Palm Coast’s Secret Deal With Solar Company: Long Tax Holiday and Other Perks for 180 Jobs
FlaglerLive | November 30, 2010
The Palm Coast City Council today will hear public discussion for the first time of the details—such as they are—of a secretly negotiated deal between the city administration and a solar energy technology company that would bring 180 jobs to the city over three years, and capital investment of at least $49 million. The agreement would extend the company a 10-year property-tax break. The company would pay no such taxes for the first four years, then would start paying in 10 to 15 percent increments after 2014.
The agreement doesn’t name the company or its origin, but notes that immediately after the agreement is signed by the two sides, the company would either lease or buy “appropriate business space” in Palm Coast “suitable to meet the employment commitments” made under the agreement. The company would then notify the city of the location and size of the space it has secured suggesting that the company has scouted a space ready for occupation and use. The $49 million in capital investment would be subsequent to that move, suggesting further construction. The length of the tax holiday is not necessarily going to be 10 years. The company would apply for the tax break only after it’s started making good on the $49 million investment.
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The agreement calls for the company to create jobs at an average annual wage 115 percent above the county’s average $30,000 wage—that is, jobs would average $34,500. Average is not median, however. In other words, if 100 employees make $25,000 each and a single executive makes $1 million, the average wage is $35,000, even though the media wage is $10,000 less than that. The agreement does not specify that the average-wage requirement should apply to the rank and file, exclusive of executive salaries.
Although the agreement puts a premium on local hires, it also makes provisions for granting executives or managers their moving expenses on the city’s dime. That odd provision is couched as another incentive. The city and the company, the agreement states, acknowledge that the company “may need to recruit candidates for the jobs […] who are not currently a local resident.” As such, the agreement states, the city, for two years, will reimburse 50 percent of the company’s individual relocation costs, at up to $1,500 per employee, for up to 20 employees. The special allowance applies only to employees with wages of $60,000 or more.
In a detail existing local businesses would envy, Palm Coast also promises to “expedite the processing of all city permit applications submitted to the city” by the company “including, but not limited to, applicable land development permits and business licenses.”
Dubbed “Project Iceman,” the deal describes the company as one “looking to develop, manufacture and assembly (sic.) electrical/thermal solar technology.” Florida law allows local governments to negotiate secretly with private companies, outside the purview of the Sunshine law, for up to two years. The exemption to the Sunshine law is vague and broad enough that public input may—as in this case—be excluded until the deal is done.
In 2008, Palm Coast and Flagler County secretly negotiated $500,000 in incentives with Palm Coast Data, the magazine subscription company, and the city sold its 70,000 square-foot city hall to the company for $3 million, significantly less than the building was worth, in exchange for the company’s creation of 700 new jobs over three years. The company also received $3 million in state incentives under the Governor’s Quick Action Closing Fund. At the end of 2009, the company had just 1,158 employees. If it doesn’t have 1,700 on staff by the end of 2011, it would have to return that $3 million. Barring a miraculous turn-around in the magazine industry, which has been in a tailspin, the company is not likely to make good on the pledge.
The majority of those jobs were not created permanently, though the company did create many jobs and end many others, thus taking advantage of some of the local tax breaks.
Whether and how Palm Coast Data or Project Iceman actually comply with the city’s incentive agreement to qualify for tax-dollars is not publicly verifiable, even though the deal involves hundreds of thousands of tax dollars: In a reflection of Palm Coast City Manager Jim Landon’s propensity for cloaks and clubbiness, the agreement the companies sign with the city ensure that any job-hiring and wage data, even the data transmitted to the city, is kept secret. The city’s word to taxpayers, essentially is: trust us.
Neither Enterprise Flagler—the private-public economic development partnership—not the Flagler County administration were involved to any significant degree in “Project Iceman.”
The timing of the deal’s announcement is significant, however: county and city governments are heading toward their quarterly “intergovernmental” meeting on Dec. 15. That meeting’s agenda is devoted to economic development. The county, which chairs those meetings, was intending the session to start laying out a cohesive, countywide vision for economic development, largely to replace Enterprise Flagler’s failed effort to levy a property tax that would have paid for new industrial construction. Palm Coast doesn’t take Enterprise Flagler or the county seriously when it comes to economic development, intending to go at it largely on its own. “Project Iceman” is its latest example.