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How Palm Coast Lost Out on 400 Potential Jobs (Caution: Don’t Jump to Conclusions)

| March 9, 2011

To remain vacant for now: Palm Coast Holdings's acreage in Town Center where an Australian company might have had its American headquarters. (© FlaglerLive)

One of the more interesting—and newsworthy—moments of the second day of the county-wide summit on economic development Saturday had very little to do with the summit itself, but quite a bit to do with the paradox of economic development: when government is involved, it’s not just about attracting business at all cost. It’s also, and primarily, about protecting the public interest.

The moment took place around midday when Greg Rawls, the executive director of Enterprise Flagler—the county’s public-private economic development partnership—and Jim Landon, the Palm Coast city manager, spoke about how an Australian company and its 400 jobs decided to pass on Palm Coast as a location, and choose Fort Myers instead.

Rapid Nutrition is a 10-year-old Queensland, Australia-based company that specializes in nutrition and dietary supplements. It’s scouting a location for a planned  American headquarters. Palm Coast, Fort Myers and Oklahoma City were its short-listed locations. The company was scouting in town in late January, ironically at the same time that Australia’s Ten Tenors were dropping in for a two-night engagement. At the time, Palm Coast was referring to the deal as “Project Koala,” and revealing little about the company.

Palm Coast just found out it’s out of the running. Rawls gave two reasons: the company wanted a 40,000-square-foot building, which Palm Coast couldn’t provide immediately (though it could provide ample space in Town Center and, presumably, ready and rapid labor), and Fort Myers provided cash incentives the company found preferable.

Dollar for dollar, Palm Coast’s incentives were more generous. The difference was accountability: Palm Coast was unwilling to write a blank check. Fort Myers was. Fort Myers put up $1 million in cash for the company on the day of deal-signing, and promised another $1 million when 90 jobs have been created. Palm Coast, Landon said, was willing to offer $2 million in incentives, and more down the line in reduced taxes and fees, but with strings.

But it didn’t want to assume the company’s risks. Incentives would have been strictly tied to performance measures. “They have to create the investments, they have to create the jobs,” Landon said, “and if that’s what scares them away, then we’re going to keep scaring them away.”

Rapid Nutrition was not a company the county or the city sought out, or “targeted.” It sought out the city on its own, via Enterprise Florida, the state’s equivalent of a commerce department. Once it did, the city rolled out a significant package of incentives along with the red carpet (“the city of Palm Coast was very aggressive and in the game,” Rawls said), essentially putting in action a rapid-deployment force with teeth.

But while matching a company with a locality may be the end-game of economic development, it’s only the starting point of government’s responsibility to ensure that the match is a good one, and that it won’t put taxpayers at a risk disproportionate to the presumed benefits. The company is relatively well established in Australia, but it’s young. Its earnings two years ago were just under half a million dollars. It was raising private capital then, as it has been for its American expansion. That American operation would essentially be a start-up. The company  would have eventually wanted a 400,000 square foot building in Town Center, which may physically have been out of proportion with that area.

The brief discussion at Saturday’s summit about the Australian company was triggered by recurring talk about “targeting” industries and ensuring that the local government machinery is well oiled to provide optimal service to businesses—prospective or existing. The participants at the summit were made up of every local government’s elected representatives and their chief administrators, but also of two nominees by each agency of individuals from the public at large.

Those individuals were mostly tied to development, real estate, construction—the traditional local trades that have driven the economy until they crashed with it. They’ve looked to local government to ease regulations, “streamline” processes through the bureaucracy and put moratoriums on such things as impact fees, the one-time development tax developers must pay on new construction. But Jon Netts, Palm Coast’s mayor, says there are limits. “Do we abolish, abandon our regulatory responsibilities?” Netts asked. “Those have been created to match up with the demands of our residents.”

Palm Coast has a reputation for imposing stringent regulations on business, and supposedly stifling business development. An undercurrent of the two-day economic development summit emphasized local governments’ need to improve their customer service. That undercurrent, driven by the business interests in the room, was directed in large part at Palm Coast, the principal economic engine in the city. But Landon on two occasions Saturday stepped in to remind the assembly that other interests have to be factored into development decisions, though the city has shown itself to be more than willing to pony up public dollars for jobs, not always with success.

By Tuesday, at the Palm Coast City Council meeting, council member Mary DiStefano laid it out explicitly: “I have to take exception to the very long meeting Friday and Saturday, and the issue of customer service,” she said. “The negotiator, or whatever, facilitator, kept saying customer service, but he again, like the mayor said, he kept saying, show me, show me, and I’d like to say to him, show me and tell me where our customer service has failed the public. I think in the city of Palm Coast we work diligently with the customer, and I thought that that whole process was—I could have used my time better. That may not be a politically correct statement, but I feel that we in Palm Coast are doing our best. We have a game plan for economic development.”

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15 Responses for “How Palm Coast Lost Out on 400 Potential Jobs (Caution: Don’t Jump to Conclusions)”

  1. Merrill says:

    Hooray! for our leadership for standing their (and our) ground! Did not the same thing happen when an ethanol plant was planned for our community, a plan that would bankrupt our water resources? We’ll endure more pain now for more ample rewards later!

  2. palmcoaster says:

    The best plan that our local governments and schools can start to create local jobs, is to stop outsourcing our tax payers funded contracts and will create hundreds of jobs.! Just go to your buyers files and find out for yourselves…dear elected officials. In second place our local governments need to financially reward any professional, government worker or official, resident or business that invites a jobs generating business to settle in our cities or county. Once the deal materializes and the new local hires are at work, the commission is paid.
    Also advertise in the northern freezing winter times our sunny location in Florida. Promote more very popular sports event that will pay itself with the fee to compete and sponsorships.
    All our government dependencies have a public relations department and paid employees so how come they are not doing that already? The county public information fellow, needs to waste less time in his local videos and spent his energy in showing our county image instead more to attract outsiders. Something that has not worked until now in spite the heavy cost, has to change and can be done with less $$$. Get our retired professionals volunteers involved by calling a meeting with them, they know how to do it and reward them properly when goals are achieved. The Internet is a great tool to contact prospective’s and the phones work wonders, needless to say direct mail to potential targets once identified. Example of slogan to be used; “Move your business to our playground of golf courses, beaches, paradisiacal bike rides and walkways and/or surfing our waves as well as sailing or boating our crystal warm water bays” Sure your IT (Information Technology) person can say it better than I. Last should be in place that any developer to do work in our Cities or County needs to hire man and machine local first.

  3. John says:

    Ms. DiStefano, the word on the street is the the City of Palm Coast is the hardest place to conduct business. These statements are from new business owners, current business owners, developers, and residents. The actions of those who represent City of Palm Coast in the day to day contact with customer is were the City’s CUSTOMER SERVICE fails. As a politician I would assume that you listen to your voters. There were go again…making assumptions about our political leaders.

    If we do not fix the over zealous departments in the City we will continue to cripple economic development.

  4. lawabidingcitizen says:

    Whew! Dodged another bullet.

  5. T says:

    This is unfortunate! This county needs jobs… good jobs, the kind of jobs that this opportunity could have helped provide and it absolutely would have been worth the risk. This is exactly why this county needs economic development funding ASAP.

  6. beach resident says:

    Ok-John! But, Falgler Beach is every bit as hard a place for Customer Service. They do not know what is
    going on the Permitting & Building Dept. They act as if they do not like business people. They show it. Even the town pillars show it by not shopping or dining in town. After all the Mayor does not beleive her city selling bait is in competition with Big Al’s Bait Shop. She wants to worry about putting in a Belks Department Store in the little bait shop on the Pier. Instead, she and company should be worried about Food Lion space for tax revenue. Atleast, Palm Coast is not that bad. Ms. DiS. is just becoming crones. Customers Service is what makes or breaks a business! The same for city departments and citizens.
    Oh-good fellows, just remember business pay prime taxes, also. Residences are not alone!

  7. beach resident says:

    John, we have Flagler Beach as hard to deal with on Customer Service. New businesses have a hard time getting through building regs & permitting a standard business operation. PC does not seem that bad. Our pillars are not business minded. Our Mayor wants to put Clothing Store in the Pier Bait Shop.
    Does PC think that way? She does not think that an open City Bait Shop is in competition with Big Al’s Bait. PC does not have a monopoly non-business officials. Ms. DiStefano may have risen fron the wrong side of the bed the other day. So much for Customer Service!

  8. Alex says:

    Lets just assume that Enterprise Flagler—the county’s public-private economic development partnership would be very successful bring in companies and jobs. All the unemployed in Florida and in the country would be flooding into Palm Coast. Can we provide jobs to all these people and support them until we can get companies relocate?????????

    What happened to the Laissez Faire capitalist system?????? What our so called leaders are doing is managing our economy. Are we the Socialist County of Flagler or the Socialist city of Palm Coast????

  9. Well... says:

    Guess they didn’t like the moniker “Project Koala”, maybe they wanted “Project Dingo” instead. Maybe Fort Myers called it “Project Dingo” and that Dingo ate our Koala.

  10. Unconditional incentives will almost always backfire. Yes, gambling can potentially yield winnings, but this City cannot and should not gamble, and I applaud the City’s decision not to crumble under public pressure. Not wanting to assume this company’s risks is not a bad choice.

    By the same token “potential jobs” should not be the only measure in making these choices, and expecting a tremendous amount of jobs to be created at a magical, accelerated rate (i.e. one to two year terms) is not realistic. Palm Coast has the ability to nurture a true startup culture right here, but public opinion, pressure, and impatience are unfortunately real challenges.

    Ky Ekinci
    Office Divvy ™

  11. TindaleAssociates says:

    Enterprise Flagler has been around for a very long time. What makes you think throwing more money at them is going to stimulate economic development? As far as I am concerned, they have had more than enough time (and money) and have produced little result. We are barking up the wrong tree with this group. Time to move on, re-work the plan and move forward leaving EF in the dust.

  12. dlf says:

    What happen to the Ace hardware stow in Flagler? Why doe it take so long to opine a business in Flagler? I was told by two business, new, that it takes for ever to get the city to approve things, to get someone to make an inspection while they are waiting for the city to move they are losing money and not hiring people.

  13. Val Jaffee says:

    I remember the city saying they had no control over approving the licence????? I’m confused. But in these tough times I’m not sure nutrition and dietary suplements are on the top of consumers shopping list.

  14. Jeanne Lowery says:

    I am a former resident, and will soon be, a return resident. I grew up in Florida. I am shocked at the economic devastation that has happened to Florida. I know so many people here in Philadelphia that are looking to purchase homes in Florida, however, that will not help the problem that Flagler County is suffering from. People can purchase homes in Florida. But if jobs are not created, no one will benefit. Jobs are needed in Flagler County, including Palm Coast. You may not want businesses, for whatever reasons, but businesses are what helps bring people to your city, they are what you need to help with the taxes. You need to hire a committee who’s sole purpose is to encourage people to move their business to Flagler County. Hire an outside firm if necessary. We need people to think outside the box. For example, there are companies up here that are being strangled by the high union wages/benefits that are paid up in the Northeast. Encourage companies to move to Florida and show them the incentives for moving south. Especially to Florida and to Flagler County.

    I want to see Flagler County thrive again. Before it’s too late.

  15. Jim says:

    Palm Coast and Flagler County a sad place for jobs and new businesses.

    They want only Goverment funding like Armory or bigger Airport, and the people
    holding these jobs ,don’t even live in the County.

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