by Mike Sharkey
Staff Writer
As the Special Committee on Economic Development Incentives and the Jacksonville Economic Development Commission rewrite and amend the City’s incentive policy, one major problem that must be addressed is the public’s perception of incentives.
Jerry Mallot, the executive vice president of Cornerstone — a division of the Chamber of Commerce — addressed the committee Thursday about Enterprise Florida, his role in it the last four years and its role in economic incentives locally. Deep into the presentation, it became apparent that one of the committee’s biggest concerns as they attempt to rewrite the complex incentive policy is the problems with Jacksonville’s policy and how it is perceived by the general public, which often gets a one-sided view of incentive-laden projects.
City Council member Faye Rustin specifically asked Mallot what was wrong with Jacksonville’s policy in relation to the rest of Florida and other southern states. Mallot’s answer centered on three basic things: geographical limits of the current policy, the time it takes for a company to complete the process and the public’s perception that incentives are little more than corporate welfare for companies that offer little in the way of a return to the average person.
“I feel like we have a fairly competitive incentive package. We have all the tools available,” said Mallot. “But I feel there are three things that are disadvantages. One, we have a fairly strict area in which we can utilize incentives in our area.
“Two, there is an issue of constraints on time. We have a process that is very long and that creates some uncertainly. When the JEDC process starts, it doesn’t let any bad projects through, but this can take two to three months,” explained Mallot, adding that occasionally projects fall through for various reasons, even after spending months in the pipeline. “A company would be more than disappointed if they lost two to three months and didn’t get anything. This is a disadvantage, but not a killer.
“Three, we talk more about the issues of incentives than other communities and that creates an issue of instability. It becomes an agenda item forever. We’ve been talking about incentives since I’ve been here [at the Chamber].”
Two of the main issues the committee would like to address through the policy rewrite process is how incentives can be used all over Jacksonville and how Jacksonville can capture some of the manufacturing and shipping business that is being lost to states such as Georgia, South Carolina, Alabama and Mississippi.
JEDC executive director Kirk Wendland said one of the problems with providing incentives to every company that wants to relocate or expand in Jacksonville is that there is only so much money available. Combine that with the fact that Mayor John Delaney created the JEDC with a specific area of town in mind and it is easier to understand why a software company looking at Southpoint may not receive any incentives, while a downtown housing project gets millions. Wendland also stressed that only a small portion of each incentive, no matter the size, is actually local taxpayer-funded cash. Most of it comes in the form of state and federal government subsidized grants and tax breaks that the developers eventually pay back through stipulations within the incentive package.
“We actually get much more from them [in taxes] and in the long run, we get much more than that,” said Wendland. “We are the winners and we are the net beneficiaries. One-third of the companies that expand and relocate here get no incentives at all.”
Wendland admitted that it will be tough to compete with nearby states for certain types of business, but it is a geography issue as much as anything. With at least a dozen good-sized ports scattered all over the state, cities like Jacksonville have a great deal of competition for state incentive money that can be used to attract manufacturers and shipping companies. For example, with only two major ports, Georgia is able spend more per port — but less statewide — to make renovations and secure business. However, Wendland believes Jacksonville has selling points that coastal cities in those states lack.
“Compared to Georgia, South Carolina, Alabama and Mississippi, we will always be in last place in what we can provide for them [companies] economically,” said Wendland. “But from a quality of life standpoint, I hope we are in first place.”
Added Mallot: “I would say the consolidated government helps, too.”
Council and committee member Warren Alvarez said he spends a great deal of time trying to justify huge incentive packages to his constituents, most of whom live on the north and west side of town —beyond the boundaries of JEDC-sponsored incentives. Alvarez blames both the Council for passing every deal its presented and the media for reporting the generalities of a deal without explaining the details. Often, those details reveal that the company is getting very little in the way of cash and must meet hiring requirements within a specific timeframe or face stiff financial penalties.
“Maybe your committee could look at how we explain incentives,” said Mallot. “That would be a good thing.”
Wendland agreed, saying that public perception is certainly an issue especially when projects like Vestcor ($17 million in incentives to renovate the Lynch Building) and The Shipyards (over $75 million in incentives for an $860 million project) make the news.
“We spend a lot of time focusing on what a company is getting and not what the community is getting,” said Wendland. “When a company gets $2 million in economic development grants, the perception is that when you folks [City Council] vote on that project, the next day I’m writing a check for $2 million. That’s not the case.”
Within the next month, Alberta Hipps, who chairs the special committee, expects to receive a first draft of the policy rewrite. Plans are to have the final version go before full Council on May 14 or May 28 with final approval coming by June 25.