Higher standards to be imposed on business applicants seeking economic incentives in Sarasota County

Vote this week increases the number of jobs that would have to be created and raises average salary of new employees

Jeff Maultsby. File photo

After months of airing frustrations about Sarasota County’s economic development incentives, the County Commission this week voted 4-1 to approve new guidelines, recognizing that the county is well past the Great Recession.

The board also authorized a future public hearing on amendments to the County Code regarding consideration of applications from companies seeking property tax exemptions related to economic development.

Commissioner Michael Moran cast the lone “No” vote, having voiced his consternation on numerous occasions with the incentives program. Moran has argued that the county needs some type of process through which it can measure the effects of support it provides to businesses.

However, on Aug. 30, Commissioner Charles Hines told his colleagues, “I’m glad we’re doing this. As things change, we need to grow and modify.” He added, “We’ve heard that the economy’s doing better.”

Among the changes approved in the guidelines, a company seeking economic incentives would have to commit to creating a minimum of 10 new full-time, permanent jobs instead of five, and it would have to offer an average wage that would be equal to 115% of the average salary in the Metropolitan Statistical Area (MSA) in which Sarasota County is located, Jeff Maultsby, director of the county’s Office of Business and Economic Development, explained to the board.

The average MSA wage is $40,621, Maultsby said, so 115% of that would be $46,714.

The maximum grant a company could get for creating a job with a salary equal to 115% of the average annual MSA wage at the time would be $3,000. The figure could rise to $4,000 per new job with a salary equal to 150% of the average annual MSA wage; and up to $5,000, if the salary were equal to 200% of the annual average MSA wage.

Furthermore, the resolution removes language that said, “in light of the impact the multi year recession had on the citizens and businesses of Sarasota County …” It also adds a clause: “WHEREAS, the core principles of the Economic Development chapter of the Sarasota County Comprehensive Plan focus on transforming Sarasota County’s economy so that it is more diverse and sustainable, including goals, objectives and policies to support diversification and the attraction of a highly-skilled and globally competitive workforce;”

The resolution explains that the economic development incentive grant is a “‘not to exceed’ amount, which will be payable in increments based on achievement of performance goals as set forth in an Economic Incentive Agreement entered into by the County and the applicant.”

The County Commission sits in session on Jan. 25. File photo

In the proposed amendment to the County Code regarding new businesses’ applications for tax exemptions, Maultsby explained that his staff recommended removing four factors; those are in the section regarding economic development policy guidelines. “There was some subjectivity involved in those,” he pointed out.

The revised section says that in making its determination as to whether to grant tax exemptions, the County Commission may consider three factors:

  • Number of current and projected employees of the business located in the county.
  • Average wage of employees of the business.
  • Amount of capital investment of the business.

The four factors Maultsby recommended for elimination pertained to whether a company is innovative; the firm’s commitment to purchasing local goods and services; its “[n]et positive contribution to the local economy”; and sales factors.

Tax exemptions may be granted for any number of years up to 10, under the proposed amendment, and the board may agree to give an applicant any percentage — up to 100% — of the assessed value of the qualifying property.

“Companies must invest at least … $1 million in capital investment in our county to be eligible” to apply for a tax exemption, Maultsby added.

The changes in the ordinance would align the county’s guidelines with those of the state, he told the board.

If a company did not meet the minimum eligibility criteria in the ordinance, he said, staff would not process an application.

A ‘redline’ segment of the economic incentives resolution shows a number of the changes. Image courtesy Sarasota County

As Maultsby reminded the commissioners in a memo he provided them in advance of the meeting, the Aug. 30 agenda items were in response to a discussion they had in early July. That ended in their calling for higher standards for the economic incentive process. Additionally, the memo noted, they asked that the ordinance governing the tax exemption application process be changed “to allow the Board more discretion in its decision making,” including the duration and amounts of exemptions.

The memo also said that because the Sarasota Manatee Area Manufacturing Association (SAMA) “was very involved” in the drafting of changes a previous commission made to the ordinance, staff of the Office of Business and Economic Development “will reach out [to] SAMA prior to the public hearing [on the newly proposed amendment] to ensure the group’s feedback is incorporated.”

Lisa Damschroder the economic development coordinator in the county’s Office of Business and Economic Development, told The Sarasota News Leader on Aug. 31 that the public hearing on the revised ordinance will be held on Nov. 14.

Questions and comments

After Maultsby completed his Aug. 30 presentation, Hines asked why 10 was chosen as the minimum number of jobs in the incentives guidelines. Maultsby replied that that is the requirement of the state’s Qualified Targeted Industry Program, which is administered by Enterprise Florida. If the board wanted a higher number, Maultsby added, staff could make that change.

“OK,” Hines responded. “I just wanted to hear your position on it.” Hines added that the “10 jobs could create phenomenal things,” and the number would be expected to grow.

Commissioner Alan Maio. File photo

Commissioner Alan Maio said, “I’m never going to say never, but it’s going to be hard for me” to approve an application if the owner or a top representative of a firm does not appear at the meeting when the board is considering its request for exemptions. He referenced the situation on July 12, when the commissioners considered such a tax exemption application and the owner “did not even show up at the hearing.”

Additionally, Maio said, he plans to ask any applicant if the firm will be “hiring one of our big, general local contracting firms” for construction of new facilities in the county, or whether it will be using an outside company whose workers would just be in the county “four nights a week for 12 weeks.”

Damschroder responded that staff would come to the commission first to determine whether it would agree to an applicant’s request for tax exemptions. If the board gave its approval, she continued, then staff would have to finalize the proposed contract with the applicant and bring that back to the board for a vote. Therefore, she said, staff could convey Maio’s concerns to an applicant and work with the Office of the County Attorney on the appropriate wording in the contract.

Following the comments, Commissioner Nancy Detert made the motion to approve the revised resolution and to authorize the public hearing on changes to the County Code. Hines seconded it.

“I appreciate the work that you all have done,” Chair Paul Caragiulo told Maultsby and Schroeder.