VOL. 132 | NO. 208 | Thursday, October 19, 2017
Amazon, Pfizer Approved for Tax Incentives
By Patrick Lantrip
Amazon was awarded a 15-year payment-in-lieu-of-taxes incentive by the Economic Development Growth Engine for Memphis and Shelby County at its Wednesday, Oct. 18, meeting, despite the online retailer’s proposed distribution center spurring a larger debate about the types of jobs the city should incentivize in the future.
Located at 3292 Holmes Road, the 615,440-square-foot, $62.9 million receive center will create 600 new jobs with an average salary of $29,000, not including benefits. Of Amazon’s $62.9 million investment, more than $46 million in construction costs would go towards construction costs, $23.3 million towards manufacturing machinery and $3.7 million for the land.
This would be the company’s first Memphis facility, though it operates several fulfillment centers in Tennessee, including ones in Chattanooga, Charleston, Lebanon, Murfreesboro and Nashville.
Over the term of the abatement, the project will generate almost $37 million in local tax revenue, while saving Amazon $15 million, for a cost-to-benefit ratio of 2.43.
However some members of the board, chiefly Memphis City Councilman Martavius Jones, expressed concerns over the types of jobs that companies seeking tax incentives are bringing to the table, since the average starting pay for 575 of the jobs would only be around $12 to $14 per hour.
Jones said both the city council and Shelby County Commission “have not done a good job setting what our priorities are.”
“We have to be deliberate in types of jobs that we incentivize,” he told the EDGE board. “To incentivize barely a living wage… when we do that, we’re saying it’s OK for the next company to do this.”
Conversely, EDGE president and CEO Reid Dulberger said that while the average incentivized job EDGE has brought to Shelby County since 2011 pays $75,000 excluding benefits, it’s important to attract jobs to support other segments of the population as well.
“My perspective is that we have a lot of our population for whom these are great jobs, who will likely line up to get a job, because Amazon also has a strong benefits program,” Dulberger said.
EDGE Board Chairman Al Bright Jr. added that projects like Amazon’s are good because they raise the bottom line significantly, referring to the $37 million dollars in tax revenue the project would create.
Ultimately, despite the lengthy debate, the EDGE board unanimously approved the incentives package for Amazon.
Also on the agenda was Pfizer’s request for a 14-year PILOT to move its Global Financial Services operations into a 58,000-square-foot space in Boyle Investment Co.’s Ridgeway Center and retain its distribution operation in Shelby Oaks, where it has operated since 1994.
While stating in their application that its workforce in Memphis has been declining due to technology and business changes, the pharmaceutical company said it would consider moving the financial operations to Germantown or another location outside Memphis if the PILOT were not granted.
Pfizer will invest $2.9 million for the purchase of furniture, fixtures and computer equipment and $4.7 million for tenant improvements at the new Shady Grove location.
EDGE staff projected the move will generate $17 million in local total tax revenue during the PILOT term with a $5.3 million benefit to the applicant, for a 3.22 benefit-to-cost ratio.
Meanwhile, the developers behind a multifamily project at 1544 Madison Ave. were awarded a 15-year PILOT for the 217-unit development at the corner of Madison Avenue and North Avalon Street.
The $24 million project is being developed by 1544 Madison Partners, a partnership among Orgel Family L.P., Three Madison Investments, Berlin Boyd, Adam Slovis, Benjamin Orgel, Jay Lindy and Michael McLaughlin. It will consist of 181 one-bedroom units, 36 two-bedroom units, 5,000 square feet of commercial space and 256 off-street parking spaces. Seventy units will be reserved for low- to moderate-income residents, per the terms of the PILOT.
EDGE staff projected the property taxes for the site would increase from $29,463 to $166,720 per year, while saving the applicant $411,769 per year.