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News Clips 01/29/2013
Florida trying to recoup money from corporations that failed to meet jobs goals
Source: Florida Current, 01/28/13
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By Gary Rohrer
There are 18 companies that have received $21.3 million in up-front taxpayer incentives since 1996 for projects to expand or move to Florida that have failed to meet job or wage goals. The companies, some that never followed through on their projects, returned $14.3 million to the state after adding 2,605 jobs out of a total 5,761 jobs required under the deals.
Enterprise Florida CEO Gray Swoope told lawmakers about the projects this past week, saying they represent 18 projects out of 125 that have received Quick Action Closing Funds for incentive projects but had to give back some money. Swoope sees the projects that added some jobs but did not meet their goals as partial successes, rather than complete failures.
Three other companies -- DayJet Corp., Digital Domain and Redpine Healthcare Technologies -- have gone bankrupt after accepting state money, leaving Florida to chase after the cash in court. Digital Domain’s bankruptcy, which cost the state $20 million, has received the most attention. Enterprise Florida officials were skeptical of the incentive deal for Digital Domain, but the package was pushed through the Legislature in 2009 anyway.
The DayJet and Redpine deals cost the state $2 million and $400,000, respectively, in incentive funds.
Officials from Enterprise Florida and the Department of Economic Opportunity, which collaborate on incentive projects, are quick to point out the DayJet (2006) and Digital Domain (2009) contracts were inked before Gov. Rick Scott took office in January 2011, and the Digital Domain project evaded Enterprise Florida’s normal vetting process. The Redpine deal, however, was signed in June 2011.
DEO has asked the Legislature for up to $500,000 in additional money for the 2013-2014 fiscal year to pay for the legal fees of Squire Sanders, a large international law firm, to pursue the case in Delaware, where Digital Domain is based. The agency also is pursuing the funds issued to Redpine and DayJet in court, but is using in-house counsel for the DayJet litigation. Attorney General Pam Bondi’s office is taking on the Redpine case. Information on how much the state has spent on the cases so far was not immediately available from DEO.
“DEO is committed to holding companies accountable and is taking all steps possible to seek the return of taxpayer dollars,” DEO spokeswoman Monica Russell wrote in an email.
In at least two cases, however, the state entered into Quick Action Closing Fund contracts with companies that previously had failed to meet job or wage goals under incentive contracts and gave back up-front funds.
Embraer Aircraft Holding Inc. received $5.9 million over two contracts in 2008 and 2010 to create 250 jobs. The contracts came eight years after another branch of the Brazilian aerospace conglomerate, Embraer Engineering Services Inc., gave back $277,000 of their $500,000 incentive award after failing to create any of the 100 jobs required in a separate project.
All of those deals were signed under previous administrations, but Scott announced a deal with aircraft manufacturing firm Pratt & Whitney in November. In that deal the company is poised to pull down $4.7 million in state and local incentives for creating 230 jobs over nine years with an average wage of $81,000 and for making a capital investment of $63.7 million. Part of the incentive package is $3 million in up-front Quick Action Closing Funds. Pratt & Whitney has already paid back $400,000 out of a $1 million incentives deal inked in 2000, when it added 844 out of the required 1,300 jobs.
Skeptical legislators are looking at economic incentives with increased scrutiny this year, and have already called on DEO to post all incentive deals online. A portal containing the deals is up and running, but only some of the deals signed since 1996 are online. DEO officials say all deals not protected by confidentiality will be online sometime in March.
Still, lawmakers are looking for a return on investment from incentive projects as budget battles heat up. Swoope told House and Senate panels that since 1996, $335 million in taxpayer incentives have created 103,544 jobs. Some lawmakers remain unconvinced.
“If we’re not going to get a true, honest picture the metrics aren’t going to matter. I’m looking for truth in numbers,” Sen. Audrey Gibson, D-Jacksonville, told Swoope last week.