Tax issues aren't exactly "sexy," but bear with us here, because last night, Boca Raton voted to move forward in giving an anonymous company called "Project P2P" $6 million in taxpayer money (with about a half-million dollars coming from the city). According to county documents, the company is looking to expand massively and create more than 800 jobs. But thanks to a wildly un-transparent state law, the public won't find out who that company is for at least another six months.
In February, we delved into the state's "Qualified Target Industry" tax plan, which doles out refund checks for companies that "create jobs" in Florida. If a company in one of the state's "target industries" — like aerospace, homeland security, and life sciences — chooses to relocate to a city or town in Florida, that company can get government money to do so. For every job a company creates, the state can dole out $3,000. If the company chooses to build in a rural area, the award jumps to $6,000 per job. (Local communities split some of the cost.) The program has been used to lure companies like Amazon and the Cancer Treatment Centers of America to South Florida, though it's unclear how much the tax credits actually influenced their decisions.
But thanks to a 2001 state law, companies that apply for refunds are kept anonymous until 180 days after any money is awarded. When New Times asked Boca Raton why a company called "Project Mohawk" had applied for an $85,000 credit in February, the city said it wasn't allowed to tell us a thing. All the public knew was that the company was a "distributor of designer and consumer goods" looking to create 17 new jobs.
But last night's deal made "Project Mohawk" look like a lemonade stand.
According to county documents, "Project P2P" is looking to create 838 jobs at an average salary of $55,000 per year. (Interestingly, the company is already located in Boca Raton, which is a bit odd, since the programs are largely meant to lure business to Florida.) The company, listed as an "information technology company with headquarters in the city," has applied for $6.14 million in tax credits.
Of the $6 million, the city and county will each pay roughly $500,000. The state will kick in the rest.
When reached by phone, Economic Development Manager Jessica Del Vecchio said she could not provide any additional information about Project P2P.
The funds will be split between the Qualified Target Industry Program and the state's Quick-Action Closing Fund, which effectively throws money at companies to prevent "job loss" in the state.
Both tax programs are run by Enterprise Florida, an economic development program the state founded in 1994. The program has become a centerpiece of Rick Scott's "job creation" plan — in 2011, Scott reinstated the Department of Commerce and installed former Miami-Dade port chief Bill Johnson as secretary. In doing this, Johnson became the head of Enterprise as well.
The program is a triumph of conservative politics: Enterprise manages a stash of both public and private money and is run like a business, with Johnson acting as president and CEO. Scott serves as Enterprise's "chairman."
In February, Enterprise spokesperson Stephen Lawton told New Times that every project is "thoroughly reviewed to ensure it is the best deal for the taxpayer, and no company receives any money until it has met its job creation benchmarks,” he added, claiming that from 2010 to 2012, businesses that received refunds under the program made a 6.8-to-1 return on investment to the state.
But it appears something may be up with that vetting process (which, again, happens in hiding). Since 1994, 1,437 companies have been awarded credits. Of that number, more than half are now either ineligible for further funds, having met only “a portion” of their contract commitments, or have had their refunds vacated entirely. (In 2013, we showed that a for-profit college called Anthem Education was awarded $350,000 to relocate to Fort Lauderdale even though it had been investigated and named in a congressional report on shady institutions. The company shut down abruptly in 2014.)
A 2014 state analysis found that all of the state's incentive programs, minus the Qualified Target Industry program, did not deliver on the amount of jobs they'd been projected to create. (The QTI program, though, actually overdelivered.)
Here's a map of where incentive money had been used across the state between 2009 and 2012:
Good Jobs First, a national government accountability group, has lambasted Florida's Qualified Target Industry and Quick-Action Closing Fund programs, calling the latter "a secretive discretionary fund used in both relocation and retention deals." Scott, the group says, has worked to conceal things even further.
Per its website:
Despite its status as the “Sunshine State,” Florida has some critical shortcomings in its transparency practices. First among these is the fact that deals executed by economic development agencies are exempted from the state’s public records law for two years. And before deals are executed, businesses seeking subsidies are granted confidential status on the grounds that it is “proprietary business information.” In some cases, state development officials do not even disclose the name of the company to the locality they are negotiating with for local money. This practice of secrecy has serious implications for democratic processes and accountability of economic development programs.
For example, in July 2011 Hillsborough County agreed to provide $1.2 million in subsidies to an unnamed company to retain more than 1,500 jobs. The company turned out to be PricewaterhouseCoopers, which had publicly declared that it had no intention of moving out of the state. After the controversy erupted, PwC withdrew its application for the subsidy.
In 2007 the Office of Tourism, Trade and Economic Development (OTTED) began to post a list of subsidy contracts on the web for some programs. However, the information was removed from the web after the administration of Gov. Rick Scott took office in 2011 and began the process of replacing the agency with a new Department of Economic Opportunity (DEO). The state’s private economic development agency, Enterprise Florida (EFI), provided at that time limited information on subsidy recipients in its annual Incentives Report.
Scott himself advocated closing the "bankrupt" Quick-Action Closing Fund last October.
Anonymous tax-incentive programs are somewhat common, though no less controversial, in other states around the country. The Kansas City Star last year said its state's tax-incentive program "values taxpayer privacy more than transparency to the public."
As if the deal weren't already laughably untransparent, the City Council approved the deal as part of a package "consent agenda," wherein entire groups of bills are passed at once with little time for community input. Now that Boca Raton has approved its portion of the plan, the state must now sign off on the project.
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Read the Project P2P application here:
Correction: The story's headline previously said Boca Raton had given $6 million to an anonymous company. Boca Raton merely approved its portion of the plan last night.
The city clarified in a statement that:
the amount to be paid by the City is $576,400, not $6 million. And the company will not be anonymous. Before any funding is committed by the City, a detailed agreement (including the company’s name, information and the jobs to be created) will be reviewed and approved by the City Council at a public meeting. (Similar agreements will be executed by the State and the County.) In addition, before any money is paid by the City, the City (and the County and State) will require verification of the new jobs being created. All of this is clearly explained in the staff memo attached to the agenda.