Tuesday, February 21, 2006

The Present PILOTs Program Is All About Missed Opportunities

Sometimes, when the spirited defense of the current PILOT program begins, it seems to lose touch with reality.

In the consultant’s report recommending the overhaul of the current tax incentives program, this is what’s written on page 57 in defense of the $60 million worth of tax freezes:

“During the interviews, general benefits of the PILOT Program were discussed. Such benefits include the following:

“1 - FedEx Corporate Campus – fueling Memphis’ economy. The PILOT program helped make Memphis an attractive place to do business and help secure high paying professional jobs. In addition, FedEx campus has stimulated significant growth in the immediate area of the FedEx campus in terms of retail, hotel, and resident development.

“2 - PILOTs help fill vacant properties which, if left vacant, would simply ‘pull down’ the market values of surrounding properties. This could have a cumulative effect, which could ‘pull down’ the broader tax base, which could potentially require an increase in property tax rates to maintain local tax revenues at the same level.”

Amazing. Just amazing.

If there is a more striking indictment of the failure of vision in this community, it is the area of the FedEx World Headquarters. There, we had major expansion by the company that invented global commerce, by the company that is the state’s largest employer and by the company that is the hub of innovation for Memphis and Shelby County. We had the chance to transform the area into one of the nation’s premiere business centers - complete with technology centers, research firms and first class office space – by exploiting the interest of all the companies drawn by FedEx’s gravitational pull.

Instead, we chose to allow the area to become just another generic, derivative area unlike what is found off most exits of I-40 and Tennessee 385.

If defenders of the PILOT program can brag about how the FedEx corporate campus fueled Memphis’ economy, it can only serve as further indictment of the thinking that gave birth to the tax freezes program as it now exists.

The area around FedEx is all about missed opportunities. So is the PILOTs program.

Surely, if we should have seized just one chance to shape a singularly powerful economic anchor for our region, one that could have come to symbolize the vibrancy of Memphis, it should have been the area of Hacks Cross and Winchester Roads.

So what did our lack of vision bring us? A FedEx World Headquarters surrounded by suburban shopping centers; a concentration of big box retail – Costco, Wal-Mart, Target, Lowe’s, Sportsman’s Warehouse and Sam’s Town; at least 31 restaurants (we lose count), an impressive array of fast food and chain places; the hotel - a Holiday Inn Express; two cell phone stores; cash advance stores; an uninspired Starbucks; Michael’s; PetSmart; Walgreen’s; and, well, you get the picture.

In case you missed the big news, the Shelby County Board of Commissioners has paved (pun intended) the way for a new Nissan dealership to be added to the mix.

At the intersection that should have been Memphis’ prime location stands a drug store, a gas station and a bank.

Also, proponents of the PILOTs told consultants that the tax freezes help fill vacant properties. Again, it’s as if they don’t drive around in this county. While there is warehouse after warehouse in Southeast Shelby County (with most not paying taxes), there is nothing that the PILOTs program has done to revive the multi-modal centers that stand along I-55 between I-240 and Riverside Drive as sad reminders of the abandonment of the urban core.

These are the facilities that were once thriving hubs of activity for Memphis’ distribution industry, but instead of giving incentives to keep them healthy and to optimize the existing infrastructure already paid for there, PILOTs were used as incentives for green field development of the distribution business. These vacant rail and truck yards are stark proof that the PILOTs program, as it now exists, is all about real estate development, not economic development.


Anonymous said...

The location of the FedEx Express World Headquarters and World Technology Center in southeast Shelby county is one of the greatest failures of Memphis. I know that there are complicating factors, but bringing at least one campus of the two into downtown should have been our city leaders mission in life.

BraveCordovaDem said...

This is just another major example of how the development interests control major decisionmaking in Memphis, no matter how inefficient and impractical it may be.

Larry said...

Let's see ... build a new, efficient headquarters on a nice campus partially shared by a golf course. The campus also has a nice outdoor track to run on. The campus is located closer to where most of the employees who work there live. It has easy access with plenty resturants, banks, and other places to run errands during lunch or after work ...

The other choise is to build (or renovate) a highrise downtown.

Hmmmmm ... sorry, at this point downtown still loses.

Anonymous said...

I'm not sure I understand the complaining about the FedEx HQ location. So there are retaurants, retail, other office buildings, and residential areas around it. Why is this considered a bad thing?

Smart City Consulting said...

Larry, this isn't an either-or about downtown or the east location. It's about making the most of the location at Winchester and Hacks Cross. Downtown isn't the issue and doesn't need to be scapegoated.

As for why aren't restaurants, shops, etc., good enough: because they can be found anywhere. This was a location with a world-class magnet for world-class development, and instead, it is derivative. This was a chance to increase the property taxes at this location and we blew it, at the expense of all the residential property taxpayers who pay a disproportionate share of public revenues here.


Larry said...

I still have to echo anon's comment? Why are restaurants a bad thing? Your response is because they can be found anywhere? There is another FedEx facility on Airways ... there is almost nothing but businesses nearby (and the airport) ... There is a great need for a restaurant for the workers at the Airway complex who would like to leave the compound.

Many employees DON'T want to work there. Tell an employee at the World Headquarters that he/she must move to the Airways compound and they feel like they've been demoted.

Personally, I think it's great that there are so many GOOD restaurants within a few minutes of the FedEx World Headquarters.

Not only that, but there are several apt complexes and residential homes just a few minutes away ... I'd hate to see it because nothing but an industrial area or only office bldgs in the area.

So you have homes, shops, restaurants, medical facility, and employment all in one small area ... isn't that New Urbanism/Smart Growth in a nutshell???

Anonymous said...

Oh, Larry, PLEASE wake up out of your dream world and face the facts....

turnerarch said...

It’s interesting that many years ago one of the first cooperative projects involving Memphis, Germantown, Collierville and Shelby Co. centered on this very issue, The idea was to create a "brand" for the area. Stamp the corridor along 385, specifically Winchester from the Headquarters to the World Tech Center, with designed elements that would unite the entire area and sell it as "the" corporate campus/ technology corridor for the region. A very good reference was made to the Galleria district in Houston where high design is found everywhere from landscaping, street intersections, and design guidelines.
Somewhere we missed the mark. No sooner has the initiative been announced then the tech bubble went “pop”. However, the idea was still viable and so it drug on. Meanwhile short cited gains such as the Cosco center, Kroger and a hodgepodge of fast food joints and big box retailers jumped in before they could be planned out. Instead of having a district where corporations could immerse themselves in their own culture, where big names could set up offices along a beautiful boulevard, we have the same old pattern that stretches along Winchester.
Of course folks like Larry see this as an appealing patter. I mean the only reason the areas only slightly east along Winchester have seen the same type of shopping centers vacated was a string of “bad luck” experienced by retailers. The cycle does seem to be accelerating a bit so we might see the retail area around this intersection experience the same decline as its eastern neighbors within the next decade or so. But then again, I guess there is nothing wrong with a discount drug store next to a Fortune 500 company. If anything, it shows what little value we associate with having the FedEx headquarters in Memphis. What should have created one of the most wealth intensive corridors in the city is now looks a lot like any other strip mall area in town.

membase said...

From and economic standpoint, it's hard to argue with the existence of restaurants, groceries, big box retailers, drug stores near the FedEx WHQ. The campus increased daily traffic counts at Winchester and Hacks Cross, and the businesses sprang up to serve hundreds of employees of FedEx and other nearby office buildings. The consumers like the convenience of stopping at Kroger or Walgreens on the way out of the office, as well as having ample choices for lunch. This is the efficiency of capitalism...entreprenuers rise to meet the need and wants of the market.

Government's failure wasn't preventing retail development. This would have been like sticking a finger in the proverbial dam. Besides, if the FedEx HQ had been built in a tower downtown we would be dying to see a bustling retail street presence to follow. Public officials failed through an absolute loss of control in land use planning. There is no sense of cohesion or order at all. Nothing complements the bold architecture of the FedEx Campus. How much better it would have been if a high-density collection of restaurants, smaller shops and upscale residential units had been developed across the streets from FedEx, connected to the jogging trails by tasteful covered bridges?

Property law limits what government can make an owner do with his/her property, and so it should be. But was any attempt made at all to influence what developers like Michael Lightman and others did with the surrounding land? I doubt it.