MEMPHIS, Tenn. — The Memphis EDGE board has approved a big tax break for retailer IKEA.
The board granted IKEA a $9.5 million PILOT, or payment in lieu of taxes.
The tax break was pivotal in getting IKEA to open a store on Germantown Parkway behind Costco.
This is the first PILOT granted to a retail business. Wednesday, IKEA reps submitted their application for a tax deal, and the EDGE board changed its policy just for this project. It turns out the board has the authority to make that change, without anyone from city hall’s approval. For now.
“It’s very likely this store would not be advancing if the vote didn’t go this way today,” Justin Roth with IKEA said.
It’s as simple as that. If they didn’t get their way, they were packing up and leaving. But a quick change of the rules helped cement the deal, and the store is set to open fall of 2016.
IKEA promises hundreds of jobs, competitive starting salaries, and millions in property tax revenue over the next 11 years. In return, it’s getting a tax break. EDGE reps say the pros outweighed the cons in this specific deal. But as of now, they aren’t making a habit of these retail pilots.
EDGE board member Mark Halperin said, “It’s potentially a very slippery slope of this body to grant a PILOT for retail.”
The board plans to take a close look at all of its policies regarding future deals. The way it works now, it has internal control over any rule changes, but City Council members are asking to have more of an oversight role here on out.
Wanda Halbert said, “We want to make sure we firm up the relationship with any policies and procedures to make sure there are no misunderstandings in the future.”
Halbert also worried about jobs. This location is set in the suburbs, but store reps have promised to hire staff throughout the region. Now they need to shore up better public transportation routes.
Roth said, “We are very excited to ensure local Memphians are represented both in the contracting and construction of this store, and hopefully in working in our store.”
Bottom line, it’s a big deal, but required a slight bending of the rules.
Halperin reminded the room, “The community is excited about IKEA coming to Memphis. And it’s nice to beat Nashville.”
A win for the western part of the state this time, anyway.
IKEA officials are meeting with MATA Thursday to discuss possible public transportation routes. They say it’s essential to shoppers and future employees to have more access to this area.
IKEA estimates it will open in late 2016 with 175 full-time employees earning $40,000 or more per year plus another 100 part-time employees.
