for economic development
By Joe B. Kent – Guest Blogger
Richard Smith, Greater Memphis Chamber Board Chairman, continued his activist economic development reform efforts by calling for, once again, the overdue restructuring of the Economic Development Growth Engine (EDGE). Overdue because current EDGE Board members have been serving for more than seven years enabled by a poorly written Joint City – County ordinance which did not term out Mayor appointed board members.
EDGE Board approved efforts have contributed to below municipal peer-average total wage growth and excessive tax incentives for the benefit of local interests. These excessive local company tax incentives to retain company operations (retention PILOTs) in Shelby County were unfortunately justified with incomplete accounting and overstated EDGE Scorecard “Total New Tax Revenue Generated” amounts.
EDGE has overstated
Through incomplete bogus accounting, EDGE has overstated “Total New Tax Revenue Generated” by an estimated $800-900M at an estimated direct taxpayer loss of $250M+. This tax revenue loss undermines true economic development efforts and support for small business in safer/paved streets, better workforce and public transit.
Simply stated, its past time for the current EDGE Board to go based on the above results. It’s just not healthy to have tax abating board members with unlimited terms.
Restructured EDGE Board
What might a restructured EDGE Board look like? That is an EDGE Board that will serve the entire community and not just a small few. Such a board would need to operate under a more comprehensive definition of economic development to serve the entire community as opposed to serving largely corporate and real estate interests.
Recently, in an effort to ascertain authentic public feedback on local economic development efforts, an unscientific survey was conducted by the social media group Memphis Raise Your Expectations. A majority of survey respondents defined economic development as “A community policy intervention endeavor with aims of improving the economic and social well-being of people”.
Respondents further ranked the percentage importance of the Amazon Road Map categories contained in the economic development policy pronouncement of the University of Memphis. The percentage importance survey results were as follows: Career Ready Workforce-21%, Public Transit – 19%, Quality University-17%, Quality of Life – 17%, Efficient Air Travel – 14% and Tax Incentives-12%.
Given the above adopted definition of economic development and Amazon Road Map categories, a diverse nine-member EDGE Board would consist of the following representated seats: 1) K-14 Career Ready, 2) Public Transit, 3) University, 4) Quality of Life, 5) Airport, 6) Small Business, 7) Small Business, 8) Real Estate and 9) Corporation.
This restructuring would insure advocacy for a balanced and comprehensive approach to local economic development that would serve the entire community using a “Just Follow the Amazon Road Map” mentality.
Chamber Report and Conclusion
Based on extensive research, press accounts and the most recent County Commission economic development committee public hearing featuring a Greater Memphis Chamber of Commerce report, it’s conclusive that excessive time and resources have been spent targeting local taxpayer funded wealth transfers in the form of tax incentives to existing corporations and real estate interests.
The former activity has been prioritized over more growth-oriented economic development activities like shovel ready site preparedness and customer friendly process design backed with targeted incentives. To that extent and based on research, preliminary Chamber report and public testimony the following is recommended:
- Appoint new EDGE board members with representation that would adopt a balanced “Just Follow the Amazon Road Map” approach to economic development with management authority over the EDGE Chief Executive Officer
- Streamline processes to accommodate one-stop shop for Shelby County economic development services while protecting client anonymity and eliminating application fees
- Adjust and target incentive amounts for desired industries that have been shown to decrease income inequality like advanced manufacturing for external recruitment while lowering incentives for warehouse distribution. In a recent Economic Institute study, warehouse distribution has been shown not to have the economic impact as reflected in local economic modeling.
- Economic modeling training for all local legislators to support effective quarterly oversight practice while establishing legislative subject matter experts
- Properly and completely account for “Total New Tax Revenue Generated” in EDGE economic modeling
- End retention and residential PILOTs while preserving PILOTs for large local expansions and external recruitment
The implementation of the above recommendations while leveraging Shelby County assets should reset efforts to result in a true economic development growth engine.
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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