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October 3, 2005 There is an interesting editorial this morning in the CA concerning secrets at the Industrial Development Board. They are withholding the name of a potential PILOT recipient until the full board gets ready to approve or deny the PILOT. The whole subject of PILOTS and their effect on our local tax situation has been a consistent subject of this website. The evidence is that they are grossly overused and that certain local interests get most of the benefits and that the tax burden is being carried by the homeowners in higher and higher property taxes. We have posted below some additional information on current PILOTS and we have listed them by the date that they are supposedly returning to the tax rolls listing them at the longest date to closer dates. The longest date is 2040, 35 years from now. If you study these listings, you will note that most of them are downtown properties and interests. Also in another list we have, we note extensions of time that were granted by the IDB before the property returns to the tax rolls. Here is a listing of a few of the extensions. JPI Apartment Development, LP was the original Lessee. The current Lessee is Knickerbocker Properties, Inc XXXIX, Levee Road, (North Mud Island). The project cost is $27 million. The date of board approval was 4/13/99 for 25 years. It was then extended to 40 years terminating in 1/14/40. The parcel number is 069-077-00042. Peabody Place LP is the original Lessee. The Building address is Peabody Place, Hampton Inn. It was originally approved for 25 years but was extended to 40 years and will end on 12/31/38. It is appraised at $10,870,000 and pays zero taxes. Forty years is ridiculous for a PILOT but that is what these special interests are getting from an unelected board. Click here to see part of the 2005 County Trustee PILOT contract aging report.  September 28, 2005 Pilots (payments in lieu of taxes) are much in the news these days. Finally they are coming under a lot of study. Today, there was a very biased article in the Commercial Appeal written by Amos Maki of the CA. Here are some examples of the bias of this article. “Memphis and Shelby County have had strong success with the local tax break program -- payment-in-lieu-of-taxes, or PILOTS. In fact, that program along with state tax incentives played a large role in International Paper's recent decision to move its corporate headquarters from Stamford, Conn., to Memphis. In August, the Memphis and Shelby County Industrial Development Board, the agency that administers PILOTs, granted IP a 15-year property tax freeze that could save the company $15 million, a crucial step in the city's successful effort to win the company's corporate office. ECD officials also said IP could qualify for job training grants for new hires, the jobs tax credit and sales tax credits.” Many people feel that IP would have moved here with or without the giveaway as they were in one of the highest tax states in the USA, Connecticut. Also they have said that they are going to sell off some divisions which probably means job losses in Memphis. But the unelected officials on the IDB gave away our tax money. This has to stop. Another example from this article is shown below. “Brad Kornegay, president of the Memphis-based real estate firm Colliers Management Services, said the PILOT program enables Memphis and Shelby County to compete for jobs. "This isn't pork barrel, this is necessity," Kornegay said. "Without it, these companies are not here." Besides creating jobs, supporters of the PILOT program argue that it produces a return on investment as well. "A 2000 study sponsored by the Memphis Regional Chamber and conducted by Jackson, Tenn.-based Younger Associates found that the PILOT program created $2.47 for every $1 the city and county didn't collect.” Well, the reason we cannot compete is that we have the highest tax rate in the state and one of the major reasons we do is that we gave away $54.5 millions dollars in Pilots in 2004 and the annual giveaway is increasing each year. Nashville and Davidson County gave away $675,000 dollars in 2004. Then the article goes on to cite a study done by Younger Associates claiming that $2.47 is created for every dollar the city and county did not collect. If you believe that, I have some oceanfront property in Phoenix, Arizona I want to sell you. I suggest you go to the following report paid for by the State of Tennessee which concludes: As a general rule throughout the U.S., no one knows • the actual magnitude of tax abatements; • whether abatements are cost effective in creating jobs and promoting economic development; • the total cost of tax abatements; • how much revenue schools are losing because of abatements; and • there is very little in the way of audits or legislative oversight. Click here to read this State report to the General Assembly  May 18, 2005 I recently read an article in the CA written by Paul Kovacs who is a member of the Germantown Economic Development Commission. He wrote about the tax income we have lost in Shelby County due to the wholesale granting of PILOTS (payments in lieu of taxes) to local businesses. He said that instead of a 3 or 4 to 1 multiplier that would make sense in the granting of pilots, it was more of a 1 to 1, one dollar of tax relief equaling one dollar of extra profits for the grantee of the pilot. He raised some interesting points and I did some of the same research and found out some interesting facts. I have put below a spreadsheet that shows the pilots for the year 2002 and shows what the firms paid in frozen taxes and what they would and should have paid had they paid at the same rate as other business firms not receiving pilots. The information is from the State Comptroller's Office and concerns the 2002 report on Pilots and their effects. The tax loss for Shelby County is $53 million for that year. There are some interesting names on the list which you will recognize. Also I have listed the same information for Davidson, Hamilton, Knox, Madison and Williamson counties and you will see the contrast with Shelby County. No wonder our property taxes are so high. Shelby (Memphis) 53 million lost to pilots Davidson (Nashville) 0.78 million lost to pilots Hamilton (Chattanooga) 7.62 million lost to pilots Knox (Knoxville) 0.0 lost to pilots Madison (Jackson) 2.04 lost to pilots Williamson (Franklin) 0 .28 lost to pilots Here are the designations of the column headings for the spreadsheet shown below Column headings are defined as follows: LESSEE - indicates the business presently leasing the property. PROP VALUE - is the lessee's estimate of the fair market value of the property. PILOT/CI - is total payments in lieu of taxes paid by the lessee for the reporting period to a city. PILOT/CO - is total payments in lieu of taxes paid by the lessee for the reporting period to a county. TAX/CI - is total taxes that would be due the city if the lessee owed taxes based on the fair market value of the property. TAX/CO - is total taxes that would be due the county if the lessee owed taxes based on the fair market value of the property. Click here to see who got the bacon while the taxpayers got the shaft. | CCC MINUTES | | FIRE AND POLICE NEWS | PARK SERVICES | CITY ATTORNEY'S OFFICE | PUBLIC WORKS | ENGINEERING DIVISION | FINANCE DIVISION | SALARY & BENEFITS | APPOINTED CITY EMPLOYEES | MEMPHIS SCHOOL SYSTEM | RIVERFRONT DEVELOPMENT CORP | INDUSTRIAL DEVELOPMENT BOARD | HOUSING AND COMMUNITY DEVELOPMENT | MEMPHIS SHELBY COUNTY AIRPORT AUTHORITY | | Return Home | 2009 NEWS | MEMPHIS CITY GOVERNMENT NEWS | MEMPHIS CITY COUNCIL NEWS | MLG&W NEWS | SHELBY COUNTY GOVERNMENT | CONTACT US | |
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