by Bradley Parsons
Staff Writer
More companies receiving City incentives revealed this year how that money was put to work.
Half those companies last year ignored a City survey, measuring the effectiveness of taxpayer–financed development incentives. To encourage a better showing this year, the Jacksonville Economic Development Commission appealed to their sense of civic responsibility, and, of course, to their bank account.
JEDC executive director Kirk Wendland said the City “pressed hard” for the responses. The companies received another round of phone calls and letters. The JEDC backed up the correspondence with new development deals, providing a financial penalty for non–response. The surveys provide the raw numbers for the JEDC’s annual status report, which measures how many jobs the City incentives create and the amount of private investment. This year 75 percent of the companies responded.
“We probably put a little more teeth into the process this year,” said Wendland.
After last year’s disappointing response, Wendland said contracts negotiated in 2003 required a response. Refusal to respond could result in incentives being voided or fines. Wendland said a typical fine would cost about 10 percent of the incentive.
“If they don’t provide us the information, the penalty on a $50,000 project may be $5,000. Larger deals might get a higher monetary penalty,” said Wendland.
The surveys give the JEDC a big–picture view of how the City’s money is being spent. Wendland said the status report provides a spot check on whether developers are living up to promises of private investment and job creation.
“It’s an aggregate look at if the developer promised 100 jobs, but maybe we’ve only seen 50 so far. Or if they said they’d invest $1 million in capital, but only put half a million in so far. If they’re using public resources, it’s a look at if they’re living up to their end.”
City incentives are routinely tied to the developer’s ability to create jobs and invest private capital. The deals often allow the City to take money back if the developer comes up short. Wendland stressed that the City keeps separate account on individual development deals. A company’s failure to respond to the surveys doesn’t mean the City isn’t keeping track, he said.
“We are absolutely enforcing all the clawback requirements of these contracts,” said Wendland. “All these people not responding in the past has no effect on how we enforce the contracts.”
The big-picture painted by this year’s survey is about what Wendland expected. Private investment is just below projections, while job creation lags further behind. Wendland noted that capital investment is usually put in at the beginning of a project. Job creation, he said is usually spread over several years and may not even begin until a project is done.
A draft of the report shows 93 companies, whose projects are on the tax roll, investing more than $988 million in private capital into their projects since 1996, about $20 million less than projected. The City has invested more than $58 million into those projects. That money has bought 10,666 jobs as of 2003’s end. The development was projected to create 11,560 jobs.
The final version of the report will be ready later this week. Wendland said the final numbers would probably remain the same.