Vitality displaces stagnancy
By Joe B. Kent // Guest Blogger
VITALITY DISPLACES STAGNANCY
Vitality displaces stagnancy. And vital systems in an investigative press and legislative oversight that check local economic and workforce development efforts are not working in Memphis and Shelby County. In fact, Commissioner Terry Roland referenced a need for a more investigative press in County Commission Budget Committee session on Wednesday June 27, 2018.
It’s known in local leadership circles but not press reported that new unneeded tax incentive programs for inner city real estate development are accelerating as true market demand increases which is the opposite of what should be occurring. Increased demand was just reported by The Memphis Flyer. It’s also known in local leadership circles but not press reported that over the last seven years, the Economic Development Growth Engine (EDGE) has systematically justified large corporate retention tax abatements which also benefit real estate investors using a bogus accounting model without adequate local legislative oversight. And it’s also widely known in local leadership circles but not press reported that excessive tax abatements for real estate development sacrifice true economic development that benefits all in safer/paved streets, a more prepared workforce and better public transit. Economic development is routinely defined as process that a community undertakes to improve the well-being of its people which real estate development alone fails to accomplish.
With proven degreed experience throughout the country in local economic and workforce development efforts, for over year now, I have been going on public record as a taxpayer activist in Memphis, TN. I have gone on record through public comment and continue to do so with local taxpayer funded non-profit boards and legislative bodies regarding the current state of Memphis economic and workforce development efforts.
Thus far, my findings are that the local press does not adequately call into question the progress of local economic and workforce development efforts and local legislative oversight is inadequate. For example, the Joint Council/Commission EDGE committee announced on March 1, 2018 finally after seven years has only met once since being established. This lack of meetings has yet to be questioned by the local press which points to a lack of institutional vitality as unneeded tax abatements accelerate and true economic development efforts suffer.
Instead of leading and crafting economic development policy through the work of public hearing, it seems legislative leaders are waiting to be enlightened by the Memphis corporate community leadership (MCCL) complex in Memphis Tomorrow, Economic Development Growth Engine (EDGE) and Greater Memphis Chamber. An MCCL complex that seems to mistake real estate development for economic development. Legislative leaders, through public hearing, are uniquely equipped to call on professional leaders from the education, corporate, small business and government sectors to craft, curate and lead local economic development policy efforts as opposed to relying exclusively on the MCCL complex.
Just about 10 days ago I attended the EDGE subsidiaries’ series of quarterly meetings as a professional activist promoting local economic development reform. Meetings included but were not limited to the Greater Memphis Alliance for Competitive Workforce (GMACW), an EDGE subsidiary and full EDGE Board meeting. The below sections address press coverage of the meetings followed by my personal experience as a taxpayer activist at the meetings.
Local Press Coverage of EDGE Meetings
Per Terry Roland’s committee remarks regarding “selective” local press coverage, coverage of the EDGE meetings varied widely. Press outlets chose not to cover the GMACW meeting and only covered the EDGE Board meeting. The reporting from that meeting varied widely between news organizations. The Commercial Appeal provided the most balanced reporting covering public dissent across multiple EDGE projects. The Memphis Business Journal only covered the Parkside TIF project and Memphis Daily News covered all projects except for Hollywood Feed without referencing any public dissent. The following sections describe my experience as a taxpayer activist at the meetings.
Greater Memphis Alliance for Competitive Workforce (GMACW) – June 20, 2018
Given the importance of local workforce development, one would think this to be an active Board. Think again. The GMACW Board managed to have only one public 15-minute Board meeting for the entire 2017-18 year. Based on that minimalist result, I mocked the result of one 15-minute public board meeting in the 2017-18 fiscal year to address the important local priority of workforce development.
Further based on a report on the EDGE website after three years, GMACWs chosen MemphisWorks career navigation platform for students and adult learners had only 8,588 participants. These numbers should look more like 75,000 enrolled participants. This 75,000 participant estimate is based on my professional experience in the career and workforce development space throughout the country and what typically would be achieved in a city the size of Memphis over a three-year term.
Increased participant results translate into filled jobs and benefits to the tax base. Result deficiencies translate into shortfalls in this case of approximately $10-15M in recurring annual Memphis/Shelby tax revenue shortfalls. To learn more, see MCCL Measured analysis.
EDGE Board Meeting – June 20, 2018
The EDGE Board who like the United States Supreme Court appears to have lifetime terms with most board members serving for as long as seven years, took up a variety of controversial items. The items include new residential payment-in-lieu of taxes (PILOT) and a second amended increased PILOT abatement for Hollywood Feed, a locally based pet store chain.
In this meeting, as a professional activist, I objected to a list of items while asking for the resignation of EDGE Board members that had served more than four years. Additionally, I proposed that the excessive residential PILOTs in Broad and Thrive projects be reduced so that the abatement does not exceed projected tax revenue as per EDGE project summaries which would have saved taxpayers approximately $9M while still providing a $9M abatement to local developers.
With this compromised abatement, local developers would have been the beneficiary of $9M more in abated taxes here in Shelby County than in any other county in the State of Tennessee. This is because residential abatements are disallowed everywhere in the State except for Shelby County. The proposal for decreased abatements was not even discussed by the EDGE Board which then voted to approve $18M in excessive residential tax abatements when compared to the rest of the State of Tennessee while ignoring my proposed $9M compromise abatement.
Next, I objected to the second increase in the Hollywood Feed PILOT doubling the abatement by $650K. The reason for the objection is that locally based Hollywood Feed with 70% store location growth over the last two years does not need an additional $650K in assistance from local taxpayers. With growth like that, the thriving Hollywood Feed should be open to surrendering their current PILOT abatement in full. During the Hollywood Feed presentation, a lady audience member new to EDGE meetings looked at me with her eyes wide open and said, “They are not supposed to be giving money to thriving businesses are they?” And I said, “They are certainly not supposed to be increasing the already existing abatement on two occasions !!”
But during deliberations on the increased PILOT, our trusted EDGE Board congratulated Hollywood Feed on their growth and in a split vote unnecessarily increased the existing Hollywood Feed abatement a second time by $650K using local taxpayer funds.
Another item that was taken up at the EDGE Board meeting was the Parkside Tax incremental Financing (TIF) approval. Others besides me objected to this project based on disruption to the neighborhood and park surroundings. In total, in one meeting, the trusted EDGE Board appears to have unnecessarily abated a minimum of $10M in local taxpayer funds. The full transcript of my public comment remarks can be found here
The Memphis ecosystem needs institutional checks and balances in local legislative oversight and press to better function to serve local taxpayers in economic and workforce development efforts. This increased institutional vitality will displace stagnancy while helping insure needed progress in local economic and workforce development efforts that reside in the Memphis corporate community leadership non-profit complex. Increased vitality drives economic growth which results in a better more thriving Memphis for all.
Joe B. Kent
Mr. Joe B. Kent has worked throughout the country on workforce and economic development projects and is a reform activist in Memphis. Joe B. has a BBA in Finance, Masters in Instructional Technology and is a certified Global Career Development Facilitator with an emphasis on labor market information.
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