Seven years ago it was if Dorothy had finally escaped the land of Oz to firmly plant her feet back on Auntie Em's farm forever.
"I'm very pleased to announce that today (in 2005) Memphis, Tenn., will be the new location of International Paper's global corporate headquarters," CEO John Farachi said in 2005.
Now four months after negotiations began, a new 15-year retention pilot agreement between the Fortune 500 company, Memphis and Shelby County needs only ratification from the economic development growth engine board next week. FOX13 News has obtained a copy of the pilot term sheet that lists the company as providing more than 2,200 jobs and adding 101 new positions, all amounting to a company investment over the period of more than $361 million.
READ: EDGE, International Pilot Term Sheet
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A projected company expansion will be the largest investment made by IP in Memphis since it relocated its headquarters in 2005.
"Retaining IP and positioning them for growth here in Memphis and Shelby County was of prime importance," said Reid Dulberger, EDGE President and CEO.
The deal puts to an end some hand-wringing speculation the company ranked 111th on the Fortune 500 list of major corporations might be lured away to DeSoto County in order to fit with their expansion plans. While Dulberger says International Paper had continually asserted they wanted to stay in Memphis, an expiring lease at one site with 500 employees and the potential addition of 100 others through a merger, might have opened the floodgates to other relocation offers and the potential for the eventual erosion of IP's corporate presence in Memphis.
"Our concern was on Day One," Dulberger said. "We lose 600 high paying jobs and over a very short period of time other communities come to realize that IP might be in play and the options that they have today would swell dramatically."
Dullberger's dire scenario might very well have played out. Just hours before the Wednesday agreement became public, Mississippi Gov. Phil Bryant still harbored hopes his state could somehow land its first Fortune 500 corporation headquarters.
"Business that may have at one time been in the Memphis market that has been transferring here," the Magnolia State's governor said. "The warehouse tax is very low. So, we incentivise companies that want to come here and take advantage of that."
But, did we give away the store in supplying IP with what is a lengthy tax abatement? Not if you look at the bottom line of the money IP generates through salaries alone. The pilot term sheet's stats of job data shows the total payroll annually averages $480 million. With their slated expansion the benefit to cost ratios is $4.26 of new tax revenue generated for every $1 of abated taxes.
"You don't abate all taxes," Shelby County Mayor Mark Luttrell said. "They in turn will bring something back to the table in terms of jobs, spending power in the community, in terms of their community partnership.
However, critics of incentives plans fear once you open the door for one corporate giant others will follow. Dulberger says in what's become the "dog eat dog" world of economic development strategies you've got to have tools to compete.
"We are not going to let our economic bones be picked clear by the competition," he said. "We need these companies. We need IP. We need FedEx. We need AutoZone. Large and small companies throughout the community. We will be aggressive in retaining them."
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