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VOL. 7 | NO. 22 | Saturday, May 24, 2014

Selling Memphis

Economic development agencies fine-tune incentive process

By Amos Maki

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Not too long ago, Dudley Boyd, president and CEO of National Bankers Trust, entered a conference room at the Greater Memphis Chamber’s office at the Falls Building Downtown.

Boyd was visiting the chamber’s offices to discuss a possible payment-in-lieu-of-taxes (PILOT) incentive that would allow his company to relocate its headquarters to a new office building inside the city of Memphis.

“We’re the guys who need to close the deal,” says Reid Dulberger, president and CEO of the city-county Economic Development Growth Engine. “When we’re talking about projects, there are several organizations, including EDGE, that are very active toward the end of the process putting incentives together.”

(Memphis News/Andrew J. Breig)

What Boyd saw when he entered the meeting room shocked him. Sitting at the conference table were partners from most of the area’s economic development agencies, including the chamber, the Economic Development Growth Engine of Memphis and Shelby County, the state Department of Economic and Community Development, the Workforce Investment Network, Memphis Light, Gas and Water Division and anyone else who might be needed to made the idea of a relocation a reality.

“We thought we were going to a two or three-person sit-down, including us, and when we first walked in I think there were nine officials there,” Boyd said. “I was just shocked because we aren’t used to that, but they were all very business-like and I was very impressed.”

Boyd’s experience at the chamber that day is a reflection of the system of teamwork a diverse group of local economic development agencies have developed to recruit and retain businesses in Memphis and Shelby County, a system that took years to refine and one that is still being fine-tuned.

“I tell people we don’t know we’re not supposed to work together,” joked Dexter Muller, interim president of the chamber and leader of the organization’s community development team.

The chamber is not alone when it comes to local economic development efforts. The business group is a cog in what has become an increasingly well-oiled machine that does everything from walking prospects through the incentives process to developing a strong workforce.

The chamber, EDGE, ECD, WIN, Southwest Tennessee Community College, Tennessee Valley Authority, Memphis Mayor A C Wharton Jr.’s Mayor’s Innovation Delivery Team, Memphis Tomorrow and others are all pieces of the economic and community development puzzle.

Shelby County Mayor Mark Luttrell said the current economic development system, which is focused on job creation and retention and providing services like workforce training, takes a team-based approach and requires constant evaluation.

“We are constantly encouraging these different organizations to work together,” Luttrell said. “We are looking at how we can make this collaboration more central. The array of groups we have focused on this issue is not all a bad thing. It shows the focus and commitment we have on economic development and job creation.”

The chamber, long the leading economic development agency for the city and county, is the tip of the area’s local economic development spear.

The chamber’s economic development team, headed by Mark Herbison, is responsible for generating leads that could bring new business to town and for encouraging existing business to stay and expand.

That takes working with an extensive team of professionals from a wide range of organizations, each with clearly defined roles.

“Our job is more of the sales team that generates leads and brings prospects to the state, the mayors and EDGE,” Muller said. “I think it works quite smoothly between the three of us. EDGE and the state don’t need members like we do. What they need is to close the deal, generate new tax revenues and get people hired. We all share that mission but we don’t grant incentives for relocation, we don’t grant incentives for infrastructure or workforce development, which they do. Every prospect we have we share with the state and EDGE.”

Every other Monday, Herbison meets with his economic development partners in his second floor office at the chamber, reviewing leads and helping tailor the right incentives – whether its tax freezes, infrastructure or workforce development training – for each prospect.

Economic development goes way beyond Memphis Mayor A C Wharton Jr. It takes an extensive team of organizations to bring a new company to town or to convince an existing company to stay and expand. It’s a system that took years to refine and one that is still being fine-tuned.

(Memphis News/Andrew J. Breig)

Chamber officials market the city to prospective clients, wine and dine company officials, and negotiate deals – and it is all done mostly in secret because the chamber is a private entity.

Muller said there are several reasons the chamber is best positioned for this key role.

For one, the chamber can operate largely in secret because it is a private organization exempt from public records and meetings laws, which allows the companies exploring the city and county to remain anonymous, a critical factor for most firms. In addition, it’s easier for the chamber to use its own funds, which come mostly from the group’s members and supporters, to pay for recruitment efforts that might be viewed by some as expensive or over the top.

“That is an easier function to do in the private sector than it is for the public sector because you don’t want to take public money for what might seem like expensive recruiting efforts, things like dinners or travel,” Muller said. “The public isn’t very responsive to that. That’s probably something that is better done with private sector resources.”

And the chamber certainly has economic development resources, funds that the cash-strapped city and county may not be able to provide, even though politicians on both sides of Main Street say job creation is a top priority.

The chamber recently increased funding for primary economic development efforts – marketing Memphis to new and existing businesses in the hopes of landing a relocation or expansion – by 228 percent.

The economic development funding surge has allowed the chamber to take local business leaders across the country to tout the benefits of doing business in Memphis and Shelby County.

“We moved money out of administrative functions and into economic development, which is our primary function,” Muller said. “Nonprofits can sometimes be focused on their organizational survival and if that’s what you’re primarily focused on you can lose sight of your real mission.”

And with the formation of the Chairman’s Circle, the chamber’s ability to focus and invest in economic and community development efforts will only grow. The Chairman’s Circle consists of 103 business leaders over who will donate $25,000 each and delve into a wide range of community development efforts.

“I think one of the things we’ve done through the Chairman’s Circle is realize you can’t get it done by yourself,” Muller said. “You can’t keep top executives engaged if they’re not needed or if they feel they’re not needed. You can’t pretend you need them and we came to the realization we can’t get along without them.”

Muller said city and county residents should be thankful that there are several organizations devoted to economic growth and that each organization takes precautions to limit duplication of services and efforts.

“I don’t know why anyone would care that multiple organizations exist,” Muller said. “I don’t see us duplicating at all what we do.”

If the chamber and its partners – site selection experts, consultants and the state – are responsible for generating business leads for Memphis and Shelby County, the staff at EDGE, with support from other local stakeholders like TVA, WIN, MLGW and others, is responsible for sealing the deal.

“We’re the guys who need to close the deal,” said Reid Dulburger, EDGE president and CEO. “When we’re talking about projects, there are several organizations including EDGE that are very active toward the end of the process putting incentives together.”

EDGE uses what is a growing arsenal of incentives to make the deals sketched out in the chamber’s conference room or the mayors’ offices come to fruition.

EDGE administers the PILOT incentive, the primary economic development incentive tool used by Memphis and Shelby. EDGE is in the midst of a review of the PILOT incentive that could lead to the most significant reforms in the program’s history, changes that could allow the program to do more. In addition, EDGE has developed several programs to aid existing small to midsize companies.

EDGE’s partners with the state, which can provide tax credits for workforce training and infrastructure incentives, and local workforce development teams come together to help produce a total incentives package they hope is attractive enough to lure a company to Memphis and Shelby County.

“It’s our role to put a deal on the table that gets the deal done,” Dulburger said. “The PILOT may be the biggest piece but often times it’s the entire package that matters.”

Dulburger said it’s a complicated process but one that has produced tangible results.

“This is a highly integrated process locally,” Dulburger said. “These organizations are literally in contact on a daily basis working to make sure we put our best foot forward.

I think it’s a model.”

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