IN THEIR COURT: San Francisco-based McKesson Corp. is considering making a major investment in Memphis. McKesson executives are shown ringing the opening bell of the New York Stock Exchange last year. -- PHOTO COURTESY OF MCKESSON CORP.

Members of the Memphis-Shelby County Industrial Development Board were told last month the board’s tax incentive program needs to be tweaked – and soon. The reason: a major economic development project coming before them in November needs the new provisions.

That project involves McKesson Corp., a San Francisco-based multiplatform health care services company, making a capital investment of as much as $186 million in a new corporate campus in Memphis. McKesson is considering four different ways to consolidate three of its local operations, with the new facility the company develops ultimately serving as its U.S. logistics and supply chain headquarters.

To pave the way for McKesson’s project, the IDB is scheduled to vote today on a restructuring of its tax incentive policies.

Also coming at today’s meeting is a PILOT (payment-in-lieu-of-taxes) request by American Esoteric Laboratories of Memphis to support an expansion by the clinical laboratory services provider. That expansion would create 60 new jobs.

On the agenda

McKesson employs 813 people in Memphis at the moment and cannot “promise job growth in the near term,” according to its own application for a PILOT benefit from the IDB. Instead, its local plans likely will be regarded as the first “job retention” economic development project considered under new IDB guidelines.

Before getting around to McKesson’s plans at its meeting this afternoon, the IDB will vote on carving out a new basis for which PILOT benefits can be awarded. That new basis is the number of jobs a company keeps in the Memphis area instead of moving them elsewhere.

The board currently doesn’t have much to offer a company that may see an economic benefit in pulling up stakes and leaving Shelby County. If they’re approved today, the new guidelines will let the board start offering benefits to those companies if certain conditions are met.

The conditions include the companies making investments in their local facilities of at least $10 million, retaining at least 100 jobs in Shelby County and showing their long-term commitments.

“The Industrial Development Board and staff feel that something like this would be very helpful to our economic development strategy,” said Charles Gulotta, executive director of the Memphis-Shelby County Office of Economic Development.

Money matters

Pulling the trigger on the new business incentive will provide a more attractive economic reason for McKesson to develop the new facilities it wants in Memphis.

The company is considering two sites for the headquarters part of its project, one in North Memphis and the other in the city’s southeast industrial corridor.

The economic stakes for the project are high. McKesson has several options on the table, including moving some of its local operations to North Mississippi or Fayette County.

Once the company has incentive offers in hand from the areas where it’s considering new facilities, top brass at McKesson who have no ties to Memphis will decide what to do next.

The company has proposed four scenarios under which it would restructure some of its Memphis operations. The proposed level of capital investment ranges from a little more than $26 million to almost $187 million.

Two other scenarios have the company spending $51.5 million and $162.1 million.