Economic Development Corp.’s CEO talked of potential for $100 million in annual economic impact with 180 new jobs in place
Referencing what she called the “business disruption” created by the proposal, Sarasota County Commissioner Christine Robinson made the motion on May 24 to deny the opportunity of local and state tax incentives to a national roofing company interested in moving its headquarters to the county — with the potential of $100 million in annual economic impact when the firm reached its full employment of 180 people. The motion passed 4-1, with Commissioner Carolyn Mason in the minority.
The total incentives package of $1,584,000 would be split, with the county covering 45 percent of it and the state, 55 percent, according to material provided to the commissioners.
County staff had been working with Enterprise Florida on the state portion of the deal, which would have included $216,000 in county financial support over an eight-year period and $864,000 from the state, provided the firm generated the 180 jobs over the next five years and maintained them for a minimum of four years.
A staff memo to the board explained that some of the jobs would be held by employees transferring from the current headquarters. The average starting wage would be $58,757, which is 150 percent of the average annual county wage. The county would pay $4,000 for each job, up to $720,000 over the five-year period, the memo noted.
Under a state tax refund program for businesses, the firm would have been eligible for a bonus of $2,000 for each new job, because it planned to relocate its corporate headquarters, putting it in the second-highest tier among employers sought by the state.
“I understand the ramifications are probably going to be pretty big with Enterprise Florida,” Robinson said, “but you can’t ignore our local businesses, big and small. They are the life blood of our community.”
Nineteen representatives of local roofing companies and business organizations in Sarasota and Manatee counties had appeared before the board prior to the discussion of the request, pleading with the commissioners not to pursue the firm’s relocation.
“I’m grateful for the people who showed up today and voiced their concerns,” as well as those who wrote the board members, Mason said. While she respected their opinions, she added, “I don’t agree with a lot of what I have heard.”
Prior to Robinson’s making her motion, Mason had put forth a motion to approve the staff recommendations for the negotiations to proceed with the company. It died for lack of a second.
During a May 25 telephone interview with The Sarasota News Leader, Rob Sitterley, a principal with Merit Advisors in Orlando — a consultant working with the company — stressed that the relocation would involve a corporate headquarters only. “These were not roofing jobs. … This is a national firm. I’ve said it over and over again. … But the [Gulf Coast] Builders Exchange won. They spread this [misinformation] and got people nervous.”
“Ultimately, what we’re talking about,” Sitterley said, “is one Florida community making a very big mistake.”
In the aftermath of the May 24 discussion, Sitterley added, he already had received calls from half a dozen other communities in Florida and three additional states. Representatives of the States of Georgia and North Carolina also had followed up with him about initial proposals they had made, he said, noting that news of the County Commission decision had spread across the country. He had a call scheduled with leaders of the company later on May 25, he added, at which time they would discuss their next steps.
Investing in the county
In response to a question from Commissioner Mason, Jeff Maultsby, the county’s director of business and economic development, explained on May 24 that while $450,000 was listed in agenda backup material as the firm’s capital investment in the county, that was just for its initial leasehold improvements. Additionally, he said, the firm’s representatives had said they would need to purchase equipment, at an estimated cost of $300,000, and they were looking at an option to expand their footprint by 25,000 square feet, which would mean even more of a financial investment.
In seconding Commissioner Robinson’s motion, Commissioner Charles Hines said, “These types of things, in my view, are really supposed to be positive to our county.” Yet, representatives of the Greater Sarasota Chamber of Commerce and a number of its members “are here on opposite sides. What that’s telling me is something’s wrong here,” Hines added. Moreover, he explained, when the board considers a rezoning petition, for example, it has to make a decision. Providing incentives to this firm, he pointed out, “isn’t something we have to do.”
Vice Chair Paul Caragiulo noted that the board has considered a number of smaller Qualified Targeted Industry Tax Refund (QTI) applications since he became a county commissioner in late 2014. This “Project Mulligan” is the first situation in which the county has considered the potential relocation of a corporate headquarters, Caragiulo continued, as Mark Huey, president and CEO of the county’s Economic Development Corp. (EDC), had noted. Caragiulo talked of his discomfort with the necessity of confidentiality at this point in the process, especially given the fact that, “in this community, we have an open government on [steroids] kind of attitude.”
Maultsby explained that if the commissioners voted to permit formal negotiations with the firm under the incentives programs, and those were completed, “there [would] be full disclosure” of the name of the firm and where its headquarters is before the final paperwork would be signed.
Regarding public comments warning that the firm would take away employees and technical personnel from local roofing companies, Huey explained that the firm was willing to put clauses into the contract with the county to stipulate that it would not hire anyone from roofing companies or construction firms in Sarasota or Manatee counties for eight years. However, Hines indicated that would not be enforceable under Florida law.
Maultsby also pointed out that a representative of the firm had informed him that 30 of the first 50 jobs in Sarasota County would be expected to be held by transfers from the current location. Further, Maultsby continued, company representatives saw themselves attracting talent from what they referenced as “the Tampa Bay region,” and, if they could not fill all the positions from that area, they would conduct national searches.
The firm also had committed to a clause in the contract stipulating that it would not establish or purchase a roofing operation in Sarasota County or Manatee County for eight years, Huey told the board.
Among the members of the public who addressed the board on May 24, Alvin Singleton, who said his company — Singleton Roofing — has been in business for 47 years, pointed out that a vote in favor of the proposal would “be a slap in the face to all of us roofers here.”
Others — such as Rachel Beckner of Green Roofing — spoke of the difficulty of finding a “good crew” to handle the jobs their firms won.
Jon Mast, CEO of the Manatee Sarasota Building Industry Association, told the board, the firm “will be directly competing with those … in our already stressed workforce.”
“If this were a manufacturer of roofing supplies, all of us would be on board,” Paul Stehle, chair of the board of the Gulf Coast Builders Exchange, told the commissioners. “This is a roofing company trying to sell themselves as a corporate headquarters.”
The approximately $1.6 million in county funds would be much better utilized if they were put to job training or into biotech companies or other types of businesses that the community does not have, he added.
Attorney Dan Lobeck, president of Control Growth Now, elicited chuckles among the audience members when he pointed out the rarity of his agreement with the Gulf Coast Builders Exchange in opposing the incentives package, characterizing it as sort of a “man bites dog situation.”
Yet, Steve Queior, president of the Greater Sarasota Chamber of Commerce, urged the board to approve the incentives. “National headquarters are the ultimate prize,” he said.
After his board discussed the issue in-depth, he added, the members agreed that this was “an opportunity to place ourselves on the map.”
Tim Vanderhoof, vice president of business development for Enterprise Florida, pointed out that the incentives would not be “corporate welfare,” because the firm would have to establish itself in Sarasota County, pay a variety of taxes and demonstrate it had met specific hiring and wage criteria before it received any tax refunds.
Referencing roofers’ concerns that the firm would pull away their employees, he stressed, “This is a corporate headquarters. These are accountants, controllers, [human resources] staff … that may move from their current location [and] they will buy homes, buy vehicles, need a new roof occasionally.”
He has worked for Enterprise Florida all over the state, he added, but “not once have we seen so much resistance.”
During his presentation to the board, Huey of the EDC acknowledged the frustrations about having to keep the company name confidential at this point. However, he pointed out, even its employees were unaware of the ongoing discussions, and leaders of the firm would need to be able to share the news of the relocation in their own way.
Huey also noted that decisions to move corporate headquarters “are rare.” This is the first he has dealt with in his almost five years with the EDC, he added, noting that less than 1 percent of such relocations occur each year in the United States.
As for the projected annual economic impact on the county, if the company did move its headquarters to Sarasota County, Huey pointed out that much of that would be realized by small businesses, such as dry cleaners and restaurants.
Huey further explained that the firm has roofing operations in 44 states in the continental U.S., and 99.5 percent of its revenue comes from outside Sarasota County; 85 percent of it comes from outside Florida.
Noting that some speakers were concerned about the firm competing against local roofing companies, Huey said the firm also had committed to a clause in the contract saying it would not solicit or bid on roofing projects in Sarasota and Manatee counties. Because this is a national company, he pointed out, most of its revenue comes from national accounts, such a Home Depot.
In response to a question from Commissioner Mason, he explained that the primary reason the firm expressed an interest in Sarasota County was because it felt this is the type of community where its employees would want to live. Additionally, company representatives told the EDC staff they did not feel they had the same ability to expand the headquarters over the long term in their current location.
When Commissioner Robinson asked how the lead on the company originated, Jennifer Taylor, vice president for business development at the EDC, explained to Robinson that during her 25-year career in economic development, she has collaborated on other projects with the consultants representing the firm. On March 14, she received an email from Enterprise Florida about the firm’s interest, she added, and she also had a phone call from the consultants.
Sarasota was not the firm’s first stop, Huey pointed out, but after the representatives began to consider Sarasota County, “it’s been a ‘love fest’ ever since.”
In another exchange with Robinson, Huey said he understood that the local incentives program was established in 2010 as a result of the impact of the Great Recession, because county leaders wanted to diversify the economy. It was “Ground Zero,” he added, “for some of the worst impacts of the global recession,” including falling home values.
Robinson then talked about a study undertaken of the county’s business climate — released just before Huey took the job with the EDC. “You couldn’t have dreamed up a worse document for the county,” she added. “We had hit rock bottom,” with an unemployment rate of 12.2 percent in 2010. She reminded Huey about how she and he had “shopped” the proposed new county incentives plan to community businesses and organizations such as Chambers of Commerce, as well as Realtors and the Gulf Coast Builders Exchange. When those groups encouraged county leaders to put together the new program, she continued, she doubted any of them “ever envisioned that we would create such a local business disruption” as the issue before the commission that day.
More board discussion
Commissioners Hines and Caragiulo voiced support for Gov. Rick Scott in his travels and efforts to encourage companies to move to Florida. Caragiulo added, “I don’t personally believe that anyone who’s been observing this commission … would ever classify the five of us as being against economic development.” He concurred with Robinson, Hines and Chair Al Maio that the crux of the problem for them was the process that had led to the May 24 discussion.
“This has been very divisive,” Maio concurred. “I don’t believe for a minute that there was anything underhanded going on,” he continued. Nonetheless, “people seize on the lack of information, that something’s being hidden.”
Robinson clarified that she was opposed only to the incentives, not to the company itself. “I would hope that they would still consider us.”
Caragiulo, Hines and Maio agreed. “I’ll sell Sarasota County against any other county in this state,” and he would promote Florida over any other state as a business location, Hines added. With Maultsby having said the firm was considering offers from Georgia and North Carolina as well, Hines told Maultsby to tell the firm’s representatives “we’re a heck of a lot better” than those other two states.