and F#ck EDGE. 

True story, Nike is Not a social justice company. Let’s see if the following gets any local media coverage. After getting a $58M PILOT in 2012, in 2019, while Nike sat on the National Civil Rights Museum (NCRM) Board, 1169 low wage Memphis Nike workers lost subsidized health coverage. And there is more.

After being part of botching the local workforce development system, why would “social justice” Nike’s Willie Gregory want to be Chairman of the Memphis Chamber ? Its baffling, and Gregory recommended Beverly Robertson for Chamber CEO. Wonder what Robertson, formerly NCRM CEO, thinks about what has happened with Nike’s Memphis operations ? 

This question comes after Nike was granted a $58M PILOT in 2012, that was scheduled to transfer, on average over 15 years, $3.9M per year from one of the most impoverished areas of the country in Memphis, to one of the least impoverished areas in Portland, Oregon.

Based on Nike’s pre-COVID and most recent 2019 EDGE PILOT compliance report , the following can be concluded:

Nike apparently made no 2018 City of Memphis PILOT payments (pg.2). Based on the EDGE Board approved project summary (pg. 6), Nike was scheduled to pay only 10% of their City property taxes. Nike has no record of a 2018 City of Memphis PILOT payment.

No 2019 MWBE spend. Nor has there been any reported for 2017 and 2018, per EDGE compliance reports, against a $60M MWBE spend commitment. (pg. 6).

1,169 Nike workers lost their subsidized healthcare benefits in 2019 from 1918 which is not compliant with EDGE PILOT requirements. Nike reports 749 employees with healthcare benefits, which is well below their PILOT commitment of 1912, while also reporting 1949 employed at the Nike Northridge facility (pg. 4). It further appears that wages offered through Adecco temporary services, headquartered in Zurich Switzerland, for Nike positions, have fallen below $12 per hour

Again, with Memphis in need of increasing wages with benefits, improved workforce development and  increased spending with MWBEs, why would Willie Gregory want to be Chamber Board Chairman?  Nike clearly has no passion for the needed work in Memphis. But Nike does have a passion for reducing wages and benefits on the back of a majority Black Memphis community in need, while touting social justice, through public relations. Let’s take a look. 

Analysis – 2019 Nike PILOT Performance

After also championing taking a knee with Kaepernick and the discontinuation of the Betsy Ross sneaker, the above video description states:

“We [Nike] will continue to stand up for equality and work to break down barriers for athletes* all over the world. We will do and invest more to uphold longstanding commitment in supporting the Black community and partnering with world-class organizations dedicated to ensuring racial equality, social justice, and greater access to education.”

After reviewing Nike’s public relations videos, the following PILOT performance analysis is concerning. 

Based on Nike’s 2012 application, Nike estimated employee benefits at a cost of $7k per employee (pg.9).  Based on the committed benefits of $7k per employee for 1912 employees, an $8.1M cost reduction in annual employee benefits occurred in 2019 with 1163 Nike workers without healthcare benefits.  

Extrapolating that against their project summary, using an economic impact multiplier of 1.9564 (pg. 3) , that would result in an economic impact reduction of $15.8M per year. Lower economic impact, in wages, contributes to neighborhood decline as recently documented and found in Orange Mound. 

Being generous here, and using the 1949 reported employees for 2019 and adding back the additional 47 employees over 1912 committed employees, without benefits, at $12 per hour, would add $2.4M to economic impact resulting in $13.5M in economic impact losses from $15.8M (pg 4). The $13.5M in lost economic impact, results in $456k less in annual Memphis/Shelby tax revenue from wages. 

Additionally, Nike is short on their PILOT capital investment $28M in real and $17M in personal property ($45M). At the same time, Nike claims to be making an undefined, $36M capital investment that is not part of the PILOT (pg. 3). Perhaps they are making the investment, but it does little to soften the blow of 1163 low wage Nike workers without subsidized healthcare benefits. 

And finally, no MWBE spend and not paying City PILOT taxes in 2018 is indefensible. The wealth transfer is on with Memphis/Shelby taxpayer money being transferred back to the much more affluent Portland Oregon area. 

Conclusion

Right sizing the original Nike PILOT would have reduced it by $38M from $58M to $20M and that reduction assumes Nike is compliant. The case has been and is clear for PILOT reform. Besides, Memphis economic development challenges are rooted in small business and workforce. The former are the casualties of local “economic development” policy.

And finally, “social justice” Nike, from the top of the Memphis ecosystem, has lowered the Memphis corporate community performance standard, yet again, on the back of a majority black community in need. In this case, the problem is not “systemic racism” but again, unchecked runaway elitism…