- (female announcer)   Production funding for   Behind the Headlines   is made possible in part by   the WKNO Production Fund,   the WKNO Endowment Fund   and by viewers   like you, thank you.

- The debate over tax incentives and economic development tonight on Behind the Headlines.

[intense orchestral music] I'm Eric Barnes of The Daily Memphian.

Thanks for joining us.

I am joined tonight by Martavius Jones from the Memphis City Council.

Councilman, thanks for being here.

- Thank you for having me.

- Along with Tami Sawyer, from the Shelby County Commission.

Commissioner Sawyer, thank you for being here.

- Thank you so much for having me.

- Along with Bill Dries, reporter with, The Daily Memphian.

We are talking today about this conversation, this debate that has been going on as long as we've been doing Behind the Headlines and certainly before that, about how the County, the City, the region does tax incentives.

Scheduling note that we taped this before a joint meeting of the City Council and the County Commission that happened the day before this airs.

And also last week, we did a show with Reid Dulberger from EDGE, which is the entity that administers many of the tax incentives in town.

As well as Worth Morgan, a City Councilman who would like to streamline and change in probably a different direction than I believe the two guests today.

And that show is available online at wkno.org.

But I will start with you Councilman Jones, what are you calling for in terms of changes to how PILOTs and other tax incentives happen?

- First Eric I think we need to have the discussion and review of the EDGE Board.

EDGE was constituted for approximately 10 years ago.

And we need to as the elected officials that delegated our responsibility the County Commission and the City Council I think we need to have a discussion to see if we're satisfied with what the results have been, if there are any adjustments that are necessary and how do we move forward?

You know, I look back at what may have been the major employment wins and they seem to have been short lived when it comes to the incentive.

The most recent being ServiceMaster.

But when we talk about Electrolux and Mitsubishi some of the ones that received some of the greatest incentives, they didn't seem to last long.

So I don't think that we're getting and those are just the high profile ones the ones that make the headlines.

I'm of the opinion we're not getting the results that were intended.

- And are you calling for, when you talk about the vote and the Council to have a vote on specific projects that do and don't get incentives, or did I misunderstand you?

- Yes and so there's, you know there are a number of different factors when these PILOTs and these others incentives are being, when they're being evaluated.

You know, there's one that generally a cost-benefit ratio.

And so if one has a cost-benefit ratio less than one that means that it's costing us more than it's benefiting us.

And I think that if we're gonna enter into an arrangement where we have that negative cost-benefit, I think the elected officials need to know why and we need to be the ones approving it because we're the ones who are directly accountable to the taxpayers.

And that's just one aspect of it.

- Got it.

And Tami Sawyer from your perspective, what sort of changes are you calling for?

- There's two major things that I'm looking at Eric.

First with the tax incentives that we give as a County and as a City, me being a resident of Memphis, I believe that the incentives that come through need to have community investments attached to them.

Currently, we give this incentives out willy-nilly with no requirement to invest in our schools, our roads, you know and it remains a continuous issue.

We say that we need to incentivize businesses choosing Memphis.

And we blame our workforce.

We say that we don't have a strong workforce.

Remember up until three years ago, our city was marketed as one of the lowest wage, lowest places to pay wages in the country.

And so what I would like to see is incentives redone, repackaged with some type of community fund requiring these companies, the larger ones especially.

This is not necessarily focusing on small business development but on the larger companies to invest in the community, whether that be childcare, school systems, roads, et cetera.

And then second to Councilman Jones' point.

There needs to be more oversight.

I actually would love to use my counterparts the Republicans talking points here where during the COVID crisis they have continuously shown chagrin for the role of the health department and said, "We are listening to non-elected people.

Why are we allowing non-elected people to make decisions," and their attacks on the health department.

Here we are putting our largest business decisions in the hands of EDGE and DMC who are extremely powerful and the average Memphian wouldn't even know what those acronyms mean and who runs them.

- Yeah and EDGE is the Economic Development Growth Engine that again we had the CEO, President on last week and they administered the PILOTs, the payment in lieu of taxes, as well as some other grants.

DMC is Downtown Memphis Commission, which is probably one of the biggest, if not the biggest incentive giver.

One more question to you on what you just said and then we'll go to Bill.

On this notion of investment so it is the idea that for a company to get say a PILOT, and you know, you're talking about larger companies, not small businesses.

That they would also have to spend, commit to spending cash on say, schools or childcare, that there would be committed cash outlays on the part of the company that's being recruited?

- Yes I mean, I haven't spelled the entire thing out but I do believe yes, that that is what's important.

If you're coming here and you want the talent, right?

ServiceMaster says they need to go to Atlanta, their new parent company "that's where the talent is," quote unquote.

But you know, we know that the current statistic for our schools is we're graduating only a third of our students, prepared for work or college, right?

And if we have all of these Fortune 500 companies and large businesses that are getting tax incentives and we're still producing low education for our students, they should have some type of commitment.

If we're not gonna change our budget to invest in education, if we're gonna focus on business development, then the businesses should be required to invest in our youth.

- And I think the proponents, and again, I'm sorry Bill.

But the proponents of these incentives would say, "Well they are still paying property taxes and those property taxes do go to the schools."

And the second perspective that they always have to think into something like that is they won't come to Memphis.

They will go to another city or another state where they don't have to make those investments.

Because it's all sort of the low cost choice in terms of what incentives are on the table because, you know thousands of entities around the country, cities, state and region are doing these sorts of incentives.

So again, your response to that and then Bill I promise I'll go to you.

- Yeah, very quickly I would just say that if you look at what's happening with tax incentives across the country, reform is the word of the day.

Boston is reforming their tax incentives to be more inclusive in the community.

Washington, DC required 35% MWBE investment.

That's investment in Minority and Women-owned Businesses for the building of the National Harbor.

That was almost what a billion dollar development.

And so when we say like, we can't make these requirements or people won't come, how does that work when we see major cities making changes that impact their community?

San Antonio redid the entire system.

You know, Atlanta where people were going, has requirements to invest in Minority-owned businesses in the communities.

Memphis has low self-esteem when it comes to these things, we think we can't require things, or people won't come here, when everywhere else is like you're not gonna play my people like that.

New York is requiring statewide 30% MWBE investment.

And we're still like, "Oh, no."

- Right, Bill go ahead.

- Councilman, let me ask you about EDGE's current requirement, kind of the entry level requirement on wages which is $13 an hour plus employer subsidized health insurance or healthcare access.

Is $13 an hour with that stipulation, is that enough?

- No, frankly no.

Just a few council meetings ago, Mrs. Beverly Robinson, who is the chair of the Chamber, provided a presentation to the Memphis City Council.

And it indicated that for a single working person with one child, that the living wage is closer to $21 an hour.

So I would contend that we are incentivizing our continued poverty if we look at and settle on $13 an hour as the floor as far as providing incentives.

I by no means am I saying that we should do away with the incentives.

I just think we need to be more deliberate, we need to set more direction of the types of employers and the types of industries that we incentivize.

But clearly, $13 an hour is not enough.

And we shouldn't be incentivizing.

- Commissioner, what's your thought on this, is this all about a certain wage an hour?

- That's a very important point absolutely.

Thirteen dollars an hour is not minimum wage anymore.

Fifteen dollars is minimum wage and we're very close to that not even being the talking point.

We're looking at cities on the West Coast that are talking about $20 an hour.

Banks are sending their minimum wages at $25 an hour.

Bank of America just announced that by 2025 they'll be at $25 an hour.

And you know, people wanna make the argument that these are low talent jobs and why should they be required?

And anyone who makes that statement, I would challenge them to throw boxes for eight hours in a crowded warehouse in the middle of a pandemic and not have childcare because you can't afford it on $7.50 or $12.

- I think both of you have heard this argument from Reid Dulberger, the President and CEO of EDGE.

Who says, "We need to have a wide range of jobs" "because if we just go after the higher paying jobs, "that we're going to leave people in the current labor market in Memphis out."

Commissioner, what do you say to that?

- You know, I'm doing better with my language.

So the words that I would use about that I'm not going to use Bill.

But I think that it is a silly argument.

It's one of those arguments that makes it sound like you're invested in something when you're not.

I don't think that by increasing wages, certain people aren't going to be included because there's often a profit margin that makes room for these wages.

The reason that there's a national push for $15 an hour, Bill is because the minimum wage has not been increased in generations.

People were still earning $7.50 as minimum wage when before I was born.

And you know, I'm estimating here because I can't remember the year, but it's been a long time.

[laughs] And you know, just considering that you know, the price of what a dollar is worth from 1982 to now, a dollar is almost worth $20 now.

You can't walk into a store and buy something for a dollar, pretty much.

And so we haven't changed minimum wage with, but we're still requiring people to live off of the days when you could get you know, a loaf of bread and milk for a dollar.

- Councilman, your thoughts on this.

Should economic development incentives be reserved just for new sectors in the economy and for the higher paying jobs?

- On an incentive standpoint, yes.

I think that there will always be a need for lower paying jobs and they will come to Memphis.

But I just think that the incentives should be reserved for those higher wage industries and companies.

- All right, Eric back to you.

- Well for both of you, I'll just stay with you Martavius, Councilman Jones.

The Mississippi factor comes up a lot, right?

As does even Fayette County and Arkansas, but Mississippi is probably the number one.

In terms of lower wage jobs, you know warehouse jobs, which often are a little bit more involved than we probably present them.

But the argument is well if we don't offer these incentives, if we go too high on the minimum wage, if we go too high on the requirements, you can just go across the border and still have access to the airport, to FedEx, to our neighborhoods, to downtown, to Beale Street, to the Grizzlies, the Tigers, I mean all the sort of amenities that people sell and that people who live here love, you can take advantage of those by locating in Mississippi with far fewer restrictions and requirements and what the business people will say is a much more streamlined process.

So it's not just competing against Boston and these other cities that Commissioner Sawyer has talked about where they've done reforms.

Mississippi has not done those reforms as far as I know.

And so people push back on that what's your response?

- This goes back to the comment that Commissioner Sawyer made, about Memphis having a self-esteem problem.

If Memphis feels that it needs to compete with Mississippi, rural areas, areas that are not developed, we have a self-esteem problem.

We have a self-esteem problem if we think that that's the case.

From the standpoint of warehouses, Memphis does not have hundreds or even thousands of parcels of undeveloped land.

That's what you need for a 3, 4, 500,000 square-foot warehouse.

That's gonna pay jobs that are, that they feel are competitive at $13 an hour.

So my thing is when we talk about those jobs and the salaries that they demand or command, if we fill that we need to compete with that I think that we need somebody else at the helm who needs a better outlook and who's more optimistic about what Memphis can offer.

And we need to be competing against cities like Nashville, Charlotte, Austin, not DeSoto County, not Marshall County, Fayette or Crittenden County.

- Commissioner Sawyer, I see you nodding again are you not worried about that pushback, the competition with Mississippi line that the business community often uses?

- No you know, I agree again.

It goes back to the self-esteem issue.

Who are we as a city, who are we as a state?

There's a lot of things that Mississippi does that you know, are we going to, do we wanna be 50th in educating our children, do we wanna be 50th in our public health?

You know, do we wanna have a month of lack of access to clean water as Jackson has right now, instead of two weeks like we had.

You know, we could go on and on.

But I think that again these are all arguments that we're pulling together to not even try.

The biggest issue here Eric is the time to have the conversation and try to do something different is now.

To say that someone might choose to go to Southaven instead of Memphis.

You know, we've seen people try but even if you look at the casinos, everybody thought that we were gonna have this huge you know, second Las Vegas and it was still too far from Memphis to prosper for a long time.

We are still the center of the Mid-South and that means something.

- And again, I should note that last week we had Reid Dulberger from the EDGE as well as Worth Morgan from the City Council who's on the other side of this you can see that at wkno.org.

Or you can download the podcast wherever you get your podcasts.

So just to balance things out.

On the issue of schools and the economy, or excuse me and taxes and investing in children.

I mean, again the pushback would be, I have to play the role of devil's advocate today given the way we structured this.

Would be that the well, if they are, if those companies are moving to DeSoto County, be they $15 or 13 hour, $10 an hour jobs.

The taxes, the property taxes, they're going into the coffers of DeSoto County, Marshall County, not into Shelby County, and so the taxes that pay for the school system go down, they aren't, we're not getting them.

Commissioner your take on that?

- Yes that's a possibility.

You know we've had that happen before, where companies have decided not to come to Memphis and we weren't doing anything.

You know we weren't requiring anything.

And so I guess, you know the other side's argument is if we do something different they might definitely choose not to come.

But we've also seen those companies go to other places and then close a year later.

And then, you know my last point there Eric is that, [throat clearing] right now we're doing nothing and still losing companies and still losing jobs, you know.

So if we're still gonna have a short lifespan with these incentives, if the, you know companies are gonna bounce around and come here for two, three years and move on.

Then we should get what we can from them for those two or three years.

I just think that again, these are arguments that are presented to not try anything.

- Councilman Jones, we mentioned ServiceMaster.

And we talked last week with Reid Dulberger about ServiceMaster.

That it is, you know the headline is that, "ServiceMaster is moving to Atlanta."

In fact the bulk of the employees by his count is still over a 1,000 employees related to Terminix are still in Memphis.

And so the PILOT was built around, I believe around 800, 850, somewhere in the 800 range of jobs.

So the headline says one thing and that's on us in the media.

But the reality is that they still have a major presence here.

Are you worried that, and those are higher paying jobs.

Those are a more, a broader more professional jobs.

I mean, there's a tremendous.

It is not the low wage jobs that we've been focused on here.

Are you concerned that Terminix will move, and that you know what happens if they move or if they want more incentives to stay?

Those are the high paying jobs that you talked about.

The ones that we, I think in your words should be proud of.

How far should we go as a city, as a community to keep Terminix in town?

- Well I think that if we're looking at that prospect then we have to respond accordingly.

But going back to my contention, I think that those, and I agree with you.

Those are the jobs that we want to be competitive with.

Now one of the things, one of the other arguments that's made and I don't necessarily agree with it is we're talking about our workforce and what the education level is here.

If we look at other competitive cities, Atlanta, Charlotte, Austin if you would.

I would contend that everyone who populates those cities are not natives.

What I feel that we need to be doing and what I strive for us to do, is make Memphis attractive to companies that would want to relocate here.

One of the things, in this environment right now, we look at some high tax states like New York, Illinois, California.

So if I had my druthers about me, we would have personnel on the ground recruiting for Memphis in those areas to bring them here.

That's what I think that economic development and incentive need to look like.

If this required of us to provide more funding for us to do so, I'm in agreement with that.

But I don't think we're doing a good job of selling ourselves as an attractive city.

- All right.

- That's the direction I think we need to move.

- We'll go to Bill.

- Let's talk about the series of two meetings that the first one has been held as we record this.

But Commissioner Sawyer since we can't talk about what actually happened at that meeting, since we're recording today, what are your expectations for the meeting, what specifically do you want to come out of these two joint sessions?

- So we were able to make requests in advance.

And one of the requests that we had was one that we start from a baseline.

And you know so everyone has access to the same information.

And so we reviewed different reports and you know we're able to come into this conversation from a similar standing point.

Even though our outlook might disagree and be on different sides.

What I hope that these two meetings ended up being is not a waste of time.

You and I have talked about it before.

I don't want it to be PowerPoint mania.

I want us to, what I struggle with as a County Commissioner is a lot of talking and not a lot of action or change happening.

And so what I hope that these two meetings come out with is, either a game plan for the County Commission and City Council to say, "Here's what we agree on, here's what we think we can do."

You know, whether it be having a Community Investment Fund, or agreeing to setting a minimum wage, whatever it is, or investing in recruitment, you know.

Whatever the case may be.

Something has to come of it.

Otherwise we just spent the taxpayer's money for nice lunch and sodas.

- Councilman, your hopes for these two very important meetings.

- I'll go back to the fact that this is a, EDGE is a function that was created by the prior or previous City Councils and County Commissions.

And it will be I'm coming up, well I'm in the sixth year of my term.

And so for us to have this body and for the elected body to not review and determine what should be the future direction, I think it will be a dereliction of our elected duties in the trust that citizens of Memphis and Shelby County have entrusted us with.

So we have to take a look back and assess and determine if or not we are satisfied with the results.

And the whole definition of insanity is continue to do the same thing but expect different results.

We have to look at that.

I am not satisfied with the result that we have seen whether it's from a wage standpoint, whether it's from an industry standpoint.

And I think that I don't want roll off of the City Council see that going forward, we're heading in the same direction where we've been over the past 10 years- - Let me, I'm gonna say, a minute, I'm sorry Bill to interrupt you just with a minute left here.

I wanted to take actually a bit of a left turn because we have you both here and you know, the topic of the day and still remains COVID.

And as we you referenced earlier you know changes in how the distribution is happening it does seem that that distribution is smoother now, more people are getting it and obviously supply from the federal government and the manufacturers is increasing.

And there are some people out there who are talking on a national level about the whole situation flipping where demand will be the problem not supply.

And I guess I'll go to you first Tami.

I mean, one of the groups that has vaccine hesitancy, hesitancy about the vaccines on a national level is black communities.

There's much history to that we don't have enough time to get into.

But the horrific history of experimentation on black people and people of color and poor people in this country is real and present in the hesitancy.

What are you hearing from your constituents about their eagerness or their wariness of getting the vaccine?

- Just very quickly.

I think that the hesitancy has been a bit overstated.

You know, people, white people in the South are just as hesitant as black in the South you know.

- One study was yeah, I should yeah 40% of Republicans about nationally don't wanna get the vaccine and a big percentage are hesitant.

Go ahead.

- Thank you.

And so what I'm hearing from my constituents, they wanna be informed, you know.

Some people are waiting to see.

I'm seeing a lot of people share what their experiences with the vaccine and I think people wanna be healthy.

- Yeah all right.

We're out of time, I appreciate that.

I appreciate Councilman Jones, thank you for being here, Commissioner Sawyer.

That is all the time we had this week.

Remember you can get past episodes of the show at wkno.org, or you can download the full podcast of the show wherever you get your podcasts.

Thanks and we'll see you next week.

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