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PLANTATION - A decade ago, when Motorola Inc. asked for $7-million in incentives to create 1,000 more jobs here, longtime Mayor Frank Veltri said the city would do "everything we can short of bankrupting" itself to help.
He was exaggerating, but not by much.
For more than 30 years, taxpayers have been lavishing incentives on the electronics giant.
Mayors, county commissioners and governors reduced taxes and rewrote laws. They let Motorola pump metal waste into a lagoon. They helped it build a day care center and exercise room. And when the company began laying off workers, they paid for new jobs anyway.
What did taxpayers get in return?
They got a lot of tax revenue, to be sure, although the state and the company are so secretive there is no way to know how much.
They also got suburban sprawl, congested roads and more children for their crowded schools.
They got jobs, too, but not as many as predicted.
In fact, employment has declined in recent months at the big plant in Plantation, which now faces an uncertain future.
Meanwhile, a Motorola factory in nearby Boynton Beach was demolished last year, and the company, once one of Florida's largest high-tech employers, has slashed its state work force from a high of 6,500 in 1995 to 3,000.
* * *
The Motorola story highlights the risky business known as "economic development": Government routinely invests millions of dollars - everything from loans and tax breaks to cash and free services - to certain companies that promise to retain or create jobs.
Sometimes the jobs don't pan out, however, or they disappear after a few years. And that underscores the "central confusion" the public has about incentives, says Greg LeRoy, executive director of Good Jobs First, a labor-backed group that tracks incentive deals.
Jobs come and go because of the economy and the market, not because of incentives, he says. "States perpetuate a fiction that incentives create jobs. But they often subsidize companies for doing what they would have done anyway."
In Florida, much of the largesse appears to flow to a small number of the state's 1.5-million businesses, but the taxpayers' bill is substantial. For the fiscal year starting this month, a St. Petersburg Times analysis shows, the cost of economic development for state government alone could reach $956-million, mostly in tax breaks.
Some companies getting incentives, like Motorola, add jobs for a time, then eliminate some jobs. Some companies, like Wal-Mart, pay such low wages that some new employees have to seek Medicaid for their families. And some companies acknowledge they would have located or expanded in the state even if Florida had not offered tax refunds.
Gov. Jeb Bush and the Legislature staunchly defend incentives, saying they keep Florida competitive with other states and countries.
Incentives generate tens of thousands of good jobs and tens of millions of dollars in tax revenue, says the Bush administration, which counts Schaumburg, Ill.-based Motorola in the win column.
"Without question, these incentives (to Motorola) have been a good investment for the state," says Scott Openshaw, spokesman for the governor's Office of Tourism, Trade and Economic Development. While recent downsizing in Motorola's South Florida operations has caused "temporary disruption," he says, "the regional economy and the employees are stronger and better able to tackle new business and employment opportunities."
Motorola, which reported $1.53-billion in worldwide earnings last year, declines to disclose how much it has paid in state taxes or how much it has saved because of incentives.
"While we benefited from various tax incentives offered by the state and local governments, these incentives offset a small portion of (the company's) overall investment," spokesman Steven Hendricks says.
Armadillos and alligators
Motorola has long been a company that seemingly could do no wrong in Florida. Ever since it invented the walkie-talkies that helped win World War II, the firm has been the exclusive supplier of two-way radios for many police and fire agencies in the state.
When the wireless pioneer decided in the 1960s to make some of its radios here, it contacted the administration of then-Gov. Claude Kirk.
Kirk was quick to help the company find a factory site.
"We just hustled them," says the former governor, now 79. "We had to have the jobs. We couldn't live on tourism alone."
In January 1970, Motorola paid about $800,000 for 80 acres on the fringe of the Everglades 6 miles west of Fort Lauderdale, near the tiny town of Plantation. It was part of a larger tract under development by wealthy investors. Still, it was home to armadillos and alligators and largely inaccessible by roads and sidewalks.
By leapfrogging into the swamp, government and the developers had to contribute to a system of power lines, sewers, stormwater ponds, roads and schools to serve the massive plant. Broward County allowed Motorola to use a lagoon to rinse chemical wastes generated in the production of radio batteries. Plantation created a new industrial zoning district and annexed Motorola into the city.
"We offered them whatever incentives were available," says Veltri, who served as a City Council member for six years before becoming mayor for 24 years.
Veltri, now 93, says he was
wowed by all the jobs and local taxes Motorola would bring. In the years that followed, the company also donated generously to schools and charity and nurtured local electronics firms.
But Motorola also was the "genesis" of suburban sprawl in Broward County, says Lee Hillier, a former Plantation council member and critic of Veltri. The company helped spur an explosion of growth that saddled taxpayers with new expenses, strained public services and contributed to school crowding, Hillier says.
Employment quickly reached 2,500, and some people migrating to the area complained about commutes along roads ill-prepared for the traffic. Job seekers without cars had trouble reaching the factory.
The county expanded its public bus system and agreed to use federal funds for carpooling. Still, the traffic got worse.
A second factory
Looking for more space to make beepers, Motorola went shopping for a second factory site in 1979.
This time, it picked a 90-acre cow pasture marked for residential development in the small town of Boynton Beach, 28 miles north of Plantation in Palm Beach County. The company forecast 5,420 workers there by 2000, a $71-million payroll and millions of dollars in tax revenues.
But there were also costs. Each new employee migrating to the area would create additional demand on roads and schools in a burgeoning district already "having difficulty building facilities to keep pace with growth," planners said in a report on Motorola's regional impact.
They also worried about pollution, noting that the Plantation plant seemed to "be improperly disposing of hazardous wastes."
Motorola says its cleaning of waste in the lagoon was "standard industrial practice at that time," adding that it installed a state-of-the-art wastewater-treatment system in 1980.
The company won't say how much it paid for new roads, sewers and other public services. But spokesman Hendricks says the company was "diligent in adhering to both the letter and intent of all zoning and growth management laws and rules."
Eventually, Florida promised $4.6-million for road improvements in South Florida through a fund created partly for Motorola. Palm Beach pledged $2-million. Boynton Beach committed $2-million in federal funds for utility services. And Florida Power & Light said the plant would ultimately require new feeders and transmission lines with enough juice to power 16,000 homes.
A change of heart
About four months after the beeper plant opened in 1983, Motorola executives seemed to have a change of heart. They told the Palm Beach Post they might scale back their long-term plans to increase jobs in Boynton Beach unless the state repealed a tax that cost the company and several other multistate firms millions of dollars a year.
Then-Gov. Bob Graham and the Legislature promptly obliged, reneging on a pledge to beef up education spending through a corporate tax hike.
As demand for beepers exploded, the company wasn't timid about bargaining for even more tax cuts.
By 1994, Motorola had $22-billion in sales. It had a lock on hundreds of millions of dollars in state and local contracts for everything from police beepers to 911 systems. For the fourth time, the Boynton Beach operation was expanding with the help of incentives. And the Plantation factory was in line for federal loan money so Motorola could add jobs there to make and export $104-million worth of radio communications gear.
That same year, then-Gov. Lawton Chiles and the Legislature enacted a tax refund program for companies that promised to create high-wage jobs.
In the fall of 1995, Motorola became one of the first applicants for a refund. The company put out the word - and the South Florida Sun-Sentinel reported - that Motorola might add 1,000 new jobs in Plantation if state and local government provided $7-million in incentives, or $7,000 per job.
If not, Motorola hinted, it might move or expand elsewhere, possibly in one of 11 states that it implied were dangling as much as $17,000 per job.
The application for the new tax refund program asked the company how it had handled "environmental and growth management. ... Basically, what kind of a corporate citizen has the applicant been?"
Motorola responded that it had helped write some of South Florida's environmental rules and believed in "cradle-to-grave" care of precious community resources.
It didn't mention that, in anticipation of new federal pollution rules, it had removed contaminated sludge and soils from the lagoon. Or that it was monitoring "very low levels" of groundwater contamination in Plantation to make sure nothing bad seeped into the drinking water.
Asked about criminal and civil penalties, the company gave a more complete response. There had been three recent instances of improprieties concerning federal contracts, it said, and a fine for violating a political money rule in Iowa.
In Florida, no one in government blinked.
"We want Motorola to stay and expand here," Mayor Veltri told the Sun-Sentinel . "We will do everything we can short of bankrupting the city."
(Veltri says now he remembers "getting down on our hands and knees to help the corporation without overtaxing our people.")
The city persuaded state officials to waive a regional planning review. It promised fast-track inspections and agreed to issue permits for the expansion before state experts could examine Motorola's drainage and road-improvement plans.
Hillier, 49, the former City Council member who moved to Plantation to ride horses and get away from noise, flooding and traffic in Miami, says that's exactly what followed: more noise, more clogged roads and more school crowding. In fact, three schools within 2 miles of Motorola are now deemed so "critically overcrowded" by the school district that they need portable classrooms.
Gov. Chiles' administration agreed to give Motorola $4,500 for each new job, or up to $4.5-million for 1,000 jobs, with 80 percent from the state and the remainder from the county and city.
Chiles' aides boldly predicted tens of millions in new state taxes, 1,443 "spinoff" jobs at businesses nearby and a return of $32.17 for every dollar the state paid if Motorola maintained the jobs for 10 years after the last refund payment.
Motorola's "longtime commitment to Florida" guaranteed taxpayers would "be repaid many times over," said Charles Dusseau, then the state's commerce secretary.
Buyouts in Boynton Beach
Less than a month after Dusseau signed the tax-refund deal for the Plantation plant, Motorola offered buyouts to more than 1,000 of its 3,200 employees in Boynton Beach.
While companies are not supposed to get incentives for moving jobs from one city to another, nothing in the 1995 contract for the Plantation factory specifically prevented Motorola from cutting jobs in Boynton Beach. In fact, the agreement contained no binding commitment for the company to keep the 6,500 jobs it said it had in the state that year.
Despite the corporate restructuring, Motorola proceeded with the expansion in Plantation. It added manufacturing space, plus a day care center and wellness center for employees.
But by January 1999, it had still "not filled all of the qualified positions," the city reported.
As the company fell behind cell phone maker Nokia, employees began noticing some trends: Motorola was boosting its use of factories in low-cost production sites in Asia. It was carefully controlling additions to its work force in Plantation by using contractors supplied by temporary staffing agencies.
It also was filling some Florida slots with foreign workers. Between 1996 and 2004, federal documents show, Motorola filed petitions to bring 110 foreigners to Florida on permanent work visas, mostly for higher-wage engineering jobs paying an average of about $63,000 a year.
When Motorola sent Gov. Bush's office an application for a tax refund in 1999, the question of foreign labor didn't come up. But the contractors presented a problem.
Vera Greenwood, the governor's incentives manager, had trouble confirming that the company had met the first target in its expansion plans: the creation of 100 full-time jobs with an average wage of $31,375. Greenwood notified Motorola that it might not qualify for a refund.
But Motorola insisted it had far exceeded the requirements, creating 955 jobs (including contractors) with an average wage of $53,273 (including Medicare, Social Security and health benefits).
Despite the dramatic differences, Bush's aides accepted Motorola's numbers. Saying the company had hired far more people than required, they sent a $112,500 refund in December 1999.
In 2000 and 2001 Motorola slashed its worldwide work force, moved jobs from Boynton Beach to Plantation and shifted some manufacturing overseas.
"Morale is low, as no one knows who will be the next to get the ax," Broward economic development official James Bowman wrote after visiting a Motorola job fair in June 2001. "However, as we already discovered, a majority of the jobs are being transferred to Japan."
About three months later, Dr. Pamella J. Dana, Bush's top trade aide, approved another refund for $365,625.
And a few weeks after that, Norm Taylor, Broward County's economic development director, grew concerned when Motorola cut 7,000 jobs worldwide. Above the headline of a newspaper article about the layoffs, he wrote a note asking an aide to get "an audit or strong evidence" from the governor's office that jobs weren't being eliminated in Plantation.
"I have no confidence the state is actually tracking this," he wrote.
But the governor's office reassured Taylor that it carefully checked all the job numbers. And in October 2002, Motorola got another $365,625 refund, this one for creating 503 jobs.
In addition, records show, the company got $553,469 in sales tax refunds in 2002 and 2003 for equipment purchases - a break designed for businesses that increase jobs in the state.
While revenue officials and the governor's aides dispensed the tax refunds, another state agency was using federal money to assist 634 laidoff Motorola workers.
They became eligible for federally funded retraining when their jobs were eliminated because of foreign competition or shifts in production to foreign countries.
The retraining costs so far: more than $3-million.
An itch to move
The beeper plant in Boynton Beach was razed last year to make way for condos, shops and restaurants.
The Plantation factory continues a slow decline, with about 60 more employees laid off earlier this year.
Instead of terminating the incentives for the Plantation plant, however, the governor's office last year modified Motorola's contract, giving the company more time to meet its job promises. The state also delayed audits twice.
Openshaw, the governor's trade spokesman, says there's nothing to indicate Motorola got tax breaks for simply shifting jobs from plant to plant. South Florida benefited from improved roads and thousands of Motorola jobs for more than 20 years, he says. The company remains eligible for more than $3.5-million in tax refunds over the next six years.
Hillier, the former Plantation council member who repeatedly criticized city "giveaways" to big business, fears that the plant's days are numbered.
"It's not a question of if (it will close), but when," says Hillier, who served one four-year term but was defeated for re-election in 2001. Now he works for a state-chartered agency that manages Plantation Acre's growing drainage and flooding problems.
"When these big companies get an itch, they move," Hillier says. "They have no loyalty to the community."
But Florida remains loyal to Motorola. Since 2000, the state has paid the company more than $40-million for goods and services. And in June 2004, the governor recognized Motorola with a Sterling Award. It is given annually to "role model" organizations in Florida.
--Times computer-assisted reporting specialist Connie Humburg and researcher Carolyn Edds contributed to this report.