Funding Source: $1.7M in EDGE/Depot Funds returned to the taxpayer
SAMPLE
From: Joe B. Kent <jkent@pathtrek.net>
Sent: Wednesday, June 15, 2016 3:17 PM
To: cprichards@fedex.com
Subject: Sense of Urgency
Ms. Richards,
I would like to meet with you in your role as a GMACW Board Member to discuss the local workforce development effort. I am not interested in meeting with GMACW staff at this time. I have been following the GMACW implementation very closely and feel as if I can add value by providing a specific plan and doing the following: 1) help raise money for youth development 2) provide technical assistance and 3) add a sense of urgency to the effort. From here in Memphis and a graduate of the University of Memphis, I have a Bachelors in Business Administration (Finance Major), Masters of Science in Curriculum, Instruction and Technology and hold a Global Career Development Facilitator Certification where I focused my work on Labor Market Information and Supply and Demand Analysis. My LinkedIn Profile is a follows: https://www.linkedin.com/in/jbkent
Having said that, while attempting to consider the job market here in Memphis, I enrolled in MemphisWorks at http://memphisworks.com . Well, MemphisWorks is Not Working as shown in the below email. I read the Terms Agreement and it makes reference to “province” instead of “state”. Since Memphis is here in the United States, I thought that I should bring that to someone’s attention. Secondly, I thought you might find this somewhat interesting, later in the document, it states the following “ These Terms and Conditions are governed by, and to be construed and interpreted in accordance with, the laws of the Province of Ontario and the laws of Canada applicable in that Province. Any action taken in connection with the operation and content of the Site, or these Terms and Conditions, must be brought in a court of competent jurisdiction located in Toronto, Ontario, Canada.
Also below and while using the American Public Data System, I am making a $15,000 in kind contribution to the effort by providing a first pass Memphis Workforce Trends Report. I am tired of seeing my hometown stumble around without a coherent compilation of labor market information 18 months into the project as they grapple with the important topic of workforce and economic development. If you see something that’s not right in the data, please let me know and allow me the opportunity to defend or correct the data. In this way we are at least talking about the data which serves as a way to advance the local effort. At the end of the report, there are 2 Supply and Demand Reports. 1 report is for Job Zone 3 Associates Degrees and above. The other report is for Job Zone 2 or High School Only. Please see below and let me know when we can meet.
Thank you in advance for your consideration and I look forward to hearing back from you.
MemphisWorks Agreement – https://1drv.ms/b/s!AiNXRWm6KZQi3Q34w2R7YK9bZb-9
Memphis Workforce Trend Report – https://1drv.ms/b/s!AiNXRWm6KZQi3RCq4kJ5GrHYyak1
From: Memphisworks [mailto:info@workbay.net] Sent: Tuesday, June 14, 2016 4:25 PM To: jkent@pathtrek.net Subject: Welcome to Memphis Works!
| Hello, jkent! |
| Thank you for your interest in Memphis Works! We are working on building a community website that will make you proud. Right now, we’re still in our development stages, but we want to keep you updated with news related to Memphis Works.
Please stay tuned – we hope to be in touch shortly with updates about the site. Thanks for joining our community! Cheers, Memphis Works |
Currently, a massive public accountability process hole exists that prevents informed budget forecasting and evaluation of economic development incentives through more accurate measurement. A centralized web based fiscal impact tool and note generator would provide a solution for improving budget forecasting and return on investment evaluation regarding economic development incentives.
Additionally, the County Trustee’s office has repeatedly called for a centralized integrated database for all incentives from multiple abating boards in their annual report . This convergent need should be leveraged to develop a central repository for tax incentive fiscal notes and impact analysis. The work could be funded with $1.7M in misused EDGE/Depot funds coming online. There could not be a more relevant, needed, appropriate and course correcting investment when it comes to $1.7M in misused EDGE/Depot funds than a tax incentive fiscal impact tool.
Keep in mind, there was a time in Memphis, prior to Memphis Tomorrow, when local small business could propose an innovative solution to a community problem and local leaders would go to work to bring it to market. Yours truly, in the mid 90s, proposed and erected the first web based Shelby County Assessor’s property database.
That was then. Now the FedEx/Memphis Tomorrow complex is busy ripping off local small business ideas and shipping them off to out of town companies like Burning Glass and Talent Pipeline Management so that the workforce development system can be botched over 5 years. That’s what happened with my connected workforce development solution which is the same thing that Burning Glass out of Boston and the like are bringing to market 5 years late in Memphis after the FedEx/Memphis Tomorrow complex dismissed local small business solutions.
The way the FedEx/Memphis Tomorrow complex rips off small business is not overt. What they do, is they try to starve out small business and once they are starved out, the solution reappears somewhere else. For my part, a local research project was launched at the same time I attempted to get my connected workforce development solution to market. Part of my research was to see if they would rip my solution off and yep the hack complex ripped it off which is why Memphis struggles with small business in a closed elitist SPOONERGATE system.
As a typically broke local small Memphis business, this brings me to my latest solution, which is the “Memphis/Shelby Tax Incentive Fiscal Note / Impact Repository (TIFNI).
The Solution
With the Trustee’s office on public record stating the need for a centralized incentive database and Mayor Harris saying a fiscal note for every abatement is a “great idea !” in a meeting on 10/2/19, the Memphis/Shelby Tax Incentive Fiscal Note / Impact Repository should be a slam dunk. And funding should not be an issue with $1.7M in EDGE/Depot funds coming on line.
Further, it would seem the Epicenter would want to get behind bringing local small business solutions to market to solve community problems. And the UofM Fogleman College of Business, under Dr. Damon Fleming, has all types of small business development work underway and a need for accurate local economic development measurement.
Here are the benefits of Memphis/Shelby TIFNI delivered through web based technology:
The availability of such information stands to curtail excessive incentives while informing optimal public economic development investments and more accurate budget forecasting.
Conclusion
The need for Memphis/Shelby TIFNI has been unaddressed for 8 years. With $1.7M of EDGE/Depot funding coming online and existing local small business solutions proposed to solve the outstanding need, there could not be a better time to get started.
New data intake processes are needed by State of Tennessee officials to accommodate citizens that puke at the mention of Fred Smith, Pitt Hyde and Christine Richards. This dissent at least needs to be formally heard. Governor Lee will fail in his Memphis turnaround efforts if he can’t accept the basic fact that the FedEx/Memphis Tomorrow complex is a national embarrassment. The complex has resulted in the product of SPOONERGATE and implementation ecosystem decline over 20 yrs that accommodates elitists feeding on a community in need. Here are a few evidence snapshots of elitist led ecosystem decline:
But Lee continues to appoint FedEx/Memphis Tomorrow rigged system bureaucrats in for example Christine Richards on the Tennessee Public Charter School Commission. Why such a nightmare decision that is nothing other than more of the status quo?
Richards, formerly Chief Counsel at FedEx, was core to the last design for decline 2014 economic development plan in Memphis and subsequently a key contributor in the botching of the Memphis workforce development system while serving on the first Greater Memphis Alliance for a Competitive Workforce (GMACW) Board. An early warning concern of Richard’s involvement came from the University of Memphis Planning Department in 2015 and cited conflict of interests concerns regarding Richards related to the local economic development need to diversify away from the logistics industry.
The UofM report goes on to articulate plan concerns around a lack of specific timelines, measurable deliverables and GMACW workforce development efforts in 2015. The report was published prior to the new UofM Board of Trustees when the University seems to have been more free to raise concerns regarding the local establishment while exercising communitywide thought leadership.
Here is an email that I sent to Richards regarding deficient workforce development efforts in 2016. The email was dismissed and today, in 2019, deficient workforce development efforts remain with no plan or data to support connected career pathways development efforts. Its a closed elitist system that feels entitled to dismiss taxpayer concerns regarding publicly funded work. And, Fred Smith and Pitt Hyde have been entirely content with Memphis ecosystem decline provided that their FedEx/Memphis Tomorrow machinery can botch ecosystem evolution at will while feeding on a community in need using taxpayer funds. Its been going on for 20 years.
Following the lead of Smith and Hyde, consequently, locally based state officials are invested in elitist decline as well. Its all they know for Memphis. Representative Mark White and Memphis area Tennessee Economic and Community Development Director Gwyn Fisher, routinely entertain meetings with the embarrassing FedEx/Memphis Tomorrow complex but won’t meet with non-establishment organizations. So there is no real help from the state in questioning the elitist monopoly and Memphis ecosystem decline. There are a number of solutions, but White and Fisher are not open to hearing them.
As a result, White and Fisher support an elitist system of decline that rips off small business, uses bogus accounting to justify excessive corporate/real estate incentives while botching the workforce development system over 5 years. The excessive incentive mentality is evident in the data where Memphis has $500M+ in job incentives and Indianapolis has $135M with greater percentage job growth than Memphis. In this way, its not about economic development but elitist bullying and feeding on a community in need that has continued, without critical measurement, under Richard Smith as Chamber Board Chair. And then there is re-elected Mayor Jim Strickland.
Rigged System Furthered
Re-elected Mayor Jim Strickland only knows decline over the last 20yrs. He is unalarmed with business as usual decline under the FedEx/Memphis Tomorrow complex. During Strickland’s first term the workforce development system was botched as excessive corporate/real estate incentives roared for the benefit of the small few. Strickland might as well change the city logo to that of a silver spoon.
Excessive incentives in Memphis have roared over 8 years without any fiscal impact analysis, an alarming unreported fact. Those excessive incentives are a primary reason for a lack of transit funding and neighborhood decline. The EDGE incentive scam was launched soon after the great recession and contains glaring similarities to that Wall Street scam in bogus assumptions used in economic impact studies and projection accounting that underwrites excessive incentives for the benefit of the small few.
Fiscal impact analysis of incentives is fundamental to measuring the effectiveness of economic development efforts and budget forecasting. But fiscal impact analysis does not happen in Memphis regarding some $800M+ in corporate/real estate incentive awards. This is a design for decline. And the former occurs, as control of workforce development efforts circulates back to the where they were originally botched at the Chamber. Its a social construct in Memphis that demands loyalty to ecosystem decline under Fred Smith and Pitt Hyde. All in all, its a closed system that is not good for business and why Memphis hasn’t grown in 20 years with the same rigged system of players directing ecosystem decline.
Conclusion
The only plan in Memphis is a rigged closed system that consists of the same players, no real measurement, legislative or press oversight while feeding on a community in need. A real measurable economic development plan still does not exist after almost 2 years under Richard Smith’s Board leadership at the Chamber. There is no sense of urgency under the FedEx/Memphis Tomorrow entitled spooner complex. Its just a closed social construct that furthers Memphis ecosystem decline.
State solutions to resolve the problem could include an intake process to formally accommodate non-establishment viewpoints but it looks to be more of the same under Lee. Good luck to Governor Lee in listening to the nationally embarrassing FedEx/Memphis Tomorrow complex who has authored Memphis decline over 20 years.
SPOONERGATE is about a closed, silver spoon elitist system that while using taxpayer money has strangely engaged in design for Memphis ecosystem decline. The most notable trait of this process is the lack of course correction amidst failed workforce development implementation and foreign contract awards all while excessive corporate/real estate incentives roar for the benefit of the small few. The rumor is the State is taking a close look at intervention. If this is the case, the State needs to know what they are dealing with in a closed rigged cycle of influence. Rigged doesn’t grow. Fred Smith missed this in his history studies.
Memphis corporate community leadership feels entitled, in a closed system, to rig the system for the same few while expecting to grow. Deficient workforce development efforts, over the last 5 years in Memphis are estimated to have cost Memphis/Shelby taxpayers $1B in wages and $30M in tax revenue. Further, taxpayer funded workforce development under Fred Smith and Pitt Hyde began about five years ago, starting out as a Chamber Chairman’s Circle iniitaive, then going to EDGE and now back to the Chamber.
Interestingly the failed efforts are circulating between the same famillies and inidividuals in a rigged Memphis cycle. First Willie Gregory headed reform efforts under the Chairman’s Circle, then the Greater Memphis Alliance of Competitive Workforce (GMACW) was handed off to EDGE and Jack Moore of the Wilson family after the Canadian contract failed.
Now workforce is making its way back to the Chamber with Richard Smith, Board Chairman and Spence Wilson, Jr. over the Chairman’s Circle. And now, Willie Gregory appears to be positioned to perhaps be the new Chamber Board Chair. Its a rigged system cycle and SPOONERGATE in all of its glory.
Below a list of events that reveal a closed rigged system bent on a lack of course correction and ecosystem decline. After all, it’s what they know under the FedEx/Memphis Tomorrow system. Having worked in communities, across the country, I have never seen anything this deficient and rigged. Its so offensive.
RIGGED SYSTEM AND ECOSYSTEM DECLINE
2015
Chamber Chairman’s Circle initiative in GMACW misses all State of TN LEAP Grant Deadlines
2016
The below events occurred as corporate/real estate incentives roar using EDGE bogus projection accounting.
January – Glen Fenter and GMACW staff, saddled by GMACW Board chaired by Willie Gregory, with unproven Canadian vendor for workforce development work. FedEx and Memphis Tomorrow both represented on Board.
March – State deadlines continue to be missed. I approach newly elected Mayor Jim Strickland with a solution to course correct and get the initiative on track. Nothing happens as Strickland joins GMACW Board.
April 2016 – ACT WorkKeys initiative launched and effectively goes unimplemented based on current data
July – Joined the Greater Memphis Chamber of Commerce and advocated a research based solution for connected, data driven career pathways and workforce development supported with common language development. Solution and local small business dismissed as connected workforce development goes unimplemented.
October – Met with the Hyde Foundation with solution in hand. No course correction.
2017
January- Fenter resigns from GMACW
March – Councilman Edmund Ford, Jr. opens up inquiry on unfilled jobs. I participate and propose a solution. Inquiry shut down without conclusion.
April – EDGE takes over GMACW and only has 3 GMACW Board meetings in 2 years while meeting every month to award excessive corporate/real estate tax abatements while saying workforce development #1 priority.
June – Meet with Jack Moore and nothing happens while raising implementation concerns with Chairman’s Circle Spence Wilson, Jr. Wilson implies I must EARN my right to raise concerns about taxpayer funded work.
June – I was kicked out of Greater Memphis Chamber without cause while having bylaws and annual membership review rights denied. This is a key indicator of the closed rigged Memphis system under the nationally embarrassing FedEx/Memphis Tomorrow complex
August – Let Fred Smith and the #1 local employer know of the problem. Still, no course correction.
2018
January – April – Continued to engage the EDGE Board while attending all meetings without any protest waiting patiently to substantively engage the EDGE Board. No engagement
June – Offended by the lack of service delivery, became publicly combative, as at this point, workforce development efforts are 3 years behind schedule
July – Engage Richard Smith of the Chamber. Solution dismissed and local efforts fall another year behind schedule
Later Summer – Met with bureaucrat Ted Townsend of the U of M. Nothing happens as he is dispatched to chase incentives around town as local workforce development efforts tank under the new FedEx/Memphis Tomorrow U of M Board of Trustees.
Later in 2018 – Smith is cited in the paper touting Talent Pipeline Management, a Washington DC solution, which is the same common language approach that I was advocating . In typical Memphis fashion, local small business dismissed.
2019
January – Legislative EDGE Tasks forces end without any changes to EDGE Board, not questioning excessive incentives or investigating deficient workforce development efforts.
June – Typical of a closed rigged system, Richard Smith, Greater Memphis Chamber Board Chair, publicly shuts me out based on my activist work
July – University of Memphis, The Memphis Economy project, abandons their peer city economic development measurement platform blinding the public from objective measurement
Currently, after almost five years, there is no published employer demand data, no centralized job board, ACT WorkKeys remains unimplemented, no plan and no measurable definition for career readiness. And the rigged cycle heads back to where it all started with Willie Gregory, Spence Wilson and Richard Smith at the Chamber.
Its a closed rigged FedEx/Memphis Tomorrow system that lacks the ability to grow and evolve operating with a design for ecosystem decline. Operates with a sense of entitlement to run the city into the ground while feeding on a Memphis community in need. All of the above occurs without objective public university thought leadership, press or legislative oversight. So pukin offensive…..
The EDGE Scandal results from a lack of fiscal impact analysis regarding some $500M+ in EDGE abatements over 8 years. EDGE has been referencing economic impact analysis to justify excessive corporate/real estate incentives which does not address the fiscal impact of abating taxes. According to the Bureau of Economic Analysis, that houses the Regional Input-Output Modeling System (RIMS) II used by EDGE, the RIMS II system cannot be used to conduct a complete fiscal impact analysis.
But in a rigged elitist Memphis system, this lacking accountability, as a matter of process, is just normal operating procedure. After almost 20 years, local leaders know nothing else under the rigged FedEx/Memphis Tomorrow system. The fact is that a fiscal note should accompany each tax abatement as a matter of process.
Unalarmed are such leaders as Kemp Conrad, Gerre Currie, Martavius Jones, Brandon Morrison, Edmund Ford and Mickell Lowery. All of these leaders have both academic and professional resumes that support competency in business and finance matters. But that expertise is being squandered in serving a Memphis community in need as excessive corporate/real estate incentives roar.
Jones has stated that it takes one full term to learn the job of a City Councilman. But it takes no time to be alarmed at gross fiscal process gaps ! Alarming, is the lack of alarm by local officials fluent in business and financial affairs.
Fiscal Impact
Using economic impact analysis without fiscal impact analysis lays the foundation for excessive corporate/real estate incentives that feed on a Memphis community in need while not serving the business community with adequate public support services. Excessive incentives are not good for business.
Using responsible assumptions, this spreadsheet imposes a fiscal impact analysis on EDGE abatements. The spreadsheet finds almost $300M in excessive job incentives when appropriate fiscal impact analysis is imposed. The major assumptions in the modeling include return on investment criteria individually for existing property and new capital investment property tax abatements.
Additionally, another major assumption concerns the per employee cost of locally funded public services that needs accounting for in a fiscal impact model while supporting the local economy. Arguments for this cost can range from $1,600 to $2,500 per employee to support the free enterprise system. If such costs are not accounted for, employers and the local community will not be adequately serviced resulting in the public’s diminished ability to serve the local economy while attracting new business investment.
Unlike the previous EDGE Scorecard analysis blog, the spreadsheet analysis makes accommodations for expected EDGE arguments and subtracts abated new cap x property taxes out of total project costs. The responsible assumptions used in the analysis end up recouping the entire $515M abated for taxpayers over a 13.5 year weighted average project life.
Before this fiscal impact analysis, it was determined through peer city benchmarking that job incentives were as much as $400M in excess. The spreadsheet can be downloaded for public use and can accommodate varying assumptions in the blue shaded area. But for whatever reason, fundamental fiscal impact of excessive tax abatements was not addressed in City/County EDGE task forces. Wonder why ?
EDGE Coverup
Last year, amidst concerns of EDGE bogus projection accounting, massive corporate/real estate incentives and below average total wage growth, City / Council EDGE task forces were formed. EDGE first originated as a Memphis Tomorrow Fast Forward initiative.
Councilman Berlin Boyd and Commissioner Willie Brooks, both employed by FedEx at the time, chaired the task forces. But there was no real EDGE reform. The EDGE Board was preserved in its current form while excessive incentives and botched workforce development efforts went unaddressed. It was a coverup of sorts resulting in a lack of course correction, a key indicator of a rigged system.
The only outcome was the creation of yet another “convening” economic development body called the Shelby County Regional Economic Alliance. So far, it has been a cheerleading group of sorts where almost 2 years since Richard Smith took over as Board Chair of the Greater Memphis Chamber, there is still no plan or measurable definition for economic development.
In the meantime, the entitled spooner elitists continue to bully and feed on a Memphis community in need with excessive incentives without fiscal justification. In addition, to the excessive abatements, EDGE even misused some $1.7M in Depot funds that should have gone back to the taxpayer. The lack of fiscal impact analysis, as standard operating procedure over 8 years, proves an unchecked, entitled elitist spooner system bullying and feeding on a Memphis community in need. All of this occurs under the nationally embarrassing FedEx/Memphis Tomorrow corporate community leadership complex as a new poverty report shows increases in poverty.
Conclusion
So how to evaluate EDGE ? Well it starts with a fiscal impact analysis. Some local legislators seem to want to load up the evaluation with EDGE over performance. But that wouldn’t be fiscally conservative while not accounting for the business cycle. And how would the botching of the workforce development system and the loss of Electrolux, all under EDGE management, be accounted for ?
The proposed solution of 50% abatement on new cap x, provided current job levels are maintained and a 1% abatement on total wages with EDGE investment and term minimums maintained, right sizes PILOTs.
At any rate, the nationally embarrassing FedEx/Memphis Tomorrow complex, of which EDGE is a part, enjoys the support of lacking public university thought leadership, press and legislative oversight to confront elitist excesses that further irritate community imbalances. This has resulted in systems of decline being culturally engrained into the Memphis community leadership system. Rigging the system is seen as proficiency in evolving the ecosystem. But rigged systems don’t result in competitive economic growth; something Fred Smith must have missed in his history curriculum.
And sadly, ignorant of anything else after 20 years, local leaders only know rigged systems of decline. This leaves educated leaders unalarmed by gross fiscal process gaps further normalizing ecosystem decline while ignorantly viewing the nationally embarrassing FedEx/Memphis Tomorrow complex as visionary.
So, its more of the same in a design for ecosystem decline……
THE CALCULATIONS IN THIS BLOG CHANGED SLIGHTLY FROM ITS ORIGINAL PUBLICATION
The Regional Input-Output Modeling System (RIMS II), used by EDGE and housed at the Bureau of Economic Analysis, lays out clear guidance on its limitations and use in projecting economic impact. But EDGE has not followed its gudiance for the purpose of abating taxes.
This blog will follow RIMS II guidance to recalculate the EDGE Scorecard. To quickly summarize, the blog finds $200M in excessive job PILOT abatements when using RIMS II. This finding in no way results in the elimination of PILOTs but advocates for PILOT reform to address excess. The blog leaves open the question of how much Memphis might have excess abatements in some 9 other abating boards outside of EDGE.
As part of the FedEx/Memphis Tomorrow entitled spooner complex, the RIMS II system implementation has been botched to afford excessive incentives for the small few. Its stunning that the FedEx/Memphis Tomorrow complex botched the workforce development system while awarding excessive incentives for corporate/real estate interests. But at their very core, the spooners in Memphis feel entitled to feed on a community in need, as other communities propel forward under more responsible community leadership. The basic lie and spooner entitlement underwrites the perennial Memphis decline.
RIMS II LITERATURE
To recalculate the EDGE Scorecard, using RIMS II, adjustments to cost and projected revenue must be made. Prior to this recalculation using RIMS II guidance, this blog has been saying that job incentives are $200M+ in excess when benchmarked against other communities. That assertion is effectively revealed in the recalculation of the EDGE Scorecard using RIMS II guidance.
Cost. First this recalculation accepts the use of RIMS II economic multipliers because when fully following RIMS II guidance the use of multipliers makes sense. RIMS II states:
For important decisions, fiscal impact and economic base studies can be used to complement an economic impact study. These studies estimate the costs of local government services needed to support development projects. These costs include any new spending on public infrastructure or any cash incentives to attract new businesses. More sophisticated fiscal impact studies also consider the expected costs of providing more public services, such as education and public safety, resulting from economic growth.
The fiscal benefits of a project—which include increased revenue from taxes, fees, and user charges—are typically subtracted from the costs of public services to summarize the results of the study. If additional tax information is provided, an I-O model can be used to estimate the expected increases in tax revenue from a project. However, an I-O model cannot be used to conduct a complete fiscal impact analysis.
Abating taxes is an important decision. At the same time, RIMS II guidance clearly states that it alone is not suitable for estimating fiscal impact. Or said another way, RIMS II alone is not suitable for estimating the fiscal impact of abating taxes. EDGE has not been following RIMS II guidance to fully estimate the fiscal impact of abating taxes. The above guidance will be used to recalculate the cost of supporting new jobs in the economy in addition to the actual tax abatement. EDGE only calculates abatement costs when considering tax abatements. This results in an incomplete analysis while paving the way for excessive corporate/real estate tax abatements.
Another note from RIMS II guidance provides this example:
To give an example of how intangible benefits may play a role in the decisionmaking process, consider the case where local officials must decide whether to open a new fire station. An economic impact study may show that the impact of the operation of the station will result in only 10 new jobs. Yet if the local government’s main objective is to increase public safety, this estimate of new jobs will not provide all of the information needed to make the decision.
This note eludes to the need to provide an offset calculation for investing in the local community as opposed to awarding excessive tax incentives to corporations that serve global audiences.
Revenue. This RIMS II case study states the RIMS II does not consider potential offsetting re-employment of the labor and capital upon industry departure but can be used if some idea of re-employment is provided. EDGE assumes in their retention PILOT economic impact studies all new revenue from retention abatements, which in effect assumes that if the employer is not retained in Shelby County, that the entire tax base associated with the economic impact of that company dies.
This is an irresponsible and scandalous assumption which results in inflated revenue for retention PILOTs and the EDGE Scorecard. The EDGE Board should have assumed something beyond death of the entire tax base when considering retention abatements. A responsible assumption will be made that adjusts projected revenue downward for the EDGE Scorecard pertaining to retention PILOTs.
EDGE SCORECARD RECALCULATION
This EDGE Scorecard recalculation does the following while using RIMS II guidance:
Cost Recalculation. Unaccounted cost in the Memphis system to support economic development show up in the form of depleted services in transit, education and public safety. To account for these unaccounted cost, per RIMS II fiscal impact note guidance, we assume it costs $1,000 per year in local government expenditures to support each local job. Our methodologies are disclosed at the end of the blog.
95 EDGE Board approved PILOTS were reviewed. The excessively incented FedEx Downtown project was excluded as it was mostly a Downtown Memphis Commission project. To support 40,272 total direct and indirect jobs, per the 95 PILOTs reviewed, across multiple PILOT terms, the additional cost in addition to the EDGE Scorecard abatement cost of $515M results in an additional system cost to support those jobs of $542M. That results in a total revised EDGE Scorecard cost from $515M to $1.06B.
Revenue Recalculation. Based on the RIMS II case study note, for retention PILOTs, we make a responsible assumption, away from death of the entire entity associated tax base, that 50% of the tax base in existing direct and indirect jobs will be retained upon a company departure. This calculation results in a $398M reduction to EDGE Scorecard revenue from $1.336 to $938M. Next existing taxes found in community revenue credit revenue of $44M is subtracted to result in $894M in recalculated EDGE Scorecard revenue.
EDGE Scorecard Net Recalculation. The final recalculation of the EDGE Scorecard results in $894M in revenue and $1.06B in overall community cost to result in a net deficit of $166M. EDGE claims a $821M gain. The difference between the recalculation and the EDGE claim is ($987)M.
At a minimum, EDGE job incentives are $166M in excess when applying RIMS II guidance for a stagnant breakeven state. This would result in right sized incentive amount of $349M down from EDGE’s $515M for a stagnant state. Or if taxpayers were to make at least as much as EDGE at 5%, it would drop the incentive amount by $359M based on this evaluation from $515M to $156M. Both amounts lead to the conclusion, that EDGE incentives are $200M+ excessive.
CONCLUSION
Service gaps due to excessive incentives are detrimental to both the community and local business. Educating the community about these costs will help right size incentives.
Fiscal impact when abating taxes for economic development is a legislative budget and not a economic development committee issue. If local legislators want to add back in EDGE’s claimed portfolio over performance in more fully evaluating EDGE, that’s fine. But considering that over performance is not fiscally conservative by not considering the business cycle.
The proposed 50% abatement on new capx only and 1% on total wages both provided if current job levels are maintained, while maintaining EDGE investment and term minimums, would right size job PILOTs for the future. Additionally, changes need to be made away from incenting abating boards to represent corporate/real estate interests over the taxpayer. This in itself is scandalous.
In the end, Memphis cannot propel forward on a stack of lies as the entitled elitist feed on a community in need without reliable measurement, legislative and press oversight and independent university thought leadership. Without the former, this is an ecosystem design for decline.
METHODOLOGY
Job Support Costs – Total Memphis/Shelby costs in public safety, $30M total for transit and K-12 education were totaled to be $1.05B and divided by 2 resulting in a total public spend of $525M to support jobs in the local economy based on a 50% employed population. The $525M was then divided by 500K employed jobs in the local economy to arrive at a cost $1,050 in cost per job. $1,000 was used in the study.
Revenue Adjustment – Retention PILOTs revenue was adjusted downward based on the assumption that the entire tax base does not die upon a company departure while assuming 50% of the tax base would be retained in the event of a corporate departure. When companies depart, they typically take 30% or less of their workers. Assuming a 50% retained tax base upon a company departure, would assume a 30% negative impact to the remaining tax base upon a company departure.
Governor Lee,
Entitled silver spoon elitism is the root cause for systemic Memphis decline. Just as many of us feel entitled to draw our next breath, the Memphis spooners feel entitled to run their city in the ground while using federal, state and local tax dollars. The Memphis Tomorrow CEO organization, a national embarrassment, is down in every category over almost 20 years as their initiatives feast on taxpayer dollars.
So how can state taxpayers afford to invest in systems of decline? After all the FedEx/Memphis Tomorrow CEO complex has been content with decline for almost 20 years. Local leaders fall in line with Memphis Tomorrow leadership modeling, while lacking the human systems, checks and balances to evolve the ecosystem.
Local leaders in the political establishment, press and university complex are not alarmed at the deficiencies found in GDP, employment, total wage growth and botched systems and corresponding excesses found in tax incentives implementation that point to the entitled spooners feeding on a Memphis community in need. Deficient Memphis Tomorrow CEO membership is arguably more expensive than the natural $161B disaster of Hurricane Katrina, where Memphis trails New Orleans in GDP growth. In this way, community decline has been institutionalized as the resident population is dismissed.
For my part, I have been cursed with having worked in other communities throughout the country and the ability to compile a few data tables. The former curse and landing in Memphis, forced me to ask the question, “What the hell is going on here?” I have never witnessed in other communities such engrained processes of decline. People live in a bubble here, disconnected from critical economic development measurement while competing against Northern Mississippi and Eastern Arkansas in a global economy. I wonder at times if Fred Smith and Pitt Hyde have ever left Memphis.
One has to wonder, what Smith, a history buff, expects to happen in the system when elitism that feeds on a community in need is so systemically apparent? Does he expect data informed dissent to play a role in an American Democracy or does he expect entitled spooner corporate socialism to continue unchecked while wrecking the local Memphis ecosystem. While there are ups and downs with the business cycle, Memphis has declined as a competitive ecosystem over almost 20 years.
My guess is, after almost 20 years of Memphis Tomorrow, Smith expects more corporate socialism that has stifled local GDP growth. workforce development and the emersion of needed small business establishments to power the local economy. Again, its not clear to me that Smith has ever left the City of Memphis except maybe for his legendary trip to Las Vegas to save the day at the Blackjack table.
While there have been several concerning events here in Memphis for me like getting kicked out of the Chamber without cause, seeing the workforce development system botched by the entitled spooners from the top of the ecosystem and watching business leaders systematically deploy bogus projection accounting to justify excessive incentives, the lost records by the Shelby County Schools also caught my eye.
A few years back, I was calling on the Atlanta School System and would witness rather strange occurrences. Soon after that a cheating scandal was uncovered. The Superintendent, Beverly Hall was fired while Atlanta educators faced prosecution. Here in Memphis when the grading scandal broke, there was a big production of an investigation only to conclude without a verdict and lost records. Lost records ! Are you freakin kidding me ? That’s a whole other investigation. But this lack of measurement and verdicts is what underwrites local Memphis decline within a rigged system.
And Smith and Hyde further botched the Memphis workforce development system over five years while dismissing small business solutions, while failed Canadian contracts were awarded. Now business to address the issue after fiver years is slushed out to local non-profits, and multiple out of town players like YouScience, Burning Glass and Talent Pipeline Management. I could have had this matter resolved 5 years ago as a local small business. But that is what corporate socialist do, as a matter of process, is stifle small business and the workforce development system. Its in the data and a design for ecosystem decline.
While there are ups and downs with the business cycle, how can state taxpayers invest in a declining Memphis ecosystem ? Sure the spooner elitist will tell the state what they want to hear and that they will do better. But they really don’t know how to do any differently. They only know systems of decline as modeled from Memphis Tomorrow. Listening exclusively to the same people in Nashville will not help Memphis or the State.
And most of all, entitled spooner elitism and corporate socialism doesn’t work for anyone, to include in the end, the elitst spooners at the top…..