County gets few jobs for our economic development millions
The Indian River Board of County Commissioners has poured more than $7 million into its economic development program in the past decade, yet there are fewer jobs in the county now than when the program started – even though the county’s population has increased by more than 10 percent over that time.
The taxpayer dollars went for inducement payments, job grants and tax abatements intended to generate job growth by luring new companies and retaining current ones, but a Vero Beach 32963 look at these economic development subsidies show the overwhelming majority of the tax money went to two deals that were controversial at best, with most of the grants raising questions about why the commission continues to throw good money after bad.
Here are some of the findings from the 32963 investigation:
n Despite millions of dollars spent on incentives, the number of people working in the county in January 2016 was lower than the number employed in January 2006, according to the Florida Research and Economic Information Database Application. According to the database, there were 58,611 people working in the county in January 2006, but only 57,947 employed in January 2016, a loss of 664 jobs.
• This decrease in employment came during a time when the county’s population increased by nearly 18,000, rising from 129,980 in 2006 to 147,919 in 2016, according to the U.S. Census Bureau.
• Since 2006, the county has budgeted $1,314,992 for the Indian River County Chamber of Commerce, which runs the county’s jobs effort through its Economic Development Division, continuing to fund it year after year despite the fact the county has experienced a net loss of jobs during that time.
• In 2013-14, $84,717 out of $139,898 the county budgeted for economic development went for administrative costs at the Chamber, with a big chunk of that money helping fund the salary of Chamber Economic Development Director Helene Caseltine.
• The county spent $186,488 on economic development in 2014-15, but about two-thirds of that went for a consulting study and more salary/administrative costs. The only Economic Development Division-assisted company to deliver jobs in 2014 and 2015 was True Aero, which anticipated 13 jobs, but actually delivered eight.
• Under the 2015-16 budget of $163,445, Caseltine is receiving $53,559 in salary, $11,271 in benefits and $5,555 for payroll/unemployment taxes from the county ($70,385 total, or 43 percent of the annual budget). A group called the Economic Leadership Alliance raises private money to further bolster her compensation.
• The county spent another $108,619 on consultant reports commissioned to evaluate its economic development policies, procedures and spending during the past three years.
• Companies that receive job grants and do actually create jobs don’t necessarily stick around. A company called OcuCue received $50,334 in county job grants for creating nine jobs but has since relocated out of the county after being acquired.
• The Chamber’s Economic Development Division provided 32963 with a document that claims 1,277 “total number of new hires to date” as a result of its efforts over the past 10 years, but the same document shows that more than half of the jobs included in that number were not “new hires” but jobs “retained” at Piper Aircraft.
• Even the claim of job retention at Piper appears to be inaccurate: The Chamber claims to have retained 650 jobs at the airplane factory (its website claims 850 jobs), but Jacqueline Carlon, Piper director of marketing and communications, told 32963 the company presently has only 625 full-time equivalent positions.
Looking back, the biggest county dole-out during the past 10 years was a $4 million payment to Piper Aircraft in 2008 for a job incentive deal that faltered. Under the 2008 deal, Piper was supposed to invest a certain amount for capital improvements at its Vero plant, spend a specified amount on research and development and have 950 employees on its payroll by the end of 2011.
Piper fell short by 230 employees but county commissioners let the company off the hook and did not demand repayment of the incentive money.
The second largest investment was nearly $1.2 million in tax savings and job grants given by the county to INEOS for a $130 million biofuel plant on Oslo Road that so far appears to be a failure. Vero Beach 32963 reported this month there’s no evidence a single drop of biofuel has been distilled at the government-subsidized plant. Although jobs have been created at the facility, if it can’t produce fuel those jobs will likely go away. An INEOS executive declined to comment about the plant’s production.
Piper acknowledged not hitting the jobs benchmark under the 2008 agreement because of the severe economic downturn that began in 2007, and its decision to cancel development and production of a single-engine jet. But the company said it has complied with a 2012 amended agreement and done much to bolster the local economy.
“Since the original agreement and despite serious global economic challenges, Piper has invested more than $100 million in the Vero Beach operation in addition to annual payroll and Florida supplier purchases. Piper’s investment in the community, through product development costs and capital expenditures, has directly returned more than $9 for every $1 invested by the state and local governments in economic development incentives for the company and its employees,” Carlon wrote in an email to Vero Beach 32963.
Piper did not provide any documentation to back up its return on investment claims, but it is the county’s fifth largest employer and says it is getting ready to hire 75 more workers as it begins producing the new M600 airplane.
Caseltine defended the disconnect between anticipated and actual job creation, noting that the county does not lose money from a company’s unfulfilled expected new jobs. A company only receives job grants for the actual new jobs that meet certain wage standards under performance guidelines: “If a company does not ‘perform,’ i.e. create the anticipated number of new jobs, they do not receive the funds that were encumbered under their award. Funds not used then go back into the county’s General Revenue,” she said.
She said the Chamber’s high administrative costs are justified because “I know my job and am good at my job. I am certified as an economic development professional. I have nearly 30 years of experience as an economic development professional. I am asked by national organizations to serve on economic development panels, and asked to serve as a mentor to other economic developers pursuing their own certification. I believe the county is well-represented.”
Partly because of their limited success, the jobs grants have been controversial, and even some company owners who received job grants said the county would be better off using its job-creation money for workplace training, international recruiting and working to remove code restrictions that inhibit business growth.
Clifford Morris, president and founder of Florida Organic Aquaculture, a hugely successful shrimp operation in Fellsmere, thinks the county’s economic development incentives and marketing strategy are too conventional.
He said distributing thumb drives and hiring site consultants for trade show visits doesn’t make Indian River County stand out from the rest of the cities and counties recruiting businesses and recommended the county look outside the U.S. to attract companies from South America.
“I don’t think its [marketing and recruiting] is properly focused. Business stimulation should be niched and focused. They’re going to seminars. What does that help us?” Morris said. “We can resonate with South Americans. We have a big Hispanic population in Indian River.”
Caseltine defended her office’s marketing strategy. She said Indian River is a county of only 147,000, so it doesn’t have the financial and personnel resources to recruit internationally, as Morris suggested.
“I agree that face-to-face interactions with prospective clients are best, but costs of travel abroad are high and more than our budget would accommodate. It is proven that to earn trust and build relationships, those would not be one-time visits abroad, but multiple trips with more than one person representing this county,” Caseltine said.
“Much larger metropolitan economic development organizations, such as Jacksonville or Miami, do this as part of their business recruitment strategy – unlike counties with a population of 147,000,” she said.
She said the chamber is on the verge of improving its trade show strategy: “Beginning next fiscal year, we will work with a firm that will represent Indian River County at six industry trade shows, distributing our collateral material. We are able to attend any of the trade shows under their registration fee, so there is no additional cost to us except travel. They also provide and coordinate opportunities to meet key industry representatives.”
Another company owner who received job grant money was Bob Putnam, president of Boston Barricade Company. He said just throwing money at companies is not the best strategy and there are other ways to entice businesses.
“It’s not a friendly area for business. Vero Beach Electric is picking your pockets every day and industrial space is limited because of the costs of meeting the [fire and building] codes,” said Putnam, noting 70 of his company’s 200 workers are in Vero Beach.
Putnam’s company has received $80,333 in job grant money the past two fiscal years toward a total award of $126,000, but says code revisions would be more helpful to him than job grant money. He argues stringent fire and building code requirements are hindering his efforts to grow in Vero Beach and adding to the cost of doing business in Indian River.
Putnam also said economic development efforts need to be focused on creating more industrial sites.
“We’re challenged with finding a new building in Vero Beach,” he said, noting his company operations are spread between three local buildings.
“I don’t want my wife closing the business at 11 p.m. out at [Interstate] 95,” Putnam said of the available industrial land in the I-95 area.
“The county should take a look and quiz business owners like myself about the challenges of setting up businesses in Indian River County,” Putnam said. “It’s been a challenge to attract talent.”
Caseltine disputed Putnam’s claim about a lack of industrial space. She said there is “very good inventory for an area of our size,” with industrial space in the 10,000 square foot range along the U.S. 1 corridor and Old Dixie Highway.
Enticing companies with financial incentives to locate or stay in your town is hardly new. University of Central Florida economic professor Sean Snaith said sometimes local governments have to give inducements to compete. “If you’re looking to add jobs, you will want to be in the game,” Snaith said.
But “not everyone is a big fan of them,” Snaith said of the incentives.
County Commissioner Peter O’Bryan defended the county’s incentives to recruit business, explaining county officials realized a decade ago that being a bedroom community and agriculture market was not good enough and cultivating a diversified economy was necessary.
Site consultants “want to see an open-for-business attitude,” said O’Bryan, the county commission’s liaison to the Economic Development Division.
Jason Nunemaker, Fellsmere city manager since February 2005, said the need for economic development was apparent when “during great recession the lack of diversity in our economy was laid bare.”
Like Caseltine, Nunemaker said Indian River County doesn’t have the resources to throw money around and lure big companies with hefty financial inducements. “For us, we do have to be creative and dynamic in how we attract people. We can’t just throw money at things. The public has no appetite for that either,” he said.
“It’s not a matter of bribing someone with incentives,” Nunemaker added. “Because if that’s the only reason they’re here, when another sweeter deal comes along, they’ll be gone eight years later.”