New and Existing Facility Capital Investment (1)

INTERNATIONAL PAPER / 50% RETENTION PROBABILITY / CATEGORY GRADE – F (60)

The below company pursued thoughtful for profit motives by leveraging existing facilities and building an additional new facility with their capital investment avoiding the hefty cost of significant HQ operational disruption, employee and distant relocation costs. These thoughtful for profit 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 50% is applied to the below quantitative analysis without the benefit of a tax abatement for existing jobs but assumes a locally extended expansion PILOT abatement for new jobs. When responsible accounting is applied to economic modeling for a retention 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 PILOT profiles for this capital investment category:

EDGE Company Retention/Expansion Profile:

International Paper – Grade F: International Paper also has a sustained, resourceful and strategic Memphis/Shelby County community development program focused on a variety of local needs. The International Paper retention/expansion PILOT leveraged an existing facility and built a new facility avoiding the hefty cost of existing facility and employee relocation. The EDGE Board reported $226M 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 International Paper: (ER $226M) – (RP $113M) – (RW $48.5M) – (LI $69M) = $4.5M revenue loss less $54M retention tax abatement results in a $59.5M loss or $4M per year Memphis/Shelby County taxpayer loss. Estimated EDGE Overstated Revenue Generated: $230.5M

Raw Data Source (absent above calculations): http://database.growth-engine.org/pilots/International+Paper