Report: Memphis 'Ground Zero for Government Waste'

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Memphis knows pork, the barbecue kind, and it knows pork, the government kind.

From water slides to restaurants, the Beacon Center, a Nashville-based free market think tank, found plenty of “corporate welfare,” “excessive handouts,” and more in its annual “Pork Report” issued Tuesday.

While the center’s “Pork of the Year” award went to the statewide Tennessee Department of Economic Development, the group found much to criticize in Memphis.

"This year's Pork Report shows that the city of Memphis sure knows how to squander taxpayers' hard-earned money," said Beacon CEO Justin Owen. "Whether it is the government getting in the restaurant business, and failing badly, or continuing to waste money on film incentives, which many cities have stopped because of their terrible return on investment, Bluff City continues to be ground zero for government waste."

In Memphis, the Beacon Center researchers hammered on the FedEx Forum, the Riverfront Bar & Grill, the Memphis Film & Tape Commission, and the UrbanArts Commission. 
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The report said the hike to hotel taxes here, which would give $4.2 million to the Memphis/Shelby County Sports Authority Board to pay for and maintain the Forum, could hinder tourism, instead of helping it.



“Ultimately, that’s going to drive tourism away and, at the end of the day, the local taxpayers will be the ones eventually on the hook for this,” said Beacon’s president and CEO Justin Owen.

The Riverfront Bar & Grill was the name of the restaurant and bar inside the $43 million Beale Street Landing. The building is still being paid for by Memphis taxpayers, but the original management of the restaurant was first hired and overseen by the Riverfront Development Corp.

Earlier this year, the restaurant was taken over by Deni and Patrick Reilly, owners of The Majestic Grill. The Reillys rebranded it as The Front Porch with a new menu, staff, and design. It was meant as a pop-up concept for the space. The Front Porch closed for the season in mid-November, according to its Facebook page.

As for the original Riverfront Bar & Grill, Owen said “running a restaurant and bar should not be the role of any government at any level.” For proof, the center said the original restaurant lost $90,000 in its first year in business and had to close temporarily last winter.

“Restaurants have a notoriously high failure rate, and it looks like government-run restaurants fare even worse,” the report said. “It wouldn’t be surprising if we report next year that the Riverfront Bar & Grill’s goose has been cooked.”
Beacon's criticism of the Film & Tape Commission was largely aimed at the state's film commission. A 2013  audit of the Tennessee Film, Entertainment, and Music Commission found "significant problems" with the oversight of its incentive program. A 2016 audit found that the group had improved but still needed a bit of work.

Still, Beacon noted that this year "Memphis taxpayers will be footing a $175,000 bill to incentivize filmmakers to bring their sets into the city."

UrbanArt was faulted for hiring a Los Angeles artist for the $700,000 “I Am A Man” project.

“Not only did the state outsource taxpayer dollars to an out-of-state artist, but such extravagant expenses will almost assuredly incentivize future artists interested in state-commissioned works to disregard any concerns for the costs,” the report said.

The report gave numerous other “excruciating” examples of what it called “government waste” from across the state. But it said, “nothing compares to the debacle of the TV show ‘Nashville.’”
After ABC cancelled the show last season, “it seemed there was finally light at the end of the money put tunnel,” the report said.

“But a cancellation, poor ratings, and the show’s relocation to a barely watched cable channel were still not enough to dam up the floodgates of taxpayer handouts,” it said. “Tennesseans ended up forking over nearly $11 million to float the fifth season of Nashville on CMT, with $8.5 million coming from the state’s film program, $1 million from a direct grant from the city of Nashville, and $1 million from the Convention and Visitors Bureau and the city’s Event and Marketing Fund.”

The state economic development agency won Beacon’s “Pork of the Year” award thanks to the Industrial Machinery Tax Credit.

“From 2011 to 2014, we have spent nearly $67 million per year for a whopping 55 jobs,” the report said. “Even if the program's main goal isn't to create jobs as some have said, it is not the role of government to buy equipment for private companies.”

Visit here to read the report in full.

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