VOL. 133 | NO. 180 | Tuesday, September 11, 2018
City Panel Debates Whether to Tweak or Toss EDGE
By Bill Dries
A seven-member city group looking at the effectiveness of EDGE – the city-county Economic Development Growth Engine – has a decision to make.
Do they recommend tweaking the body that grants tax abatement incentives or do they take the city out of the EDGE and create a city Industrial Development Board?
The group appointed by Memphis City Council chairman Berlin Boyd met for the first time Monday, Sept. 10, and quickly concluded changes will accompany the group’s recommendations over the next three months.
“We have to start acting like the business community,” said Carolyn Hardy, chairwoman of the Greater Memphis Chamber board who is also serving on a county government committee exploring changes to EDGE.
Hardy was recruited by the state of Mississippi to move one of her businesses south of the state line before she ultimately decided to keep it in Memphis.
“It was truly one-stop shopping when it went in. They basically said, ‘Carolyn, what do you need for us to close this deal,’ ” she said. “When a prospect comes to us we need to really treat them with respect and figure out what it’s going to take to close this deal.”
Mark Yates was on the old city Industrial Development Board as city and county elected leaders began talking about a consolidation of economic development services into what became EDGE.
He was appointed as the first chairman of the EDGE board but bowed out before the board met.
“It came down to how do we positively affect the recruitment of companies and bring those companies and make it easier for them to business in our community,” Yates said of EDGE’s formation in 2011. “The Industrial Development Board, say what you will … it was efficient. It got deals done. It was scruffy but it got it done,” Yates said.
Leslie Smith of Epicenter pursued the point.
“It sounds like the scrappy sort of pull-it-together, make-it-happen deal was probably less limited by process, less held back by politics. But there also had to be the visionary leader sitting in the middle of that,” she said.
“We would work through the process,” Yates replied. “What are the validations from a banking or financing standpoint. We had the ability to analyze and say this is the return on this type of investment for the community. This is the credit worthiness of this particular client. This is what we can expect from a job creation standpoint. What is the probability of trying to claw back if this company doesn’t make it.”
But attorney Clay Purdom of the law firm Martin, Tate, Morrow & Marston, said returning to an IDB for the city would not necessarily eliminate duplication, which EDGE was designed to eliminate.
“I don’t know if there is a board that we can put together that’s going to accomplish everything we need,” said Purdom, whose law firm has represented companies going before the EDGE board for incentives. “There’s going to be different parties that are going to have to be at the table. … You are going to have to meet with the city. You are going to have to meet with the county. That’s not something I think this board could do.”
He also said fees in the process have cost some of his law firm’s major corporate clients looking at Memphis $300,000 to $400,000.
“If we want to compete with Mississippi, we’ve got to have state involvement,” Purdom said. “Mississippi does a real good job at throwing money at companies. And it’s the reason they are so competitive. … It’s hard to have a one-stop shop at EDGE. I think that’s where the Chamber can work with EDGE and bring all the parties to the table.”
EDGE CEO Reid Dulberger has said EDGE was formed with the negotiated understanding that the Greater Memphis Chamber would have the role of selling the city to corporate and business clients.
Boyd has talked about a city IDB being able to abate county property taxes as well as city taxes through a memorandum of understanding similar to what some of the county’s suburban cities and towns have with county government.
“County approval would still be needed under the MOUs granted to various municipalities,” Purdom said. “In addition, you have a baseline, you can only offer what EDGE offers now. If we were trying to differentiate ourselves and increase our offerings we couldn’t do it.”
Council member Reid Hedgepeth, a council member when the EDGE board was approved by the city and county in 2011, was blunt.
“What we were told and what actually happened were two separate things,” he said. “All it was was just another huge layer of red tape. We were looking at ways to make the IDB more efficient and EDGE came up and it was a catchy name at the time.”
Boyd said economic development pursuits need what he termed a “czar” to get answers quickly for businesses and site consultants looking at Memphis.
“Now is the time to streamline the process so that we have this czar that can come and say, ‘Memphis can do this deal. I say we can compete at this level. We’re ready. Here’s the application, Turn it in. Let’s go,’” Boyd said. “Right now, at the rate we are going, everybody says ‘that’s not my responsibility’ or ‘I can’t do that’ or ‘I didn’t know we wanted to turn that in and compete on this deal.’ Time out on excuses.”
Eric Miller, Greater Memphis Chamber senior vice president of economic development, pushed for more confidentiality for prospects including using project names to identify them. He said it’s essential for publicly traded companies that could see stock prices fall with reports they are looking elsewhere and also see reaction from employees worried about the change.
Like the others, he was critical of fees involved in the EDGE process.
“This is different, let’s just put it that way,” he said. “Fees need to bear some rational relationship to the service that is being provided to the company. And my sense is that is problematic here, let me put it that way.”
The group meets next on Sept. 26.