Florida’s loss of QTI has competing states celebrating – and winning projects from us already
July 30, 2020
There is no question that Florida’s low taxes, business friendliness, skilled workforce and quality of life are attractive to companies looking to relocate or expand their organizations here. But when site selectors are evaluating multiple states for transformative projects like the relocation of a corporate headquarters or other major operation involving a large number of high paying jobs and hundreds of millions in capital investment, those selling points simply are not enough. Site selectors want communities to bring something else to the table in exchange for the investment the company is making that will demonstrate how serious they are about winning the project.
This is where incentives often come into play. Until last month, Florida had the Qualified Target Industry (QTI) rebate to offer. This incentive – which has helped the state secure over 50,000 high-wage jobs and billions in capital investment since 2011 – provided significant return on investment and posed zero risk to taxpayers. If the jobs promised were not created or the salaries were not above average wages, no payout was made to the company deemed eligible for QTI. It’s the furthest thing from ‘corporate welfare’ imaginable – which is unfortunately what its detractors in the Florida Legislature branded QTI and used that as an excuse to let it expire on June 30.
The loss of QTI could not come at a worse time for Florida, and for Tampa Bay in particular. Over a million Floridians are out of work now, and our unemployment rate is over 14%. Florida has one of the highest number of COVID cases in the country. For the past two years, we, along with our colleagues in the Florida Economic Development Council (FEDC), have been reaching out to our legislators to explain why QTI is one of the most valuable incentives in our toolkit and one that is vital to our ability to compete for projects. But our efforts were ignored.
And now our competitors are wasting no time taking full advantage of our current situation to win massive projects that were considering Tampa and other markets in the Sunshine State.
Earlier this month, the Triangle Business Journal published an article titled, How North Carolina stands to gain as Florida loses key tax credit for job recruitment. The article notes how Florida has lost two mega projects recently to North Carolina: Honeywell’s global headquarters and health care giant Centene’s massive new campus – over a million square feet of office space and more than 3,200 jobs. Tampa competed for both of these and lost to Charlotte. We lost Centene earlier this month. We could not offer them QTI as a part of their incentive package because of the upcoming expiration. While there were other factors that influenced Centene’s decision to choose our competitor, you can bet that the fact that we could not even offer the company a performance-based incentive for a project that will invest over a billion dollars in Charlotte had something to do with our loss.
Our competitors are celebrating their good fortune. Chris Chung, CEO of the Economic Development Partnership of North Carolina, told the Triangle Business Journal that “You have to imagine the QTI incentive was an important part of the ‘total package’ that Florida offered to both those companies. So, in that context, it’s fair to assume that Florida no longer having its flagship incentive program will diminish its competitiveness relative to other states like N.C. that can still utilize the full breadth of their incentives arsenal.” The article also mentions three other projects Florida recently lost to North Carolina: Aircraft Solutions USA, Pamlico Air, and LabCorp. These projects represented another 1,200 jobs Florida lost to North Carolina. And that is only one state! We’re losing projects to other southern states like Texas and Georgia as well for the same reason. I can tell you from speaking with my economic development colleagues across Florida that most have similar stories about losing a significant project for their community due to a lack of incentives to offer.
I will reiterate here that incentives are not the be-all, end-all for winning projects. But when it comes down to a situation where almost everything is equal between two communities and site consultants look for a tiebreaker, they will usually turn to incentives. Incentives, according to John Boyd, a New Jersey-based site selection consultant quoted in the Triangle Business Journal piece, “are powerful tools to help companies underwrite the costs associated with a relocation or an expansion….And given the COVID-weakened economy with soaring unemployment levels, corporate cost cutting and the need to get people back to work, business incentives like Florida’s QTI are an important part of a winning and job-creating program.”
Well, Florida’s QTI was an important part of our winning job creation strategy. It was also the last truly useful state incentive left in our business recruitment and expansion toolkit. Over the past five years, Florida’s Legislature has done away with nearly every significant tool we’ve used to recruit transformative projects in the past. We’ve lost the Quick Action Closing Fund and the Enterprise Zone Program – something nearly every other state has. Nor do we have access to the Economic Development Transportation Fund that would help us to compete for massive projects that require significant transportation improvements. That incentive technically exists, but it has gone unfunded for years.
We cannot sit idle and watch Florida lose projects that can transform our state’s economic future and put us on a path to recovery. The Tampa Bay EDC is collaborating with our FEDC peers to propose options to our elected leaders and Governor DeSantis that will help our state get back on its feet and strengthen our competitiveness. We don’t need a repeat of what happened to Florida’s once-thriving film industry, which was effectively destroyed a few years ago when Legislators succumbed to the wishes of a Koch Brothers’ funded campaign to end the state’s long-running tax credit program.
We’re in the business of bringing business here, not giving other states a reason to rejoice at our own self-inflicted wounds.