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VOL. 125 | NO. 140 | Wednesday, July 21, 2010

Fund Signals Memphis ‘Open for Business’

By Andy Meek

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He wasn’t saying “I told you so,” but he came close.

The day after Pinnacle Airlines Corp. acknowledged Mississippi officials had made the Memphis company a generous offer to relocate to Olive Branch, Memphis Mayor A C Wharton Jr. reminded at least one person about something he’d won approval for just one week before that.

Pinnacle confirmed the offer from Mississippi late Thursday. One week earlier, Wharton had pushed hard for the Memphis City Council to allow the creation of a $5 million fund that could be used for economic development purposes.

The fund, which the council approved, would be used to pay for infrastructure needs a company might have – often among the most costly and critical elements of relocations and expansions. The money will go toward building roads, public garages and the like.

In essence, the money is a deal-sweetener Wharton and other city officials can now use as one more chip to stack in the city’s favor when new companies come calling – or when existing corporate citizens start to get wooed away.

And the mayor did not hesitate to bring up the new fund the day after learning even Mississippi Gov. Haley Barbour has gotten involved in Mississippi’s offer to Pinnacle.

“This helps to add some perspective to why I asked the City Council to set aside the $5 million,” Wharton said Friday.

The mayor and other economic development officials consider the fund’s creation a step in the right direction. They routinely contend the economic development game is the kind of competition Darwin could appreciate, wherein survival of the fittest requires cities like Memphis bringing as many incentives to the table as possible.

“The $5 million fund established by Mayor Wharton, I think, is a strong signal that Memphis is open for business,” said Arnold Perl, secretary and counsel of the Greater Memphis Chamber.

Unfortunately for Memphis, other states and cities often have plenty more incentives to wield beyond the kind of tax freeze Memphis regularly trumpets.

“We’re not equipped the way our neighbors are,” Wharton told council members in arguing for the new fund’s creation. “We talk about PILOTs (payment-in-lieu-of-taxes). But it’s hard to take a PILOT into a bank loan committee.

“Those of you in construction know this. What just really drove it home to me – that we’ve got to get into the same playing field that our competitors are – is the McKesson departure.”

McKesson earlier this year decided to put a distribution facility and 300 jobs in Olive Branch – the same city where Mississippi is trying to lure Pinnacle.

Wharton and other city officials were personally involved behind the scenes in selling McKesson, a health care company, on Memphis. It was one of the first projects Wharton worked on as Memphis’ mayor.

“We had a crime package that nobody could beat,” Wharton said, adding there were also things the chamber was prepared to do.

“But we had nothing to put on the table in the way of infrastructure. Olive Branch, Mississippi, had $250,000. Along with the state of Mississippi, Olive Branch has incentives that we don’t have. We’ve got to send a signal that we’re serious. We’ve got to get in the game.”

For Wharton, the one that got away is actually several ones that got away. In his pitch to the council for the development fund, he also alluded to “Footloose,” director Craig Brewer’s new movie that Brewer had hoped to shoot in Tennessee.

It will be filmed in Georgia instead of Memphis reportedly because the Peach State offered more generous incentives than Tennessee to film there.

“We worked around the clock trying to keep that movie here,” Wharton said.

The economic development fund is one more piece of the puzzle, along with personal trips Wharton is making around the country to secure the same results.

Earlier this year, for example, the mayor accompanied a delegation from the chamber to New York and met with Daisuke Koshima, the chairman and CEO of Sharp Electronics Corp.

While in New York, Wharton also spent time with officials from a group that promotes Japanese exports and fosters ties with trading partners.

Meanwhile, a Pinnacle spokesman last week said a decision on where to locate a new larger corporate headquarters is still far away. And it remains to be seen how the new economic development fund might play a role in that decision.

“It reminds me of something my mother always said,” City Councilmember Barbara Swearengen Ware said about the new fund. “It’s better to have it and not need it, than to need it and not have it.

“We are assisting in the growth of (places like) Olive Branch when we don’t do the things we need to do.”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 51 223 1,152
MORTGAGES 55 189 861
FORECLOSURE NOTICES 25 45 144
BUILDING PERMITS 149 541 2,593
BANKRUPTCIES 24 120 581
BUSINESS LICENSES 14 65 264
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0