Friday, March 30, 2007

Study: Economic development program here lags competitors, a new study finds

The Commercial Appeal [link]
March 30, 2007
by Amos Maki

A new study blasts Memphis and Shelby County for an economic development program that is the "most under-funded in the nation."

The study, commissioned by local public and private officials, says the lack of funding has resulted in a "dearth of the programs, key personnel and marketing channels" necessary to grow and recruit businesses to the area.

"As the world of business recruitment has become more competitive, we have gone in the opposite direction," said Shelby County Mayor A C Wharton. "We're not even on the ball field."

Wharton, Memphis Mayor Willie Herenton, the Memphis Regional Chamber and local business group Memphis Tomorrow commissioned the study to create a new economic development plan.

The plan will be part of a broader four-part economic growth initiative called "Memphis Fast Forward" that focuses on crime, government efficiency, economic development and education, and workforce development.

While still in draft form, the economic development plan -- produced by Atlanta-based Market Street Services and funded by Memphis Tomorrow -- targets four key industries: Logistics, Music/Film, Biosciences and Tourism.

The five-year plan would create 49,395 jobs, about triple the number of jobs created from 2004-2007.

Those new jobs would generate $53.3 million in new tax revenue annually for the city and $32.1 million in new tax revenue annually for the county after five years.

"It's not like we're going to throw money in a black hole and never see anything happen," said Gary Shorb, president and CEO of Methodist Healthcare and vice chair of Memphis Tomorrow. "It's an investment with a return."

Market Street Services found that Memphis and Shelby County's economic development budget paled in comparison with peer cities like Nashville, Knoxville, Louisville, Ky., Atlanta, Charlotte, N.C., Orlando, Fla., and Richmond, Va.

In fact, even Sioux Falls, S.D. -- with a metro population of 213,000 -- invested more in 2005 in economic development initiatives than Memphis and Shelby County.

The 2005 budget for the Sioux Falls chamber's five-year economic development program was $1.7 million. The 2005 budget for the Memphis Regional Chamber's latest five-year plan, Think Memphis, was $324,000. Together, Memphis and Shelby County invested only $350,000 in economic development through the chamber in 2006.

Nashville's economic development plan -- called Nashville 2010 -- was also developed by Market Street and had a $3 million budget in 2005.

"I'm not going to sugar coat numbers, they're either good or bad," said John Moore, president and CEO of the Memphis Regional Chamber. "But this plan is about moving forward and I see opportunity after opportunity."

Moore sounds optimistic because despite serious handicaps the chamber has been able to bring significant new business to the area, including a $250 million Nucor steel mill and ServiceMaster's corporate headquarters last year.

"We've been successful in spite of ourselves," said Larry Jensen, president and CEO of real estate firm Commercial Advisors LLC and one of the local officials involved in developing the plan. "So if you step back and say 'Let's be strategic in our thinking,' we can take this thing to the next level."

Getting to that level will require a new five-year, $66 million economic development plan. At $13.2 million a year, that would be more than 40 times the amount the chamber had budgeted in 2005 for Think Memphis.

Securing that budget would require an all-out push by the public and private sectors, said Ken Glass, chairman of Memphis Tomorrow and outgoing chairman and CEO of First Horizon National Corp., parent of First Tennessee.

"The major portion of it, we think we will get it from the major players (in business)," Glass said.
Moore and others are entering a "quiet phase" of talks with some of the city's most high-profile executives to secure private funding before presenting the completed plan to the public.

"At every level, it's the top companies and top leaders of those companies that carry the flag on this type of initiative," said Moore, formerly the most senior Northwest Airlines executive in Memphis.

Supporters say the performance benchmarks set forth in the plan -- including significant increases in job creation, wages, per capita income and minority-owned companies, combined with equally large decreases in unemployment and poverty rates -- will help attract broad public and private sector support.

Herenton said the plan will likely need $1.5 million a year each from the city and county and that he will request that the City Council provide the funding.

"I think if it is adequately funded and implemented it will move Memphis and Shelby County to a new level in terms of economic growth, job creation, minority business development and per capita income, which will raise the quality of life for the whole community," Herenton said.

Wharton said his administration has already budgeted $1.25 million for economic development in the 2008, which starts July 1. "Shelby County is going to put its money where its mouth is," Wharton said.

Luke Yancy, president and CEO of the Mid-South Minority Business Council, expects the plan to have an army of supporters from the public and private sectors because each side was heavily involved in the planning process.

"I think this particular plan has been well thought out and I think we had representation from all areas of the community," Yancy said. "It attacks the issue of economics in this community and the disparity between the haves and have-nots.

"Unless we address this issue of economics, then our city will not prosper and become the world class city it has the potential to become," he said.

-- Amos Maki: 529-2351

Memphis fast forward
  • What: New economic development plan for Memphis and Shelby County
  • Why: Memphis-Shelby County has the most underfunded economic development program in the nation
  • How: A five-year, $66 million economic development plan with public and private contributions.
  • Targeted industries: Logistics, Music/Film, Biosciences and Tourism.
  • Goals: Creating 49,395 jobs over five years.
  • Benefit: $53.3 million in new tax revenue annually for the city and $32.1 million in new tax revenue annually for the county.

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