Special Report: Collier falls behind in race for economic cash, tax incentives

The Collier County Commissioner's Chamber filled up early in preparation for the Jackson Labs debate in July 2010.  Commissioners eventually dissolved discussions with the company, even though they included a potential $130-million state package. Collier officials haven’t made a consistent, formal pursuit of such deals.

The Collier County Commissioner's Chamber filled up early in preparation for the Jackson Labs debate in July 2010. Commissioners eventually dissolved discussions with the company, even though they included a potential $130-million state package. Collier officials haven’t made a consistent, formal pursuit of such deals.

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The state of Florida has handed out nearly $700 million in economic development incentives over the last 17 years.

Collier County's share of the money: $15,000. Or 0.00002 percent..

— In the highly competitive rush to attract and retain high-wage businesses in emerging industries, the state of Florida has handed out nearly $700 million over the last 17 years.

The tax breaks and cash incentives have helped develop Jacksonville’s financial sector, build Tampa’s biotech cluster and sustain the Space Coast’s aviation industry.

Michael Reagen

Michael Reagen

But the money has done virtually nothing for Collier County. Its share of the money: $15,000. Or 0.00002 percent.

As roughly 1,000 private companies and nonprofits have dipped into Florida funds designed to spur business growth, Collier County has been a nonfactor in the economic incentive game, according to a Daily News review of data posted this month by the Florida Department of Economy Opportunity. While the state estimates the $677.5 million in incentives have created more than 88,000 jobs, just one Collier company has received a tax refund through the state DEO, and no DEO incentive agreements have been executed since 2008.

“I think the idea of having incentives to get great community business activity has been kind of muted, frankly, in Collier County,” said Michael Reagen, president and CEO of the Greater Naples Chamber of Commerce.

Indeed, some local leaders say the incentives haven’t been needed, and Collier County isn’t missing out on state funds that create jobs. The incentives, typically sought by private businesses with the help of local governments, target certain industries that haven’t been native to the region’s economy. There’s also concern the kinds of companies receiving incentive packages could disrupt the county’s relaxed Gulf-side aura.

“Collier County is absolutely a different kind of county,” Commissioner Fred Coyle said. “We’re fairly selective on the businesses we’re trying to bring here.”

Nationwide, municipalities have embraced economic incentives in the competition to lure new companies and keep existing corporations. In some regions, local governments have sweetened the pot by matching state incentives or offering their own packages.

While the state has paid out $6.6 million in incentives to Lee County businesses, for example, the county government has arranged to spend $23.7 million of its own money for incentives since 1996.

As Collier looks to diversify its economy, and Gov. Rick Scott asks legislators to more than double the state’s incentive money, a conversation about the county’s interest in incentives looms. Local leaders will decide whether to continue without incentive packages or accept the tactic that has made luring and keeping job creators a cutthroat business.

The incentive rush

“Many times we’re not competing with just prospects that are looking at us versus other areas of Florida,” said Jennifer Berg, a spokeswoman for Lee County’s economic development office. “It’s typically other North American locations.”

Across the state, about 1,100 agreements similar to 21st Century Oncology’s have been executed since 1996, when Enterprise Florida started brokering the deals. About $1.35 billion in incentives have been arranged, though only half of that has been paid out to date.

In 2007, 21st Century Oncology Management Services had aspirations to expand.

At the same time, the Fort Myers-based cancer care corporation was running up against two headwinds: the front-end of the recession, and a series of Medicare rate cuts targeting oncology.

So the company turned to Enterprise Florida, the state’s public-private partnership that arranges incentive packages for companies in targeted growth industries.

In exchange for creating 140 jobs at its Lee County headquarters, state and county officials agreed to provide $420,000 in tax refunds.

“Even though we’re a company with approximately $600 million in revenue, it’s a significant impact,” 21st Century Oncology Chief Operating Officer Joseph Garcia said.

Across the state, about 1,100 agreements similar to 21st Century Oncology’s have been executed since 1996, when Enterprise Florida started brokering the deals. About $1.35 billion in incentives have been arranged, though only half of that has been paid out to date. Precise historical data wasn’t available, but in fiscal 2012, about 75 percent of the money came from the government.

(The Daily News only examined incentives for jobs arranged and documented through the Department of Economic Opportunity and Enterprise Florida. Incentives through other agencies, such as Space Florida and the Office of Film & Entertainment, were not included.)

Most of the incentive agreements have been tax refunds similar to those received by 21st Century Oncology. Others have been direct cash incentives known as Quick Action Closing Funds, up-front money given to secure a company’s movement or retention. Most of the money — about $359 million — has been paid to five medical and scientific research institutes in Orlando and along Florida’s southeastern coast.

State records indicate about 500 of the 1,100 incentive agreements have resulted in job creation, totaling more than 88,000 positions.

Economic development leaders say the incentives are necessary in a competitive marketplace, particularly as Texas, Michigan, Pennsylvania and other states continue to offer lucrative packages.

“Many times we’re not competing with just prospects that are looking at us versus other areas of Florida,” said Jennifer Berg, a spokeswoman for Lee County’s economic development office. “It’s typically other North American locations.”

Critics see incentives as the heavy hand of government, picking winners and losers in the supposedly free market.

“Everybody in Florida wants jobs and an increase in economic activity,” said Dan Krassner, executive director of Integrity Florida, an independent watchdog critical of Enterprise Florida. “When you see a state program only helping some communities, you have to ask, why those and not all? Shouldn’t all of the regions matter?”

A few high-profile agreements have also crumbled, leaving taxpayers without a return on investment.

Most notably, the state agreed to $20 million in up-front cash to Digital Domain Media Group in 2007 for a Port St. Lucie animation studio, only to watch the company go bankrupt five years later.

In Lee County, few jobs have been created, a bottling plant sits dormant and commissioners remain concerned about the lack of results from the county’s $5 million direct cash incentive to health drink maker VR Laboratories in 2010.

Despite the occasional loss, business and municipalities continue to trumpet the incentives — though some embrace them more than others.

The incentive impact

Lexey Swall/Staff
Gov. Rick Scott, left, and Arthrex founder and President Reinhold Schmieding take questions from the media after Arthrex breaks ground for a manufacturing plant at Ave Maria on Monday, April 16, 2012. The $25 million facility on Oil Well Road will have 190,000 square feet of usable space and is projected to bring between 400 and 500 jobs to Collier County.

Photo by LEXEY SWALL // Buy this photo

Lexey Swall/Staff Gov. Rick Scott, left, and Arthrex founder and President Reinhold Schmieding take questions from the media after Arthrex breaks ground for a manufacturing plant at Ave Maria on Monday, April 16, 2012. The $25 million facility on Oil Well Road will have 190,000 square feet of usable space and is projected to bring between 400 and 500 jobs to Collier County.

“For us to be a player in the high-tech areas, you have to stake your ground in one or two industries, because the companies cluster,” Lee County Commissioner Tammy Hall said.

With just one paid agreement since 1996 — a $15,000 tax refund for Arthrex Inc. in 2000 — Collier County businesses have received the fewest incentive dollars through the DEO among the 45 counties to get money from the department.

Seven Collier businesses have arranged state incentive agreements totaling nearly $1.5 million since 1996. Yet only the Arthrex deal came to fruition. The most recent company to reach an agreement — medical manufacturer Inovo Inc., in 2008 — is moving its headquarters to Lehigh Acres later this year.

Some Collier leaders said the region isn’t set up to take advantage of state incentive dollars. The region’s economy has largely depended on tourism, agriculture and construction — none of which are targeted by the state’s incentive program. Only 20 percent of the region’s workforce is employed in manufacturing, information, financial activities or professional and business services — all targeted industries.

The county has also been picky when it comes to which businesses to seek. It wouldn’t take on a sawmill like rural Suwannee County has done, bringing $3 million in state incentives and an estimated 350 jobs with it, Coyle said as an example.

“We wouldn’t even think about that,” he said.

While county and local governments don’t receive the money, they’re often instrumental in pairing businesses with the state. In many cases, they also chip in incentive money.

Economic development leaders in other parts of Florida said the incentives prove vital at leveling the competitive playing field.

In Escambia County, home to Pensacola and roughly the same population size as Collier, about $4.7 million in state incentive payments have helped create nearly 2,200 jobs. Of that, $3 million has allowed one of its cornerstone companies, Navy Federal Credit Union, to expand on a new 240-acre property. The incentives also ward off competition from neighboring Alabama, Georgia and Mississippi, said Scott Luth, senior vice president of economic development for the Greater Pensacola Chamber of Commerce.

“They’re essential to our ability to recruit new investors to our community,” Luth said.

Lee County officials have been aggressive in using incentives to keep Fort Myers-based retailer Chico’s FAS Inc. in Southwest Florida, with packages totaling $4.45 million from the state and county since 2002.

They’ve also targeted medical technology, light manufacturing and renewable energy, setting aside $25 million in county reserves for incentives.

“For us to be a player in the high-tech areas, you have to stake your ground in one or two industries, because the companies cluster,” Commissioner Tammy Hall said.

The incentive future

Georgia Hiller

Georgia Hiller

Collier County Commissioner Fred Coyle.  Taken in 2011.

Collier County Commissioner Fred Coyle. Taken in 2011.

With the collapse of the housing market and recent recession, Collier County is joining the movement toward economic diversification, albeit later than some others.

A four-person economic development department was created last year, led by Bruce Register, a former business development manager for Hillsborough County. New to the job, Register isn’t committing to a specific vision for the future of business in Collier County.

“We’re going to be listening to the community, understanding what their expectations are, and learning what they want to see from the community in regard to the future economy,” Register said.

Whether that future includes joining much of the state in seeking out incentive deals remains to be seen.

The county has dipped its toe into the incentive pool before. Commissioners approved $2.2 million in incentives for Arthrex in 2011, and the dissolved discussions with the Jackson Laboratory included a potential $130-million state package. But Collier officials haven’t made a consistent, formal pursuit of such deals.

“We have mentioned over and over high-wage, high-tech jobs, but nobody has ever mentioned this grant money and this pot of money,” Commissioner Donna Fiala said.

That pot could grow, too, if Gov. Rick Scott gets his way.

He’s requesting an increase of Enterprise Florida’s budget, from $111 million to $278 million this year, though legislators expressed some skepticism about the agency’s effectiveness at a February House subcommittee hearing.

Coyle said he doubts the county, already dealing with a fairly restrictive budget, will create a large incentive fund, likely opting to pursue private venture capital money instead.

“If you want a real big game-changer over a very short period of time, economic incentives are absolutely essential,” Coyle said. “But if you’re willing to pursue a slower, perhaps more steady and less expensive course, you can do exactly what we’ve done in the past.”

Click here to view database in larger window »

The Florida Department of Economic Opportunity's online incentive portal shows about 1,000 companies have taken advantage of state incentives, which are largely funded with taxpayer dollars. Here's an accounting of all the companies since 1996 to have agreements with the DEO executed. Years with an asterisk indicate the company had more than one agreement spanning multiple years. In cases when a company paid back the incentive, the "payments made to date" reflects that refund.


(Click here to view larger map)

The following map breaks down how much the businesses in each county have received in corporate income tax refunds, direct cash payments and other economic incentives. Some agreements have pending payments, and funds given to a company but later repaid are not counted. The data is compiled from the Florida Department of Economic Opportunity. It does not include all economic incentives, such as sales tax refunds and incentives through other state agencies, such as Workforce Florida and the Office of Film & Entertainment.

Legend: From lightest to darkest shade

  • $0
  • $0 to $1 million
  • $1 million to $2 million
  • $2 million to $4 million
  • $4 million to $10 million
  • $10 million to $40 million
  • $40 million to $150 million

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