SHELBY CO., Tenn. - A new report from the Shelby County Trustee’s Office shows the county didn’t collect $51.3 million in taxes last year because of PILOTs.
PILOTS (or payment-in-lieu-of-taxes) are often used to bring new companies to the area and help current businesses expand operations. These PILOT contracts allow businesses to pay significantly reduced tax payments for a set amount of time.
In her report, county trustee Regina Newman said she created this list to keep track of expiring PILOT contracts and get those companies back on the full payroll.
The report shows 497 PILOT contracts were approved last year, and those deals were taxed $6.8 million.
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“These types of incentives have been shown to make a difference in as little as two percent of the time. It’s not that these companies really make a decision based on these incentives, they just obviously take advantage of the money that’s there,” said Ron Stultis, director of policy & research at the Beacon Center of Tennessee, the nonprofit, nonpartisan, and independent organization that researches public policy issues in the state.
Stultis said this report shows a lack of prioritization from officials.
“What our governments are supposed to be focused on is services that benefit all people that they represent – their roads, schools and public safety. But what they’re doing instead is giving these tax abatements to large corporations and then these services become underfunded,” said Stultis.
The report shows the EDGE board of Memphis approved most of the PILOTs last year with 235 contracts, which were taxed a total of $2.8 million.
In a statement to FOX13, an EDGE spokesperson said: “Without these edge projects, there would be a potential loss of more than 30,000 good paying jobs and an even greater loss of nearly $45 million worth of pilot spending with city and county-certified minority/women-owned business enterprise.”
The report shows Downtown Memphis Commission approved 118 PILOT contracts last year, which brought in a little over $2 million in taxes.
“The Downtown Memphis Commission, through the CCRFC, issues real property PILOTs, thus the properties in this program never pay less tax than they paid before the PILOT. Even with a 75 percent abatement of the future value, all would pay more than their current rate,” said Jennifer Oswalt, president Downtown Memphis Commission.
Currently, the trustee’s office said there are 20 delinquent PILOTs contracts, which is a decrease from two years ago when there were 26.
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