Safeguards have not been fully put in place to prevent state leaders from approving an economic incentive plan similar to the $20 million that went to the failed Digital Domain Media Group in 2009, the governor's inspector general reported.
The report from Chief Inspector General Melinda Miguel also found that there was nothing unlawful in how the money was awarded to lure the company to Port St. Lucie and eventually West Palm Beach.
However, investigators noted there were gaps in written documentation, conflicting recollections of events and unavailable key witnesses, as they reviewed how the project was successfully moved through the Legislature after initially being rejected for incentive funding.
The gaps in paperwork and testimony have left the state's Department of Economic Opportunity, which has been charged with recouping at least some of the $20 million, to contend that "further legal action may be warranted."
The governor's office deferred comment to a response in the report from Jesse Panuccio, department executive director.
"The atypical circumstances of the Digital Domain deal are troubling, and this unfortunate situation underscores why the granting of economic incentives should follow the detailed process currently prescribed by statute," Panuccio wrote.
After Digital Domain went into bankruptcy last September, Gov. Rick Scott ordered a review of how the money was allocated and instructed the department to work to recoup the money.
Florida remains in line with other creditors, including local and county governments that provided more than $60 million in land, buildings and other incentives to lure the animation company to South Florida.
In September, the company that provided computerized work for movies including Titanic, Tron and The Curious Case of Benjamin Button, and was teaming with Florida State University's film school, filed for Chapter 11 protection, shuttering its Port St. Lucie facility and laying off most of the 300 employees who worked there.
State leaders have vowed a "never again" approach and have spent much of this legislative session reviewing state incentives, but so far no changes in law have been approved.
"Although improvements have been made to statutes and processes since 2009, an award similar to the one to Digital Domain could happen again today," Miguel stated.
Both Panuccio and Miguel recommended the department formally review the incentive process and recommended internal changes at the department and Enterprise Florida, the state's public-private business promotion arm.
"At a minimum, this process should include full disclosure in writing to ensure transparency of the rationale for the final decision," the inspector general report said.
According to the report, after the company and its president, John Textor of Jupiter Island, failed to receive a favorable recommendation from Enterprise Florida, he and David Brill, former Gov. Charlie Crist's economic development director, and former Rep. Kevin Ambler (R-Tampa) took the project through Legislature.
"Dr. Brill recalled that Governor Crist was adamant and told him 'I want this done exactly the way it would be done if it were a normal process'," the report said.
Digital Domain was one of six incentive projects backed by Crist that legislators approved in 2009 worth $21.52 million.
The failure of Digital Domain has been at the core of opposition of many legislators to the state business incentive program.
The Senate is looking at earmarking just more than $16 million for Enterprise Florida, for example — down from the $111 million it received this year.
The Senate also appears likely to reject another $173 million Scott has proposed for Enterprise Florida to use as one-time funds for incentives and economic development programs.