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January 5, 2016 11:00 AM, EST
FedEx Threatens to Move Tennessee Technology Center if It Doesn't Get 20 More Years of Tax Breaks
FedEx is threatening to move its massive information technology center out of Collierville, Tennessee, if the town government doesn't give the company millions of dollars worth of additional tax breaks over 20 years.

The Memphis-based shipping giant is Collierville's biggest employer, with 2,500 high-paying jobs at the 10-building information technology campus on Bailey Station Road, said John D. Duncan, the town's director of economic development. The town advertises the company's presence as it tries to attract more corporate headquarters and similar office jobs. Duncan said he supports the additional tax breaks to keep FedEx in town: "It's a crown jewel."

He said the company hasn't mentioned a possible relocation site. "As they would tell you, they're looking at all options and alternatives as they make their analysis," he said.

FedEx is in discussions to renew one or more of its three leases at the Collierville tech center, FedEx spokesman Jack Pfeiffer wrote in a statement. "Our investment in the people and local economy is proof of our commitment to the area, but as with any negotiation, we must consider all options," he wrote. He said that if the 400 outside contractors who work on the technology campus are included, the number of workers there is 2,900.

He also reiterated a statement that a FedEx official made last year — that FedEx might move additional facilities out of the Memphis metro area if it doesn't get the tax breaks known as payments in lieu of tax, or PILOTs. "PILOTs have helped the Memphis metropolitan area successfully attract and keep companies like FedEx, which, with more than 30,000 team members in the Memphis area, is proud to be the largest private employer in the region." FedEx's demand for local tax breaks in Collierville reflects a bigger pattern of the company seeking to reduce the amount it pays to governments. FedEx receives property tax breaks from other local governments in the Memphis area and similar support in other states. The company successfully lobbied the Tennessee Legislature to vote last year to limit the jet fuel tax it paid, saving it millions.

Many other companies across the country are trying to cut taxes and maximize government subsidies. When picking sites for new factories, corporate headquarters or other investments, companies sometimes play communities off one another, pushing them into a subsidy bidding war, say researchers who have studied the issue. In the case of existing facilities, companies sometimes simply threaten to move to another community that gives them a better deal.

FedEx opened its Collierville information technology campus in 1998 and received 20 years of tax breaks. Those breaks expire in 2018, Duncan said. FedEx now is asking for an additional 20 years of tax breaks. Each year, $975,000 worth of taxes would be abated, he said. The company would give Collierville about $325,000 in payments in lieu of taxes each year.

Collierville's industrial development board is scheduled to discuss FedEx's proposed tax break extension at its meeting Jan. 7 at Collierville town hall. The industrial development board would then vote on the matter later this month, probably sometime during the week of Jan. 18, Duncan said. If approved, the measure would go to the town's board of mayor and aldermen  Jan. 25.

Duncan said the current tax break discussion focuses only on the technology center, not the smaller facilities FedEx operates in Collierville.

The company also is seeking a 15-year extension of Shelby County tax breaks on the Collierville information technology property, Pfeiffer said. Details on that application weren't immediately available.