Dear Dr. David Rudd,

As The University of Memphis (U of M) pursues Carnegie Research 1  status, it is disappointing to see the U of M Memphis Economy project abandon its 15 peer city economic development research parameters. Such a platform could have provided the Memphis community with an objective and authoritative economic development measurement tool to support community evolution.

What you have done at the U of M in effect, through the abandonment of your research parameters, is removed the local economic development establishment’s peer competitors from the football field, while setting the score back to zero in the 4^th quarter. As you know, your former measurement platform smartly identified 15 peer competitors like Little Rock, Nashville, Indianapolis, St Louis and etc. This platform provided the community with a means of comparing economic growth against peer cities which goes to measure the effectiveness of economic policy and incentives.

The removal of the goal posts works well for your partner in EDGE who has approved some $200M in excessive corporate/real estate abatements for the benefit of the small few while at the same time falling significantly behind their peer competitors in economic development performance. But in typical rigged system fashion, we as a community now have REMOVED goal posts, which unfortunately, culturally sits well locally with missing records and mistaken data within a decline by design framework.

All too often, through a lack of institutional vitality, Memphians are robbed of real facts and news that confronts the status quo of a  rigged system that occurs through deficient corporate community leadership. It seems, always in close proximity to you and others, at the board level, are company representatives from the highly deficient and embarrassing FedEx/Memphis Tomorrow complex. It’s a complex that is down in all categories over 20 years while using Federal, State and Local tax dollars.

Recently in a Mayor Strickland Weekly Update, Strickland attempted to make the case for momentum while disconnecting the community from reality when comparing Memphis to 6 cities. Upon an independent review of the BLS data, its a failed case. Houston showed some weakness, explained through a slow down in the energy sector but still had greater percentage total wage growth than Memphis. Unfortunately, if elected officials and public institutions like the U of M choose to drink the Kool-Aid of a hack FedEx/Memphis Tomorrow complex, it does not bode well for the Memphis ecosystem. Its a complex that has managed to accomplish the following as confirmed by data without an explainable external event:

1. Botched Workforce Development System
2. Stifled Small Business Sector
3. Deficient Total Wage Production
4. No Proposed Funding Solution to Support Adequate Public Transit
5. Excessive Corporate/Real Estate PILOTs for the Benefit of the Small Few
6. Depleted Tax Revenues Required to Attract Economic Investment
7. No Completed Plan or Defined Measurement for Economic Development

We Bought In Too….

It was never a plan of mine to send you an open letter or to publicly confront FedEx/Memphis Tomorrow. This is because I and other community “outcasts” from Memphis Raise Your Expectations (MRYE) believed in the transformational promise of a U of M with their own Board of Trustees. It’s a U of M that came with promises of investigative journalism partnerships through the hire of Marc Perrusquia and transformational economic development work through Ted Townsend. And, we also have the annual Poverty report issued by Dr. Elena Delavega and journalist Otis L. Sanford on staff at the U of M.

We, the “outcasts” believed and bought in to the promise of a transformational U of M. We did this while conducting surveys around and advocating for, in legislative chambers, the brilliantly written Dr. John Gnuschke’s , Amazon Road Map policy pronouncement . But unfortunately, we only saw the U of M in legislative chambers when they were lobbying for local taxpayer funding involving their pet U of M projects and not for community economic transformation.

All of which brings us to where we are today. We in Memphis have no completed plan or measurable definition for economic development as excessive corporate/real estate tax incentives roar while being justified with bogus EDGE projection accounting. Many of the corporate recipients of excessive incentives sit on your board.

The former occurs as true economic drivers in workforce and small business development have been botched over 8 years while funding solutions for public transit are nonexistent. Given these realities, as a result, total wage growth lags the Memphis/Shelby peer growth average and needed local government revenues required to attract economic development are depleted. Depleted and deficient local tax revenue growth since 2010 approaches $500M as a result of failed FedEx/Memphis Tomorrow economic development efforts.

The momentum we have in Memphis concerns subsidized corporate/real estate development for the benefit of the small few and not community economic development.  To that extent, if you are listening exclusively to the FedEx/Memphis Tomorrow complex, the U of M is robbing the community of needed growth vitality and will not be a transformational force; but instead just a cog in the wheel of a rigged system that has stifled economic evolution for the last 20 years.

So, congrats on falling in line with the cultural norm of missing records, moving goal posts, mistaken data and now totally removing the goal posts with the abandonment of a peer city economic measurement platform.

It all comes with an incestuous partnership, which I questioned but overlooked early on between EDGE and The U of M Memphis Economy project. An incestuous partnership, that is just typical of a rigged system within a FedEx/Memphis Tomorrow authored decline by design framework.

In the end, if there is not needed institutional vitality to check the corporate socialists, they will run themselves out of town, blaming public institutions like yourself for an inferior Memphis product. And the U of M, who is going nowhere, will be holding the bag. Better speak up U of M….

PS. Oh, Good luck with your Carnegie R1 designation approval. And tell Richard Smith regarding his concerns for credible measurement, the U of M with the support of the FedEx/Memphis Tomorrow complex just completely mangled objective measurement….

Sincerely,

Joe B. Kent

MCCLM and MRYE

What might an independently active area University do to propel economic development? Well, they might compare total wage growth to peer cities while evaluating economic policy incentives. Or, they might advocate for a research based and measurable definition of economic development. Or, they might benchmark local taxpayer funded incentives against another Tennessee city to inform right sizing tax incentives. Or, they might advocate in legislative chambers for their thoughtful policy pronouncements that dampen the importance of incentives for optimal economic and connected workforce development policy for all while promoting local small business.

And then again, an independent University of Memphis (U of M) might deploy their investigative journalism unit to expand on bogus projection accounting used to justify excessive corporate/real estate incentives for the benefit of the small few. But unfortunately, that is not what we have with the U of M. The U of M is merely an extension of the FedEx/Memphis Tomorrow devolutionary community leadership complex through their corporate controlled Board of Trustees.

Dr. David Rudd said he reports to his FedEx/Memphis Tomorrow complex Board of Trustees. That’s the problem. Everyone in Memphis seems to report to the FedEx/Memphis Tomorrow complex hacks and its not working ! The former State Board framework that affords the U of M more independence in local research while allowing for the questioning of Memphis power centers, would be far better for the community.

Worst and Best PILOTs

Given this institutional gap and lack of check in the Memphis ecosystem, this blog reviews corporate/real estate incentives. The following tables rank the worst and best PILOTs based on a benchmarking standard against Nashville. The discussion on economic development incentives has been wrongly framed by the local press around all or none as opposed to questioning excessiveness. Excessive in the below table is determined by the benchmarking contained in this blog and the application of a formula that would right size PILOTs based on the benchmarking.

The proposed PILOT formula applied is 50% of property taxes abated on new capital investment when current jobs levels are maintained and 1% for total wages for new jobs only while maintaining EDGE capital investment and term requirements. The amount in the “Revised Total PILOT” applies the above formula which in effect makes PILOTs more than twice the actual amount awarded on a per job basis than Nashville and still more than Nashville when Nashville property tax rates are converted to higher Memphis/Shelby tax rates.

Then the “Revised Total PILOT” amount is subtracted from the actual EDGE “Abate” award to arrive at the excess “Difference” amount and “Excess” percentage difference. When this model is applied, all 91 approved EDGE PILOTs are still awarded at a total of $309M down from $529M which quantifies some $220M in excessive incentives. It should be clear for readers of this blog that an end to all tax incentives is NOT being advocated here, but what is being advocated is lower more responsible incentives overall.

TOP 20 WORST PILOTS IN EXCESS AMOUNT TERMS

TOP 20 WORST PILOTS IN PERCENTAGE TERMS

BEST PILOTS IN AMOUNT TERMS (Indigo Ag does not include DMC Parking Incentive)

BEST PILOTS IN PERCENTAGE TERMS (Indigo Ag does not include DMC Parking Incentive)

Hats off to the Memphis Business Journal for teeing up the tax incentive discussion. The MBJ, arguably with the least political capital to do so, based on their target audience, more often than any other media outlet raises questions about excessive corporate/real estate tax incentives as advocated for by the FedEx / Memphis Tomorrow complex. The MBJ gets that elitist corporate socialism for the benefit of the small few is anti-business. To that extent, the need for Hack Reform is paramount !

But then again and unfortunately, the MBJ article seems to frame the discussion around an all or none incentive debate. Without question, the use of economic incentives are required in the competitive economic development space. But the questions are, 1) Who is really charged to lead economic development efforts; local government or business development organizations like the Greater Memphis Chamber? 2) Are Memphis/Shelby economic incentives excessive?, 3) Why 75% abatement all the time? and finally 4) Are there perverse drivers in place like fee revenue that contribute to excessive incentives that lead abating authorities to represent corporate/real estate interests over the taxpayer?

And as far as Richard Smith, mentioned in the MBJ piece, he has been in an impossible position. He is charged with optimizing economic development policy while inheriting the elitist economic policy pronouncements of the culturally engrained FedEx/Memphis Tomorrow corporate socialists leadership complex that have not worked. Smith has tried to get movement on economic development reforms only to be undercut by the FedEx/Memphis Tomorrow complex.

And from the article, its true that economic incentives are required for the FedEx Downtown expansion but not $32M in incentives. But Smith is not an activist or an economist, but a FedEx corporate leader charged with pursuing the maximum available incentives just like his Chamber Board Vice Chair in Willie Gregory of Nike did a few years back with a $57M abatement that transferred wealth from one of the most impoverished areas of the country in Memphis to one of the least impoverished in Portland, Oregon.

This excessive wealth transfer systematically occurs at the same time Nike’s social justice campaign proceeds. Again, its an impossible position for Smith to have the objectivity to chart optimal economic development policy while being hampered by the FedEx/Memphis Tomorrow corporate socialists. The very corporate socialists who are down in all of their community and economic development categories over 20 years while their initiatives feast upon your Federal, State and Local tax dollars.

So, moving forward lets answer the questions posed above and propose solutions.

Who Should Lead Economic Development?

Since taxpayers fund economic development efforts, local government should define, measure and lead economic development efforts with input from first the University community and secondarily from the business, education and public at large communities. But, good luck on getting the University of Memphis and Robot Rudd to show up and allow his subject matter experts to present based on objective research findings.

Over time, local government has unfortunately allowed the FedEx / Memphis Tomorrow complex to botch the workforce development system while allowing excessive corporate/real estate incentives for the benefit of the small few to roar as small business vitality has plummeted. This is a corporate socialist design for decline and has cost Memphis/Shelby taxpayers some $250M in tax revenue shortfalls since 2010 while presently recurring at $50M per year.

Are Memphis/Shelby Incentives Excessive?

Memphis/Shelby tax incentives are excessive while having been justified with hack bogus projection accounting over 8 years while in many cases abating taxes against existing property. The below charts show per job total incentives for Memphis vs Nashville for retained and new jobs benchmarked against Nashville incentives. The chart on the left shows actual abatement amounts and the chart on the right converts the Nashville abatement amount to higher Memphis/Shelby property taxes.

The proposed solution for right sizing job tax incentives is to maintain EDGE and DMC term and capital investment minimums with a 50% abatement for new capital investment down from 75% while not abating existing property taxes. Further, in order to qualify for capital investment abatements, current employment levels must be maintained for the abatement term while 1% of total wages for new jobs would be abated in addition to the capital investment abatement.

Applying this formula against approved EDGE abatements since 2011 would have reduced total job tax abatements by $220M and would have still been equal to Nashville per job retention abatements and 20% more than Nashville for new jobs when Nashville abatement amounts are converted to a higher Memphis tax rate.

Under this arrangement, to give a few specific examples, the FedEx Downtown total project abatement would have totaled $9.2M down from $32M and Auto Zone would have totaled $8.9M down from $11.3M. The FedEx proposed abatement calculation assumes $20M in real property investment and $13M in personal property over a 15 year term. See below chart to see the impact of the proposed incentive solution when benchmarked against Nashville.

75% Abatements and Perverse Drivers

Fee revenue for abating boards creates perverted drivers that in effect have abating boards representing corporate/real estate interests over the taxpayer. This results in creating a perverse market condition and 75% abatements for all while maximizing fee revenue with higher abatement awards . Its a design for decline authored by the FedEx/Memphis Tomorrow corporate community leadership complex.

Fee revenue should go to local government with abating boards funded through annual appropriation. Its unfortunate that this perversion was not addressed in the sham EDGE Council / Commission review committees both chaired by FedEx employees. And its also unfortunate that the review of some 9 other abating boards has yet to be scheduled by the County Commission as required by their own resolution.

Conclusion

Local government should lead economic development efforts and listen to taxpayers. Listening to economic development subject matter experts and taxpayers is the best possible economic development strategy available. Such a strategy, would mark a departure away from a closed economic system and the hack elitist corporate socialism of the FedEx/Memphis Tomorrow complex while engaging in Hack Reform.

And then again, there is $250M in lost community investments presently accelerating and recurring at $50M in Memphis/Shelby tax revenue shortfalls. Really, how does a Memphis community in need, left behind in the global economy, recover from those shortfalls ???

An open thoughtful debate regarding economic development policy has been needed for sometime in Memphis where the University of Memphis could be a pivotal voice. But the University of Memphis, under Robot Rudd, has been a no show on the economic development policy front, seemingly with Rudd programmed by the hacks of the FedEx/Memphis Tomorrow complex.

Take for example The Memphis Economy of the University of Memphis partnership with the Economic Development Growth Engine (EDGE). What’s that all about? If anything, such an incestuous partnership compromises the University’s ability to be an independent voice on economic development matters with respect to excessive tax incentives for corporate/real estate interests. The former excessive incentives have been a long term local mainstay all while a measurable definition or plan for economic development remain outstanding.

As of late, the only time that one sees University of Memphis representation advocate or present in local legislative chambers is when they are looking for a legislative appropriation or for TIF approval. But, the U of M does have all of the politically correct designates in Ted Townsend on economic development, John Gnuschke at The Memphis Economy, Elena Delevaga and her annual poverty report and  both Marc Perrusquia in an investigative reporting / public services unit and Otis L Sanford on staff while working with the establishment funded Daily Memphian.

All sounds great right? But, they all seemed tamped down, under Robot Rudd, by the hacks of the FedEx/Memphis Tomorrow complex. None of them regularly advocate on the record for transformational economic development policy change while questioning local power centers. And real power is not gonna be questioned in the Daily Memphian. Just looks to be more pageantry than anything else.

Gnuschke, wrote a brilliant economic policy pronouncement almost two years ago in The Amazon Road Map but no one from the U of M has advocated for it on the record as a way to jump start economic development with specific reforms. The local “outcasts” in MCCL Measured and MRYE got behind the Amazon Road Map, conducted surveys and advocated for the Road Map on the record, all while Robot Rudd and the U of M sat back with the hacks and watched from a safe distance. And so, no one talks about The Amazon Road Map.

If the U of M were going to advocate for economic development transformation, they just missed a stellar opportunity as the Shelby County Commission struggled through a challenging budget season. Its clear that property tax rates were excessively decreased in previous years, while botched workforce development efforts and excessive corporate/real estate incentives justified with bogus projection accounting have taken a  toll on the County budget. And, its also true that real economic development needs such as adequate public transit are going unmet. But effectively silent on such matters was, you guessed it,  the U of M.

Conclusion

The hacks seemed to have stifled subject matter expertise and yet another needed policy voice in community and economic development matters. Such action, only robs the Memphis community of needed vitality to grow, all while rigging the system for stagnation and perhaps further decline. Its just more of the same……

Complete Tennessee was never needed anyway as featured in the Daily Memphian. Locally, Complete Tennessee was redundant to what the Greater Memphis Alliance for Competitive Workforce (GMACW) was to do but wasn’t doing in connecting local workforce development efforts. GMACW was founded out of the FedEx/Memphis Tomorrow and Chamber Chairman’s circle complex with FedEx originally as GMACW’s chief private sponsor. But, in practice, connecting local workforce development efforts was never the chief economic development priority as excessive PILOTs have been and continue to be.

After all, with workforce the stated #1 priority, the EDGE/GMACW Board has failed to hold a public board meeting in the last year as they have met every month to award PILOTs. All the while local small local business solutions have been systematically locally blocked within a closed economic system so Canadian contracts could be protected that didn’t work or so that a billionaire out of Nashville in Orrin Ingram, who sits on the SCORE Board, could have plenty of time to get his new Youscience venture off the ground. In the meantime, 100,000 students and a Memphis community in need have gone without connected workforce development services for a period of 4 years.

And even if Complete Tennessee were needed, local Complete Tennessee Board members in Barbara Hyde and Carolyn Hardy didn’t take up the 2017 Complete Tennessee findings by publicly advocating for a sense of urgency with interventions or solutions on the matter. There is still no published employer demand quantitative data, articulation of career pathways or connected research based career pathways implementation plan for Memphis. Related to the Memphis region, the Complete Tennessee 2017 study states:

Institutions voiced concerns about understanding the region’s labor market priorities. Inversely, local industry expressed frustrations with the timeliness of student completion, often desiring micro-credential programs as a way to meet pressing needs for both employers and low-income citizens. Additionally, participants stressed the importance of clear career pathways for students that align with regional workforce demands.

In the meantime, as I advocated for a research based solution as a Greater Memphis Chamber member, with my local small business, it was blocked by the Chamber of which Carolyn Hardy was Board Chairman at the time in 2017. The Chamber kicked me out without written cause while not providing me with a copy of the Chamber bylaws or my membership rights as 100,000 students and a community in need went without connected services. Now, that is a closed economic system that shuts out local small business and community in need with employer connected education/workforce development services.

At the same time, employment severely lags the peer average costing taxpayers millions. It was never about the Memphis/Shelby taxpayer, a community in need or supporting locally owned small business. It was always about Canadian contract awards or an order for SCORE Board member, billionaire Orrin Ingram, while local connected workforce development services were being botched from the top of the Memphis ecosystem as the same hacks obstruct Memphis growth.