VOL. 133 | NO. 98 | Wednesday, May 16, 2018
New Incentive Targets Sewer Woes For Developers
By Patrick Lantrip
With certain areas of the city such as the Fletcher Creek drainage basin nearing peak-hour capacity, the city of Memphis is teaming up with the Economic Development Growth Engine for Memphis and Shelby County to help ensure that impending sewer issues do not hamper future development.
With this in mind, EDGE and the city have proposed a Sewer Capacity Management Incentive, a PILOT (payment-in-lieu-of-taxes) incentive to help applicants absorb the cost of offline sewer storage and pumping facilities as may be required by the city of Memphis.
“We are trying to act in a way that will be supportive of continued development in the city.”
President & CEO
Economic Development Growth Engine for Memphis and Shelby County
“In order for development to continue, the city is going to have to require that companies and developers use offline storage and pumping facilities,” EDGE president and CEO Reid Dulberger said. “Meaning that during normal business hours the effluent from an office building, apartment, warehouse, manufacturing plant, etc. will be basically stored in a tank and pumped into the transmission lines to the treatment facility during off-peak hours.”
Like most PILOTs, the SCMI would provide a 75 percent abatement of city taxes for up to 15 years. However, unlike most PILOTs, this one does not abate any county taxes.
“This one is a little different because it comes with a direct request from the city of Memphis, which is working to ensure continued development in the city as they continue to address their sewer capacity issues,” Dulberger said.
Since the need to install an offline sewer system creates additional costs for developers, Dulberger said the city was looking for a mechanism to offset the added cost of the facilities.
To be considered for SCMI, an applicant must first receive a written recommendation from the Memphis Department of Public Works. If DPW agrees to recommend the project, the applicant would then contact EDGE staff to complete the Sewer Capacity Management Incentive application.
“(The city) will be the gatekeepers on this, and we are trying to act in a way that will be supportive of continued development in the city as they continue to work towards long-term improvements to the system,” Dulberger said.
Projects that are eligible for the new incentive include retail, office, industrial, distribution, tourism and hospitality, multi-family residential, and mixed-use. However, pawn shops, adult entertainment and product stores, liquor and tobacco stores, payday loan and title loan establishments and car dealerships will not be considered.
Since the incentive is designed to only offset the cost of the sewage storage system, Dulberger believes that the term length of these incentives will not be as long as their more traditional counterparts.
“We anticipate that these will be for a relatively short duration, probably more in the three- to five-year range, than in the nine- to 10-year range for a typical PILOT,” he said.
Brownfield sites, which are defined as “any real property that has been vacant or abandoned for at least five years, has a prior history of industrial uses, and has potential environmental contamination as indicated by a Phase I Environmental Assessment,” are also eligible for this incentive.
Additionally, applicants seeking a SCMI must use city-certified MWBEs (minority/women owned business enterprises) for no less than 50 percent of the cost to acquire and install the offline sewer storage and pumping system.
In addition to an annual compliance report that must be submitted to EDGE during the length of the incentive, EDGE and DPW staff has the right to periodically visit and inspect the project to ensure conformance.
Any company that receives a SCMI will be responsible for all maintenance of the offline sewer system to the point where it connects to the public sewer system.
There will be a closing fee of $35,000 charged to the applicants.
The EDGE board will review and vote on this new SCMI proposal during its Wednesday, May 16, meeting.