The Sky Is Not Falling On Cities

This op-ed article by Carol Coletta is printed courtesy of www. planetizen.com where it was featured last week:

Cities aren't in decline. The way population change is "measured" by the Census Bureau leaves much to be desired, writes Carol Coletta in this week's Op-Ed. But even if cities were in decline, a city's population is no longer tied to its economic success. What is ironic about these estimates and the misleading story of decline that has been spun around them is the fact that cities no longer have to grow big to grow wealthy. For the first time, according to research from CEOs for Cities, a city's population is no longer tied to its economic success.

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by Carol Coletta

The problem is the headlines are wrong. The leads are wrong. And the Census Bureau's estimates are wrong.

It's not the first time. The biggest surprise of the 2000 Census was the fact that many cities had gained population because throughout the previous decade the Census Bureau had asserted that cities were in decline. While downtowns boomed and in-town neighborhoods gained new life, the story out of Washington continued to promote quite the contrary.

How did the Census Bureau get it so wrong? The first and most obvious point is that the latest Census numbers are estimates. According to University of Wisconsin-Milwaukee Associate Professor of Urban Planning and Census Bureau consultant Dr. Virginia Carlson, these estimates are reported within a margin of plus or minus 3 percent. Yet, newspapers reported that Chicago, for instance, lost 1.2 percent of its population. That number is easily within the margin of error. Using the Census Bureau's own methodology, Chicago's population may, in fact, have increased. But look closely at how Census calculates its estimates, and the story gets curiouser and curiouser.

First, Census assumes that population changes are spread relatively uniformly within a county, discounting the fact that immigrants tend to congregate in central cities. Birth rates, too, are assumed to be evenly distributed throughout a county, even though certain kinds of central city populations have higher fertility rates.

Second, the Census Bureau counts only construction of new single family houses when making its population estimates, despite the fact that renovations and conversions make up a significant segment of the "new" housing market in cities, especially older central cities. Even renovations of boarded up, single family homes are not counted. Compounding the problem is the fact that housing (and therefore, population) loss is estimated by the age of the housing units, so that cities with older housing are assumed to "lose" more units than places with newer housing. What this means, in fact, is that the Census Bureau actually cannot measure urban renaissance if urban renaissance brings with it the revitalization and renewal of older housing.

Third, the Census Bureau assumes that the number of people living in housing units hasn't changed since the last decennial Census. That means it is biased against a number of vital trends we've seen that mean larger households, namely 20-somethings sharing space, new immigrant households and families moving into cities.

What is ironic about these estimates and the misleading story of decline that has been spun around them is the fact that cities no longer have to grow big to grow wealthy. For the first time, according to research from CEOs for Cities, a city's population is no longer tied to its economic success. Instead of worrying about growing big, cities should be worrying about growing smart. The percentage of citizens with a college degree is a much better predictor of economic success than population. So the real question for cities is how to develop, attract and retain talented people.

Nevertheless, even though it is not a necessary ingredient of success, population change continues to be a popular way to measure cities. Unfortunately, the way population change is "measured" leaves much to be desired. Will the big surprise of the 2010 Census once again be the comeback of cities, just as it was in 2000? It will be if we don't change the way estimates are made.

The real story of what's happening in cities today has yet to be told.

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Carol Coletta, host and producer of the nationally-syndicated public radio show Smart City and president of CEOs for Cities, has been pioneering innovative strategies to improve cities for 30 years.

Three Priorities for the Future of Memphis

It’s always good to listen to a billionaire’s opinions, especially when he’s Bill Gates, someone who has made his fortune by foretellling the future before any one else and whose foundations put his money where his mouth is.

A couple of weeks ago, he made three points worth remembering. One, a well-educated workforce, not tax breaks, is the key to luring high tech business. Two, a country can never have too many geniuses. Three, high school education in this nation is broken badly.

First, tax breaks. In a speech to a packed house at the National Conference of State Legislatures’ meeting in Seattle, he made his point simply and directly. Asked what government can do to attract jobs, he said: “The industries that I think about most…are far more sensitive to the quality of talent in the area than they are to tax policies. If you are coming up with a breakthrough in medicine, it doesn’t matter if you’re paying a little more in taxes.”

Second, immigration. He said the United States must make it easier for top foreign technologists to work here. Gates recalled when Microsoft once hired a number of people from India to work in this country. News reports there bemoaned the departure of so many smart people, while those here bemoaned the arrival of workers perceived as competing with domestic talent.
"It really can't be bad news in both countries, and if we sent them back, was the U.S. going to say, 'Good news -- geniuses are gone?' " said Gates, criticizing groups who oppose high-tech employers’ recruitment of foreign nationals to work in the U.S.

Third, education. Gates reiterated a favorite theme of late, when he told the nation's governors that America's high schools have become "obsolete." "The nature of global competition is that the work forces, particularly in China and India, are getting better educated," he said.

In a world growing more competitive by the day, these are priorities that Memphis needs to address before it's too late.

Also, Gates’ comments point up how America’s major CEO’s have now in truth become international CEO’s, as well-versed and concerned about competitive issues in India as in Indiana. Fred Smith, FedEx founder, is another business leader who can connect dots between education, trade policy and innovation that link events in Memphis with Shanghai, Krackow and Taipei.

More and more, it’s like chaos theory taken to an economic level. When a butterfly in Bangalore flaps its wings, it can very well cause an economic hurricane in Memphis.

Today's Chicago Sun-Times editorial page declares, "Look at us now: Downtown's rebirth has saved city's soul."


Here's what the editorial writers had to say:

"Why is Chicago such a fabulous city? Because it has been run by visionaries who understood that the vibrancy of a city's downtown is essential to its long-term health. From planner Daniel Burnham, who transformed the lakeside with gracious parks, to the present Mayor Daley, who envisioned the highbrow yet communal Millennium Park, Chicago has been fortunate in its civic leaders, men and women who have a profound interest in enhancing and developing the city."

Since working there this summer, I have had to leave the Loop only twice for meetings, once to go to University of Chicago sociologist Terry Nichols Clark's apartment in Bronzevile with a spectacular view back to the city and out to Lake Michigan, and once to visit David Perry at University of Illinois at Chicago's Great Cities Institute. But then, UIC is only one block out of what is now considered downtown, so that hardly counts.

The point is that Chicago's decison makers have kept their offices downtown. They see each other at lunch. It's easy to get together and share ideas. And, in my opinion, it shows.

It's good to see the commitments First Tennessee Bank, Baker Donelson, the Hyde Family Foundations, among others, have made to downtown. We just need more like them.

Have We Seen the Future?

John Branston's Memphis Flyer column this week analyzed actual increases in attendance at the Zoo since the pandas' arrival compared to estimates of what could be expected. Instead of the predicted 400,000 new visitors in the pandas' first year, only 177,590 showed up.

I was reading the column to my husband on our way home tonight from Miss Cordelia's. When I told him that new visitors to the Zoo were short of predictions by more than 200,000, he commented, "They're holding on to their money so they can buy tickets to the aquarium."

Keeping It Real. Memphis According to Mary.

Mary Cashiola got it just right in this week's Flyer when she noted that being "overlooked" by chain stores and restaurants comes with its own virtues. "What we have is real," she wrote. "It wasn't testmarketed in four major cities then imported here. And that authenticity sets Memphis apart and can be used as a selling point."

Contrast Mary's confidence about Memphis with that of The Commercial Appeal editorial writer this morning who embraced the "decision" by the Rolling Stones to play Memphis as some sort of sign that Memphis is worthy. It reminds me of poor Sally Fields' Oscar acceptance speech, "They like me. They really like me." Once again, our short history of acts like Velvet Underground bypassing Shelby County for DeSoto County was cited as evidence of a competition we can't afford to lose. The editorial writer even went on to suggest that the FedExForum's concert bookers should make their slogan, "Ain't Too Proud to Beg."

It made me want to beg The Commercial Appeal writer to pick up a copy of the Flyer and read Mary's column.

Michael Porter, the Harvard strategy guru, counsels clients to build strategy off difference not sameness. Sameness is never a winning strategy. When will we learn to be confident in our difference and capitalize on it?

Portland Proves the Point

Oregon was the only state in the nation where obesity did not increase, according to the study by Trust for America's Health. Why? An AP story reports that Oregonians are more likely to engage in physical activity, like bike riding. Why? Mild temperatures help. But the real difference is that state's attention to creating real urban density and pedestrian- and bike-friendly urban design. As one bike commuter put it, "I get 45 minutes exercise every day without even thinking about it." That's the point. Design physical activity into the environment so that we don't have to "exercise" but we do it without thinking.

We're Fat and It's Going to Cost Us

New reports from the Trust for America's Health grabbed headlines today. The headline in the Chicago Sun-Times read "South Will Rise Again -- If It Can Get Off Couch." It wasn't a fun day to be from Tennessee, which ranked fifth on the list of "fattest states."

Why are we fat? Another report today noted the proximity of McDonald's to schools. And, indeed, we eat too much, too often of the wrong foods.

But the way in which we design our cities also plays a significant role. We have engineered physical exertion out of our lives. If every trip depends on a car, and the only way to get moving is to "exercise," we are a huge disadvantage if our goal is healthy living. Unfortunately, except for those who are very poor or ultra committed, every trip in Memphis does, indeed, begin and end in the automobile. And there is no sign, no hint that this will change in the foreseeable future, despite the fact that other Southern and Western cities are making serious commitments to transit.

If obesity were simply an individual problem of individual making with individual consequences, we might hope for better behavior and be done with it. But it is not.

A 1993 report by the former director of the Centers for Disease Control traced the underlying factors leading to the diseases listed on death certificates. He found that "diet/physical inactivity" ranked second only to smoking in their impact. An unhealthy diet and sedentary lifestyle actually caused 17 percent of deaths, while smoking caused 18 percent of deaths.

Health care costs are skyrocketing in America. It is the fastest growing item in most state budgets. Where will the money come from? A report earlier this summer from the National Governors Association said there are only two places to get it: K-12 education or higher education. Governors are afraid to cut funds for K-12 since schools everywhere are underperforming. What's left? Higher education where the constituencies for spending are far narrower and precedent for private funding is much stronger.

Now, consider that research from CEOs for Cities points out that cities don't have to grow larger to grow richer but they do have to grow smarter. Their economic success depends on their number of college graduates.

Americans get fatter, Americans get sicker, states spend more on health care, states spend less on higher education, the economies of cities suffer, we all suffer.

Could we please re-think how we develop and design our city? Could we please get serious about public transportation and quit fooling with toy trolleys on routes to nowhere? Could we please support active lifestyles as part of daily living?

Is this too much to imagine for Memphis? I don't believe it.

We'll Get Back to You in 24 Hours About Our Hybrid Buses

So MATA plans to add hybrid buses to its fleet to save money on fuel and maintenance costs? Good move, Mr. Hudson. Now that you've taken the bold and progressive move of purchasing more environmentally-friendly buses, could we go back to the basics and apply the same common sense thinking?

Motorists across the country are now looking for alternatives to gaz-guzzling cars, and many are turning to public transportation. But if anyone has ever tried to navigate the maze that is Memphis' bus routes, it's likely that the experiment ended in frustration and a trip to the gas station to fill up your car.

First off, if you call MATA you are asked to enter the bus route you would like to ride. As a neophyte bus rider, you probably have no idea. If you decide to take the more technologically-savvy route and go the the internet, you can enter where you are and where you want to go to find your route. But here's what you get:

"Just fill out the following form, and one of our Customer Service Representatives will get back to you within 24 hours with a recommendation of bus routes to take."

This is not made up.

This Smart City Consulting staffer is spending a lot of time in Washington, D.C. these days sans car. But it's not a problem. WMATAs web site has a trip planner that instantly gives you multiple options for ways to get where you are to where you are going either on bus or rail (an entirely different blog for a different day). There are links to PDF files with maps of the bus routes, the time it takes and directions from where you step off the bus to the front door of your final destination. This is not made up either.

The routes make sense (they use a groundbreaking grid system!). They (mostly) run on time. People use them.

Could we learn something here?

Consolidation Is A Tough Sale On Its Best Days

With the prospects looming in coming weeks of a return to rhetoric in which the “c” word is hurled, it’s worth remembering the facts of consolidation, whatever your point of view.

Despite the pervasive belief that Memphis is somehow different than most cities in the country with our two-headed local government, the truth is that of the 3,034 counties in the U.S. and the 20,000 cities, only 35 have consolidated governments, and only nine of these are in the top 100 largest cities.

It’s amazing how widespread the confusion is. A few years ago, one of Memphis’ leading CEO’s was speaking to a Leadership Memphis class about what should be done to move our city ahead. One suggestion was to consolidate our governments so we could compete with Dallas, Atlanta and Houston. Of course, none of those three cities has consolidated governments, but nobody seemed to notice.

Another misperception is that more and more cities are chosing to consolidate. Actually, most major cities that consolidated did so in the 19th century and the first few years of the 20th. In fact, no city and county the size of Memphis and Shelby County have consolidated in the past 100 years.

Therein lies the starkest lesson about the difficulty in pursuing consolidation. In the past 80 years or so, there have been almost 150 consolidation referendums, and only 25 were approved, most of them for smaller cities. Even the widely reported consolidation of Louisville and Jefferson County in 2000 came after three previous votes had failed.

Meanwhile, in Tennessee, although we think Memphis is unique in having both a city and county government, Nashville is the exception, not the rule. No other metro area has a consolidated government. Besides Nashville, the only other consolidated governments in Tennessee are the metropolises of Lynchburg/Moore County and Hartsville/Trousdale County, and together, their population doesn’t equal Millington’s.

Since consolidation was allowed by the state legislature in 1953, consolidation votes have failed twice in Memphis. But we are not alone. Knoxville has voted down four consolidation charters, Chattanooga has turned consolidation down twice, and Nashville passed it in 1962 after turning it down in 1958.

In other words, on its best day, the consolidation of governments is a tough sell, and the outcome is more likely to be failure than success. That’s because Tennessee law sets the bar so high that only a few governments can vault it. The law says that for consolidation to take effect, it must be approved by voters within the largest city and by voters outside the largest city. In other words, there are two tallies kept, and if consolidation loses on either, it is defeated.

And because tens of thousands of Memphians have already voted with their feet and moved to the bulging cities of Germantown, Collierville and Bartlett, it defies common sense to suspect that they would now approve a large government dominated by the city they are trying to escape.

While it is tempting to sell consolidation as a way to reduce taxes, the track record in this regard is contradictory. But the argument that consolidation produces a unified vision for the community, its economic development policies and its priorities is undoubtedly true. That was a point made recently on Smart City (you can hear the interview at www.smartcityradio.com) when new Louisville Metro Mayor Jerry Abramson talked with Carol Coletta about the changes wrought by the new government.

In fact, Louisville is the poster child for consolidated government, as Abramson cut the combined workforce by 10 percent and righted a $40 million budget shortfall.

At the end of the day, however, the greatest benefits of consolidation are more intangible than tangible. It is seen in the new spirit that is unleashed in a city that modernizes its governmental structure. It is the feeling of hopefulness that is generated, the pride in being innovative and the powerful message about the city’s self-confidence and progress.

Ultimately, the primary test of consolidation here is whether it would reduce taxes for Memphians, who pay a disproportionate share of the tax burden in Shelby County – 100 percent of city taxes and about 70 percent of county taxes. This means that in joint operations like the health department, Office of Planning and Development and other joint agencies, Memphians pay a premium for services when compared to non-Memphians.

Whether consolidation is in the future for Memphis and Shelby County, the overriding public policy issue that needs to be addressed is the disincentive that exists to live in Memphis. Presently, Memphis taxpayers are called on to subsidize their own decline, tempted by their own governments to abandon older neighborhoods in favor of new ones, producing a decline in the quality of the urban infrastructure and creating an incalculable social cost – decline in sense of community, the inequality caused by the flight of wealth, the inefficient use of land for suburban sprawl and the redundancy in public investment.

This deserves the attention of every elected official who represents the citizens of Memphis, because with or with consolidation, there are ways to equalize the tax burden for Memphians by shifting services from the city’s tax base to the larger, more regional tax base of the county. In this way, the tax rate paid by Memphians could ultimately be only slightly more than the rate paid by Germantown and Collierville residents.

And if that day were ever to come, it would overshadow the benefits that could come with consolidation.

Pondering Imponderables # 2

Even Germantown can’t match its rhetoric about the importance of design when developers need land. A couple of locations within the city limits are now sites for the clear cutting of trees. And this in the city that thinks it sets the standard for all the rest of the county when it comes to livability.

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The Airport Authority is making a valiant effort to remove the eyesore caused by the landscaped “M” that greets drivers as they leave the airport headed to I-240. Following our blog on the overgrown weed patch that had replaced the planned flowery welcome mat, Authority workers removed the weeds and sodded the “M.” Maybe next year, they can graduate to flowers, and if all else fails, they can contract with the Riverfront Development Corporation to do it for them. The entrance to downtown that the RDC has created on Riverside is what the access road to the airport was supposed to be – full of trees, flowers and landscaping.

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In the next few weeks, Mayor Herenton will be making another push for school consolidation, so get ready to endure an outburst of demagoguery from the Shelby County School Board of Education chairman. Increasingly, however, personality conflicts aside, this is an idea whose time is coming.

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A “big announcement” on the future of The Pyramid is being planned. Whether taxpayers should celebrate will depend on whether the potential developers show up with their own financing and not depend on city and county governments to be part of the financial plan. Don’t expect for any investors to pay the outstanding debt on the signature building, as city and county governments had hoped when it appointed the committee to recommend future uses.

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The Memphis Cook Convention Center Board appears ready to sign a contract for SMG to continue managing the facility. When SMG was hired, its stated goal was to reduce the $1.5 million in deficit funding paid for by the hotel-motel tax, but in truth, the deficit has grown by about one-third. Every one on the board likes and respects SMG employee Pierre Landaiche, who manages the convention center, which begs the question of why the board doesn’t just make him an offer he can’t refuse and cut loose the costly corporate overhead of SMG. The Philadelphia-based corporation, which essentially owns the assembly building management market in the U.S., promised more than it ever has delivered in the way of special expertise from its home office to help grow the Memphis convention center market.

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So, President Bush is appointing his old spin meister Karen Hughes to improve the U.S.’s image abroad. One of her ideas is a tried-and-true campaign tactic: the rapid response team. Secretary of State Condoleezza Rice said the team would “work to deal with misinformation and misinterpretation” from around the globe. She said the Administration has had to rebut “all kinds of lies about what we are doing.” All of this raises the question of who will correct the misinformation and misinterpretation that is distributed by the Administration itself, particularly in the areas of intelligence and foreign policy. Nor does it deal with the fact that roughly 80 percent of the bad press abroad and the bad image of the U.S. comes directly from American policies, according to Ms. Hughes’ own consultant.

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Memphis City Schools’ budget was $500 million in 1997. It is $800 million today. It had 108,000 students then and 119,000 students now. We’re not making any point. We just found it an interesting statistic.

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Since 1998, county property tax rate increases have totaled $1.54 plus the 5 cents for debt service on rural school bonds property owners outside Memphis pay. The breakdown is 83 cents for school operations, 45 cents for debt service and 26 cents for general government. The general government gain has been up and down as more of the rate has been shifted to debt service. The debt service costs will continue to climb in the future, but to this point, the major factor in county property tax increases has been school operations and not the county's debt.

It's Time To Give The Film Commission The Incentives It Needs

At a time when Memphis and Shelby County Governments are waiving more than $60 million in taxes every year to recruit new businesses, the Memphis and Shelby County Film Commission -- which has the greatest return on investment of any economic development agency in this city -- continues to beg for peanuts.

Increasingly, executive director Linn Sitler and her staff are competing with rival locations like Louisiana which are offering significant financial incentives. Louisiana has followed a trend across the U.S. and has passed legislation offering special financial benefits for film productions. The local film commission has made national impact recruiting a series of films and television programs to Memphis, but even the staff's considerable charm.good will and national reputation for getting the job done cannot carry the day with producers looking to squeeze every dime out of their production budgets.

Considering that Memphis and Shelby County manage to waive more than $1 million a week to get anything from a warehouse paying its employees less than average incomes to 94 high-paid executives from International Paper, it’s time for the city fathers to pause long enough to set aside something to support our film business.

In the past legislative session, Ms. Sitler and staff member Brett Smith lobbied state legislators for tax breaks to get Tennessee on a level playing field with its rivals, but they came up short. Hopefully, next year legislators will see the light (no pun intended). Film production is exactly the kind of economic shot in the arm Memphis and Tennessee should be chasing. It doesn’t require any increase in public services, and it leaves millions of dollars in the local economy.

Ms. Sitler, who is regarded as one of the nation’s best at her business, says the incentives are needed. And, if that’s not enough justification, so does local director Craig Brewer, basking in the glow of national praise for “Hustle and Flow” and who is paying a $800,000 premium to film his next movie in Memphis. That’s the amount of financial incentive offered to him by a competing state and which he rejected to stay in his hometown.

Our two best experts tell us the incentives are needed. It’s time for all of us to listen. Lord knows, we've gotten more economic activity from the film commission than many of the other trendy economic strategies that have come and gone, accomplishing little except a batch of plans for the shelves.

And if you're skeptical of the value of the film commission, just consider the lsit of movies since 1990:

1990 "Silence of the Lambs" Orion)
1991 "Trespass" Feature (Universal Pictures)
1991 "Taking Back My Life:The Story of Nancy Ziegenmeyer" (CBS-TV)
1992-93 "The Firm" (Paramount Pictures)
1993 "The Client" (Warner Brothers)
1994 "Without Air" (Winghead Films/Independent)
1994 "Separated by Murder" TV Movie (CBS-TV)
1995 "A Family Thing" (MGM-United Artists)
1995 "The Delta" Charlie Guidance Prods./Independent)
1996 "The People Vs. Larry Flynt" (Columbia Pictures/Code Pink)
1997 "The Rainmaker" (Paramount Pictures)
1997 "The Road to Graceland" (Largo Entertainment/Independent)
1997 "Why I Live at the P.O." Film Short (Eudora Prods.)
1998 "Breakfast with Arty" (Metamorphosis Prods.)
1998 "Cookie's Fortune" Sandcastle 5 Prods./Independent) *Based in Holly Springs, MS
1998 "Woman's Story" (Muddy River Productions/Independent)
1999 "The Big Muddy" (Fine Grind Films/Independent)
1999 "Intersections" (Workingman Productions/Independent)
1999 "The Poor and Hungry" (BR2 Productions/Independent)
1999 "Breakin' It Down" (Red Ceiling Pictures/Independent)
1999 "Cabbin' It" (Cinehaus, Inc./Independent)
1999 "Central Garden" (Fine Grind Films)
2000 "Cast Away" (Dreamworks)
2000 "Death Row" (Teamworx Productions)
2001 "Going to California" (San Vincente Productions/ShowTime)
2001 "The Angel Doll" (Angel Doll Productions)
2001 "Death Row " (Teamworx Productions)
2001 "Cast Away" (Dreamworks)
2001 "American Saint" aka "Cabbin' It"(Cinehaus, Inc./Independent
2002 "A Painted House" (McGee Street Productions, Inc./Hallmark Entertainment)
2002-2003 "21 Grams" (Focus Features)
2004 "40 Shades of Blue" (Forty Shades of Blue, LLC/Independent)
2004 "Streaker" (Creative Forces/Independent)
2004 "Walk the Line" (Fox 2000)
2004 "Hustle & Flow" (New Deal Entertainment/Homegrown Films/Independent))
2004 "Send In The Clown" (Sharp Entertainment/Independent)

To underscore the importance of supporting the work of the film commission, an article in yesterday's New York Times makes the case for us.


August 18, 2005

California Considers Tax Breaks for Filming

By DAVID M. HALBFINGER

LOS ANGELES, Aug. 17 - For the first time since a handful of immigrant New Yorkers moved west to Hollywood seeking cheap land for their movie studios, so many motion pictures are being made outside California that state leaders are poised to enact subsidies to keep productions from leaving.

The state's dominance in entertainment production has been eroding for years, as filmmakers and television producers gobbled up generous tax incentives in Louisiana, New Mexico, Illinois and other states, and pursued tax breaks, cheaper labor and favorable exchange rates as far away as Canada, Eastern Europe and Asia.

One figure often cited is the number of feature-film on-location production days in Los Angeles, tracked since 1993 by the city's Entertainment Industry Development Corporation. That number has dropped from a peak of 13,980 in 1996 to just 8,707 last year, a 37 percent decline. The figures exclude production days on studio lots, for which permits are not required.

Meanwhile, in Louisiana alone, spending on film and television production has skyrocketed from $20 million in 2002, when lawmakers approved the nation's richest entertainment tax-break package, to a projected $425 million this year, officials said.

Now, Hollywood leaders seem to have convinced politicians in both parties - including a sympathetic Gov. Arnold Schwarzenegger, a Republican - that enough is enough.

Assembly Speaker Fabian Núñez, Democrat of Los Angeles, said: "When you start losing middle-class jobs to other states, you've got to at some point figure out how to make an investment to keep those jobs in California. The Hollywood industry is a blue-chip industry that is based in California. We want to keep it here."
As if working from the same script, supporters of the subsidies are keeping the focus on jobs, jobs, jobs.

"We really built the case to show this is not about helping the studios," said Bonnie Reiss, a senior adviser to Mr. Schwarzenegger and former entertainment lawyer. "This is about, when productions are kept here, it's about the caterers and the makeup people and the grips. It's about those people."

Though officials cautioned that the details could still change, and taxpayer groups are already grumbling, an outline of a bill to be sponsored by Mr. Núñez is circulating in Sacramento that would give makers of films, television shows and commercials $50 million a year or more, twice the annual amount available from the New York State film office. Louisiana, by comparison, paid out $65 million in credits last year.

The bill, tentatively set for a hearing on Monday before the State Senate Appropriations Committee, would provide a 12 percent tax credit on a project's spending in California, up to a cap of $3 million per production, according to a draft obtained by The New York Times. Television movies, which are perhaps the most endangered species of Hollywood production, may be given an extra 3 percent credit.
Crucially, the credits would be refundable, meaning that a producer with no tax liability would receive the full amount of the credit in cash from the state.

The incentives may not alter the calculus for a $100-million-plus studio tent-pole like "War of the Worlds" or "The Island," but could sway location decisions for films on the order of "Wedding Crashers" or "Herbie: Fully Loaded," which cost $40 million to $50 million to make.

"Our goal is to change behavior," said Amy Lemisch, a former producer who is director of the California Film Commission, a state agency.

Like their counterparts in other states, California officials say they struggled to frame their legislation as narrowly as possible so subsidies go to productions that might truly be shot elsewhere.

Qualifying projects would have to shoot 75 percent of their days in California. New one-hour television series, or those now produced elsewhere, would be eligible, as would television movies. News, sports, talk and game shows, sitcoms, awards shows, telethons, reality shows, animation, student and industrial films, and pornography would be ineligible because, officials say, they are unlikely to go elsewhere for financial reasons. But the bill would include incentives for increased production of television commercials, in a nod to a less flashy but major source of Hollywood jobs.
To avoid subsidizing star salaries, the bill would allow only the first $25,000 of salaries for stars, directors, and other "above-the-line" talent to count toward in-state spending. To ensure that the money is funneled into job creation rather than subsidies for the studios, overhead and distribution costs would be excluded. And to ensure that recipients of the money really put it to use, they would have to begin shooting within five months of approval or forfeit the tax credits.

Qualifying projects will be accepted first come first served, Ms. Lemisch said. She acknowledged that this could mean that some more efficient producers receive state money while others who may need it more to stay in California could be turned away. "It's not an exact science, but I think if we are capturing enough applicants, we're going to see an increase in production," she said.

California has given the film industry tax breaks before: when post-production houses were converting to costly digital equipment, the state offered an investment tax credit. And an initiative known as Film California First, which lasted less than three years, reimbursed film companies up to $300,000 for payments to police and fire departments or other public agencies for their services or the use of public property.
But the entertainment industry has tried at least twice, without success, for a package of direct subsidies for in-state production. A first effort failed when opponents disputed the severity of the runaway problem; a second effort, in 2002, died amid opposition to what some called corporate welfare for the studios.

This time, as a result, the unions and guilds are being pressed into a leading role.
"We're not talking about big stars, but working production people, the people who make the system work - film editors and camera-people, truck drivers and location managers," said Barry Broad, a lobbyist for both the Teamsters, which include 8,000 Hollywood workers, and the 40,000-member American Federation of Television and Radio Artists. "At some point, they will not have enough work to sustain a living in California, because too much of it will go. And we'll lose the critical mass."
Proponents say the incentive package's bipartisan support - and the way it is being shepherded through Sacramento at the close of the legislative session, with less opportunity for public scrutiny - mean it is likely to reach Mr. Schwarzenegger's desk before lawmakers go home on Sept. 9.

But there is opposition to the bill, most vocally so far among taxpayer groups.
Jean Ross, executive director of the California Budget Project, a nonpartisan fiscal watchdog, said the incentive package was far too rich and would be the first fully refundable corporate tax credit passed by the Legislature, setting "a costly precedent."

More important, she said, "I think the question is, in a year when we have a state budget that cut $3 billion out of public education, is this the best use of scarce public resources?"

But Mr. Núñez, the Assembly speaker, cast the tax incentive as a way to shore up the state's tax base and prevent future revenue shortfalls like those that forced the budget cuts in the first place.

The California tax incentive would not be the richest around by any stretch. Canada provides a 16 percent refundable tax credit on labor costs, with no cap; the provinces of Ontario and British Columbia add 18 percent more, while Manitoba offers a whopping 45 percent credit for labor costs, according to the California Film Commission.

In the United States, 14 states have passed or expanded incentives for production this year alone.

But Louisiana remains the leader in enticements to the film and television industry. The state offers a tax credit of 15 percent of a production's total costs, even it is only partly shot in Louisiana, and an additional 20 percent of a film's in-state payroll. A revised credit, which takes effect in January, will apply only to spending in Louisiana but will rise to 25 percent of spending, plus 10 percent of payroll.

"It's an absolutely amazing incentive," said Jeff Begun, a vice president of Axium International, an entertainment production payroll company that tracks incentives by state.

He added that Louisiana still had no sound stages but noted that several were under construction. "One of the arguments for California is that it may cost you a bit more, but everything you need is here," he said. "But they're building all that stuff in Louisiana."

Panhandling Remains Long After Elvis Fans Leave

Elvis Week has come and gone, and the thousands of tourists have returned home, having left their cash in the local economy and left with memories for life. Sadly, the beggars that greeted them downtown when they arrived didn’t leave with them.

Instead, the man who’s been sleeping for days in the window casement on the Beale Street side of The Orpheum Theatre remains there. Based on the number of hours that he sleeps each day, hassling tourists during Elvis Week was hard work. Meanwhile, other downtown beggars have taken to bathing in the fountains in front of City Hall almost in the shadow of the Center City Commission, charged with making downtown Memphis a special experience for all of us. Then, there is the demanding panhandler who attempts to block cars traveling city streets, forcing them to give him money, and if denied, he smacks their cars with a stick.

In honor of these summer residents of downtown Memphis, we reprint our blog on this subject. It becomes even more relevant these days, particularly in light of what other cities are doing to control the problem. Atlanta’s new anti-panhandling laws passed resoundingly this week by the City Council and were supported by Mayor Shirley Franklin. Proponents of the law called downtown Atlanta “hostile,” because of the aggressiveness of the men and women who spend their days begging for money there.

Meanwhile, here, we act out the role psychologists would call “the enablers,” ignoring behavior that is objectionable and the warning signs for people in distress, people who deserve a helping hand rather than a handout.

Also, this week, Chattanooga received a $1 million grant to house 100 chronically homeless people who also suffer from alcoholism. Mayor Ron Littlefield says Chattanooga will be known as a “city of compassion” and address the root causes of homelessness and not just the effect.” One of those effects is panhandling, a perennial problem in downtown Memphis.

Either approach to deal with the problem is valid, and perhaps, Memphis officials can draw inspiration from strides being made in cities across the U.S. and do something to address this aggravating problem which diminishes the enjoyment of downtown for all of us.

Downtown workers and visitors would appreciate it. In fact, it’s something they are begging for.

**********


Tuesday, June 21, 2005
Summer in Panhandler Heaven

It is officially summertime in Memphis. Flowers are blooming, the temperature is going up, tens of thousands of people flood downtown for baseball at the best minor league stadium in the country and the panhandlers are back in force. As reliable as the swallows at Capistrano, they reappear to wander through downtown, some in constant conversation (often with themselves), to sleep in an alley or two, to follow downtown residents they have come to recognize and to torment the poor, bewildered tourists their radar always seems to fix on.

Other cities seem to be making strides in addressing this nuisance. Gone are the homeless people living in cardboard boxes above grates outside the federal buildings of Washington, D.C., and even Jackson Square in New Orleans, once panhandlers paradise, is free of harassment.

Few cities have resorted to anti-vagrancy laws, which has the deserved stigma from its legacy as a weapon in the South to deprive African-Americans of their rights. A more measured response is anti-panhandling laws, especially when coupled with social services that prepare people for re-entry into society by finding them jobs and training and diagnosing and treating mental disorders

To set the record straight, this is not a problem with homeless people. The majority of them, probably less than five percent according to research, panhandle. Rather, it is an attack on behavior of a few who devalue and demean the common space that we collectively share, not to mention the smell of urine and worse that emanates from downtown parks and alleys in the summer. As the assault by one panhandler a few years ago against mental health advocate Nancy Lawhead reminds us, there are reasons to be wary. That is why Nashville’s new police chief made the fight against panhandling a priority. Cincinnati conducts a quarterly census and has passed laws against panhandling and for the removal of camping sites. Other cities that are actively addressing this problem include Little Rock, Atlanta, New Orleans, Austin, Orlando, Los Angeles and Las Vegas.

Back in Memphis, the word is out. There are panhandlers that come back to Memphis each year expressly because of its lax reputation and laxer enforcement. There is the man who regularly lives in Barboro Alley for the summer. There are the panhandlers who hitchhike back to summer in Memphis. There are the panhandlers who feel invincible.While there is the irritation to downtown residents that comes from the insistent begging, it is nothing compared to the discomfort that comes from watching a family from Spain or tourists from Denmark confronted by an imposing fellow who follows them down the street, talking loudly and with his hand in their faces.

With a tourism industry of $2.4 billion, it creates memories that do nothing to enhance the city’s reputation. But more to the point, it is more than a disservice to our guests. Most of all, it is a disservice to the panhandlers themselves. They deserve opportunities for to do better, and the first step is to get them off the streets so their needs can be addressed. Some say it is not compassionate to target them, but the sign of a compassionate city lies in offering these people the means to end their dependence on their skills as public nuisances.

Teamwork Brought Home Victory In IP Competition

Success has many fathers, it is said, so before the delivery room is filled with proud parents, we need to take a moment to recognize the team that put together the proposal that lured the world headquarters of International Paper from Stamford, Connecticut, to Memphis.

While VIPs made the announcement, it was their staff that did the heavy lifting, and it was good to hear them given credit at the press conference. None of the praise is likely to be reported, so for the record, the team was headed up by Memphis Regional Chamber senior vice-president of community development Dexter Muller – now serving as interim president and CEO.

Representing city and county governments were Richard S. Copeland, director of the Division of Planning and Development; Kelly Rayne, special counsel to Mayor AC Wharton; and Pete Aviotti, special assistant to Mayor Willie W. Herenton. The other member of the team was Mark Herbison, senior vice-president of economic development for Memphis Regional Chamber. These were the five people responsible for putting together the economic coup that added Memphis’ third Fortune 500 company.

Also key to the economic development win was City Council Member Rickey Peete and Shelby County Commissioner Julian Bolton, members of the evaluation committee of the Memphis and Shelby County Industrial Development Board. They asked the right questions and ultimately supported the payment in lieu of taxes (PILOT) proposal that IP accepted. Both elected officials have questioned our community’s rampant overreliance on tax freezes in the past, and their stamps of approval for the deal go a long way in convincing the public that it was a deal that is wise and in taxpayers’ best interests.

The teamwork that won the headquarters was highly orchestrated and highly cooperative, and while bragging rights about IP may yield big benefits, the most important outcome may be the rediscovered working relationship between the Chamber, Memphis and Shelby County. It could prove crucial to Memphis’ success in recruiting new business and nurturing existing business in the coming years, and here’s hoping that they continue to meet in an informal way to guide economic development activities and policies.

While there may in time be questions about the size and rationale for the $15 million tax waiver given to IP over 15 years, there is no question that this is what tax freezes are for. Last week, we wrote that in a 10-year span when Memphis and Shelby County gave 415 tax freezes, Nashville/Davidson County gave five. In fact, during that decade, about 60 percent of all the city and county taxes waived in the state was waived here.

Nashville reserves tax freezes for major corporate headquarters just like this one, and with this victory, Memphis should now fine tune its economic development policies and remove the stigma that comes when you repeatedly sell your city at a discount.

IP has been a beneficiary of five PILOTs, including one that it defaulted on. For its part, one of its first acts as a new corporate citizen should be to reassure the taxpayers who are investing so significantly in their future. They do this by making a commitment to stay in Memphis at least until 2020, when the tax freeze expires. The corporation’s decision to break its promise with Connecticut after pledging to remain there until 2010 gives some people pause, but it was never enough to keep Memphis from competing for the 94 high-salary executives that will now call our city home.

In the end, too, the deal would never have been consummated without Gary Shorb, Chamber chairman, Mayor Herenton and Mayor Wharton, who gave their team the flexibility to negotiate what they considered the best agreement for this community. That’s often the greatest test of real leadership, and with IP, Memphis not only passed the test. So did they.

The Latest Battle Front In The Culture Wars: Intelligent Design

There are times when the Religious Right would try the patience of Jesus Christ Himself.

The growing battle over “intelligent design” is the latest evidence of the literalism that threatens the independence of school districts by imposing the religious beliefs of a few onto the education of the whole. We predict that any day now the Shelby County Board of Education will wade into the religious thicket and try yet again to inject Christianity into the school curriculum.

It seems a strange irony that the Religious Right, the professed people of faith appear to lack any faith at all. Rather than have faith to accept and worship the Bible as a sacred book, they instead are compelled to insist that it is a science book and a history book. Oh, ye, of little faith.

It’s hard to believe that on the 80th anniversary of the Scopes’ “monkey trial” in East Tennessee, we are heading toward another showdown with the fundamentalists determined to impose their religious views on every one else. We could only imagine if Muslim-Americans, or even Jewish-Americans, were trying to do the same. The outrage from the Right would be deafening.

But people engaged in holy wars rarely reflect objectivity. Rather, they claim everything is evidence of anti-Christian bias and use the word, agenda, to bludgeon anyone who disagrees with them. There is the gay agenda, the atheistic agenda, the liberal agenda and the anti-Christian agenda.

What is most remarkable of all is that they make these kinds of inflammatory, simplistic statements in the most religious country in the history of humankind – the United States. If there is indeed an anti-Christian agenda that is undermining this nation, it would represent the greatest upset since David beat Goliath.

But, back to creationism, excuse me, I mean intelligent design…in about a month, scientists and creationists will battle in Dover, Pennsylvania, over the teaching of evolution in public schools. You may have thought that we had already resolved this issue. After all, the courts have ruled over and over that these religious-based theories about the origins of the species are violations of separation of church and state.

Then again, the Religious Right discounts the principles of separation of church and state, too. It’s a myth created by Godless liberals (like Jefferson). Once you can dismiss historical precedents this easily, science is relatively simple.

“Intelligent design” is the latest disguise for that good old-fashioned favorite of the Religious Right -- creationism. Proving that they have learned the lessons of Karl Rove, they have dressed up creationism in new clothes and given it a new name. At the same time, they attack anyone who has the temerity to question them.

Of course, creationism did need some updating, since it was based on the argument that our world is 6,000 to 10,000 years old; the fossil record shows they are off about 4.6 billion years old.

This time around, no one argues such a wrong-headed position, and proponents calmly suggest that “intelligent design” should be taught in the interest of fairness, because Darwinian evolution is nothing but a “theory.” Of course, so is gravity and the atom, but that fact doesn’t slow down their efforts in treating textbooks like rap cd’s. They would label them with a warning: “This textbook contains material on evolution. Evolution is a theory, not a fact, regarding the origin of living things. This material should be approached with an open mind, studied carefully and critically considered.”

It sounds so reasonable and so fair…until you look under the hood. There lurks the latest pseudoscientific version of creationism. Actually, evolution is a theory. It is also a fact. Darwin uses the word, evolution, precisely one time in On the Origin of the Species. (By way of comparison, the Bible never uses the word, rapture, even once, but that’s another story.)

In truth, it is hard to understand why Darwin’s writings engender such visceral rhetoric from the Right. The central proposition of evolution is this -- millions of years ago, a species of primates split into two branches. One became chimpanzees and the other become humans. In other words, humans did not evolve from chimpanzees, but from the common ancestor for both of chimpanzees and humans.

(At this point, it’s hard not to hear the voice of Mark Twain saying: “It now seems plain to me that that theory ought to be vacated in favor of a new and truer one...the Descent of Man from the Higher Animals.”)

Our connection to ancient ancestors seems obvious. Our appendix, the thin coat of hair that vanishes shortly before we are born (apes keep theirs and it becomes their fur) and the vitamin C in our diets unlike most mammals are vestiges of our genealogy. Or consider the oddity of goosebumps; coming as a response to the cold, they are intended to fluff up our fur to keep us warm. Such peculiarities certainly don’t point to intelligent design, because the presence of these characteristics is meaningless in modern humans. More to the point, the presence of these peculiarities indicate the evolutionary process that is still at work.

In response to such obvious facts supporting evolution, the intelligent design school offers up Of Pandas and People, offered up as a textbook. The book doesn’t mention religion, but it might as well. The name, “intelligent design,” begs the obvious question: who was in charge of such intelligent design? The book trots out old creationist fiction that organisms appeared spontaneously and have remained unchanged since their creation.

Every high school student knows this is not true. Different organisms and animals appear in different fossil records. First, bacteria; then algae; then animals with shells and marine life; then the Cambrian explosion that produces an array of life including vertebrates. The timeline is about three billion years.

The truth is that never have we had so much historical, physical evidence of the evolution of living organisms as we do today. The fossil record is rich in details and gives no support to the view of instantaneously created species that remained the same since their sudden appearance on the scene.

In light of the insistence of intelligent design advocates, it would stand to reason that its theory would be the subject of intense scientific research. That is hardly the case. Virtually no research has been done, and that is the strongest reason that it can find no respect from the scientific community.

In the end, intelligent design is not the solution to a scientific problem. It is the latest response to a religious problem among fundamentalists whose faith is not strong enough to countenance anything short of a literal interpretation of the Bible.

The latest evolution case comes up for a ruling in a few weeks, and at least some of us will be praying for reason to prevail.

We remain baffled as to why there is any contradiction between evolution and belief in God. To us, evolution is the most intelligent design of all.

Agricenter's $20 million In Public Funding Failed To Carry Out Its Founding Mission

In response to Thursday’s blog on how Memphis and Shelby County lead Tennessee in the number and amount of tax freezes, we received several calls and emails. One reminded us that Agricenter International and all of the businesses leasing space and land there don’t pay property taxes, because they are on public land.

It points up the problem in trying to calculate the true amount of property taxes that are being waived in Shelby County. Just the taxes waived by industrial development boards get the amount to about $65 million, but the public accounting never even includes city and county property, such as Shelby Farms Park, where Agricenter is located.

Of course, the Agricenter story is about much more than waived taxes. Its story also is about direct funding from property taxes and control over 1,000 of irreplaceable parkland. While others debate the future of Shelby Farms Park and how to transform it into one of the U.S.’s great parks, Agricenter interests have generally stonewalled any effort to develop an overall master plan for all 4,500 acres in the heart of Shelby County.

Perhaps, it is understandable since the Agricenter compound has crop production that produces about $350,000 a year in revenue; a 140,000 square foot exhibition center with leased office space; a 300-lot RV campground; a farmers market and nursery; Ducks Unlimited’s headquarters; Showplace Arena and several unsightly buildings that dot the landscape.

Its founding mission in 1981 was to be a “regional resource and technological center for all aspects of agriculture,” and when it opened, it professed to being a “showplace for cutting edge technology and equipment…a repository for information in a state-of-the-art data bank…a prominent center for innovative research…the site for permanent and changing exhibits…and the host/sponsor/organizer for significant agricultural conferences, seminars and conventions on emerging themes.”

Those were formidable goals, but unfortunately, along the way, Agricenter became nothing more than a publicly subsidized office development. It is now a sad dowager when compared to its high hopes of 25 years ago.

Agricenter has been given $19.4 million in public money since it opened ($15.6 million from county government), which seems especially ironic since it sits on parkland that has scratched for every penny it has ever received from the county budget. The only real investment for the park was the Visitors’ Center, and it was built with a state grant of about $1 million.

Remarkably, the county lacks full oversight control over the facility, because of the cozy relationships between the Agricenter Commission (the county board which is supposed to provide the checks and balances) and Agricenter International itself.

The good news is that for the first time in fiscal year 2003, Agricenter finished in the black with revenues of $2,053,184 and expenses of $1,917,353, producing a positive cash flow of $135,831. Agricenter received yearly operating money from Shelby County Government until 1996 when the county administration put its foot down and told the board it was time for the project to be self-sufficient. However, county government continues to pay for capital improvements at Agricenter, and despite the original lease calling for lease payments, there is no evidence in county files that such payments have ever been made. In fact, during the spring of 2004, the Wharton Administration even forgave the $250,000 loan made to Agricenter.

The original lease said Agricenter would be used for the promotion, support and advancement of agriculture and agri-business, and “no other use of the leased premises shall be permitted.” Based on the signs on Germantown and Walnut Grove Roads for events, that language seems to have been forgotten long ago. We are told that during this calendar year, no agricultural events are booked into the exhibition hall.

In recent years, Agricenter’s revamped its mission to include “recreational opportunities” in addition to agricultural research, educational programs, environmental conservation and natural area preservation. These are noble goals, but would $20 million in public funding been invested in an operation dedicated to them? In fact, it would be easier to make the case case that this mission would fit more appropriately at Shelby Farms Park.

Agricenter was once a risk worth taking. It was just one of those projects that never seems to be able to get on track. Unfortunately for taxpayers, government has trouble pulling the plug on projects that get off track, and even though the county administration first served notice in the early 1990’s to Agricenter that the county was disturbed about its lack of progress, it continues to get county help and concessions even today.

It’s time for Shelby County Government to spend at least as much money and devote at least as much attention to the real regional asset – the park itself. Looking to the future and to the need to attract the creative class to Memphis and Shelby County, it is the park that will be our competitive advantage in the global economy.

The Wharton Administration has given more attention to the park than it has received in 10 years, and soon, it says an important announcement about the future of the park will be made.

Meanwhile, the story of Agricenter is a cautionary tale. The tale of a great park at Shelby Farms remains to be told.

Words To Live By

Reading Chicago Metropolis 2020 plan tonight, I ran across the following...

"The sustaining force of this historic process of renewal is Chicago's strongest spiritual asset: its swaggering self-confidence. This cannot be underestimated as a propellant of economic and civic revitalization. As historian David S. Landes writes in The Wealth and Poverty of Nations, his important book about why some nations create great wealth and others do not: 'In this world, the optimists have it, not because they are always right, but because they are positive. Even when they're wrong, they are positive, and that is the way of achievement, correction, improvement, and success. Education, eyes-open optimism pays. Pessimism can only offer the empty consolation of being right.'"

Milbloggers Are The New War Correspondents

Every war seems to bring with it an unexpected aspect unforeseen by The Pentagon. The War in Iraq – whether being called by The White House the War on Terror or the Struggle Against Global Extremism, depending on which is testing best this week – is in truth our first digital war.

The proliferation of cell phones, Blackberries and laptops has made imbedded media correspondents irrelevant. Now, hundreds of soldiers, regardless of their rank, their politics or their point of view are taking advantage of technology to become war correspondents.

Blogs eloquently tell about chaotic triage, question the wisdom of command strategies and plumb personal fears are sent daily – and sometimes, hourly. These ruminations on life in Iraq, including photographs, are inspiring generals to look for the delete button.

Only now is the mainstream media discovering the blogs and the availability of interviews with soldiers in the Middle East. And predictably, the Pentagon is gently trying to get a grip on a movement it did not foresee.

Somehow, it seems incredible that a command structure and its minions, vested with the ability to order planes costing $1 billion each, was incapable of seeing the potential impact of average GI’s talk directly and plainly with the folks back home.

As John Hockenberry says in an excellent article, "The Blogs of War," in August’s Wired (http://www.wired.com/wired/archive/13.08/milblogs.html), it is producing an “oddball online Greek chorus narrating the conflict in Iraq.” “On the 21st-century battlefield, the campfire glow comes from a laptop,” he writes. “It’s a real-time window on life behind the lines – and suddenly the Pentagon is on the defensive.”

Like many large organizations in the public and private sectors, the Pentagon was too invested in its existing infrastructure and its own preconceived notions about combat to recognize that the digital divide would not include Iraq on one side and the U.S. on the other. To the contrary, digitalization eliminated the divide between battleground and home ground in a nanosecond. In truth, Abu Ghraib was all about digital cameras and computers as much as torture.

Like the recording industry, the war industry may damp down the fire of change for awhile, but it is not extinguished. In the end, the generals will have to run up the white flag and surrender to the inevitability and the ubiquity of digital communications wherever people are, even on the battlefield.

For a view of how developed the communications has become, check out these two videos:

www.anysoldier.com/Video/Kosovomusicvideo.wmv

or

www.anysoldier.com/Video/which-way-to-amarillo.wmv

Maybe if we just let our soldiers email their soldiers, we’d do a better job of avoiding these wars in the first place.

Local Policies Make Tax Freezes Into Entitlements

If you haven’t read it, it’s still news.

And in that vein, consider a study on the impact of tax abatements on education by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) that failed to cause even a ripple in the news pond after it was filed in February of last year.

Continuing on our economic development theme of the week and in light of recent concerns expressed by the Shelby County Board of Commissioners and Memphis City Council about the generosity of tax freezes in a time of budget crisis, the report underscores our community’s over reliance on tax freezes and gives credence to people who complain that the tax freezes have essentially become entitlements.

TACIR’s revealing and often startling statistics frame up the conflict between local governments’ need for more taxes and the taxes given up in the recruitment of new business:

• Taxes were waived 809 times in Tennessee between 1993 and 2002. A remarkable 415 of them were granted in Shelby County by the Memphis and Shelby County Industrial Development Board, the Memphis/Shelby County Center City Commission, and the Industrial Development Boards of various smaller municipalities in Shelby County.

• In other words, 51 percent of all the tax waivers given in Tennessee were in Shelby County, one of 95 counties in the state.

• While Shelby County was granting tax freezes 415 times, Nashville/Davidson County waived taxes a grand total of 5 times.

• The number of Shelby County’s tax waivers is more than Nashville, Knoxville, Chattanooga and Jackson combined – 415 to 59.

It is astounding largesse at a time when Memphis and Shelby County Governments must raise taxes regularly to cope with budget stresses, while at the same time, city and county governments are giving up $63 million a year in taxes (as of July, 2002).

Two more astounding statistics:

• Of the $74 million in taxes waived by the 95 counties of Tennessee, Shelby County has waived $43 million, or 58 per cent of all the counties. Put another way, 94 counties in Tennessee have not waived as much in tax revenues as Shelby County.

• Of the hundreds and hundreds of cities in Tennessee, Memphis has waived 67 per cent of all the city taxes waived in the state -- $20.1 million compared to $30.9 million statewide.

• In Tennessee, as of July, 2002, the amount of city and county taxes waived across the state totaled $105 million a year. Memphis and Shelby County were responsible for $63 million, meaning that our city and county governments are waiving an incredible 60 percent of the statewide total.

• While Memphis/Shelby County is foregoing $63 million annually in city and county taxes, Nashville/Davidson is waiving $7 million. Nashville reserves tax freezes for headquarters and other major projects, while here, waivers are given for everything from headquarters to warehouses to hotels to apartment buildings.

One key recommendation by TACIR was for an annual summary of economic development agreements and cost-benefit analyses, because there are no legal requirements for the publishing of this data, and it is too seldom made available to the public, who must pay a disproportionate share of the tax burden because of the tax freeze policies.

Another report recommendation called for reporting requirements to apply to all public agencies which waive property taxes, including:
• central business improvement districts (like the Center City Commission);
• sports authorities (like the Memphis and Shelby County Sports Authority which was the financing arm for FedEx Forum);
• enterprise zone development corporations (like the Tourism Development Zone used to pay for FedEx Forum);
• health, education and housing facility boards (like the ones in Memphis and Shelby County Governments);
• tax increment financing projects (like Uptown);
• city and county property (like the Memphis and Shelby County Airport Authority).

Not all of these bodies must now inform the public of the amount of taxes that are waived as a result of their decisions. “It is not possible at the present time to determine the total cost or effectiveness of tax abatements because not all lessee of public property are required to file reports,” the report concluded. “When all lessees are reporting their activities, policymakers can determine the true scope of tax abatements.”

For example, because Memphis International Airport sits on public land, tenants on the land benefit from its tax-exempt status, but nowhere are the property tax implications of Airport Authority decisions reported to the public in a systematic way.

TACIR also called for completion of cost-benefit analyses before agreements are reached. “Since January 1, 2002, all economic development agreements must have a cost/benefit analysis attached,” the report said. “This sounds good and could be an effective analytical tool, but in reality, the analysis plays no role in economic development decisions.” Here, cost-benefit analyses are normally done only when questions about tax freezes are asked and only to justify the continuation of the current tax freezes policies. These analyses are not done by a firm with particular expertise or technical knowledge about tax abatements, but by one with strong ties to economic development agencies themselves.

In addition, TACIR said that the notification of all tax abatements should be made directly to the school systems whose revenues are reduced as a result of the decisions. “As a general rule, 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,” the report said in a damning conclusion.

In the opinion of TACIR, tax abatements should be strategic and “custom-fit” and most of all, they should be tied to public policy objectives. Already, there is evidence that tax freezes are not the magic answer to economic development. International Paper is shifting hundreds of call center employees out of Memphis, Flextronics Logistics USA is cutting 100 jobs (virtually the same number of jobs it said it would produce when it lobbied for its tax breaks last year) and other companies are facing similar possibilities.

Because of the amount of the city and county taxes being waived and concerns about their strategic value, Memphians can be forgiven for not celebrating at the headline-grabbing sale of Echelon’s ballpark project for $39.5 million, which is $7.2 million more than its construction price. The new owner of the apartments proclaimed: “We really love downtown Memphis.” Unfortunately, this doesn’t include loving it enough to pay city and county taxes. The apartment complex will not pay any property taxes until 2025 in keeping with the 25-year tax waiver granted by the Center City Revenue Finance Corporation in 2000.

Tax freezes should be a key weapon in Memphis’ arsenal of incentives, but it’s become an entitlement for any company that can complete the forms. Perhaps, this is one time we could learn from Nashville, targeting tax freezes for impact projects with exceptional public value.

Mayor Wharton ran for mayor on a platform of restricting the use of the tax freezes in this way, and his office says that he is still working on a plan of action. Here’s hoping it comes soon, because every year, the current policy is costing county government more than $40 million.

Addictive, Expensive, Dangerous: The Great American Jobs Scam

This week's column by longtime urban commentator Neal Peirce has special meaning for our community, where the amount of taxes waived for businesses approaches $100 million a year.

When tax freezes given by Memphis, Shelby County and the smaller municipalities are added together, our community gives more tax freezes than the other metropolitan areas of Tennesssee combined. The cumulative size of the freezes become even more arguable when city and county governments, while giving up these massive taxes every year, must raise the property tax rate, effectively shifting a disproportionate share of the local tax burden to homeowners.


Here's Neal's column:

Call it, if you will, the crack cocaine of state and local governments’ economic development practices -- their endless flow of tax breaks and outright gifts to private corporations they either want to land, or figure they have to pay off to stay put.

Today the practice runs so deep, pervading such a huge number of corporate location moves, that officials -- even those who privately admit it’s an insane, zero-sum system -- keep on forking out the cash, no matter how incredibly costly the addiction. For years Greg LeRoy has been America’s chief whistle blower on the subsidies, which he estimates add up nationally to an eye-popping $50 billion a year. LeRoy’s just-published book, “The Great American Jobs Scam” (Berrett-Koehler) tells the story in full and colorful detail.

There’s the account of how Raytheon, threatening to move defense operations out of Massachusetts in the ‘90s, got the legislature to give it tax breaks of some $21 million annually -- and then proceeded to reduce its Bay State payrolls by 4,100 people, or 21 percent, anyway.

In New York a few years ago, Mayor Rudolph Giuliani offered $940 million to keep the New York Stock Exchange and its 1,500 jobs in town -- even though many of its member firms had already been subsidized to stay in Manhattan.

The payoffs continue. North Carolina, for example, recently offered Dell, one of the nation’s most successful technology companies, $225 million in tax incentives over 15 years to bring 1,500 jobs into the Piedmont Triad area.

When Los Angeles was hit by aerospace-defense cutbacks and civil disturbances in the early ‘90s, economic development officials on a dozen western states, like sharks sensing blood in the water, mounted aggressive job-piracy efforts to capture L.A. industries with public subsidies.

As for WalMart, the world’s biggest corporation, LeRoy has totalled up more than $1 billion it had received from municipalities in brick-and-mortar subsidies for its stores and warehouses -- public giveaways which end up throwing Main Street merchants out of business and feeding the sprawl machine that befouls our air and drives up government costs.

A good chunk of the payoffs to WalMart, Home Depot, Target et al, LeRoy reports, are based on enterprise zone and “tax increment” district financing laws that were originally designed to benefit lagging older cities, but are now turned into subsidy machines to eviscerate historic communities even further.

So what’s to be done? First, says LeRoy, “disclosure-disclosure-disclosure”; when the public is informed, the jobs blackmail diminishes. Then set up “clawback” recapture provisions when a subsidized firm doesn’t fulfill its job-producing promises. And stop all subsidies for retail deals, except in truly-depressed inner-city neighborhoods.

And, let governments, LeRoy proposes, start registering and regulating the site location consultants who make often negotiate the public subsidies. This would stop them from double-dealing (and driving up subsidy costs) by requiring that they take payment from just one party to any transaction.

But the really fresh ground LeRoy plows is a big reminder to us that the scramble for jobs that ignited the subsidy wars will soon be pointless -- and simply unaffordable.

With baby-boomers headed toward retirement, we’re likely to face an enormous shortage of skilled workers. From 1980 to 2000, the pool of prime-age (25-to-54-year old) workers increased by 35 million. But from 2000 to 2020, the expansion will be just 3 million. Teachers, nurses, expert workers of all sorts will be in desperately short supply. Huge new efforts (and spending) for workforce development will be critical to stop a slide in the United States’ standard of living.

At the same time, America’s physical plant is suffering from serious disinvestment and deterioration. Traffic congestion is costing our economy $67.5 billion a year; thousands of bridges need replacement; wastewater systems are in bad shape; almost 2,600 dams are now deemed unsafe; transit spending is far below what’s needed to maintain even the inadequate systems we now have. The American Society of Civil Engineers totals the repair bill at $1.6 trillion. Discount that 50 percent and the pending bills are still staggering.

The bottom line, says LeRoy: “We need reinvestment, not disinvestment.” It’s time, he asserts, to take a “fine-tooth comb” to the $50 billion states and cities are now spending for corporate promises of jobs. Any subsidy that doesn’t serve compelling public need by creating more skilled labor, or doesn’t provide a “carrot” for companies to invest in new skills development, should go on a list for likely elimination.

It’s time, LeRoy concludes, for sweeping reform of the subsidy policies and to recognize them for what they are: “wasteful handouts we can no longer afford.”

He’s right: When will we ever learn?

New Chamber President Can Usher In New Era For Memphis Economy

With the search for the next president of the Memphis Regional Chamber now down to five candidates, the decision looms as one of the most important that will be made in setting the course for the city’s future.

It has not always been this way. Traditionally, there are few ripples in the community when a new head of the Chamber is named, because he normally has spent most of his time focused on membership campaigns and fundraising. In recent years, cracks have appeared in the Chamber’s partnership with local governments, and the weaker relationship led to cuts in public funding.

In the end, restoring and strengthening the relationships with city and county governments is a priority for the search committee that is charged with finding an impact player as the new president. And for this reason, few committee members are interested in settling for someone to continue the status quo, and they are instead looking for a nontraditional leader for the Chamber or a Chamber executive with nontraditional skills.

It wouldn’t come at a better time.

As we said on August 1: “Memphis’ economic development programs are caught in the commodity trap. It stems from our background as an agricultural center and continues with our pride in being a distribution center. We sell products that tend to be seen as commodities, to a consumer making a decision based on the lowest price. ‘Commodity economic development’ is forever in a race to the bottom to offer the cheapest prices (which of course puts pressure on employee wages to go lower)…Cities with commodity mentalities think they can grow their economies with low wages, low land costs, low utilities, low taxes. In a commodities world, these are seen as the factors that must be controlled to keep prices down. But when we are competing with workers in Southeast Asia, Mexico and Bangladesh, it is an approach doomed to inevitable failure.”

That is why ultimately, the search committee has more than just the chance to fill a job. It has a chance to touch the future of Memphis. Because at no time in history has Memphis been more in need of new and entrepreneurial thinking than now, as it stakes out its claim to the global economy and to the knowledge workers who fuel it. In the past, the city could afford for the Chamber president to stay below the radar, to concentrate on internal management of the organization and to spend his time on finding more members to join.

But now, the city’s economic future is at stake. A continuation of old economic development policies will eventually pit Memphis workers against those in third world nations. It is not a fair fight, and that’s why it’s a fight Memphians can’t win. That’s also why the new Chamber president needs to be someone who can define a different future for Memphis, who can articulate an alternate vision and inspire public and private leaders to pursue it.

With this in mind, the Chamber search committee needs to hire someone who can create model programs like those in Portland, Oregon – the Portland Development Commission and the Mayor’s Business Roundtable. The committee needs to hire someone who can build a culture of creativity and innovation that pervades business and civic life in Memphis; someone who can create a 21st century workforce for Shelby County; someone who can retain and attract people and income to produce a net gain in population and total wealth; and someone who believes that Memphis' future is not based on getting cheaper, but getting better.

The committee needs to hire someone who is not esconced in the traditional Chamber way of doing business, because in the global economy, the traditional Chamber way doesn’t work. What is needed now in Chamber presidents are practitioners of new approaches to economic growth – approaches like economic gardening which focuses on existing entrepreneurs rather than corporate relocations, on biological models of business and entrepreneurial policy and new economic theories and philosophies.

The words of a specialist in economic gardening seem especially prescient to Memphis: “There was another, darker side of recruiting that bothered us. It seemed to be a certain type of business activity – the branch plant of industries that competed primarily on low price and thus needed low cost factors of production…cheap land, free buildings, tax abatements and especially low wage labor. Our experience indicated that these types of expansions stayed around as long as costs stayed low. If the standard of living started to rise, the company pulled up stakes and headed for locations where the costs were even lower. This was the world when we proposed another approach to economic develompent: building the economy from inside out, relying primarily on entrepreneurs.”

Memphis pioneered similar breakthrough policies in the Memphis Talent Magnet Project, Memphis 2005 and the Governors’ Alliance on Regional Excellence. In the end, all of these were taken under the wing of the Memphis Regional Chamber, and critics say the Chamber adopted the language of the reports, but never internalized their real meaning. Chamber leaders reply that fragmented local leadership, conflicts about priorities and declining funding were the roots of the problem. Whatever the cause, Memphis lost its position as a leader on the issues of the creative class, regionalism and strategic economic development, and as a result, it lost its chance to claim the competitive advantages that went with each.

These are thoughts on the minds of some members of the search committee as interviews are scheduled for the president’s job, forming questions such as: How does Memphis make better use of this key economic development position, and how does the Chamber president assume a much-needed role as an innovator and thinker on the economic challenges facing Memphis?

Fortunately for Memphis, Gary Shorb is chairman of the Chamber this year, and there is no one in the city more astute about business, more savvy about the political realities of his hometown and more determined to make the best decision possible for the future of Memphis.

Equally fortunate is the fact that the Chamber cupboard is not bare. Senior vice-president of community development Dexter Muller – now serving as interim president and CEO – is one of the smartest experts on public policy in the region; Larry Henson, vice-president of research and information technology, sets the standard in his field; and Mark Herbison, new senior vice-president of economic development, draws high marks for his work. They are joined by many Chamber colleagues who are equally qualified to expand their reach and the Chamber’s role in setting a new course for the future than the existing staff.

These are people who are well-aware of the challenges to Memphis’ economic future, because they face them every day. Led by someone with a new vision for Memphis’ economic growth, there is no question that the Memphis Regional Chamber can reclaim its roles as cheerleader, advocate, philosopher, motivator and the dreamer.

Memphis deserves no less, and the Chamber search committee is, in Chamber-speak, where the rubber meets the road.

Feelings of Worthiness Call For New Approach For Pyramid Development

In recent years, Memphis has shown a welcome appreciation for doing things right – National Civil Rights Museum expansion, AutoZone Park, FedEx Forum and Stax Museum of American Soul Music.

The cumulative effect of these signature projects should undermine once and for all the pervasive feelings that as Memphians, we just don’t deserve the best. We should settle for whatever we are offered, and the best project is always a cheap project. If AutoZone Park was a statement against this approach, surely FedEx Forum was its exclamation point.

The poster boy for this feeling of unworthiness is unquestionably The Pyramid, whose primary selling point was simple: it’s cheap. Of course, several problems like acoustic problems bedeviled the building during what should have been its honeymoon period and large cracks in some key walls appeared within a couple of years. But no matter; after all, it was cheap.

Now, 14 years after its opening, The Pyramid still remains unfinished – the inclinator that was supposed to glide up its side to the two-level apex is still missing, along with the dream of a landmark with a 365-day a year impact on the downtown economy. The bruised civic ego that emerged from that era even had a new verb that became part of the Memphis vocabulary – Shlenker’ed.

In the end, there was no Hard Rock Café on the south side of The Pyramid, there was no music hall of fame on the north side and the multi-media tours that began on the arena floor evaporated along with financing for the project. But the inclinator ride was another matter.

It was always considered the “cash cow” for the building, and Memphis and Shelby County Governments had feasibility studies showing that it would spin off enough money to pay for its capital costs and return money to local government.

But there was an “if.” A big “if.” First there had to be something at the apex worth seeing. The view along was not enough, because although it offered a rare view up river, there are better river views at the higher vantage points offered in the Morgan-Keegan Building and Commerce Square.

Ideas for apex attractions included a branch of Graceland, a tribute to St. Jude Children’s Research Hospital, Wonders exhibitions from past shows and a small-scale hall of fame for Memphis Music. But nothing materialized, because local government was terrified of failure. There was too much political stigma already attached to the building to encourage a politician to wade into the inclinator project.

After all, The Pyramid itself was either loved or loathed. (Every public poll from its opening to a decade into its operations showed that 50 percent of Shelby Countians supported it and 50 percent opposed it.) Even with a feasibility study showing it could make money was not enough to risk another Pyramid failure in the wake of the mountains of promises that dissolved into a landslide of debts in bankruptcy court for governments’ private developer partners.

As a result, the inclinator up the side of the building’s north side was held captive as the “deal sweetener” to lure private investors to build out the 100,000 square feet on the north side of The Pyramid (now home to Wonders) and the 10,000 square foot, two-level apex 31 stories up.

Through three different processes to attract private investment, no decision was reached. One even cost Memphis the gifted filmmaker Marius Penczner, who moved from Memphis after he was selected and then unselected as developer of an indoor ecological theme park at The Pyramid, taking the reversal as a personal rebuke. He took his award-winning production experience to the Clinton-Gore campaign where he was celebrated as the “best in the business.” These days, that ecological, interactive theme park sounds awfully good, not just because it would mean that the building would have a tenant, but that it would have one whose theme of environmental sustainability would be a unique and timely “hook.”

But back to doing things right, Memphis’ feelings of unworthiness that led us to believe that $39 million could really pay for what promoters said would be a “first-class, state-of-the-art arena, complete with the balloons for the grand opening.”

The lessons from this are many, but chief among them are that as the future of The Pyramid, the feelings of unworthiness must be left at home. Memphis and Shelby County Governments will likely not find someone to pay for development of the building, much less pay for the sizable public debt on The Pyramid. But although this is likely, the mistakes of the past should not be repeated.

There should be no interest in a second-class project. There should be no decision made on the cheap. There should be a decision short on hype and long on worthiness.

Now, that’s reason enough for The Pyramid’s iconic place in Memphis.

While Congress Focuses on Guns, We Lose The Technology High Ground

From the New York Times:


By THOMAS L. FRIEDMAN

I've been thinking of running for high office on a one-issue platform: I promise, if elected, that within four years America will have cellphone service as good as Ghana's. If re-elected, I promise that in eight years America will have cellphone service as good as Japan's, provided Japan agrees not to forge ahead on wireless technology. My campaign bumper sticker: "Can You Hear Me Now?"

I began thinking about this after watching the Japanese use cellphones and laptops to get on the Internet from speeding bullet trains and subways deep underground. But the last straw was when I couldn't get cellphone service while visiting I.B.M.'s headquarters in Armonk, N.Y.

But don't worry - Congress is on the case. It dropped everything last week to pass a bill to protect gun makers from shooting victims' lawsuits. The fact that the U.S. has fallen to 16th in the world in broadband connectivity aroused no interest. Look, I don't even like cellphones, but this is not about gadgets. The world is moving to an Internet-based platform for commerce, education, innovation and entertainment. Wealth and productivity will go to those countries or companies that get more of their innovators, educators, students, workers and suppliers connected to this platform via computers, phones and P.D.A.'s.

A new generation of politicians is waking up to this issue. For instance, Andrew Rasiej is running in New York City's Democratic primary for public advocate on a platform calling for wireless (Wi-Fi) and cellphone Internet access from every home, business and school in the city. If, God forbid, a London-like attack happens in a New York subway, don't trying calling 911. Your phone won't work down there. No wireless infrastructure. This ain't Tokyo, pal.

At the City Hall subway stop this morning, Mr. Rasiej plans to show how one makes a 911 call from the subway. He will have one aide with a tin can in the subway send a message to another aide holding a tin can connected by a string. Then the message will be passed by tin can and string up to Mr. Rasiej on the street, who will call 911 with his cellphone.

"That is how you say something if you see something today in a New York subway - tin cans connected to someone with a cellphone on the street," said Mr. Rasiej, a 47-year-old entrepreneur who founded an educational-technology nonprofit.

Mr. Rasiej wants to see New York follow Philadelphia, which decided it wouldn't wait for private companies to provide connectivity to all. Instead, Philly made it a city-led project - like sewers and electricity. The whole city will be a "hot zone," where any resident anywhere with a computer, cellphone or P.D.A. will have cheap high-speed Wi-Fi access to the Internet.

Mr. Rasiej argues that we can't trust the telecom companies to make sure that everyone is connected because new technologies, like free Internet telephony, threaten their business models. "We can't trust the traditional politicians to be the engines of change for how people connect to their government and each other," he said. By the way, he added, "If New York City goes wireless, the whole country goes wireless."

Mr. Rasiej is also promoting civic photo-blogging - having people use their cellphones to take pictures of potholes or crime, and then, using Google maps, e-mailing the pictures and precise locations to City Hall.

Message: In U.S. politics, the party that most quickly absorbs the latest technology often dominates. F.D.R. dominated radio and the fireside chat; J.F.K., televised debates; Republicans, direct mail and then talk radio, and now Karl Rove's networked voter databases.

The technological model coming next - which Howard Dean accidentally uncovered but never fully developed - will revolve around the power of networks and blogging. The public official or candidate will no longer just be the one who talks to the many or tries to listen to the many. Rather, he or she will be a hub of connectivity for the many to work with the many - creating networks of public advocates to identify and solve problems and get behind politicians who get it.

"One elected official by himself can't solve the problems of eight million people," Mr. Rasiej argued, "but eight million people networked together can solve one city's problems. They can spot and offer solutions better and faster than any bureaucrat. ... The party that stakes out this new frontier will be the majority party in the 21st century. And the Democrats better understand something - their base right now is the most disconnected from the network."

Can you hear me now?