Pandemic Does Not Stop Flow of Tax Breaks 

Since March, companies allowed to keep $63 Million in Future Taxes

Memphis and Shelby County economic development leaders have given coronavirus hardship grants to local businesses, but they are peanuts compared to tax breaks given to just one multinational company, one that's posting big profits because of pandemic-era e-commerce.

Last week the Memphis and Shelby County Economic Development Growth Engine (EDGE) touted the fact that it has given $721,700 to 129 businesses in the county. They are "throughout Memphis' most vulnerable neighborhoods," and 105 of the businesses are owned by minorities and/or women.

"Since we opened back up, our sales are down 60 percent-75 percent for this time of year," Area 51 Ice Cream owner Stephen Cubbage said in a statement from EDGE. The business received $5,000 from EDGE.

click to enlarge SHELBY COUNTY ECONOMIC DEVELOPMENT GROWTH ENGINE
  • Shelby County Economic Development Growth Engine

The funds come from EDGE's Neighborhood Emergency Economic Development (NEED) Grant. The fund is specifically for "small businesses, located in Memphis' most vulnerable neighborhoods that have been affected by the COVID-19 outbreak." The money can be used for rent or mortgage payments, payroll, supplier and vendor payments, insurance, and utilities. Depending on the situation, businesses can qualify for $5,000-$10,000 in NEED grant funding.

So far, the money has been spread to 30 businesses in the Medical District, Cooper-Young, Crosstown, and Overton Square, 27 businesses in the Hickory Hill area, 16 in Whitehaven, 13 in Orange Mound, and 11 in Binghampton, according to EDGE.

EDGE's main function, however, is to land new business here by lowering the tax bills for monied developers and corporations. Taxes pay for the police and fire services and everything else their property will enjoy. The agency's payment in lieu of taxes (PILOT) program reduces the tax bills for these developers and companies, usually by about 75 percent and, more often than not, for years and years.

Since the pandemic arrived here in March, EDGE has told these companies they can keep a collective $63.1 million that would have gone into city and county tax coffers. Want to raze that warehouse on Broad Avenue and build condos? Here's a $17.6 million discount on your taxes. Want to buy some new manufacturing machinery? Here's a coupon for $269,984. How about 240 apartments at Poplar and Highland? You can keep $14.7 million in city and county taxes. All of this in a pandemic and while thousands lost their jobs and Memphis Light, Gas & Water shut off people's power because they couldn't pay their bills.

The biggest PILOT winner this pandemic season has been DHL Supply Chain. Two tax break deals for them will cost the city and county $20.4 million in taxes to help it build an $85 million campus near East Holmes and Tchulahoma. But this wasn't a NEED-grant situation like those local businesses.

DHL posted record profits last year of $4.8 billion, up 30 percent over 2018. In its second quarter (late spring) DHL posted a "significant increase" in profits, driven mainly by the "strong growth in e-commerce," according to the company's news release at the time. In those three months, DHL — the company we gave $20 million to — made a profit of $912 million.

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