Memphis hands out more than $1 million in corporate welfare to entice auto company

Memphis hands out more than $1 million in corporate welfare to entice auto company

Memphis officials are boasting about how they snagged an auto parts importer from Mississippi with a promise of $1.2 million in corporate welfare.

The company, International Distributors USA, will relocate to Memphis, bringing 40 jobs with it.

The company now operates out of Olive Branch, Mississippi.

With a move pending, the people who work at IDUSA have no need to sell their homes or pull their kids out of local schools. Odds are, a lot of these people aren’t moving to Memphis or anywhere else in Tennessee, said Vickie DuPree, CEO of the Olive Branch Chamber of Commerce.

Photo courtesy of Flickr.

CORPORATE WELFARE: Memphis has given out a generous amount of money in corporate welfare, records show. (photo courtesy of Flickr.com and https://creativecommons.org/licenses/by/2.0/)

“Do you realize where Olive Branch is related to Memphis? We’re on the state line, and this industrial drive is just a stone’s throw away from Memphis,” DuPree told Tennessee Watchdog.

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Many people in Olive Branch commute to work in Memphis, and vice versa.

“If you’re driving on Interstate 22 into Mississippi, the first exit to Olive Branch is Exit No. 1. We run into each other. Actually, we like to think Memphis came and ran into us.”

No one at IDUSA’s Olive Branch location answered any of their listed phone numbers Tuesday or Wednesday. A job posted Tuesday on Indeed.com calls Olive Branch a suburb of Memphis.

Reid Dulberger, president of the Memphis and Shelby County Economic Development Growth Engine, which gave out the money, said he expects most of the IDUSA workers will commute to work from Mississippi.

Dulberger couldn’t say whether IDUSA officials will create new positions after moving to Memphis.

“We don’t know at this point. We won’t know until it actually happens,” Dulberger said.

Vickie DuPree (photo courtesy of Facebook)

Vickie DuPree (photo courtesy of Facebook)

IDUSA was in Olive Branch for three years. Before that the company was in Memphis. DuPree said IDUSA never belonged to her city’s chamber, and she believes the company never intended to stay in Olive Branch long-term.

Despite doing nothing to improve Memphis’ 6.8 percent unemployment rate — among people who actually live in the city — Dulberger said the company’s return is a win for Memphis.

“We are taking back a company that used to be here and relocated to Mississippi to accommodate what was growth,” Dulberger said.

IDUSA will relocate from a 165,000-square-foot building to a building with 500,000 square feet, according to the Memphis Business Journal.

“Now they have outgrown their current facility, and we are able to bring them back. Over time, companies located in Memphis or Shelby County are able to hire local residents,” Dulberger said.

RELATED — Walmart greets Tennessee taxpayers by taking huge handouts from them

According to the newspaper, EDGE offered IDUSA a 75 percent abatement of Memphis and Shelby County taxes for 10 years. The tax incentive will total $1.2 million with a local tax benefit to the city and county of almost $1.9 million.

The Memphis Commercial Appeal said the company’s average annual wage is $37,100.

As reported last year, EDGE is an unelected board of 11 people in Memphis and Shelby County. The organization gave $9.5 million in tax incentives to IKEA so it would build a store in the city.

Reid Dulberger (photo courtesy of Shelby County's official website)

Reid Dulberger (photo courtesy of Shelby County’s official website)

Mayors from both the city and the county appoint the 11 board members.

Memphis officials have already given away plenty in incentive packages.

Five years ago, for instance, state officials gave away $100 million so Electrolux would set up shop in Memphis, with city and county officials adding on an additional $20 million each.

Members of the Tennessee Comptroller’s Office have already warned Memphis officials to tighten the city’s finances, or the state would intervene. 

Memphis taxpayers paid $30 million to convert the long-troubled Memphis Pyramid into a Bass Pro Shops resort. The revenue for that project came from taxes on hotels, motels and car rentals.

Shelby County’s debt last year was more than $1 billion, according to the Memphis Commercial Appeal.

The paper said Memphis’ debt was more than $1.46 billion.

Contact Christopher Butler at chris@tennesseewatchdog.org 

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