Tag: PILOT

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Raymond James Wins Tax Break to Move From Downtown

CREDIT: Raymond James

Raymond James

A company that saw record-setting, multi-billion-dollar revenues and record-setting, multi-million profits in 2018, won’t have to pay full taxes for its new operations in Memphis over the next eight years.

Raymond James Financial won a $3.2 million payment-in-lieu-of-taxes (PILOT) deal from the Memphis and Shelby County Economic Development Growth Engine (EDGE) Wednesday for a project to move its Memphis operation from Downtown to East Memphis.

The vote was unanimously approved by EDGE board members, with two members recusing themselves from the vote. The vote came after zero debate on the deal and only a few questions from one board member.

The broker-dealer firm will have its full tax bill partially forgiven here over the next eight years for a $23.6 million project in East Memphis. That project would add 100 employees here and yield more than $5.8 million in local taxes over the term of the agreement, according to the company.

EDGE president Reid Dulberger said the properties Raymond James will move into now yield about $670,000 each year in real and personal property taxes for the city. During the eight-year course of the PILOT, the properties will yield $805,000, which Dulberger characterized as a “tidy increase for the city and county.” Once the PILOT term is finished, the property will yield $1.1 million in taxes annually, Dulberber said in his short remarks to introduce the project to the EDGE board Wednesday.

With the PILOT in hand, the Memphis facility will expand, providing service for the Private Capital Group, Equity Capital Markets, Fixed Income Markets, and maintaining a portion of the company’s back office operations.

The company said it needs to leave the iconic, step-roofed building in Downtown Memphis for a new location in East Memphis. Raymond James officials would not give any timeline as to when the 705 employees in the tower now will leave for the space in East Memphis.

Worth Morgan, the recently re-elected Memphis City Council member, hold the council’s non-voting seat on the EDGE board. He said while it’s hard to see companies leave Downtown Memphis, he doesn’t lose sleep over the future of the Raymond James tower the way he does over properties like 100 N Main.

“Because of the deterioration of its Downtown facility, Raymond James has signed two leases to relocate its operations into a 250,000 square feet in two buildings located in East Memphis,” reads the firm’s application to EDGE. “The leases are contingent on EDGE’s approval of our PILOT application. If approved, Raymond James will add at 100 jobs at these East Memphis locations.”
[pullquote-1] Those jobs would come with a an average salary of nearly $64,000, far north of the $40,400 salaries targeted by EDGE. More than half of those new jobs would be operations clerks with annual salaries of $50,000 and a benefits and incentive package worth $20,000. Thirty-five asset management clerks would earn the same package.

An operations manager could earn a package worth $152,000 annually. An asset manager supervisor could earn $154,000.

Each year, the company would pay nearly $8 million in wages and benefits to all of its employees here, according to its application.

Raymond James is based in St. Petersburg, Florida. In 2012, Raymond James and Memphis-based Morgan Keegan merged to form “one of the country’s largest independent full-service wealth management and investment banking firms not headquartered on Wall Street,” according to the Raymond James website.
[pullquote-2] The company posted “record annual net revenues of $7.27 billion” in its 2018 fiscal year, according financial reports. In 2018, the company also posted “record annual net income [or profits] of $856.7 million.” It’s total return on equity during the year was 14.4 percent.

[pdf-1] “Our focus on attracting and retaining client-centric financial advisors and providing them with industry-leading tools and resources continues to produce record results,” Raymond James Financial chairman and CEO Paul Reilly, said in a statement at the time. “It is especially gratifying to deliver shareholders an attractive return on equity in fiscal 2018, particularly given our strong capital position and the significant investments we made during the year.”

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U of M to Launch Commercial Aviation Program This Fall

CREDIT: CIT

CIT

Crew Training International instructor working with students

The University of Memphis will begin training pilots this fall with a new commercial aviation program.

The university is partnering with Millington’s Crew Training International (CTI) Professional Flight Training to offer a Bachelor of Science in Commercial Aviation degree.

David Rudd, U of M president said the Commercial Aviation program is meant to prepare students for 21st-century jobs and better position them for opportunities at companies like Fedex Express.

“There will be ample demand for qualified, well-trained pilots in the coming decades, and this program and partnership will help U of M students become top candidates for these careers,” Rudd said.

Students in the program will receive 61 credit hours of professional aviation training, and 59 hours of classroom instruction including courses in business and management. The degree is meant to prepare graduates for careers in corporate and general aviation, other aviation-related businesses, airport operations, and government regulation of aviation.

With a bachelor’s degree in aviation, a graduate’s required number of flight hours to become a commercial pilot decreases by 500.

The program also gives veterans an opportunity to use post-9/11 benefits for flight training costs, now that the U of M is partnering with CTI. Additionally, high school students in the Aviation Study program at T-STEM Academy East High School are expected to “naturally and locally progress into the U of M’s program.”

This will create an “exciting local path that has a global impact,” Jim Bowman, senior vice president of flight operations for Fedex said.

The program will be “uniquely positioned” to support the needs of the local community and address the “looming” pilot shortage. The U of M reports that more than 42 percent of active U.S. airline pilots will retire over the next 10 years. Boeing estimates that in the next 20 years, North American airlines need 117,000 new pilots.

Bowman said as the aviation industry evolves, aviators have to be more tech savvy and better prepared academically than before.

“I’m excited that the University of Memphis is now part of the path to a successful career in the aviation industry, and I congratulate the university’s leadership for having the foresight to create this program,” Bowman said.

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EDGE Approves Extension for IKEA

IKEA is moving forward on its Memphis location.

Tuesday afternoon, the Economic Development Growth Engine, or EDGE, unanimously approved an extension of the global chain’s 11-year PILOT agreement by up to 18 months.

[jump]

Reed Lyons, real estate manager for IKEA, said the extension is a “safety net, taking uncertainty out of this process.”

The tax break extension is meant to offset a potential $1.2 million loss in savings from a re-evaluation of the property value by the Shelby County Assessor Cheyenne Johnson. IKEA has already purchased the land on Germantown Parkway for $5.6 million in July of this year. Last month, Johnson appealed a Shelby County Board of Equalization ruling that allowed the property to be reverted to its value back in 2014, which was $1.25 million. The matter is now up to the state, which has yet to determine a ruling.

The base deal that was approved in January remains the same. The company will still be providing 175 new jobs, plus at least 50 seasonal and part-time positions.

Now that the extension is approved, IKEA could start construction as early as this winter. Lyons said the construction could take anywhere from 10 to 15 months.

Al Bright, chairman of the EDGE board, thanked the IKEA team for coming to the meeting.

“You are a great local partner,” Bright said. “Welcome, again, to Memphis.”

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Politics Politics Feature

A Tiff Over TIFs

Shelby County commissioner Mike Ritz is a first-termer who, on issues ranging from outsourcing Head Start programs to combating sexually oriented businesses, has indicated a willingness to stick his neck out. He is about to do so again.

This week, Ritz threw down the gauntlet against funding a developmental proposal which the University of Memphis is pushing hard and which Ritz sees as an out-and-out rip-off of the taxpayers.

The projec, approved by a 7-2 vote in committee Wednesday and up before the full commission next week, t would require TIF (tax increment financing) outlays for a portion of the adjacent Highland Street strip as a “gateway” to the university. The premise of TIF projects is that they generate significant increases in the tax base over the long haul.

“These TIFs are supposed to be used for public projects,” Ritz says. These include such things, as he has pointed out in notes sent to the media, as housing developments, street and sewer improvements, lighting, and parks.

But the Poag McEwen Lifestyle Center project on Highland, as Ritz sees it, is little more than a “gift” to the developers, who propose building a retail center/apartment complex on the west side of Highland from Fox Channel 13 north to the site now occupied by Highland Church of Christ.

“The University of Memphis is running interference for something that shouldn’t get done,” says Ritz, who maintains that the developers would be using a total of $12 million from the city and county and would be under no obligation to pay any of it back.

“There has been no analysis done on this project, and it contains no performance requirements,” says Ritz, who argues in his distributed notes about the project that “retail centers move sales and jobs around, they do not grow local economy; [there is] no growth of jobs or tax base.” In a conversation this week, he added, “It’s like moving checkers around on checkerboards. There’s no lasting benefit.”

Ritz’s statement of concern comes on the heels of two new reports.

One report from county trustee Bob Patterson notes that 120 local companies have tax freezes under PILOT (payment-in-lieu-of-taxes) programs and that some $44 million worth of county property taxes and 372 parcels of land are involved in the programs.

Another report, from the Memphis and Shelby County Industrial Development Board’s performance and assessment committee, indicates the likelihood of default by several corporations on obligations relating to their tax breaks under PILOT programs. Under the circumstances, Ritz says, the Highland project amounts to an additional “giveaway” which the county simply can’t afford.

University of Memphis officials have been aggressively promoting the project as a way of shoring up the university’s “front door.” One who concurs is veteran U of M booster Harold Byrd, who has had his differences with university president Shirley Raines concerning her lack of enthusiasm for an on-campus football stadium, of which Byrd has been a strong proponent.

But Byrd says he’s on “the same page” with Raines about the Highland Street project. “It would shore up an area that, particularly south and west of campus, has begun to deteriorate.” Citing what he says is a prevalence of “cash-for-title businesses, pawnshops, and fortune tellers,” Byrd says, “It’s definitely a distressed commercial and retail area.” Moreover, he says, “the residential area south of the university is in strong decline.”

Both circumstances would respond positively to the proposed Poag McEwen Lifestyle Center, he said, and the “gateway” aspect of the project would benefit the entire community, not just the university area itself. (For more on this perspective, see In the Bluff, p. 10.)

On the first round on Wednesday, the Highland TIF project, which has the imprimatur of the Memphis and Shelby County Redevelopment Agency, got preliminary support on the County Commission, too. The 7-2 vote in favor (Wyatt Bunker joined Ritz in opposition) came despite a recusal from Commissioner Steve Mulroy, a University of Memphis law professor.

The commission is scheduled to take up — and approve — the measure on a formal vote next week.

• This coming week sees the formal completion of the 2007 Memphis election cycle, with four City Council runoffs being decided on Thursday, November 8. The contests are between Stephanie Gatewood and Bill Morrison in District 1; Bill Boyd and Brian Stephens in District 2; Harold Collins and Ike Griffith in District 3; and Edmund Ford Jr. and James O. Catchings in District 6. Pre-election updates,as well as full coverage of the results, will be posted on the Flyer Web site and in next week’s print issue.