88 Companies Okd For State Miamidadefunded Incentives To Grow Here But Jackpot Is Elusive
Written by Miami Today on October 14, 2010
By Zachary S. Fagenson
Not a single one of the 88 companies qualifying for incentives from the state and county to relocate or expand in Miami-Dade has received the entire amount offered and made all state-required reports showing their economic impact.
Paradoxically, that might show that the program is working exactly as intended.
Since the first of those 88 companies was approved in 1997, 73 were either paid partially or not at all, 13 remain eligible for payment and two have received the entire approved amounts but the governor’s office is still waiting for final documentation.
The incentive, called the Qualified Targeted Industry Tax Refund, is based on performance, meaning companies must hire the employees and make the capital investments they claim in their application before receiving tax refunds. It’s available to new or expanding businesses with high-paying jobs in the state’s targeted growth industries.
To be eligible, an applying businesses must "create at least 10 new jobs paying 115% of the average annual wage [to] receive tax refunds of up to $3,000 per new job created, or up to $6,000 in an Enterprise Zone or rural county," according to Enterprise Florida, the state economic development agency’s website.
The state covers 80% of the incentive, the county 20%.
And even though most of the companies didn’t, or haven’t yet, met all their economic development requirements, the important part seems that no one’s on the hook for paying for job creation that hasn’t taken place.
"They are performance-based, after the fact," said Beacon Council President and CEO Frank Nero. The incentives are "not forthcoming until the company creates the jobs, makes investments and pays taxes."
Approved Qualified Targeted Industry Tax Refunds (QTIs) for Miami-Dade County could account for up to 12,430 new jobs, about 5.5 million new square feet of development and $752.4 million of new capital investment, according to the Beacon Council.
"These were approved, but it doesn’t necessarily mean the company moved here or accepted it," Mr. Nero pointed out.
But the money spent on these QTI incentives is used in conjunction with a handful of other incentives in hopes of spurring private-sector growth. Beyond those, the cost of doing business and a number of other demographic factors play into whether a company decides to expand, move or set up operations in Miami-Dade.
The "Quick Response Training [program] that goes with the QTI is for the training of new employees a company may need in a given line of activity," said St. Thomas University business school Dean and economist J. Antonio Villamil. "That supports training wages, the cost of the training."
Another popular incentive is the Road Fund that "helps companies with immediate infrastructure needs," he added, "for example, if you need an access road, or you need a traffic light to come in and out of your business."
Two more important incentives are the High Impact Performance Incentive, which offers a grant for capital investments of $50 million or more over a three-year period, and the Innovation Fund, which offers incentives particularly to life sciences firms. The innovation fund was refreshed with $75 million for fiscal 2010-2011 after it sat dormant and unfunded since 2008, according to Brea Galen of the governor’s office.
Meanwhile, the state and local incentives offered to companies considering moving or growing are generally offered early in the process and may not always be a scale-tipping factor, Mr. Nero of the Beacon Council said.
"Usually what happens is that this is one component of a total presentation made to a company, and it’s usually a variety of things the company is looking for. Incentives may be just part of it," he said. "More often than not, there’s a lot data that goes with these projects."
Such data could include the cost of buying or improving a site — often a requirement for the QTI — accessibility and cost of airfare, cost of labor, utility costs and myriad other factors companies and site selectors weigh against other areas.
And as has so often been repeated, the quality of education for employees’ families plays just as crucial a role as factors like business taxes when it comes decision time.
"There’s a vast array of tools," Mr. Villamil said. "However, every site selector would tell you that the two top determinants in terms of the business climate are the kindergarten though 12 education, then workforce skills, and then of course higher education.
"Incentives are only the frosting on the cake, but the cake is really the business climate, and that’s led by human resources."