Enterprise Florida Program Is Too Secretive, According to Critics | New Times Broward-Palm Beach

Palm Beach News

Boca Raton Recommends $85,000 Tax Refund for Anonymous Company

A 23-person company headquartered in Boca Raton is currently looking to expand its facilities and add an estimated 17 new jobs over the next three years. To help “convince” the company to stay in Boca, both the city and the State of Florida have been considering awarding the company $85,000 in tax refunds. The Boca Raton City Council voted during its 6 p.m. meeting Tuesday to authorize paying its portion of the refund, which amounts to $17,000.

The only catch? Per state law, the company’s name — and development plans — will be kept from the public until long after the government money is awarded. The law is written so the government can negotiate with businesses confidentially and without revealing trade secrets. But critics say the process is too secretive. 

For now, Boca Raton is calling the company by a code name: “Project Mohawk.” When reached by phone, Jessica Del Vecchio, the city’s economic development manager, said she was not allowed to disclose any information about the company. On paperwork related to the resolution, the company is described as a “distributor and designer of consumer goods.” 

Florida’s Qualified Target Industry Tax Refund program was established in 1994 to help persuade businesses to create jobs in the state. As the program stands, companies operating in one of the state’s “target industries” — including aerospace, defense and homeland security, and life sciences — that are looking to expand can apply for tax refunds, which are awarded based on the number of jobs those companies plan to create. For every job a company says it will bring to Florida, target-industry companies can be awarded $3,000. If the jobs are to be located in rural areas, the award jumps to $6,000 per job.

If a company’s refund application is approved, the state pays out 80 percent of the award, and local municipalities kick in the other 20 percent. According to the Florida Department of Economic Opportunity’s latest Annual Incentives Report, more than $58 million in funds was approved for target-industry companies, as of 2015.

The program has been used to lure companies like Amazon, which was awarded a $150,000 refund to build an outpost in Miami-Dade, and the Cancer Treatment Centers of America, which was given a $1.5 million refund to build its headquarters in Palm Beach County. The Cancer Treatment Centers say they contracted 225 new jobs in the process.

But, thanks to State Statute 288.075, enacted in 2001, companies negotiating with the state can, if they so choose, request that their names and business plans be kept from the public.

If a private corporation, partnership, or person requests in writing before an economic incentive agreement is signed that an economic development agency maintain the confidentiality of information concerning plans, intentions, or interests of such private corporation, partnership, or person to locate, relocate, or expand any of its business activities in this state, the information is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution for 12 months after the date an economic development agency receives a request for confidentiality or until the information is otherwise disclosed, whichever occurs first.

According to the law, companies can request an additional 12 months of confidentiality. Once an application is approved, the company’s name remains confidential for the next 180 days. Once that period ends, the company’s information is placed online, in the Department of Economic Opportunity’s “Jobs Portal.”

The program is run through Enterprise Florida, an economic development initiative created in 1994 that Gov. Rick Scott has devoted substantial energy and resources to during his tenure. In 2011, Scott revamped Florida’s Department of Commerce, and, in 2015, he appointed former Miami-Dade Port Director Bill Johnson as secretary of commerce. Johnson also acts as president and CEO of Enterprise Florida. Scott himself serves as Enterprise’s chairman.

Enterprise is funded by both private investors and public money. It runs a host of other economic development initiatives, including tax-refund projects for defense-industry contractors and minority-owned businesses.

Stephen Lawson, a spokesperson for Enterprise Florida, said confidentiality “helps ensure we don’t lose out on job creation projects to other states.”

“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 seems that more than half of the companies awarded refunds have had some trouble hitting their benchmarks.

Since 1994, 1,437 companies have been awarded refunds under the program. Of that number, 761 are now listed as either “inactive” and ineligible for further funds, having met only“a portion” of their contract commitments, or have had their refunds vacated entirely.

Additionally, business-confidentiality rules in other states have drawn criticism in the past: Kansas’ tax-refund program goes so far as to keep the award amounts themselves private, in perpetuity.

Greg LeRoy, executive director of Good Jobs First, a national organization that advocates for accountability with tax incentives, told the Kansas City Star in July 2015 that “states that refuse to disclose tax credit or tax exemption information are just hiding critical information from taxpayers, pure and simple.” He added: “If a company claims a tax credit on line 39(c) or whatever of their state tax return, that’s no different than if the state wrote them a check.”

The Sarasota Herald-Tribune in 2014 also criticized the tax-refund process, calling it "secretive."

Last night, the "Project Mohawk" resolution was approved as part of a "consent agenda," a type of vote that allows city officials to lump together resolutions that council members deem "uncontroversial," and then approve them all at once. Along with the Project Mohawk proposal, more than ten other items were approved in a single stroke by Boca commissioners.

In related news, the Sun Sentinel reported Monday that two regular speakers at Palm Beach County Commission meetings are suing the county for placing too many items on its consent agendas, thus making it harder for people to comment on proposals.
KEEP NEW TIMES BROWARD-PALM BEACH FREE... Since we started New Times Broward-Palm Beach, it has been defined as the free, independent voice of South Florida, and we'd like to keep it that way. With local media under siege, it's more important than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" program, allowing us to keep offering readers access to our incisive coverage of local news, food and culture with no paywalls.
Jerry Iannelli is a staff writer for Miami New Times. He graduated with honors from Temple University. He then earned a master's degree in journalism from Columbia University. He moved to South Florida in 2015.
Contact: Jerry Iannelli

Latest Stories