VOL. 125 | NO. 245 | Friday, December 17, 2010
IDB Approves Dalphis Move to Airport Area
By Bill Dries
The same day local leaders celebrated the coming move of Electrolux to the Frank C. Pidgeon Industrial Park, members of the Memphis-Shelby County Industrial Development Board were reminded that there remains intense competition for jobs already in Memphis.
With this in mind, the board approved a three-year, $2.4 million payment-in-lieu-of-taxes (PILOT) for Dalphis Holdings LLC to move from the Sycamore View-Interstate 40 area to the Airport Industrial Park area.
The Memphis-based window coverings company is now on Shelby Oaks Drive.
“We’re packed into three separate buildings,” Dalphis CEO Ben Morris told the board at Wednesday’s meeting.
With the incentives, Dalphis would move into a warehouse at 3980 Premier Ave. and use more than half the warehouse space for offices and an expanded manufacturing operation.
The move will create 96 additional jobs in addition to moving the company’s 126 current employees to the new locale.
The decision for Dalphis to stay in town is another for officials on this side of the state line, because the company had been aggressively courted by Mississippi economic development officials to the tune of $1.5 million in incentives.
Farnsworth Holdings, a local investment company, bought the warehouse this summer. It had been vacant for three years.
In other news from the meeting, IDB bond counsel James McLaren advised the board about the two projects still in the running for $42.5 million in federal Recovery Zone Facility Bonds, neither of which expects to secure private financing by the end of the year.
Dec. 31 is the deadline to line up financing in order to get the federal bonds. The two projects are the Royal Phoenix Hilton hotel to be built at Fourth Street and Linden Avenue, and the Poag & McEwen Highland Row mixed-use development near the University of Memphis.
At a special meeting earlier this month, representatives of both projects said it was unlikely they would close by year’s end. Through McLaren, they confirmed there will be no private financing between now and New Year’s day.
The IDB extended the inducement resolutions for both projects and voted to hold the bond allocation through March in the event that there is federal legislation to extend the Dec. 31 deadline.
The problem meeting the deadline is not unique to Memphis. McLaren cited national figures showing only 30 percent of the RDZ facility bond projects have secured private financing.
The IDB also affirmed its October decision to grant an eight-year retention PILOT for the $72 million expansion of the Cargill Inc. facility on Presidents Island.
Cargill, which makes syrup, liquid dextrose and high fructose corn syrup as well as corn and vegetable oils, is the largest tenant on Presidents Island.
Cargill threatened to move elsewhere if it didn’t get the incentives, saying the Memphis operations are “less cost effective than their comparable operations” elsewhere in the country.
The affirmation approved by the IDB tweaks language in the agreement to make more specific provisions for holding Cargill accountable for creating jobs.
Cargill’s agreement does not use the matrix system normally used to award PILOTs based on a point system. It is instead based on an economic impact analysis.
“Cargill’s performance shall not be measured by the board’s PILOT evaluation matrix, policies, procedures and lease provisions usually applicable to PILOT projects,” reads the specific agreement language. It adds the company’s performance in the expansion will be measured “solely by the number of retained jobs, the wages paid and the capital investment made.”
Cargill agreed to retain 370 jobs at an annual average base pay of $50,660 per person. The specifics of measuring those numbers doesn’t include a specific “clawback” mechanism but uses other methods.
And the agricultural industry giant must come up with at least $10 million of its new capital investment by the end of 2012.