by Max Marbut
Staff Writer
The rate of return on investment is one of the best ways to evaluate the success of a business transaction, especially when it comes to economic development on a statewide or citywide scale.
One of the State of Florida’s most successful economic development tools is the Qualified Target Industry Tax Refund, or QTI. The program has also helped the Jacksonville Economic Development Commission (JEDC) compete with other cities to bring new companies and headquarters to Duval County.
Administered by the State’s Office of Tourism, Trade and Economic Development and Enterprise Florida, Inc., the QTI program achieves results in more than one business improvement category.
In order to qualify, an applicant must relocate its business or headquarters to Florida or expand its existing business. It must also be in an industry the state deems attractive to Florida’s future business and economic growth. Categories include manufacturing facilities, management services, administrative & support services, information industries, wholesale trade and professional, scientific & technical services.
In addition, the QTI applicant is required to create at least 10 new full-time jobs that pay an annual wage equal to at least 115 percent of the state, metropolitan statistical area (MSA) or local average wage.
The minimum QTI offered by Florida is $3,000 per qualified job created. The tax refund can increase with higher average salaries – $4,000 per job at the 150 percent of average wage level and up to $5,000 per job at the 200 percent of average salary or greater level.
In the case of Jacksonville, the JEDC must first approve an application for a QTI, then it must receive final approval from the City Council before the application can be submitted to the state.
If approved businesses receive refunds on taxes they have paid including corporate income tax, sales tax, ad valorem tax, intangible personal property tax and taxes on insurance premiums, communications services and other taxes.
When the application is approved, the state pays 80 percent of the total tax refund, with Jacksonville picking up the remaining 20 percent.
“It’s a great way for us to leverage state funds,” said JEDC Business Development Chief Lyndsey Ballas.
She said QTI can be a powerful tool in economic development because having the program available can make the difference between a business coming to Jacksonville or going somewhere else.
“When it comes down to a tie-breaker between Jacksonville and another city, that’s when the QTI comes into play. But, a potential new business has to prove to us (JEDC) that we’re actually in competition with another city before we’ll offer a QTI,” said Ballas.
She said one of the best examples is an ordinance enacted by Council Feb. 26 that approved an agreement between the City and BodyTel Scientific, Inc. — a German company that was seeking a public investment to offset a portion of the cost to relocate its world headquarters to Jacksonville.
The Council approved an investment of $13,000 with the state investing the remainder of the $65,000 QTI Tax Refund.
The relocation will bring 13 new jobs to Jacksonville that meet the 200 percent or greater QTI requirement. The bottom line: the City’s $13,000 investment will yield an annual local payroll increase of more than $940,000 per year.
“A QTI is a very safe, conservative estimate, especially since it’s paid out at the rate of 25 percent per year for four years,” said Ballas, who added the program is purely performance-based. ”If for any reason they don’t create the jobs or don’t pay the taxes, they don’t get the refund incentive.”
While the QTI Tax Refund program is a useful tool and a good investment for the local economy when it’s needed to bring a new business to the table and close the deal, it’s just part of the JEDC’s tool kit, said Ballas.
“It’s not enough of an incentive to cause a company to suddenly ‘discover’ Jacksonville, but it’s an option to use when it comes down to the final negotiation,” she said.