A version of this post was published in the August/September issue of Inside Memphis Business.
It is often the case that important discussions on critical issues break down around personalities rather than policies, and we’ve seen it again with the recent debate about economic development in Memphis and Shelby County.
There were some who immediately sided with Richard Smith as chairman of the Greater Memphis Chamber and scion of the FedEx founder, and others who promptly supported EDGE and its president/CEO Reid Dulberger.
Many took sides before the discussion was seriously underway.
Visionary downtown developer Henry Turley once wryly said: “In Memphis, we pay people a lot of money to tell us what we want to hear.” That’s why Smith, as head of the Chamber, was an unexpected person to shatter the normal veneer of positive spin to roll out suggestions for attracting higher value economic development targets to our community and to question the ROI for EDGE, the city-county agency that has eliminated local taxes of about $500 million over its seven-year existence as incentives for new and retained jobs.
The controversy about his suggestions were that they felt like they arrived fully formed and were developed by small group which seemed to contribute to the unforced error of proposing to change minority business from a mandate to an inducement in the PILOT program, an idea quickly abandoned because of an immediate firestorm of criticism.
In the past 15 years, our community has launched multiple economic development plans; we’ve chased magic bullets and big projects; we have wrestled time and time again to get workforce development right; we have created a new public entity, EDGE, that was supposed to accelerate and improve our economic results; and the Greater Memphis Chamber formed the Chairman’s Circle with much the same goal.
Despite all this, for at least a decade, the regional economy has been underperforming when compared to peer cities the Memphis region used to outpace on economic measurements that matter the most – jobs growth, GDP growth, income growth, and educational attainment.
For example, it was not too many years ago that Memphis’ economy was comparable to Jacksonville and Louisville. However, jobs growth in Memphis for 2017 was 0.63 percent, compared to 3.16 percent for Jacksonville and 1.26 percent for Louisville. The growth of the GDP over five years was 12.6 percent in Memphis, 26.8 percent in Jacksonville, and 29 percent for Louisville.
Like many discussions here, everyone has opinions but facts are sometimes few and far between. Because of it, Community LIFT (Leveraging Investments For Transformation) President Eric Robertson became a voice for a broader community conversation and hired Good Jobs First, which describes itself as a national policy resource center for grassroots groups and public officials promoting corporate and government accountability in economic development, to report on “best practices” in economic development.
That seems a step in the right direction, because now, the discussions focuses on tweaking an existing program, changing people in leadership roles, or fine tuning a process.
Maybe what we should do is take out a blank sheet of paper and map out what we think the optimal structure for a high-performing economic development system should be, and how the system can be measurable and transparent, have clearly defined strategies aimed at high wage targets, have tax freezes that are incentives rather than entitlements, and include a report card for the public issued quarterly.
In other words, rather than spending time taking sides, the priority would be on taking the time for a comprehensive look at what could supercharge the Memphis economy.
The time spent on accusations and counter-accusations is merely time not spent on devising a system where roles and responsibilities are more clearly defined, goals and strategies are widely understood, and results are candidly and honestly evaluated and reported, free of the spin that accompanies announcements these days, particularly any time a PILOT shifts the tax burden from companies to homeowners and small business people.
If this analysis concludes that the present economic development system in our community does not require structural changes, it should at the least be fine-tuned to clear up confusion that exists today about the respective roles of the Greater Memphis Chamber and EDGE – and Memphis and Shelby County Governments – and to ensure that the proper checks and balances are in place.
If all the projects announced in our community in recent months – the riverfront, South City, Convention Center expansion, Fairgrounds redevelopment, and a key downtown block to include a 34-story building and a 550-room Loew’s Hotel – come to pass in the next two to three years, it will be a time of exciting progress.
If we can simultaneously get our economy firing on all cylinders, it is hard to imagine the transforming effect on Memphis and Shelby County.
That’s reason enough to take out that blank sheet of paper and begin.
David Williams: We regret that because of a technology glitch, we had to repost the blog post and it lost your comment. We hope you will attach it again. Sorry for the problem.
While I have aggressively questioned EDGE, I have always felt that Reid Dulberger is a highly competent bureaucratic administrator. The type of bureaucrat that a community needs to administer public resource programming. But I have always thought Dulberger was seriously misguided by a regressive business community in his work. There is no way that Dulberger came up with much of this insanity. And Richard Smith gets an A+ for raising concerns at a high visible level in the business community. But just this week in public testimony, we learned that the regressive Memphis business community stifled earlier public transit funding and site development solutions to support economic development. While Greater Memphis Chamber personnel changes mark progress, those new leaders are going to be required to pull a Crump era business community into the present day economic development landscape. And probably more than the Chamber, the people with hopefully more progressive political leaders will also have to drag the regressive Crump era business community along because, for sure, they have demonstrated that they are not going to lead any transformational effort needed to secure the future of the City.
Honestly, the few projects mentioned (River, Hotel, fairgrounds, hotel) are not going to be the magic elixir to fix the dire state of Memphis’ economy today. While those projects are good, it’s highly unlikely they will ever totally materialize as promised. This is because the entire country will soon face economic turbulence and down and out cities like Memphis are always among the biggest losers in bad times.
Overriding everything are our twin epidemics of poverty and crime. When you look at just how far behind our economy is compared to Louisville and Jacksonville it is just crazy to propose yet another blank sheet of paper. This is just nuts.
David:
We hear you. We agree that big projects will not “save” our economy. We need an comprehensive, consistent economic development plan because the one we have – it can be called plan – is failing. We recommend beginning with a blank sheet of paper because we tend for the usual suspects to come together and we expect different results. They often begin with how they can protect their organizations rather than considering what an entirely different, more efficient process can be.
The good news is that history shows we can turn the economy around. In fact, we have to because the trend lines will only get more troubling. We turned the economy around the early 1980s and if we did it then, we can do it now. But we need to begin by executing a more ambitious plan to expand the economy.
Thanks for the comment.
We face a tremendous crisis of confidence in our city. Despite slogans, most locals, and certainly most all outsiders, just don’t have much confidence in the future of Memphis. This has held back progress for decades and all we have nothing but decline, spiraling poverty and a worsening epidemic of violent crime. And to make matters even worse, we now have failures like Willie Herenton wanting to be mayor again. The Crump era looks good compared to Memphis of today.
David – The Crump Era reference has to do with bureaucratic hurdles for control instituted by a Boss that leveraged Depression era Federal funding for the of control to the benefit of social elites and developers. The same people as referenced by the Smart City comment. It may have worked some in the 30s and 40s but it won’t work in a global economy. Many of the staff here locally are led and misguided by really bad boards. We need largely a new EDGE Board for starters. See Evanoff article http://www.commercialappeal.com/story/money/2017/02/11/heres-what-is-lost-in-the-mpas-ominous-billboards-were-not-broke-but-we-need-tax-revenue-a-lot-more-tax-revenue-for-memphis/97750976/
David: Are we far behind those other two cities? Possibly. The numbers would suggest we are but what has been lacking, as SMC points out in this blog, are the metrics to complete a healthy feedback loop. If we get the loop fixed I imagine we would catch up to our peer cities quite quickly as we narrow down on the priorities that achieve success as defined by the data.
Metrics will point out failed or attempts or successes. They will help shape best practices. But first our leadership must not take it personally when their efforts fail. Failed efforts are par for the course on the path to success. Joe Kent would be a great person to bring on-board to implement a metrics-based approach.
The city council’s current thinking seems focused on restructuring the economic development organization rather than evaluating the policies and practices of the organization. A new organization with the same approach will clearly produce the same results
Thank you Aaron. Mayor Strickland just outlined a framework for County EDGE Ad Hoc. The main points are regarding economic development: 1) it’s not all about incentives, 2) Workforce is the top priority, 3) Focus on growing existing business 4) Research based targeted recruitment to inform incentive development
Eric Robertson is now talking about some ROI approach for all PILOTS granting organizations in relationship to available property. Goes to SMC’s earlier blog.
As far as some data, here is some data points and 2 of the primary tools that could be used to measure economic development – http://mcclmeasured.net/data-summary/
I read that FRED’S is moving it corporate headquarters to Dallas Texas. More bad news for the Memphis economy.
Maybe the city can offer up some incentives that we can’t afford.