Incentives bait wasted fishing for what we’ve already caught
Written by Michael Lewis on September 15, 2015
Miami can’t lure enough high-wage jobs with sun, sand and hub-of-the-Americas site, even coupled with benefits of a low-tax state, global links, multicultural workers and Art Basel razzle-dazzle. So incentives give us an added boost.
Every city offers something: specialized talent, low costs, great schools, transportation networks, cheap land, proximity to markets, winning sports teams, top-level culture, quality cuisine or whatever. But no city has everything.
When businesses relocate, they test every factor. More than one city could be suitable. The tipping point might be incentives, the bigger the better.
That’s makes it so disappointing that Florida is running out of incentive cash and that Miami-Dade County has dribbled away $75 million it had stashed for a decade to bring in one game-changing project.
Those projects are few and hard to get, because everyone wants them. But we need to be ready for opportunity.
Take General Electric Co., with about $150 billion in yearly sales, which is so sore about heavy taxes at its Connecticut headquarters that it talks of leaving. Think of 5,000 high-paying office jobs in Miami and the ensuing magnet global star GE could be to other companies. Just the name would be a boon in Miami, which has few headquarters to call its own.
That’s the kind of big deal we’ve long sought. And we have at least one thing GE requires: low taxes. Plus, where would you rather winter, the Northeast or Miami?
We can’t tell how GE ranks attributes of a new home. But $75 million from the county plus the same from the state would sure be a warm welcome – if we had money for them or any other game-changing deal, which we don’t.
Gov. Rick Scott asked the legislature for $85 million in incentives and got about half. Miami-Dade for a decade had squirreled away $75 million in voter-backed bond capacity for a project this big but in the past few months not only split every penny among 10 others but lined up four projects to get what’s left if these deals fail.
How could they fail?
Well, as we detailed in our pages last week, none of those set to split $75 million has yet met criteria fully. Startup film complex Miami Ocean Studios was lined up for $10 million to create 2,684 jobs. However, principals now want to guarantee just 50 jobs for the money.
At that pay pace, GE’s 5,000 headquarters jobs would rate $1 billion. If that seems steep, note that we’ve committed $3 billion for a baseball stadium that was geared to merely retain the Miami Marlins.
Don’t our economic development aims seem out of kilter?
Less than a year ago, three commissioners sought $18.5 million of the $75 million to add sand on their districts’ beaches, saying that better beaches would lure jobs even though the sand washes away. Beach upgrades are vital, but raiding incentives to do it would have been a travesty.
Some label a travesty our use of the jackpot for projects that would otherwise be built and jobs that would otherwise appear – tossing bones to projects that won’t change much even if they do meet projections.
We’re unlikely to get GE even if our economic development folks have tried. But from time to time other big game-changers appear. That’s where our big money should go.
Instead, we reward construction when our skyline is already loaded with cranes. That’s like rewarding Alaska for producing ice. Why pay to get what we’re getting without paying?
Friday an owner who moved his offices two years ago from Manhattan to Coral Gables said the key factors in his move were tax structure and quality of life. He got no incentives. In fact, he asked why we don’t have incentives, because he has a larger business that if nudged he could move here from another state.
The Beacon Council, our 30-year-old economic development team, does incentivize job creation and capital investment, but this business owner had never heard of the Beacon Council. Would its funding be his tipping point?
The county’s $75 million game-changer fund sure isn’t changing much. Most grantees would build here without a county penny.
But none of those deals, politically blessed as they are, has convinced county professionals to OK them. If companies don’t win approval, four more await. If they too fail, something might remain for a true game-changer or a less-robust job creator that might not come here otherwise.
Instead of fishing for lasting economic gains, we fish for what Miami-Dade has already caught, with a feeding frenzy to share in $75 million that should have made a difference for us.
Heavily taxed companies would like to move from the North. But other cities also pursue them. The place with the most to offer wins. We emptied our pockets at the wrong time and for the wrong reason.
Our best hope is that county officials won’t rubberstamp any of the 10 deals that don’t meet economic targets and that we retain some money for when real game-changing values come along.