“Corruption Risks” Cited at Enterprise Florida, the State’s Economic Development Agency
FlaglerLive | April 26, 2012
A new government watchdog group says taxpayers should be getting more information about how their money is spent by Enterprise Florida, the state’s public-private economic development arm, which spends millions of dollars to create jobs.
Integrity Florida on Wednesday released a report charging that tax breaks and incentive grants went to corporations that paid to be on the public-private partnership’s board of directors – and that not enough jobs were being created.
Integrity Florida executive director Dan Krassner said corporate seats on Enterprise Florida’s board are available for $50,000 and alleged board members get tax incentives and vendor contracts from the public-private partnership.
He also said Enterprise Florida doesn’t give adequate notice of its meetings and uses code-names such as “Project Bacon,” “Project Snake Eyes” and “Project Mae West” to maintain its secrecy.
“We don’t want to hurt the deals. We don’t want to hurt the jobs – we need the jobs,” said Krassner. “But it’s important the public knows, if our government is committing our tax dollars and going under contract, even if it’s with Project Bacon, we don’t have to know the company name, but we need to know how much of our money is going to be spent, how much are we on the hook for.
“We need to know how many jobs is that secret company going to create, and by when,” Krassner said.
Enterprise Florida spokesman Stuart Doyle said taxpayers have never been kept in the dark about how their money is spent for economic development projects.
“I think we’ve always been transparent in the way we do business, and unfortunately, this report does not reflect that,” said Doyle. “We notice our meetings in accordance with state policy and we’ve always been as transparent as possible.”
Doyle said Krassner had met with Enterprise Florida president and CEO Gray Swoope last week.
“It’s rather surprising that a report like this comes out,” he added, “because we walked through each of their points with them.”
Enterprise Florida was created in 1996, when the state Department of Commerce was abolished. Doyle said 20 percent of its funding comes from the private sector and 80 percent from the state. Flagler Cou8nty had a similar organization, called Enterprise Flagler, whose funding was also overwhelmingly public. That agency existed for 10 years and was disbanded last summer when the county and Palm Coast refused to continue funding it, citing its scant job-creation record and, in previous years, a lack of transparency. The county created its own economic development advisory board.
Swoope said the Enterprise Florida board is likewise a combination of private and public interests, including lawmakers and state officials, “and it was designed that way.”
“Rather than have the state or the public sector decide how to do job development, why not have the companies – the people who are out there creating the jobs every day – have the input into the state’s economic growth?” he said.
According to the watchdog group’s report, Enterprise Florida awarded contracts worth nearly $6 million last year to companies that were “confidential.” Publix Super Markets, Embraer Aircraft and Lockheed Martin Corporation – all Enterprise Florida board members – received tax breaks or incentives. Ernst & Young, the firm charged with calculating Enterprise Florida’s return on investments, also got a grant.
Doyle said there is no conflict of interest involving Ernst & Young because the firm has been working for Enterprise Florida for more than a dozen years.
“They did receive incentives a few years ago, but one thing has nothing to do with the other,” Doyle said, adding that most of Florida’s incentives are performance based and that companies get the money “only after they have produced the jobs.”
But Krassner said jobs aren’t coming fast enough or in sufficient quantities for the investment.
“We have more than 800,000 out-of-work Floridians,” he said. “And it would take nearly 42 years to put all those Floridians back to work at the current jobs goal of Enterprise Florida.”
Krassner said he’d learned in a conference call that Enterprise Florida had set a goal of retaining or creating 20,000 jobs for the last year. He’s calling for an independent calculator of Enterprise Florida’s return on investments – not Ernst & Young.
He also wants Enterprise Florida to release details about tax incentives as soon as it signs a contract.
Asked about the transparency issue Wednesday, Gov. Rick Scott, a member of Enterprise Florida’s board, called it a “trade-off” with competitiveness.
“We’ve got to make sure we can compete with these other states, but we’ve got to make sure [taxpayers] know how their dollars are spent,” Scott said. “You’ve got to compete confidentially, but as soon as you can, you’ve got to provide the information.”
In its summary of what it calls “Corruption Risk Indicators” for Enterprise Florida, Integrity Florida listed the following:
- Enterprise Florida’s most recent legislative agenda prioritized confidentiality measures.
- Corporate seats on the Enterprise Florida Board of Directors are offered for $50,000.
- Enterprise Florida board member companies receive Enterprise Florida tax incentives.
- Enterprise Florida board member companies serve as Enterprise Florida vendors.
- Enterprise Florida does not publicly notice all board meetings.
- Enterprise Florida does not provide board and committee meeting materials online.
- Despite being the fourth largest state, Florida ranked just 12th in the U.S. for new facilities and expansions in 2011.
- A company that received Enterprise Florida tax incentives is responsible for calculating the return on investment (ROI) of the incentives for Enterprise Florida.
- Enterprise Florida awarded contracts worth nearly $6,000,000 in 2011 to confidential companies.
- The only company Enterprise Florida granted incentives awards to that was “not in a targeted industry” was Wal-Mart Stores East, LP with agreements for $360,000 and
$420,000 in 2011.
The full report is below.
–Margie Menzel, News Service of Florida, and FlaglerLive