Over the years Flagler County government has provided various companies incentives in the form of subsidies either to encourage them to stay in the county or to set up shop locally. Eleven years ago the county gave Palm Coast Data $100,000. Two years ago, it gave a pair of companies a $90,000 subsidy each, one to help build a “spec” building, another to move and expand within Palm Coast. It gave a few other companies smaller subsidies, such as the $35,000 that went to a nutrition supplement firm in 2015 and $15,000 that went to a stoneworks company in 2017.
All those packages pale compared to the subsidy county government is preparing to give a company that would move its furniture assembly and distribution plant to Flagler County, constructing what would be the largest building in the county and operating off of U.S. 1, in unincorporated Flagler–a 250,000 square foot structure. The direct subsidy: $680,000 over 10 years.
It is more money than all the economic development “incentives” or subsidies the county has given companies in 11 years, combined.
It would all go to a company that’s yet to be named, in a process the county has kept under wraps for months, first calling it “Project Discover,” then calling it “Project Columbus,” with some details of the package getting approved by the county’s economic advisory council earlier this month. (That meeting’s video, usually made available on the county’s website, has not been posted.)
Helga van Eckert, the county’s economic development director, says the package is entirely defensible because the land the company would buy is currently generating barely more than $100 in county and school taxes, and that even while the county is subsidizing the company, the new operation would generate some $80,000 in new school taxes in the first year alone. Tax revenue in subsequent years would increase and 50 jobs would be created locally, with an average (not median) wage of $50,000 a year.
“This is a legitimate company, this is a relocation, this is not speculation, this is a company that wants to come here, that’s already in business and is very well established,” County Commission Chairman Donald O’Brien, who also chairs the economic development council, said.
The company’s plans to move to Flagler aren’t speculation. The way the incentive package was sized, however, is largely based on speculation. And none of the plan has been put in writing for public inspection, especially a central plank of the plan: the calculation from which the subsidy amount was drawn.
The value of the incentive is based on a speculative calculation even Property Appraiser Jay Gardner calls “vague”: that the proposed building would be valued at $13 million, and would therefore, according to van Eckert, generate the equivalent of $113,000 in property taxes owed the county’s general fund in the first year–the subsidy amount the company would get paid each of the first two years of operation. The subsidy amounts would then decline in subsequent years, zeroing out by the 10th year.
It’s not clear how van Eckert calculated that a building assessed at $13 million would generate $113,000 in county property taxes the first year. She said it’s based on current property tax, or millage, rates. But the current rate is $8.2297 per $1,000 in assessed value. At that rate, a property valued at $13 million would generate $106,990, not $113,000.
No one knows what the building’s value will actually be, once it’s built. No one knows what the economic climate will be, or whether the company will not have had to alter some of its designs. “There’s a million things that could change between now and then,” Gardner said of speculative assessment estimates, describing the information provided for the estimate as “only a guess.”
The county, in other words, may well end up paying the company significantly more than what property taxes the company would be paying the county.
Van Eckert extrapolated the tax revenue the new building would generate based on a description of the prospective building to a property appraiser staffer, who then provided only the most general estimate of what such a building’s tax assessment might be. No blueprints were provided the property appraiser. There is no written document showing the property appraiser’s estimates. “I don’t have anything in writing, no,” van Eckert said. She could not recall the name of the property appraiser who helped with the calculations.
“We don’t like writing down something like it’s a fact, because it’s not,” Gardner said today. (Though van Eckert could not remember who she spoke with at Gardner’s office to calculate the estimates, Gardner did: it was Mark Whitley, in charge of commercial appraisals. He could not be reached today.)
The property appraiser’s office is not involved in any way in the economic development deal the county is preparing: it provided information–or guesses–merely because it was asked, and would provide that information to anyone who asks for similar estimates–with the caveat that they are estimates, at best.
Yet the incentive package is about to turn into a 10-year financial commitment based on those guesses and very little else: when the economic development council heard van Eckert discuss the proposal at its meeting earlier this month, it had no written documentation aside from a chart–itself half speculative–showing what amount the county would pay the company each year, and what speculative amount the company would pay in property taxes each year. The chart, which you can see here, presents the “taxes paid by the company” as fact, without caveat nor explanation.
FlaglerLive requested the backup material that normally accompanies county government initiatives of the sort–even economic development initiatives that don’t include the compajny’s name–but there was none provided.
The County Commission is scheduled to approve the incentive package at its July 15 meeting. The incentive package the commission will be asked to approve takes the estimates as a concrete basis for hard numbers. And the incentive is in no way tied to tax assessments beyond the estimates van Eckert is providing the commission. In other words, whether the assessments come in higher or lower–or much higher or much lower–the county will be bound to pay the company the $680,000 subsidy regardless, even though van Eckert is justifying the figure by tying it to the tax revenue she expects the company’s building to generate.
O’Brien, interviewed a second time later this afternoon, said he would not be voting for an incentive package that isn’t directly tied to the tax assessment, whatever that assessment ends up being once the building is built. “Whatever the tax bill says, that’s what we would be reimbursing. If there’s a change in the tax bill, if there were a massive change in the assessment, then that’s what the incentive is going to be,” O’Brien said. “The language of the agreement is going to say that or I’m not going to vote for it.”
If that’s the case, then the $680,000 figure itself becomes sheer speculation, to be adjusted once the building is completed and the first assessment is in. But that can also mean that if the building is assessed at more than the figure van Eckert has in mind, the county’s subsidy would then rise accordingly, at least for the first two years. What’s certain in the agreement is that the first two years, the county will pay back 100 percent of the company’s county tax bill.
Previous subsidies were drawn from a special pot called the “economic growth fund.” But that fund is dwindling: it’s down to $62,000 this year. To pay for the new incentive package, the County Commission will have to draw from the general fund, and make an annual appropriation to which future commissioners will be bound. County taxpayers’ tax rate is based on the general fund’s needs.
The company would be getting $113,000 the first year and $113,000 the second year. The subsidy would begin to fall in the third year, with the last county payment in 2029. “The key is that it has to be performance based, and the key is that it has to bring more value than it costs the community,” van Eckert said. “This is the biggest project that we’ve brought into the county.” She said it takes Flagler “to a different tier.”
But “performance-based” would mean that the company is operating and paying taxes locally. The agreement is not dependent on the company providing 50 jobs (some previous agreements have been tied to job numbers).
The company would assemble home furniture on site, then ship it out. It would not manufacture it on site. Van Eckert protected the name of the company, which appears to be a known company. She said the company is currently doing its due diligence in the county, and that “long term, they’ll be moving their full operation here.” If everything goes well, “before the end of next year they’d be up and running. They’d be looking to break ground before the end of this year.” By then, the company is expected to have invested $20 million in buying the land and building its structure.
Still, much of “Project Columbus” remains speculative, especially in so far as any information publicly available is concerned, and will remain so up to the day the commission is asked to approve the project, sight mostly unseen, on July 15.