Short-Listed For High-Tech Finance Company’s 250 Jobs, Flagler Seeks $500,000 in Incentives
FlaglerLive | January 19, 2017
Flagler County is on the short list to be the site of a high-tech finance company’s expansion, and what would amount to the single-largest and highest-wage batch of jobs since the Great Recession and the six years of the county’s economic development department.
The company would create 250 jobs over three years–50 jobs in the first year and 100 jobs each in the two successive years. Flagler County is planning to offer, as an incentive, a total package worth $500,000, the largest such package in the county’s history. It would be spread over seven years and would be performance-based. That is, the money would be paid only upon proof of existing and sustained jobs. Each job would be worth $400 a year in incentives for five years, for a total of $2,000 per job. The $400 would be paid at year’s end for each job retained.
Jobs would have an average—not mean—salary of $47,000. The average is usually skewed by executives’ salaries, which means that the actual average salary of line workers would be notably lower. Still, the overall local payroll would amount to $2.4 million the first year, $7.65 million the second year, and nearly $12 million each year after that, assuming all 250 jobs are created and retained—and likely higher, with time, as raises kick in. (Career Source, the local agency, estimates that the economic impact would total $16.5 million annually, with 91 indirect jobs created as a result.)
“Those kinds of salaries and those kinds of numbers coming into the community also drive the type of retail that we’ll see in the community,” Helga van Eckert, the county’s economic development director, said. “This would be a really, really good win for us.”
The potential for the biggest single jobs gain in years, though the county has been there before.
The company is also seeking an additional $180,000 in state tax credits through the state’s incentive program called the Qualified Target Industry Tax Refund incentive (better known as QTI). Normally, the state would provide that incentive as long as the county where the company would be located would also provide a 20 percent match. Flagler County is seeking a waiver of that match, considering the much larger incentive package it is putting together.
“They like the 20 percent match because they want the community to be invested as well so the fact that we’d be looking to provide a separate incentive, it shows that the community would be invested,” van Eckert said.
Palm Coast and Flagler Beach could also potentially add incentives of their own, depending on where the company would locate. It is looking at two sites in the county, one in Palm Coast, one in Flagler Beach.
The county’s Economic Opportunity Advisory Committee meets in special session today at 2 p.m. to hear of the proposal and make a recommendation to the Flagler County Commission on the $500,000 incentive package. The committee is expected to unquestioningly approve. The special meeting was scheduled because the item needs to be on the Flagler County Commission’s agenda on Monday. In Fcat, it already is. The county commission is holding a 9 a.m. workshop followed by a special meeting where it, too, is expected to approve the incentive package, making today’s and Monday’s meetings essentially pro forma affairs to ensure that the incentive package is in place. Don’t expect to know the name of the company through those meetings: a quirk of state law allows local governments to keep the names of potential companies under wraps for a set period of time.
Flagler County and Palm Coast have been here before, of course, and been bitterly disappointed. Palm Coast government in 2008 worked out an even more massive incentive package for Palm Coast Data, at the time the county’s biggest employer, with close to 1,000 jobs. Palm Coast Data was promising to consolidate its operations from other states into the Palm Coast plant, creating 700 additional jobs. Palm Coast pledged a $500,000 tax-incentive package, plus moving expenses, plus a three-year leasing deal, with option to buy, of what was then the city’s City Hall on Commerce Boulevard, a 70,000 square foot building. Palm Coast Data did buy the building for $3 million. The state threw in another $3 million, and Flagler County threw in $100,000.
The jobs never materialized. In fact, Palm Coast Data started hemorrhaging jobs just then and having to move out of some of its buildings on the Commerce Boulevard campus. County government and Palm Coast lost some in the deal, though the direct incentives were performance-based, so that money was not paid out.
In 2013, it was county government’s turn to be badly burned. Aveo Engineering, a Czech-based company that manufactures LED lights for aircraft, pledged to build a manufacturing plant at the Flagler County Airport and create 300 jobs locally. The deal sparkled so much, with an extremely generous 40-year lease from county government, that Gov. Rick Scott came down for the groundbreaking. But that ceremonial dirt was all that turned at the airport. The company never built there, and by last year it was official: it had bailed from the airport.
But so it goes in economic development: governments do their best to encourage industry and to protect taxpayers, as both Palm Coast and county government did in both those losses: the jobs never materialized, and there was little either Palm Coast or county government could do to prevent the outcome: Palm Coast Data fell victim to an industry ravaged by the rapid elimination of print media, and the county was taken in by the bluster of Aveo’s executive, which had seemed genuine. And the losses to taxpayers from those incentives were relatively minimal, as they had been performance-based.
So it is with this new possibility, which the county is referring to as “Project Bags.” There’s usually a hint in the name as to the nature, if not the identity, of the company, though more recently the names have become a bit more obscure to guard against premature revelations.
The publicly traded company looking at Flagler has operations in New York, Connecticut and Philadelphia. It is seeking to expand in the South, either in Florida, where it is looking at two locations, one of them being Flagler, or in Georgia. The 8-year-old company is what van Eckert, the director of the county’s economic development department, describes as “high tech, somewhat disruptive to the industry, but very successful.”
“Disruptive” is not meant pejoratively. Quite the opposite: many new industries are considered “disruptive” when they successfully challenge current business models, as this one apparently does, transcending the brick-and-mortar approach to banking and finance through apps and corporate services.
Van Eckert is hopeful. “I think we’re in a good position,” she said, after company executives visited locally and met with local businesses and surveyed the schools. “I think the competition will come down to the wire with respect to making a business case for them to be here. I don’t know what else they’re looking at but I think we’ve put together a really good package for them and we’ve got a couple of really good sites, so I think we’re competitive.”