Hungry states quick to fight incentive wars
By ROBERT TRIGAUX
Published July 1, 2005
It may seem odd that last month's elite Paris Air Show serves as the best place to tell a story of Florida's economic development.
With the exception of NASA, Florida is not exactly known for its industry expertise in airplanes. But the world's premier aircraft show attracted Florida's leading economic development group, Enterprise Florida, competing with three other southern states for the defense business of a European aircraft giant.
European Aeronautic, Defense and Space (EADS) Co., the parent of Airbus, shopped aggressively for the best U.S. location for a planned $600-million aircraft plant. EADS North America played one state off another, promising the winner 200 $50,000 engineering jobs and 1,000 more if the company won an Air Force contract for refueling tanker planes.
Ever on the hunt for higher-wage work and a chance to diversify the Florida economy, Enterprise Florida pitched Melbourne International Airport as its best site, along with a $300-million array of state and local incentives.
Gov. Jeb Bush made a personal sales call over lunch with the chief executive of EADS' U.S. operations in Virginia.
But last week, the deal was handed to the competing site in Mobile, Ala.
Alabama's last-minute appeal to Airbus officials' taste buds in Paris with Champagne, braised veal and Belgian chocolate mousse reportedly was not a factor in the final site selection.
But appetite was a factor. When it comes to aggressive economic tactics, Alabama simply had the greater hunger - and a history and willingness to offer heavy incentives to attract corporations.
By economic measures ranging from job generation to growing population, Florida appears to be doing so well that it simply may not feel the same urge to compete, suggests Progress Energy Florida CEO Bill Habermeyer.
"Is there a Florida economic culture? When unemployment here is 4.2 percent and the nation's is substantially higher, you can become complacent," said Habermeyer, who recently concluded a two-year stint as Enterprise Florida's vice chairman.
But it is important to remain hungry, he argued. There are only so many high-paying jobs out there. Everybody wants a shot at them. You have to pursue as many as you can, as aggressively as you can, he said.
For the record, the official goal of Enterprise Florida this past year was to generate 24,000 jobs. It got close, by its own accounting, with 22,000.
Twenty-four hours after Enterprise Florida officials were told they had lost the big Airbus project, Enterprise staff chief Darrell Kelley told his board of directors at the group's annual meeting last week he will step down when his contract expires in mid August.
After three years at the helm, Kelley cited his age, 63, and health. "As I have gotten older, I'm finding my energy level and stamina are shorter and shorter," Kelley wrote to Bush in his resignation letter.
The search for a CEO is under way, led by Susan Story, the vice chairwoman of Enterprise Florida and CEO of Gulf Power on Florida's Panhandle. Kelley earned $272,000 in salary and bonus last year.
So it goes for Enterprise Florida, whose 12-year track record is full of highs, lows and political controversy. The half-public, half-private - some say schizophrenic - organization was started by former Gov. Lawton Chiles but energized by Bush. It is charged with improving Florida's statewide economy and attracting higher-paying jobs.
That's no easy task. Especially for an organization with so many masters to please.
The half-public portion of Enterprise Florida acts in place of the state's former Department of Commerce. It requires the group to meet state government rules on disclosure and accountability. Florida's governor serves as Enterprise Florida's permanent chairman, and the group must spend ample time communicating its goals and needs to state legislators.
They control a significant portion of the Enterprise Florida budget and, as history shows, can be quick to withhold funding if they are not kept happy.
The half-private portion of Enterprise Florida must appeal to a large board of directors composed largely of executives from power companies, banks, development and construction businesses, tech and law firms, and universities. They pay upwards of $50,000 in order to sit on the Enterprise Florida board. The vice chair held by Gulf Power's Story represents private industry's stake in the state's economic development.
That's just the start. As a statewide group, Enterprise Florida must balance often competing and conflicting economic interests of different parts of the Sunshine State. While South Florida is economically aggressive, increasingly Hispanic and eager to exploit its natural trade advantage as a gateway to Latin America, Florida's Panhandle is wrestling with rapid real estate development, rising costs and clearly lagging infrastructure of roads, schools and hospitals.
And then there are rural portions of Florida, especially in northern counties, that remain surprisingly resistant to economic development efforts that threaten more population and higher taxes.
In its latest annual performance review - one measured by green, yellow and red indicators - Enterprise Florida received a red or poor mark for its attention to the state's rural economic progress.
Florida economic development leaders warn the incentive war between the states is growing more intense, despite critics who bash the dependence on tax breaks and subsidies as short-term fixes and unfair advantages that benefit big corporations.
Predicts Habermeyer: "I see the rise of more incentives, not less, in Florida's future."
Maybe it all boils down to a case of mistaken identity. Perhaps Enterprise Florida should be renamed Incentive Florida.
--Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.