How could The Commercial Appeal and FedEx be $49.93 million apart on what the company pays in property taxes?
The story says a lot about reporting, public trust and distrust, and tax breaks. And something tells me it doesn’t bode well for Memphis and its problems with the tax base.
To recap, in its continuing coverage of the budget and the PILOT (payment in lieu of taxes) program, the CA wrote in a recent front-page story, “The single largest recipient of PILOTs is the largest employer in Memphis — FedEx Corp. The carrier, which has 30,000 workers here, paid less than $73,000 in local property taxes last year, and saved about $3.2 million on its tax bill.”
That seemed a remarkably low number. Not surprisingly, a day later, FedEx vice president for tax Robert L. Brown Jr. responded in a letter to the editor. The story was “grossly inaccurate” and “FedEx paid more than $50 million in city (approximately $22 million) and county (approximately $28 million) property taxes in 2013, not $73,000.”
Brown’s letter came about a week after FedEx Chief Financial Officer Alan Graf wrote a similar letter criticizing the CA for its PILOT reporting. Public records show that, as Brown wrote, the $73,000 is only for FedEx World Headquarters on Hacks Cross.
A spokesman for the Shelby County Trustee’s office (which only collects county taxes) told me, “Research by our collections staff has found $23,470,635.85 paid in 2013 tax under the name Federal Express and FedEx. It is possible they have other name variations but those were the most obvious.”
Reporting error? Editing error? PILOTing error? We’ll never know. The newspaper (which does not have a PILOT on its $6.675 million property at 495 Union Avenue) did not respond with either a follow-up story putting its numbers in context or a correction or clarification in the little box at the bottom of page 2A. An unforced error was compounded by indolence, arrogance, or ignorance. The cost is more misinformation about tax breaks and a loss of trust, to put it gently, between two important local institutions.
This is a strange one all around. No sane Memphian wants to see FedEx cut back its local commitment, least of all, you would think, a shrinking newspaper that would shrink a lot more if not for the Grizzlies, Tiger basketball, and FedEx Forum.
This unfortunate dust-up illustrates some of the hidden costs of PILOTs. They’re complicated, overused in Shelby County relative to the rest of the state, and they re-enforce the suspicion that everyone has some sort of deal going. Regulating them by term limits, “clawbacks” and oversight is easy to say, but nearly impossible to do when your bargaining position is that Memphis would be screwed without them. They have become a corporate entitlement. Blue-chipper FedEx gives cover to scores of tax-dodgers. The surprise is not that there are over 400 PILOTs but that there are not more.
As a homeowner, I get it but I don’t get it. My property taxes, about $4,000 a year, are pretty simple and public on the Shelby County Assessor’s website. You can try to reduce them by appealing your appraisal every four years. You can request relief if you’re over 65, have less than $28,270 of household income, or are a disabled veteran.
That’s about it, unless you don’t pay, of course, and take your chances with the trustee’s delinquent property tax collector. But most people pay full freight and on time. The trustee’s office collects about 96 percent of taxes due each year.
Memphis has by far the highest property tax rate in Tennessee and, more to the point, in Shelby County. Still, there are heroes among us. Two years ago, a couple down the street from me bought a prominent corner house and half-acre lot in Midtown for $164,000. The place was a blighted wreck. The new owners, investing at least $250,000, turned it into a showcase. For months, they employed crews of painters, gardeners, carpenters, and electricians. Their investment directly contributed to two more corner clean-ups and home sales, the survival of two restaurants and three other tax-paying businesses a block away, and the overall beauty of the street.
What did they get for their trouble? Well, a nice house to live in, to be sure. They also got a $200,000 increase in their appraisal and a tax bill that went from $3,165 to $7,050. No blight removal grant, no PILOT, no tax freeze of any kind. No fair.