FOX13 Investigates: Are tax breaks to boost big business working?

MEMPHIS, Tenn. - The biggest businesses are pulling in the biggest tax breaks in the 901.

Memphis and Shelby County give away about $71 million a year in property tax breaks (PILOTs) to businesses. RELATED: FOX13 Investigates: Memphis, Shelby County give combined $71M in tax breaks annually to companies On Thursday, FOX13 reported on the nine boards that issue those tax breaks and the concerns about transparency. The goal is for those tax breaks to boost business in the Bluff City. But is it working? Is it worth it? “We're giving large businesses and corporations welfare and guaranteed income," said Shirley Bondon, Executive Director of the Black Clergy Collaborative Shirley Bondon. Bondon is critical of the boards giving tax breaks in exchange for economic prosperity without any accountability. “We continue to give the tax breaks over and over again," she said. "It's not helpful to our community.” She contends businesses should forfeit their tax breaks if they don't deliver the jobs and housing they promise. "We want our children to go to school and be educated and be prosperous," Bondon explained. "That is really what our tax dollars are for.” How tax breaks make affordable housing possible PILOT stands for payment in lieu of tax. Tennessee law allows municipalities to give PILOTs in exchange for the promise of jobs or affordable housing. “People say PILOT and they think, I get this big check," said Roshun Austin, president and CEO of the Works, Inc. "I do not absolutely get a big check." For decades, Austin has worked to revitalize neighborhoods, support families and increase affordable housing. All of which are expensive - she says tax breaks make that work possible. "I’m not getting any return outside of a good heart and some tenants having a place to live," she said. "We are definitely not in the black on these deals.”

As FOX13 has previously investigated, our area needs about 35,000 more affordable housing units. Austin told FOX13 that most affordable housing construction deals work because of tax breaks. She showed FOX13 that she ended one year with an income of $42,000. "People think this is a get rich scheme," she explained. "No, I'm upside down. There is not a private developer that can do that and eat."

Making our region attractive? John Gnuschke was an early advisor on using PILOTs in Shelby County. He says tax breaks are necessary to compete here, but they can't be the only incentive. “The key is, is you don't want to give away too much, but you want to give away enough to make the Memphis economy more attractive," he explained. State records show Shelby County has more than 500 parcels listed under PILOTs. That's ten times more than Nashville or Knoxville. “Shelby County has always been a slow, steady growth county," he explained. "It's been a county that struggles with poverty. Okay. And as we know, we know all the barriers to growth that exist in Shelby County. Those same barriers don't exist in other areas. Nashville, Davidson County doesn't the other. Knoxville doesn't. Chattanooga doesn't. They don't face the same kind of barriers we do.” Taxpayer advocate Joe Kent has poured hours into crunching the data from PILOTs to show whether they are working. He contends we're giving away too much. “It's amazing that we're the most affordable city in the United States and we're still giving away tax breaks.” Looking for a return on investment The Shelby County Assessor's Office came to a similar conclusion. Staffers told the Shelby County Commission that taxpayers are not getting a return on their investment. According to the Tennessee Department of Labor, Shelby County has one of the highest unemployment rates in the state at four percent. Counties in the Nashville metro area have about half that - the lowest in the state. “Shelby County still has the highest unemployment rate of all the major urban centers in the state of Tennessee," said Javier Bailey, chief administrative officer for the Shelby County Assessor. "And likewise, we have an affordable housing shortage. So from a from the standpoint of return on investment, I think that there has to be some reformation because we're not seeing that.” The assessor's office doesn't make the rules on tax breaks. It's advocating for those who do to change the rules so PILOTs are more effective and better monitored.

“We do not believe that PILOTs are evil," Bailey explained. "Certainly in a lot of cases, they're necessary.” Austin agrees: We need PILOTs. “If we want reinvestment in the community, we have to use one of the few tools we have, which is PILOT," she said. However, Bondon would like to see businesses get fewer tax breaks so citizens can get more public resources. Last year, Shelby County raised the wheel tax in hopes of bringing in $17 million. In the meantime, businesses got $41 million in tax breaks in the county. “We wouldn't need the wheel tax if we weren’t collecting some of the tax incentives that we're giving away," she said.