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Reid Dulberger

Reid Dulberger is EDGE president/CEO and chief economic development officer for the City of Memphis and for Shelby County Government. He is a Certified Economic Developer (International Economic Development Council) and an Economic Development Finance Professional (National Development Council).

 

EDGE: Tax abatement works in a competitive world

By Published: April 14, 2019 4:00 AM CT

Since its founding in 2011, EDGE has worked to create and retain more than 31,000 jobs in Shelby County, while gaining commitments from our clients to spend $612 million with local minority/women/small firms.

How? Through the selective investment of public resources – most prominently, tax abatements – in development opportunities that span the spectrum from Fortune 500 global headquarters, to world-class manufacturers and huge distribution centers, to grocery stores and restaurants in distressed inner-city neighborhoods.

<strong>Reid Dulberger</strong>

Reid Dulberger

Factor in the projected $1.3 billion in local tax revenues from EDGE-approved projects – a return of $2.61 for every $1 invested – and $4.9 billion in spending on buildings and equipment, and it is easy to see why Shelby County government recently approved funding to expand EDGE’s development capabilities, and why the administration of Memphis Mayor Jim Strickland is proposing to do likewise.

Despite the Economic Development Growth Engine's documented track record of success, and that of the seven other Shelby County entities that use economic development tax incentives, the practice remains controversial. Why? For some, it’s a philosophical issue; they do not believe that for-profit companies or real estate developers should receive public support, even if the project hinges on it or the expected benefit to the community far exceeds the cost.

Some believe that other approaches will yield even better results. For example, investments in workforce development, physical infrastructure, public transportation and other services for our most challenged neighbors, or “shovel-ready” development sites. And of course, many observers are simply trying to ensure that public resources are being spent effectively and efficiently.


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Another argument we hear is that local economic development groups should only focus on new firms moving to, or starting in, Shelby County. Some say we should not help existing firms at all; others don’t think we should count the impact from those that we do. Their logic seems to be that existing companies are just posturing; that they have too much invested here to close or relocate to more aggressive communities if we ignore their requests for help.  At best, that’s a strategy based on hope.

The reality is very different. Retaining existing customers, while continuing to work on attracting new ones, is absolutely essential to growing our local economy. In fact, sound, data-driven decisions to assist existing firms actually helps our attraction efforts: Companies want to locate in communities that will still value them and work with them long after the ribbon-cutting and headlines are done.

We know that our local firms are constantly being courted by other communities near and far, looking to grow their economies. We know that firms with multiple locations regularly evaluate which of their sites offer the best opportunities for growth and profit. Here in Shelby County, we know all too well – as do other communities around the nation that sit near state borders – that companies can, and have, moved just a few miles down the road to take advantage of a more advantageous business environment. We know that in selected cases, we can help tilt the scales in favor of Memphis and Shelby County by working with our local firms facing those decisions. And we know that a job saved is just as valuable as any new job, and just as worthy of our time, attention and assistance.

We live in a highly competitive world, where those putting capital at risk drive economic growth. Those entities are looking for communities that can provide the workforce, infrastructure and other assets they need and want. But even with those assets, our clients have options and will decide whether and where to do their projects. As a community, Memphis and Shelby County needs to determine how aggressively we want to compete for that business – from both existing and new firms – and the jobs, wages, MWBE contracts, and local tax dollars that come with it.

 

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EDGE PILOT Reid Dulberger

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