Economic Development Growth Engine (EDGE)
Created in 2011 through a joint resolution of the Memphis City Council and the Shelby County Commission, EDGE is the economic development agency for the City of Memphis and Shelby County Government. EDGE provides and coordinates public resources to drive economic development in Memphis and Shelby County. EDGE leverages the benefits of economic development incentive programs to foster public/private partnerships that create jobs, grow the economy, revitalize neighborhoods, attract investments, spark innovation, and encourage entrepreneurship.
On 1/19/18, the Commercial Appeal reported $1.1B in new revenue generated by EDGE. Closer review of the data on their website at http:// database.growth-engine.org/search-results/pilots/ reveals the following:
- $800 million of the reported $1.1 billion was already existing revenue in the form of retained jobs resulting in only $300 million in new revenue generated; an $800 million reported overstated difference.
- New revenue calculations, are derived from job retention/expansion Payment In Lieu of Taxes (PILOT) analyses. With regard to the retention PILOT component, these analyses do not account for the probability that a company will avoid the hefty relocation cost and stay in Shelby County without a retention PILOT, the tax benefit of a remaining skilled workforce upon a company departure or forgone tax benefits if tax abatements were otherwise invested in jobs to directly support the local community in police, education, workforce and transportation. This lack of complete accounting further depresses the above mentioned $300 million in new revenue generated.
- An alarming trend for PILOT renewals like Pfizer and Technicolor. Alarming because PILOTS are often initially sold based on the resulting tax benefit for taxpayers when the 10-15 year PILOT ends.
Given this review, an Excel tool has been developed for local taxpayers and policymakers to model EDGE revenue and tax impact using more complete accounting methodologies and responsible assumptions. The tool was used to derive the conclusions on the data page. The tool simply asks the user to input the probability that a company will stay in Shelby County and avoid the 3-10x relocation cost over and above the benefit of a PILOT in an alternative location from Shelby County with only the benefit of a expansion and not a retention PILOT in Shelby County.
The following links provide an instructional video and access to the tool:
- Video – Provides tutorial on use of the below Excel tool to inform an honest conversation on EDGE Retention PILOTS that integrates more responsible accounting and assumption methodologies
- Excel Modeling Tool – Tool for community use in understanding a more complete and responsible accounting methodology EDGE Retention PILOTS
Further information is below regarding the retention PILOTS:
- Existing Facilities – 7 of the 19 EDGE Retention PILOTS leveraged existing facilities in their expansions avoiding the hefty cost of existing facilities and employee relocation: Valero, FedEx, Solae, Turner Holdings, WM Barr, Pfizer, AB Mauri
- Existing Consolidation – 1 of 19 EDGE Retention PILOTS was a consolidation from remote locations to Shelby County to an existing facility: Evergreen
- Existing and Additional Facilities – 4 of 19 EDGE Retention PILOTS leveraged existing facilities and expanded into new facilities avoiding the hefty cost of existing facilities and employee relocation: Nike, Bryce, Cummins and Hollywood Feed
- Facility Relocation – 2 of 19 EDGE Retention PILOTS expanded and relocated within Shelby County avoiding the hefty cost of employee and distant relocation to East Memphis Commercial Properties: Sedgwick and T&B
- New and Local Consolidation – 2 of 19 EDGE Retention PILOTS built new facilities and consolidated employees into Shelby County from Arkansas: TAG and Coca-Cola
- New and Existing – 1 of 19 EDGE Retention PILOTS leveraged existing facility and built a new facility avoiding the hefty cost of existing facility and employee relocation: International Paper
- New Facility – 2 of 19 EDGE Retention PILOTS built new facilities in Shelby County avoiding the hefty cost of employee and distant relocation: Wright and ServiceMaster