Existing Facility Retention PILOT Capital Investment (7)
AB MAURI, FEDEX, PFIZER, SOLAR, TURNER HOLDINGS, VALERO and WM BARR / 90% RETENTION PROBABILITY / CATEGORY GRADE – F (40)
The below companies pursued thoughtful for profit motives by leveraging existing facilities with their capital investment avoiding the hefty cost of significant operational disruption of existing facilities, employee and distant relocation costs. These thoughtful for profits motives would still have been served without the benefit of a retention tax abatement for existing jobs and with a tax abatement offered outside of Shelby County equal to the locally offered EDGE retention abatement. For this reason, a retention probability of 90% is applied to the below quantitative analysis without the benefit of a retention tax abatement for existing jobs but assumes a locally extended expansion PILOT abatement for new expansion jobs. When responsible accounting is applied to economic modeling for a retention/expansion existing jobs PILOT, complete and responsible tax revenue accounting starts with EDGE Reported Revenue (ER) less a probability of retention times reported revenue (RP) less remaining workforce upon company departure as a percentage of retention probability (RP) less forgone tax revenue impact for local investment in jobs and resources that directly serve the local community (LI). In the below EDGE Company Retention Profiles, the previously mentioned accounting equation is applied to arrive at an estimated Memphis/Shelby County tax revenue figure for a given company PILOT. The assigned grades are evaluating the Retention PILOT; not the company. See below EDGE Company Retention/Expansion PILOT profiles for this capital investment category:
EDGE Company Retention/Expansion Profiles:
AB Mauri – Grade F: The AB Mauri PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing facility and employee relocation. The EDGE Board reported $2.3M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for AB Mauri: (ER $2.3M) – (RP $2M) – (RW $100k) – (LI $1M) = $800k loss less $540k retention tax abatement results in a $1.3M loss or $160k per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $3.1M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/AB+Mauri+Fleischmann%26%2339%3Bs+%28ABMF%29+
FedEx – Grade F: It must be stated that given the size of FedEx, FedEx used restraint in their use of the retention/expansion PILOT program while also being a strong supporter of a range of local community development endeavors. To that extent, this analysis quantitatively reviews and grades a given company retention/expansion PILOT. The FedEx PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing distant facility and employee relocation. The EDGE Board reported $32M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Fedex: (ER $32M) – (RP $29M) – (RW $875k) – (LI $18M) = $16M loss less $14.5M retention tax abatement results in a $30.5M loss or $2.3M per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $48M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/FedEx
Pfizer – Grade F: The Pfizer PILOT renewed a PILOT from the IDB even after a Pfizer experienced a net job decrease in Shelby County since 2001. This PILOT results in a transfer of wealth from one of the most impoverished centers in the United States in Memphis to the wealthiest center in the world in New York City while providing tax abatements that approach 30 years in Shelby County. The Pfizer PILOT leveraged exclusively existing facilities in their capital improvements avoiding operational disruption and the hefty cost of existing facility and employee relocation. The EDGE Board reported $17M in tax revenue generated. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Pfizer: (ER $17M) – (RP $15M) – (RW $1M) – (LI $6.5M) = $5.5M loss less $5.3M retention tax abatement results in a $10.8M loss or $770k per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $32.5M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/Pfizer+Inc.+
Solae – Grade F: While Solae has direct access to the highest quality water in the world in Memphis, the Solae PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing facility and employee relocation. The EDGE Board reported $19M in tax revenue generated. When modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Solae: (ER $18M) – (RP $16.2M) – (RW $800k) – (LI $6M) = $5M loss less $5M retention tax abatement results in a $10M loss or $900k per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $24M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/Solae%2C+LLC
Turner Holdings – Grade F: The Turner Holdings PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing facility and employee relocation. The EDGE Board reported $1.1M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Turner Holdings: (ER $1.1M) – (RP $1M) – (RW $100k) – (LI $1.5M) = $1.5M loss less $950k retention tax abatement results in a $2.45M loss or $350k per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $2.6M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/Turner+Holdings%2C+L.L.C.
Valero – Grade F: The Valero PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing distant facility and employee relocation. The EDGE Board reported $54M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for Valero: (ER $54M) – (RP $49M) – (RW $2M) – (LI $31M) = $28M loss less $25.5M retention tax abatement results in a $53.5M loss or $3.5M per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $82.5M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/Valero
WM Barr – Grade F: The WM Barr PILOT leveraged exclusively existing facilities in their capital improvements avoiding significant operational disruption and the hefty cost of existing facility and employee relocation. The EDGE Board reported $8.8M in tax revenue generated. When modeling in complete accounting, estimated taxpayer revenue is significantly less. Modeling in EDGE reported revenue using complete accounting, the following taxpayer estimated revenue generated can be derived for WM Barr: (ER $8.8M) – (RP $8M) – (RW $400k) – (LI $1.5M) = -$1.1M loss less $900k retention tax abatement results in a $2M loss or $220k per year Memphis/Shelby County taxpayer loss. Estimated EDGE Revenue Generated overstatement: $10.M
Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/W.M.+Barr+%26+Company%2C+Inc.