The idea of the City of Memphis withdrawing from the Memphis and Shelby County Economic Development Growth Engine (EDGE) and setting up its own Industrial Development Board seems to be gaining steam despite the absence of a compelling reason for that to happen.
Some of the momentum stems from complaints that EDGE has not performed good enough in recruiting new companies and jobs to our community. It’s a complaint built on a myth, because recruitment was always conceived to be the role of the Greater Memphis Chamber.
Some of the confusion may rest with the fact that while the founding vision for EDGE was for it to be “lean and mean, and some argue that it is now bloated and involved in so many things that its original core purpose is blurred.
That said, to this point, there has been no compelling logic and rationale articulated for blowing up the agency and for the City of Memphis to go it alone.
Roles Are Clear
Despite the headlines about the Chamber of Commerce’s intervention to clarify roles and responsibilities, it all feels muddier than ever. And its latest report by a Little Rock firm which was supposed to illuminate economic development here fell far short.
In this environment of people talking across each other, misinformation has flourished, but EDGE chairman Al Bright, in a letter in response to the Chamber’s criticisms of the city-county agency, got it right.
Writing about the 2014 agreement between the EDGE and Chamber: “Among other things the Memphis Chamber was identified as the ‘lead entity for business attraction.’ EDGE is responsible for creating, managing, and improving public resource programs – such as Foreign Trade Zone 77, bonds, local tax incentives (i.e., PILOTs and TIFs), and various loan programs, while representing the City of Memphis and Shelby County governments on economic development issues.”
The roles are just as clear as laid out by Mr. Bright, and it is puzzling why there is confusion, except that in the midst of our under-performing economy, there has been a dogged reluctance to accept responsibility – if not even acknowledge that our economy was languishing – and confusion mounted.
Shelby County Board of Commissioners former Chair Heidi Shafer – who left office August 30 after three years of churlish power-grabbing with Mayor Mark Luttrell – named a task force to consider the future of EDGE. In addition to four commissioners, it has seven private citizens, and while they are all good people, they lean heavily toward the special interests that benefit from the government’s largesse with tax freezes and TIFs.
Considering it was set in motion by Ms. Shafer, it’s unsurprising that there was not a member from the county administration, but even more, the task force is missing anyone from the grassroots and neighborhoods, and as one of these leaders said when told about the task force: “We all know the fix is in. Nothing ever changes. If anything happens at all, it will be to let corporations get its hands in our (taxpayers) cash register even more.”
It’s relevant context, because in the past decade, about $800 million in city and county taxes have been waived, shifting the costs of public services to homeowners and small companies. (At this point, it’s worth remembering that slightly less than half of the tax waivers are not granted by EDGE.)
We know that the folks at EDGE consider us one of its harshest critics, but we do not have a “no tax incentives ever” attitude. We just want them given more judiciously and with specific high-value targets. We also want to live in a community that can define success by how few tax breaks it doles out rather than how many.
We have also been concerned about the flaws in its economic impact studies and the way that EDGE has expanded its reach into retail, hotels, and apartment incentives without any real analysis and justification and absent any coherent strategic vision. Also, its absorption of the Greater Memphis Alliance for a Competitive Workforce has failed to produce the kind of new strategies that are resolving long-standing business complaints about workforce.
That’s our most significant concern with the discussion about a City of Memphis-only Industrial Development Board. We’ve heard no one suggest that this new board is needed because of these concerns or because EDGE has grown beyond its founding principles. More to the point, we suspect that the city-only board is being proposed to give tax breaks more easily and more frequently.
Notably absent from the discussion is any real analysis into what’s working and what’s not and how a new city industrial development board could cure that. It’s similar to the same way that EDGE’s powers were expanded politically rather than as a result of the unveiling of a cohesive, interlocking strategic plan.
We are sympathetic with the city and county legislative bodies’ complaint about the reporting relationship of EDGE’s president/CEO. Rather than report to his 11-member board, the president instead reports to the mayors of Memphis and Shelby County.
This structure is an anomaly in local government. While there are plenty of agency heads who report regularly to the mayors about progress and get their direction, we are unaware of any other public agency where its own board is bypassed in this way.
That said, we also believe that the EDGE board could have been more assertive in having a voice in the work of the president/CEO. After all, even if they had no direct authority over that person or did not have the power to set his work plan, they could still independently have evaluated his work and laid out what their priorities would be for the agency.
After all, while they lacked direct control over the president, they had a bully pulpit and could have used it to share their opinions and perspectives with the public. It was a powerful card which the board never played.
But it was not just the EDGE board that has often been marginalized, if not ignored. So were the Memphis City Council and the Shelby County Board of Commissioners, which were often snubbed when asking questions and stonewalled when expressing their opinions.
It was a strange, if not self-defeating, response from EDGE because it was these legislative bodies which delegated their power to freeze taxes to the board in the first place. In other words, it’s understandable that EDGE doesn’t find overwhelming support from the legislative bodies.
Putting All Options On The Table
So, the core question is whether EDGE can be reformed to address City of Memphis concerns or whether a rapprochement is even possible at this point. It’s hard to tell, but it’s also hard to see how the present approaches by different groups will produce the kind of transformative economic development apparatus that we need to create more and better-paying jobs.
Simply putting people in a room from both sides – the Chamber and EDGE – and sprinkling in a few commissioners and eventually some Council members does little to get the agenda right or to consider all the available options.
As we have written before, our preference is the blank paper process, setting aside what exists now and consider what needs to exist for Memphis and Shelby County to succeed. Without that, there’s a tendency for people who are involved in the process in some way to look to tweaks and adjustments in the present structure rather than putting all options on the table.
We understand that there is general dissatisfaction among business executives with EDGE, but putting all the blame on that single agency is simplistic and unfair.
After all, the local economy was floundering years before EDGE was even created, and while we can’t conclude that merging the old city-county Industrial Development Board and the Memphis and Shelby County Port Commissioner to create EDGE has produced the kind of momentum originally envisioned, it’s unclear how the City of Memphis going its own way would have improved things.
Actually, It’s No System
The fact is that today the system is not a system at all, and there are more key participants in economic development than just the Chamber, EDGE, City of Memphis, and Shelby County. There are organizations working on economic growth at the neighborhood level, there are organizations working on minority business development, there are 12 agencies in Shelby County waiving taxes, and there are economic and market studies conducted as part of Memphis 3.0.
As for 3.0, it would make sense that the city’s comprehensive plan should be consulted and that this decision is made within its context, but unfortunately, there seems to be decisions made often these days without any thought – or even a nod – to Memphis 3.0.
All that said, we return to our opening statement. It was in the midst of the current conversations that the idea of a city-only industrial development board materialized. At this point, it seems more than anything that politics is propelling the idea, and all options are not on the table.
After all, if EDGE is to be blown up, the option of a return to the former city-county industrial development board should be on the list of options to be considered. Looking back, it’s hard to argue that the present structure is producing better results than that one – and with a much smaller staff and budget.
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