News Article | 11/29/2004

Tax Exemption Plan Lures New Business To DeSoto County

Putting together tax abatement programs to lure new companies or entice existing ones to expand has long been a staple of economic development across the country. DeSoto County is certainly one locale that has benefited from such plans in recent years. Many of the new companies that located here in the 1990s received a 10-year exemption on property taxes. Many existing companies received exemptions on new expansions. Those exemptions have played a role in pulling Memphis companies south of the border. And a new wrinkle in the Memphis tax code could add to the exodus to Mississippi. Memphis has in the past provided new companies with a payement-in-lieu-of-taxes (PILOT) package which offered substantial tax savings. However, most of the those plans lasted only three years and have now expired. Memphis has not offered to extend them. Two Memphis firms, Go/Dan Industries, Inc. and Prime Automotive Warehouses Inc., are moving to DeSoto County to take advantage of lower taxes. Go/Dan, a subsidiary of Transpro Inc. which manufactures replacement radiators for cars and trucks, has leased a 520-000-square-foot facility being built by Panattoni Development Co. at its 104-acre Southaven Distribution Center at Airways and Stateline roads. Prime Automotive has leased 150,000-square-feet of a 720,000-square-foot building being constructed east of the Olive Branch Airport. The company will continue to operate a 120,000-square-foot warehouse on Hickory Hill in Memphis. Jim Flanagan, president and chief executive officer of the DeSoto Economic Development Council, said tax incentives play a big part in luring businesses to DeSoto County but they are part of an overall package that businesses find enticing. “Companies have to take into consideration other costs besides taxes,” he said. “But several of those that have recently made investments in DeSoto County have said expiration of PILOT exemptions in Memphis have been a factor.” Flanagan said the 10-year property tax exemption offered in DeSoto County, which does not include exemption from school taxes, road and bridge tax, or parks and libraries, has been and will continue to be a useful tool to draw industry. “That tax exemption keeps us competitive with Memphis,” he said. A second exemption, known as a freeport exemption, is also credited with helping to bring new business to DeSoto County. “We can attribute a number of new businesses coming here lately to that bill which was largely passed due to the leadership of Rep. Wanda Jennings,” said Flanagan. That bill removed a tax on third-party distributors. Jennings, (R) Southaven, said the bill went into effect in July 2001 and since has resulted in a capital investment of $300 million in DeSoto County and the creation of some 2,000 jobs. “That bill shows what we can do when local and state officials work together,” she said. Asked if she thought more Memphis companies would be making the trek south to take advantage of tax breaks, Jennings said “no doubt about it.” Preston Herold, marketing director of Hillwood Development Corp. in Dallas, said a friendly tax atmosphere was one of the reasons his company decided to build the DeSoto Trade Center south of the Civic Center in Southaven. That environment paid quick returns. Emerson Electronics now occupies 365,000-square-feet of an 846,000-square-foot building and a new 389,000-square-foot facility is nearing completion that will house ConAir, a major distributor of electronic appliances such as hair dryers as well as Cuisinart cooking equipment. Another third-party logistics firm, PFSweb, has signed a three-year lease for 435,000-square-feet in the Airways Distribution Center in Southaven. “We are hoping to see more of that and we think we will,” he said. Herold said a recent designation of a “foreign trade zone” in DeSoto County will also play a major role in attracting new business. “We are excited about that designation by the Commerce Department,” he said. The designation provides tax breaks to foreign companies who locate here and to U.S. companies that import foreign goods. Jim Brown, of Brown Properties in Southaven, said DeSoto County has been business-friendly in the past and will remain so in the future. And any adverse taxation in Memphis can only make DeSoto County look even better for prospective clients. “Taxes are definitely an issue,” he said. “And the incentives we offer are also a definite factor in their decisions.” Brown, like Flanagan, said DeSoto County’s lure is a complete package which includes good schools which in turn promises a well-educated work force plus a strong work ethic. That, he said, is a winning ticket for new economic development in DeSoto County.