by Joe B. Kent, Special to The New Tri-State Defender
The local Memphis establishment routinely telegraphs a closed rigged economic development system. The establishment consists of local government, economic development organizations and traditional press. It is a system that seemingly culturally operates without vital checks and balances that would ordinarily accommodate course correction as needed.
Evidence of the rigged system can be found in the local economic development reform group charged with evaluating local economic development organizations and efforts. The current group consists of The City of Memphis, Memphis Tomorrow, Greater Memphis Chamber, Epicenter Memphis and The Economic Development Growth Engine (EDGE).
Flawed closed design
Even though the group design has yet to be questioned by the local press, it should raise questions. After all, does it make sense for economic developers to evaluate themselves? And further, group members that represent corporate / real estate sectors make up the group majority. The problem with this group is that it is for the most part the same group that brought the City its last economic development plan and subsequent sluggish economic development outcomes. In this way, the establishment did not take steps to course correct by changing the players in the economic development planning process. They just insanely continued with more of the same….
Compromised local economic development outcomes consist of a focus on wealth transfers as opposed to wealth creation and capacity building that are most common with economic development efforts. The wealth transfer has been made possible by an excessive payment-in-lieu of taxes (PILOT) strategy that has locally transferred taxpayer dollars to corporations and real estate investors. This strategy has been estimated to cost taxpayers $70M in recurring tax revenue shortfalls which contributes to unsafe / unpaved streets, unskilled workforce and inadequate public transit.
Ideally, given the outcomes of past efforts, local leadership could have course corrected and redesigned their economic development planning process to not be dominated by the same interests. Since economic development is a taxpayer funded policy intervention, one approach could have consisted of a City of Memphis and Shelby County Government led effort facilitated by The Memphis Economy of the University of Memphis using their policy pronouncement found in their Amazon Road Map publication.
Unlike the current closed planning process, this process would have been more open while calling for public on the record testimony from the community and stakeholders like the Greater Memphis Chamber of Commerce. Through this process, the entire community would have been heard and represented by publicly elected officials. This lack of public process is a missed opportunity in local economic development reform efforts and instead results in more of the same…..
Legislative and press enabled
It’s rather concerning that both mayors have not publicly called for EDGE Board restructuring and reform given that most board members have served for seven years. This executive action would surely garner press coverage and incite legislative action around economic development reform.
On the other hand, The City Council and County Commission did call for economic development reform on March 1, 2018 by setting up the Joint Council/Commission committee to reform EDGE. Unfortunately, the Joint committee, which would have been an excellent opportunity for public involvement, has only met once in effect dropkicking reform work to the next inexperienced County Commission. This is another missed opportunity that results in more of the same……
As the above inaction occurs, the local press has failed to ask local public officials questions about the lack of meetings or follow up on public requests for legal opinions. At the same time, the press has not bothered to report on the incomplete accounting for tax abatements to locally retain company operations (retention PILOTs) that have been used to justify excessive retention PILOTs. These excessive retention PILOTs have primarily served large corporate and real estate interests while undermining funding for true economic development efforts in safer/paved streets, better workforce and public transit. This occurs as EDGE effectively overstates projected new tax revenue generated on their EDGE scorecard.
As far as legal opinions, given rumors of potential required Tennessee General Assembly involvement for EDGE reform, Commissioner Eddie Jones in County Commission on June 18, 2018 requested a legal analysis from the Shelby County Attorney’s Office. The requested legal analysis resulted from public comments and subsequent Commissioner discussion regarding EDGE reform. The legal analysis has been provided to Commissioner Jones but has yet to be released to the public. Unfortunately, with public requests on the record, the press fails to challenge the County Commission to release the public’s legal opinion on the matter. Public knowledge of the legal analysis stands to help propel local EDGE reform efforts. But the press enables the closed rigged system through non-reporting resulting in more of the same……
Improved economic development outcomes are only going to occur with a more open system. That is a system with vitality in more checks and balances that accommodates public voice, demands public official accountability and legislative oversight that acts to course correct as needed. This type of system and course correction would avoid the need for expansive studies and overhauls while encouraging a balanced approach to economic development. Without system vitality and culture change that questions real power, current economic development reform efforts will just result in more of the same…..
(Joe B. Kent is a local blogger and economic development reform activist. He has a BBA in Finance and a MS in Curriculum, Instruction and Technology.)