By Ryan Poe
The Commercial Appeal
MEMPHIS, Tenn. — The Memphis Fire Fighters Association sent retailer Ikea a letter over the past week asking the company to pass on $9.5 million in tax breaks.
Ikea said no.
The letter to Ikea executives, penned by union President Thomas Malone, outlined the financial struggles that led the city to reduce employee pension and health benefits last year, and appealed to the company’s emphasis on improving communities.
Thomas confirmed he sent the letter, but declined to comment until he speaks with Ikea representatives.
The letter that figuratively lit a fire at City Hall this week didn’t sway the Sweden-based company, which still plans to accept the tax breaks over the next 11 years. The store will open southwest of Interstate 40 and Germantown Parkway in Cordova in fall 2016, a year after starting construction.
Ikea spokesman Joseph Roth said incentives played a vital role in bringing the retailer to Memphis, which is the smallest market the company has entered.
“A financial partnership was necessary to make this opening happen,” he said.
Reid Dulberger, president of the city and county’s Economic Development Growth Engine, which approves the area’s largest incentives, said the city, without Ikea, would only get $697 a year in property taxes from the vacant land. But with the company’s $64 million development, the city gets $144,000 a year in property taxes, an estimated $1.2 million in local sales taxes in the first year and 175 jobs that pay more than $41,000 a year.
Also, the city has the distinction of having such a high-demand retailer as Ikea, he said.
“It’s icing on the cake when you look at the impact this will have on the city and county,” he said.
Dulberger said the payment-in-lieu-of-taxes, or PILOTs, program is often misunderstood -- that people think cash is changing hands. Instead, the program forgives a certain amount of property taxes to encourage companies to choose to come or stay in Memphis.
Some people blur that line in an election year, he said, when it’s “politically advantageous to rail against the program.”
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(c)2015 The Commercial Appeal (Memphis, Tenn.)
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