Leaders pull out all the stops to turn ‘Project Sail’ into USAA deal

January 10, 2014

Tampa Bay Business Journal
The stakes were high as nearly 40 business, community and academic leaders gathered on short notice in early September 2012 for a series of meetings called by the Tampa Hillsborough Economic Development Corp.
Executives from an unnamed corporation were in town to ask tough questions about the Tampa Bay workforce and business climate. The area had been short-listed for a major project with the code name Project Sail. The answers those executives heard could persuade the firm to build here and hire hundreds of people, or take its multi-million dollar project and jobs elsewhere.
No one – not even the EDC – knew at the time that the executives were from United States Automobile Association, the San Antonio-based financial services giant that already had a major presence in Tampa but planned to grow more
“We were all guessing and we were miles away,” said Michael Nastanski, dean of the Donald R. Tapia School of Business at Saint Leo University. “If you like cloak and dagger, you’d love the experience.”
Here is the behind-the-scenes tale of how Tampa corporate and economic development executives wooed and won a major expansion by one of the nation’s biggest financial firms, bringing as many as 1,215 jobs and $164.3 million in capital investment to the area. It provides some rare insight into what happens behind the scenes when economic development executives work to land business expansion and retention. This was one of several big wins for the Tampa Hillsborough EDC in 2013 and illustrates the key role local organizations, working with economic development officials, play in expanding the economy.
Five days to plan
The first call came on Aug. 13, 2012, when a consultant representing an unidentified client told the EDC that a dozen executives were coming to Tampa for a site visit.
“We got the call with some information giving us highlights about the project,” said Beatriz “Bea” Bare, senior project manager, business recruitment. “We did not know who the company was or what industry sector they were in. We were going blind, and that’s not too unusual with a lot of the leads.”
The company wanted to visit Aug. 20- Aug. 21, but with the Republican National Convention beginning on Aug. 27, the site visit was pushed to early September. With a long list of issues to address and questions to answer, based on the basic information the EDC had in hand, the EDC staff put in 20-hour days and issued invitations to community partners to gather, said Jeff Lucas, vice president, business development.
“We had five days to pull this together. People were willing to change their schedules and work with us on this,” Bare said.
Secrecy and a short time frame for preparation are not unusual, said John Hagen, president and CEO of the Pasco Economic Development Council Inc.
“The fact that the company wanted to do a site visit in five days says that they had probably already vetted communities in advance using standard sources of data, had narrowed down a list of possible locations and were well into the site selection process,” said Hagen, who was not involved in the USAA project.
Consultants always have a concern about premature publicity, especially for public companies because it could impact the stock price. The EDC has to do the best it can with the information it has on hand, inviting companies that are going to be upbeat on the community to talk to prospects, Hagen said, adding that site selectors will sometimes ask to speak with specific, random company officials and even excuse the economic developer from the room so the conversations can be more candid.
The Vinik story
There were five separate meetings from Sept. 4 to Sept. 6, 2012, some at the EDC offices, others at the University of South Florida and the offices of companies taking part in interviews. The visit was kicked off by a talk from Jeff Vinik, owner of the Tampa Bay Lightning.
“He told his personal story of moving here and moving his company here and talked about the community in a very powerful way. You could see he was hitting home with the company when he was telling his story. Having that key business-to-business conversation, that peer-to-peer conversation, is so important,” Lucas said.
TECO Energy Inc. (NYSE: TE) has been a frequent participant in similar site visits, and Gordon Gillette, president of Tampa Electric and Peoples Gas, along with executives from Time Warner Business Services, sat in on one set of interviews. Representatives of each municipality in Hillsborough County – Tampa, Temple Terrace and Plant City – took part in another meeting. Presidents and deans from Saint Leo, University of South Florida, University of Tampa and Hillsborough Community College joined forces for a roundtable discussion.
None of those contacted by the Tampa Bay Business Journal cared that they didn’t know who they were talking to, and all said they were glad to have a chance to talk about the business community.
“We’re typically contacted on pretty short notice about these opportunities … Often times the educational sector is what they are interested in, labor supply and available talents and skills that might be relevant to their industries and needs,” said Ron Vaughn, president of University of Tampa. Vaughn has taken part in many similar events, but this roundtable was larger in scale than most, he said.
There were more than 30 people in the room, and the schools put on a full-court press, said Saint Leo’s Nastanski, who attended with President Arthur Kirk Jr. Educational questions focused on curriculum, numbers of graduates in specific areas and job readiness, with broader inquiries about community issues such as transportation and the quality of schools for employees’ families, said Moez Limayem, dean of the USF School of Business, who joined USF President Judy Genshaft at the roundtable.
“The overarching questions was – is Tampa Bay ready to take on another corporation and would the employee base be there for all the skill sets they would need?” Nastanski said.
The EDC had a secret weapon of sorts for the meeting – a draft version of its IT workforce study, which recommends real world training for high demand jobs and streamlined internships to fill gaps between corporate needs and available skills. It helped Tampa stand out from the competition, Bare said.
“We consider many factors when evaluating where to grow our footprint, including our existing presence in cities and the availability of a highly skilled workforce,” said Jen Becker, USAA spokeswoman, when TBBJ contacted her for this report. She also cited USAA’s commitment to hiring veterans, adding “Tampa is a great market for veteran hiring.”
The big day
After the September visit ended, all was quiet for several months.
EDC staff forwarded the final copy of the IT workforce study to the still-unknown company through the consultant, and called or emailed periodically to ask the status of the project, walking a fine line between aggressive and annoying, Lucas said.
Projects often go quiet for a number of factors, such as the reason for the project may have become less urgent or the economy may have changed, Pasco EDC’s Hagen said.
The quiet ended with a bang on Feb. 7, five months after the site visit.
Lucas, Bare and Rick Homans, president and CEO of the Tampa Hillsborough EDC, flew to Atlanta to meet on what they were told was “a huge project.” At that same time, Minneapolis-based site selection firm Hickey & Associates told the EDC it was coming in with a client, who met with Danielle Ruiz, the EDC’s director of business retention and expansion. The EDC staff in Atlanta learned that Tampa was competing with Nevada, Pennsylvania and Ohio for a 1,000-job expansion by Tampa-based HealthPlan Services – a project that Tampa eventually would win as well. Ruiz learned that Hickey’s client was USAA, which was using a different consultant but was the same firm that had conducted the site visit in September.
Using a new code name – Project Two Markets – USAA and the EDC signed a confidentiality agreement, worked on final questions and negotiated incentives, which were approved April 17 by the Hillsborough County Board of County Commissioners. The board did not know the identity of the company, but knew there were at least two states competing for the project. The incentive package included a total Qualified Target Industry allocation of $3.6 million – $729,000 from the county and $2.9 million from the state – or $3,000 for each high-wage job created, to be distributed over nine years and only paid after the jobs are in existence.
Incentives are a small part of the overall puzzle, Lucas said. While companies primarily want to know about a market’s labor force, the cost of doing business and the business environment, incentives often close a deal, as competition among states is intense. Incentives can’t make a bad deal good, but can be a financial tie-breaker and sometimes, “a signal that the community is committed to be a long-term ‘partner’ to help the company achieve success,” Hagen said.
Incentives can offset costs and risks of expansion, USAA’s Becker said, but the decision to expand in Tampa was driven by the workforce talent, local military presence and commitment to support the community.
The big reveal
Government approval of incentives doesn’t mean a company has said yes, Bare said, and in fact it was another six months before USAA firmed up its decision. The EDC was told the project was a go on Oct. 8, and the official announcement — including the first mention of USAA’s name — came out in the form of a press release on Nov. 5. Before the press release went out, the EDC sent an email blast with the news to those who took part in the industry gatherings more than a year earlier.
“You’re always excited about the possibilities of what these can do for the community … and always excited when you finally hear that companies you were interacting with have decided to come,” UT’s Vaughn said.
It doesn’t matter if the company is USAA, Coca-Cola or Depository Trust and Clearing Corp., another big financial firm that is expanding here, USF’s Limayem said.
“What really matters is having jobs move to our area … It’s a snowball effect. We are making it to more lists and more short lists.”