table of contentsfcmavoice.com/2012competitivenessstudy.pdf · florida target industry...

Prepared by McCallum Sweeney Consulting and Avalanche Consulting

TABLE OF CONTENTS

ABOUT MCCALLUM SWEENEY CONSULTING ......................................................................... 1 PROFESSIONAL SUMMARIES ................................................................................................. 3 SITE SELECTION METHODOLOGY .......................................................................................... 10 PROJECT EXPERIENCE ......................................................................................................... 14 PROJECT ANNOUNCEMENTS AND SUMMARIES ...................................................................... 18 APPENDIX A – GEOGRAPHIC INFORMATION SYSTEM (GIS) EXAMPLES.. ................................. 40

This document has been prepared by, and remains the sole property of McCallum Sweeney Consulting. This proposal is proprietary to McCallum Sweeney Consulting and is to be used and distributed by the Recipient solely for the purpose of evaluating the

proposal in connection with the particular project for which it was prepared. No portion of this document may be reproduced or copied in any form or by any means or otherwise disclosed to third parties without the express written permission of McCallum Sweeney Consulting, except that permission is hereby granted to the Recipient to evaluate this proposal in accordance with its

normal procedures, which may necessitate the reproduction of this proposal to provide additional copies strictly for internal use by the Recipient for evaluation of this proposal.

Florida Target Industry Competitiveness Report

September 13, 2012

550 South Main Street, Suite 550 Greenville, SC 29601 (864) 672-1600 www.mccallumsweeney.com

101 West 6th Street, Suite 612 Austin, TX 78701

(512) 472-1555 www.avalancheconsulting.com

MEMORANDUM

TO: EFI BOARD OF DIRECTORS & PARTNERS

FROM: GRAY SWOOPE, SECRETARY OF COMMERCE, PRESIDENT & CEO OF ENTERPRISE FLORIDA

SUBJECT: FLORIDA TARGET INDUSTRY COMPETITIVENESS STUDY

DATE: SEPTEMBER 28, 2012

CC: EFI STAFF

At our September Enterprise Florida Board Meeting, we heard a presentation from McCallum Sweeney on their initial findings regarding the Statewide Economic Development Competitiveness Study. This study is a critical milestone as we continue to look for ways to improve our business climate and Florida's ability to compete. It is important to note that Enterprise Florida, through our stakeholder council, requested this study. It was a proactive step toward getting a clear and objective look at where we are in our economic development efforts compared to our competitors and where we need to focus our energy to achieve our job creation goals. The study reviewed Florida’s current policies, practices, and resources over several years; talked to corporate decision makers and site consultants; and conducted benchmarking analyses with regional and local economic developers. The study offers suggestions on how to better advance local, regional and statewide economic development efforts while also making recommendations to help align our policies with our goals. Key findings include:

Site selectors are noticing the impressive improvements to our incentive approval process. However, the study pointed out that the state’s Closing Fund is underfunded and points out the state’s distinct disadvantage in this area. We have the opportunity to improve the flexibility and effectiveness of our existing programs.

The study also underscored that Florida has a large talented workforce noting the multi-lingual nature of the population. Given our strengths in that area we need to better market our current talent assets.

The study calls for us to continue to modernize our tax structure and streamline our permitting processes.

Finally, the study also points out the need for the development and promotion of a strong Florida business brand and the need to align marketing activities to target industries. I am proud to say that we are already making great progress on these with the support of our economic development partners.

Florida Target Industry

Competitiveness Study Memo

Page 2

The research and findings of the study provide us great insight as to how our state compares to our competitors. A number of the recommendations confirmed what we already knew, providing validation that projects such as developing a sites and buildings database are important. The study also provides an objective perspective on issues where Florida falls behind our competitors, such as the level of funding for workforce training programs and a lack of dedicated funding for economic development at the local level. On the following pages is a breakdown of all the recommendations and the status of implementation to date. I would like to thank our utility partners for funding this important effort – Florida Power & Light Company, Progress Energy, Gulf Power, Power South, TECO, and Seminole Electric. However, Florida has made impressive strides over the last two years under the leadership of Governor Scott and the Florida Legislature. I am confident that through implementation of these recommendations as well as the proactive efforts at both the state and local levels we will make our state the best place in the nation to do business. Thank you for your continued support and commitment to economic development.

State (S) or

Local (L) Issue

Method to Achieve(L) Legislative

(P) Policy

(B) Budget

(O) Operational

Status of Implementation

Cost of Doing BusinessS L • Issues for consideration by the Legislature

S / L L / P / O • EFI will recommend steps for communities to expedite

and improve their permitting processes to be more

business friendly

S O • The economic development liaisons program is in place

and being utilized throughout multiple State agencies and

departments, including EFI

Real Estate and InfrastructureS O / B • A statewide sites and buildings database is underway

and will be completed in Spring 2013; database will allow

Florida to better showcase existing assets

S L • A study of Florida's rural communites is underway, which

will be followed by a rural marketing plan and program

S O • EFI is currently working with utilities on certain

marketing activities

S P / L • Florida utilities are in various stages of pursuing ED

riders

Talent and TrainingS B • QRT budget increase request for FY 2014/15

S / L O • Both EFI and WFI have existing industry initiatives

underway

• Community practitioners should also enhance existing

industry programs

S / L O / B • WFI currently evaluating means to establish a single

workforce brand for the state

S / L O • Enhance EFI project management involvement with WFI

S / L O / B / P / L • Work is underway and best practices have been

indentified

IncentivesS O / P / L • The formation of DEO and shift of incentive processing

has led to a more streamlined process

• Continual communication is improving the process

S L • Issues for consideration by the Legislature

S L / B • Issues for consideration by the Legislature

S B • The creation of the SEED Fund is a step toward

increasing the flexibility of the toolkit and allowing the

State to respond quickly to major projects

S / L L • Issue for consideration by the Legislature

Competitiveness Study Recommendations

Establish Liaisons with Other State Agencies

Modernize Taxes

Streamline Permitting Process

Improve Portfolio of Sites and Buildings

Enhance Rural Economic Development

Toolbox

Increase Use of Economic Development

Riders

Streamline Incentive Authorization Process

Improve Flexibility and Effectiveness of

Existing Programs

Create Local Option Sales Tax to Benefit

Economic Development

Leverage Partnerships with Utilities

Improve Quick Response Training (QRT)

Improve Existing Industry Relationships

Market Current Talent Assets

Improve Project Management Tactics

Align Training with Targets

Enhance Economic Development Toolbox

Increase Up‐front Incentives

Page 1 of 2 9/25/2012 Prepared by Enterprise Florida, Inc.

State (S) or

Local (L) Issue

Method to Achieve(L) Legislative

(P) Policy

(B) Budget

(O) Operational

Status of Implementation

Economic Development Strategy / BrandingS B • Additional funding is being requested in the upcoming

legislative budget for economic development marketing

• EFI and its stakeholder and utility partners are working

together to create a TEAM Florida partnership that will

help fund business marketing and branding efforts for the

state

S O / B • Florida business brand is under development with a

January 2013 roll‐out date, and a campaign to follow

S O / B • Marketing for target sectors is currently in place and can

be viewed on the EFI website

• With additional funding, these marketing efforts can be

enhanced

Economic Development AdministrationS O / B • Training opportunities will be increased as budget allows

and a reallocation of existing resources will enable more

industry specific development opportunities

S O / B • More formal partnerships and events with EFI's ally

network are under development, including a TEAM Florida

partnership to help fund business marketing and branding

for the state

S B • Additional resources are anticipated in the future, in

addition to a re‐allocation of existing resources to ensure

talents are maximized

S O • Best practices will be established to ensure the highest

level of positive client interaction

Expand Project Management Team

Improve Professionalism of Staff

Increase Funding for Marketing

Promote Florida's Business Brand

Align Marketing to Target Industries

Develop Staff

Strengthen Ally Network

Page 2 of 2 9/25/2012 Prepared by Enterprise Florida, Inc.

Confidential and Proprietary

Prepared by McCallum Sweeney Consulting and Avalanche Consulting

TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................. 1 TARGET INDUSTRY ANALYSIS ....................................................................................................... 9 COMPETITIVENESS SUMMARIES .................................................................................................... 44 TAXES………………………………………………………………………………………………. ....... 61 TAX INCENTIVES ........................................................................................................................... 69 OTHER INCENTIVES……………………………………………………... ........................................... 79 REGULATORY CLIMATE ................................................................................................................ 87 ECONOMIC DEVELOPMENT PRACTICES……………………………………………………………….100 APPENDIX A – REVIEW CURRENT POLICIES, PRACTICES, AND RESOURCES……………………….102 APPENDIX B – CONSULTANT AND COMPANY RESEARCH…………………………………………….105 APPENDIX C – FLORIDA ECONOMIC DEVELOPERS SURVEY………………………………………….108 APPENDIX D – TAX PROFILES BY STATE……………………………………………………………...113 APPENDIX E – TAX INCENTIVE PROFILES BY STATE………………………………………………….120 APPENDIX F – OTHER INCENTIVE PROFILES BY STATE………………………………………………128 APPENDIX G – BENCHMARKING SOURCES……………………………………………………………135

Thank you to the following companies for funding this study for

Florida and its communities:


Prepared by McCallum Sweeney Consulting and Avalanche Consulting 1

Executive Summary



EXECUTIVE SUMMARY PROJECT OVERVIEW Florida has a desire to improve its competitive position for projects in its target industries. In the past, Florida has either not been considered for projects at all or has often come up second or third when making a short list of locations. The purpose of this competitiveness study is to help shape future policy for the State of Florida. The recommendations will help modernize and shape Florida’s future economic development policy. We have based our advice on the input we received from companies and consultants who have recently worked projects in Florida as well as local and regional economic developers throughout the state. We also conducted a benchmarking analysis to determine where Florida stacks up in relation to its key competitors. Overall, the research shows Florida has made great strides in the past two years in becoming recognized as a great place to do business. With the recommendations in this report put into action, Florida will become THE place to do business. RESEARCH / INPUT To gain an understanding of Florida’s current competitive position, we evaluated the state from multiple perspectives by taking four key steps: Step 1: Reviewed Current Policies, Practices, and Resources

• Interviewed ten state level officials at Enterprise Florida, Department of Economic Opportunity, Florida Economic Development Council, and Workforce Florida.

• Reviewed all current incentives in Florida • Read 50+ studies related to economic development that have been conducted in the

state • Kept up with current legislation

Step 2: Talked to Corporate Decision Makers and Site Consultants

• Evaluated 100+ projects submitted by Enterprise Florida and local and regional economic development organizations

• Surveyed Site Selection Guild • Conducted interviews with companies and site selection consultants in each of Florida’s

target industries Step 3: Talked to Regional and Local Economic Developers

• Surveyed local and regional economic developers Step 4: Conducted Benchmarking Analysis

• Compared Florida to five benchmark states: Alabama, Georgia, Michigan, North Carolina, and Texas

• Researched key competitiveness areas, including taxes, tax incentives, other incentives, regulatory climate, and economic development practices



TARGET INDUSTRIES The focus of this competitiveness study was Florida’s nine target industries, which are listed below along with their niche sectors. An overview of the analysis for each target industry follows and includes an industry overview and key findings. Aviation / Aerospace Niche sectors for the Aviation / Aerospace target industry include Aircraft & Aircraft Parts Manufacturing, Maintenance Repair & Overhaul of Aircrafts, Navigation Instrument Manufacturing, Flight Simulator Training, Space Vehicles and Guided Missile Manufacturing, Satellite Communications, Space Technologies, and Launch Operations. The competitiveness in the Aviation / Aerospace industry is increasing as major original equipment manufacturers (OEMs) try to carve out their share of both commercial and military business. Locations that are winning projects in this industry have available sites, adequate labor and training resources, and aggressive incentives. The most high profile issue is talent as strong manufacturing skills are required, so training assets such as basic manufacturing training, aviation training resources, and training support are all vital to be competitive. Clean Technology Niche sectors for the Clean Technology target industry include Biomass and Biofuels Processing, Energy Equipment Manufacturing, Energy Storage Technologies, Photovoltaics, and Environmental Consulting. The Clean Technology sector, which includes all sizes of companies from start-ups to legacy companies such as General Electric, is continually evolving as products are constantly being developed and brought to market. Companies in this sector are usually capital sensitive with equipment purchases being a major expenditure, so Florida’s constrained exemption on sales tax for equipment purchases will be a drawback. Energy costs will also be an important factor, so economic development electric rate riders as well as support to mitigate redundant feed demands are important incentive opportunities. Financial / Professional Services Financial / Professional Service niche sectors include Banking, Insurance, Securities & Investments, Engineering, Legal, Accounting, and Consulting. Financial / Professional Services encompasses a broad range of activities, but the backbone of this industry is information technology. Capitalizing on this will be a function of recognizing the growth opportunity and leveraging unique assets in the state. Compared to the home locations in the northeast of many Financial / Professional Services companies, cost of doing business and Florida’s tax climate (particularly having no personal income tax) are advantages. Labor availability and the multi-lingual nature of Florida’s population are strong assets, but branding and marketing of Florida for this industry can be enhanced.



Homeland Security / Defense Homeland Security / Defense niche sectors include Optical Instruments, Navigation Aids, Ammunition, Electronics, Military Vehicles, Shipbuilding & Repair, Computer Systems Design, and Simulation & Training. The competitive dilemma in the Homeland Security / Defense sector is balancing politics with costs. The key competitive issue for this target industry is cooperation with the state’s federal delegation in order to identify and help secure projects. Additionally, the state’s overall pro-business message suffers from the resources and effectiveness of Florida’s tourism marketing, so more emphasis on marketing and branding is needed. As there is overlap in the defense and aerospace sectors, combining efforts when marketing the state as a place to do business is recommended. Information Technology Niche sectors for the Information Technology target industry include Modeling, Simulation & Training, Optics and Photonics, Digital Media, Software, Electronics, and Telecommunications. Information Technology is a standalone target industry in Florida, but it is also a competency that crosses numerous other industries. Due to the state's quality of life assets, Florida has an advantage in maintaining and attracting the IT talent necessary to support this industry. But while Florida has this advantage over its competitors, quality of life is only an entry that allows the state to compete and is not enough to fully develop this sector. The IT industry is competitive and margins are tight, so incentives can impact the final decision. Many IT firms are unable to capture the full value of a Qualified Target Industry (QTI) incentive because of lack of tax liability (high paid employees, low investment, and low tax liability). These companies can only fully realize tax incentives that allow carryforward several years or allow the value of incentives to be monetized. Finally, similar to the other targeted industries in Florida, the IT industry will benefit from expanded marketing. Life Sciences Niche Sectors include Biotechnology, Pharmaceuticals, Medical Devices, Lab & Surgical Instruments, and Diagnostic Testing. Life Sciences is a cluster oriented industry that relies upon an agglomeration of location assets, to include an educated workforce, investment capital, and academic and research institutions. While regions like the Bay Area and Boston continue to lead internationally as life science hubs, Florida is considered to be an emerging region, especially in Central Florida and South Florida. The continued expansion of life sciences infrastructure projects such as the Lake Nona Medical City and the University of Miami Life Science & Technology Park will foster the attraction of companies to the state. In order to increase its competitiveness, the state will need to focus on expanding its pool of science and engineering graduates. The state should work to develop a network of related institutions to form collaborative partnerships. Additionally, support funding for early stage companies will also help this industry prosper.



Manufacturing Niche Sectors include Food and Beverage, Automotive & Marine, Plastics & Rubber, and Machine Tooling. A manufacturing industry is one that encompasses a variety of technologies and products, and as a result is considered a strategic area of emphasis in the state of Florida. Competitive manufacturing sectors are those that are engaged in advanced technological methods to produce products and require a skilled labor force. Nevertheless, cost continues to be a key factor is site selection, meaning labor cost and tax policy play a dominant role in a state’s ability to attract substantial projects. Manufacturing is usually capital intensive, so land, site preparation, and infrastructure costs are critical. Capital-oriented incentives are important - property tax reductions and full exemption of sales tax on machinery and equipment are two areas for improvement. In addition, training incentives need to be expanded to better meet what is being offered by competitor states. Corporate Headquarters. Corporate Headquarters crosses all industries and sectors. Corporate Headquarters opportunities will occur in areas where there is a concentration of professional services, access to an educated workforce, and a quality of life that can attract new talent. With these factors leading corporate headquarters location, all of Florida’s major urban centers have the ability to support this industry, and those with advantageous passenger air service will have a competitive edge. The Florida lifestyle for executives, particularly for empty nesters, is very appealing. Of course, the reliability of communications and sustained operations in the face of hurricanes and inclement weather is a very real concern and is more often than not the deciding factor against a Florida location. Florida is currently the only state in the nation that taxes commercial leases, so removing this tax will help Florida recruit more corporate headquarters. Global Logistics. Global Logistics crosses all industries and sectors. Florida has the most ports of any U.S. coastal state (15 on two coasts), providing diverse service capabilities statewide, though ports in Miami, Tampa and Jacksonville will benefit from upgrades making them able to handle post-Panamax ship service. Florida also has the advantage of being geographically positioned to serve diverse markets, being at the crossroads between Europe, Central and South America. For logistics companies, key issues include site and building costs, labor, transportation, and taxes. State and local support to enhance transportation infrastructure will be expected by many prospects and provided in most competing locations. The biggest competitive issue for this industry is cost, so any cost reductions or mitigation is critical to the success of recruiting companies in this industry.



COMPETITIVENESS Throughout the process, six core competencies repeatedly came to the top of economic development practices across all industries. The chart below demonstrates the company and consultant experience in Florida, local and regional economic developers perception, and state benchmarking findings in each of the six competency areas.

Competency Company and

Consultant Experience

Local and Regional ED Perception

State Benchmark

Findings

Cost of Doing Business - = = Real Estate and Infrastructure - - - Talent and Training + = - Incentives = - = Economic Development Strategy/Branding - - = Economic Development Administration = = =

(+) Positive (=) Neutral (-) Negative Cost of Doing Business Florida has a reputation as a high cost location, but the research found that this is not always the case. Real estate costs can be higher, especially in the major metro areas, but the overall business tax climate is generally neutral. The biggest negative for doing business in Florida is the permitting process. While the process is improving, it still remains a concern to both existing companies and prospective companies. The recommendations in this area are items that will help Florida continue to level the playing field with the top competitors.

• Modernize taxes • Streamline permitting process • Establish liaisons with other state agencies

Real Estate and Infrastructure Florida faces many challenges in real estate and infrastructure, which is confirmed by all three groups rating the competency as a negative. Florida does not currently have an adequate supply of available buildings and sites to meet the needs of prospective companies. When real estate is available, real estate prices and development approval processes can be a significant deterrent. Infrastructure adequate for industrial projects is not always available. While some regions in Florida have electric costs that are typically higher than the benchmark competitors, several trends are already beginning to mitigate this. Florida utilities tend to have a heavy percentage of natural gas generation, so the decrease in natural gas prices, especially relative to coal, is helping Florida utilities. Also, the Public Service Commission has shown more interest and understanding in supporting efforts to be more competitive on industrial rates, and similarly, many utilities have improved their overall commitment to economic development. A focus on the following key items will help make Florida more competitive in the area of real estate and infrastructure.

• Improve portfolio of sites and building • Enhance rural economic development toolbox • Leverage partnerships with utilities • Increase use of utility economic development riders



Talent and Training Talent and training had a starkly mixed set of responses by the three groups. The mixed responses were not readily correlated to a certain part of state nor to certain industries. One of the problems may stem from poor project management, i.e. showing locations with labor markets that cannot meet the needs of a particular project. Workforce training programs for new and expanding companies in Florida lag other Southeast competitors in all categories – financial value, experience, effectiveness, and funding. It was also discovered that some companies were pleasantly surprised at the talent they were finding in Florida, which means Florida needs to do a better job marketing the talent that is available. While there are some positives, there is room for improvement in the area of talent and training, and the following are recommendations to make Florida more competitive.

• Improve Quick Response Training (QRT) • Improve existing industry relationships • Market current talent assets • Improve project management tactics • Align training with targets

Incentives Company and consultants experience and benchmarking research indicates that Florida’s incentives are neutral, but the local and regional perception is that Florida’s incentives are not on par with other locations. Florida has improved the primary incentive challenge, which was enhancing the actionable approval process between Enterprise Florida and the Department of Economic Opportunity. While giving complete incentive granting authorization to Enterprise Florida is unlikely to happen, Enterprise Florida must remain diligent in managing the timely cooperation and execution of incentive commitments. Given the challenges of higher real estate costs and the need for infrastructure enhancement for many projects, Florida should be prepared with a highly funded grant program(s) to enhance cost competitiveness. For existing incentives, eligibility rules need to be examined for some unintended consequences of making qualification difficult. Also, more consistency for the state-local match policy would add to the ability to market expected incentive value earlier in projects. Overall, Florida is on the right track regarding incentives, but there are definite areas of improvement for Florida to concentrate on which are listed below.

• Streamline incentive authorization process • Enhance economic development toolbox • Improve flexibility and effectiveness of existing programs • Increase up-front incentives • Creation option for local sales tax to benefit economic development



Economic Development Strategy/Branding The overall message from most companies and consultants is that Florida is not on most company’s radar as a viable business location. Florida is seen as a great vacation place, but not as a place to do business. The strength of Florida’s tourist image and the power of the tourism marketing create a challenge for the business and economic development community. In addition, natural disaster risk (hurricane destruction and disruption) is still near the top of mind for many companies. The message is beginning to get out, especially among the consultant community, that Florida is a good place to do business, but economic development marketing needs to be substantially increased with a focus on the following items.

• Increase funding • Promote Florida’s business brand • Align marketing to target industries

Economic Development Administration Economic Development Administration at Enterprise Florida has come a long way from where they were a few years ago, but there is still room for improvement. In our research, many people noted the changing environment but still identified some weaknesses. Project management capability and execution as well as state and local coordination seem to be inconsistent from project to project. Additionally, there is still concern regarding incentives management and documentation processes. Overall, Enterprise Florida is headed in the right direction, and we have a few recommendations that will enhance the processes and capabilities of the economic development team.

• Develop staff • Strengthen ally network • Expand project management team • Improve professionalism of staff



Target Industry Analysis



TARGET INDUSTRY OVERVIEW States identify industries to target for business expansion and attraction based upon a state’s perceived competitiveness, its assets and advantages, and its desire to support emerging technologies and processes. State assets essential to supporting a targeted industry include an existing clustering or concentration of employment, research and development programs or initiatives, and related institutions – all of which are fostered through state-level support. BENCHMARK ANALYSIS: STATE TARGET INDUSTRIES Florida has nine target industry categories that were evaluated for this study. It was found that many of these industries are also targeted by competitor states. Florida’s target industries are identified in the table below with a check mark identifying benchmark states with a similarly defined target industry. FLORIDA’S TARGET INDUSTRIES Alabama Georgia Michigan North

Carolina Texas

Aviation/Aerospace ✔ ✔ ✔ ✔ Clean Technology ✔ ✔ ✔ ✔ ✔ Financial/Professional Services ✔ ✔ ✔ Homeland Security/Defense ✔ ✔ ✔ ✔ ✔ Information Technology ✔ ✔ ✔ ✔ Life Sciences ✔ ✔ ✔ ✔ ✔ Manufacturing ✔ ✔ ✔ ✔ ✔ Corporate Headquarters ✔ ✔ Global Logistics ✔ ✔ ✔ ✔

SUMMARY OF FINDINGS

• The five benchmark states have varying degrees of depth for their target industries with some just naming an industry as a target with others drilling down into their target industries with niche sectors like Florida does.

• Similar to Florida, Texas provides detailed niche sectors within their target industries. For each niche sector, Texas provides detailed reports and data on their website, even going so far as identifying the industry specializations by region in the state.

• Georgia is the only state to have the same targets as Florida. Georgia has additional targets outside of those identified in Florida, the most targets of any state in the benchmark analysis. At the same time, Georgia does not identify niche sectors within each target industry.

• Michigan has the smallest number of target industries and does not provide further detail of niche sectors within each target.

• Alabama and Georgia are the only benchmark states to have a corporate headquarters target, and Alabama’s target only focuses on regional headquarters.

• All benchmark states identify that there are crosscutting industry competencies that overlap target industries. Florida identifies these as Strategic Areas of Emphasis that include manufacturing, corporate headquarters, and research and development / emerging technologies. North Carolina adds small business, defense, distribution and logistics, and high growth firms to this list. As a result, even though a state does not have certain emphasis areas identified as a target industry, they have positioned themselves to support a variety of high-value added competencies for economic development.



AVIATION / AEROSPACE The competitiveness in the Aviation / Aerospace industry is increasing as major original equipment manufacturers (OEMs) try to carve out their fair share of both commercial and military business. Long-term strategies are being developed by all the major players to address the dwindling supply of expertise and talent due to a maturing workforce, which ultimately impacts costs and the ability to compete in the marketplace. All of the OEM’s are looking to states to assist with this challenge whether it is with existing programs for established companies or future prospects in new locations. Workforce development over the entire spectrum of skill sets will be the future differentiator in the Aviation / Aerospace sector. TARGET PROJECT HISTORY Out of the top economic development announcements over the last five years according to Site Selection, there was a total of eight Aviation / Aerospace projects. Florida won one (Boeing in Brevard County). Additionally, six of the eight projects, or 75%, located in the southeast.

Project Location Investment Jobs Year

Pratt & Whitney Canada $1,000,000,000 2,000 2011 Boeing Florida $163,000,000 550 2011

Gulfstream Aerospace Georgia $500,000,000 1,000 2010 Boeing South Carolina $870,000,000 4,000 2009 Cessna Kansas $780,000,000 1,009 2008

Spirit Aerosystems North Carolina $570,000,000 1,000 2008 Rolls-Royce Virginia $500,000,000 500 2007

Honda Aircraft North Carolina $100,000,000 300 2007 Of the 14 Aviation / Aerospace projects submitted by Enterprise Florida and/or local / regional economic development organizations, two located in Florida. Florida lost seven of the projects, and five are unknown – either they have yet to make a site decision or the project was cancelled.

Number of Projects 14 Results 7 Lost / 2 Won / 5 Unknown

Jobs 14 to 900 Investment $1 million to $900 million

Competitors AL, CA, GA, LA, MD, NC, NE, NJ, OH, PA, SC, TX

COST OF DOING BUSINESS For projects in the Aviation / Aerospace industry, the key areas of focus are on costs related to new facility location, labor training and workforce development, and tax and incentives. This focus is due to the operational flexibility associated with such costs. Relative to its competitor locations, Florida is adequately competitive in most operating costs. Key competitiveness issues in Florida dependent upon geographic location include land cost, property development costs (cost and schedule), and electricity, in addition to costs related to training, and incentives.



In particular, winning locations in this industry are characterized by having available sites (many with direct runway access), adequate labor and training resources, and aggressive incentives. The State of Florida and communities within the state can be better prepared for Aviation / Aerospace opportunities by having a portfolio of ready sites with air assets (i.e. direct runway access) and the availability of incentives important to this industry. Important incentives include reductions in local property taxes, sites available at subsidized rates, property improvement incentives, enhanced recruitment screening and training incentives (at least $3,000 per job), and the establishment of specialized aerospace training and certification programs.

REAL ESTATE AND INFRASTRUCTURE As noted above, available project ready sites, some with direct runway access, will enable Florida and its communities to begin to compete for Aviation / Aerospace projects. Property sizes can vary, but will range from 25 acres (high tech parts operations) to 250+ acres (assembly or repair operations). There will be deadline urgency to the site selection decision, even if project or product award is months away for the company. As a result, having project ready sites will be a competitive necessity. Equipment will be high tech and most sensitive to electricity, both reliability and cost. For anything other than assembly operations, the facilities will have a small to moderate impact on infrastructure, so communities may find themselves with little need for major infrastructure improvements (assuming the presence of air assets such as adequate runway length and load bearing capacity already exist). TALENT AND TRAINING The most high profile issue in the Aviation / Aerospace industry at the moment is talent. Like many established industries, the Aviation / Aerospace industry faces a generational issue with more retirees than usual and a higher demand for replacement talent. Strong manufacturing skills, including precision metal work and working with advanced materials, are required. Training assets should include strong basic manufacturing training, and then additional aviation training resources should be developed. Key personnel (management and technical) will relocate with new projects, so quality of life considerations will be important. INCENTIVES Incentive opportunities for this industry are targeted in a couple of key areas. Reduction in up-front capital costs of site and site preparation are important for Aviation / Aerospace projects. Given that many available sites may be at airfields and under aviation authority control, the opportunity to offer land at highly subsidized prices is present (either through sale or long term lease), and site preparation costs may be minimal. Infrastructure upgrades may be in the area of electric redundancy – this is a cost area often left to the prospect and is an area for high impact incentive support. Local participation can occur with the land incentives as well as property tax reduction. Labor recruitment, screening and training will be important. In order to compete with the outstanding training programs of benchmark states, training support (grants and/or cost avoidance provision of services) needs to be at least $3,000 per person.



ECONOMIC DEVELOPMENT ADMINISTRATION Overall project management issues are identified in other areas of this report. Maintaining the expertise of specialized Enterprise Florida project managers in this industry is recommended with full participation in major global aviation/aerospace shows and conferences. Support for international marketing is also suggested as many opportunities will be expected to come from Europe and Asia. ECONOMIC DEVELOPMENT STRATEGY / BRANDING Florida has a history of being closely tied with aviation, but growth, residential intrusion, overall decline in the presence of manufacturing, heightened sensitivity to natural disaster risk, and the rise of new geographic centers for aviation concentration create challenges to the state. COMPETITIVE ISSUES Aviation/aerospace is characterized by a mixed approach to cost of doing business. The industry outputs tend to be large and high cost. High margin products include commercial jet liners, drones and other related defense products, next generation small aircraft, and highly sophisticated and precision oriented parts manufacturing. Adoption and application of new materials and the skilled workforce needed to produce the products place a premium on quality. Consequently, in critical production areas cost becomes second to quality. However, the market is intensely globally competitive, even for national defense oriented opportunities and companies will be cost sensitive in those areas where they have some operational flexibility. The most important competitive issue for this industry is availability of skilled labor and supportive training. STATE BENCHMARK FINDINGS

• All benchmark states but Michigan identify Aviation / Aerospace as a targeted industry. Alabama, North Carolina, and Texas combine aviation and aerospace with defense in their listing of target industries.

• Similar to Florida, Alabama identifies maintenance, repair, and overhaul as a niche sector.

• Similar to Florida, Alabama and Georgia identify space vehicles and space travel as a niche sector.

State Target Name Niche Sectors

Florida Aviation / Aerospace

Aviation Aircraft & Aircraft Parts Manufacturing Maintenance Repair & Overhaul of Aircrafts Navigation Instrument Manufacturing Flight Simulator Training Aerospace Space Vehicles and Guided Missile Manufacturing Satellite Communications Space Technologies Launch Operations



Alabama Aerospace / Defense

Maintenance Repair & Overhaul Propulsion Systems Commercial Space Travel R&D

Georgia Aerospace & Aircraft

Aerospace and Aircraft Space

Michigan Aviation / Aerospace Not a targeted industry

North Carolina Aerospace, Aviation, & Defense

No niche sectors identified

Texas Aerospace, Aviation & Defense

Aerospace Product and Parts Manufacturing Scheduled Air Transportation Support Activities for Air Transportation



CLEAN TECHNOLOGY Clean Technology includes recycling, renewable energy (wind power, solar power, biomass, hydropower, biofuels), information technology, green transportation, electric motors, green chemistry, lighting, smart grid technology, and many other appliances/products that are now more energy efficient. In addition, this industry is continually evolving as more products are developed and brought to market. Typically these industries require some measure of policy support to incent both recruitment into the state and financial assistance to spur growth and development via tax/legislative policy (credits, feed-in tariffs, exemptions, low-interest loans, etc.). Clean technology is considered a desirable product requirement by both consumers from a demand side perspective and by manufacturers/service providers from a supply side perspective. Contrary to common belief, clean technology is not only start-up companies and new ventures, it permeates the entire spectrum of products and includes companies such as General Electric, Siemens, Mitsubishi, etc. TARGET PROJECT HISTORY Over the last five years, there were 22 top economic development announcements in the Clean Technology target according to Site Selection. Nine of the 22 projects (41%) located in the southeast, but none in Florida.


Bloom Energy Delaware Unknown 900 2011 Calisolar Mississippi $163,000,000 951 2011

Abound Solar Indiana $500,000,000 850 2010 Samsung/Kepco Canada $7,000,000,000 Unknown 2010

EnerDel Indiana $237,000,000 500 2010 Fortu Powercell Michigan $623,000,000 734 2010

Proterra South Carolina $68,000,000 1,300 2010 Siemens Energy North Carolina $170,000,000 825 2010

Xtreme Power/Clairvoyant Energy Michigan $1,300,000,000 3,250 2009 AREVA Idaho $2,000,000,000 1,500 2008

Hemlock Semiconductor Tennessee $1,200,000,000 900 2008 Schott Solar New Mexico $100,000,000 350 2008 Shaw Group Louisiana $100,000,000 1,400 2008

Vestas Wind Systems Colorado $700,000,000 2,750 2008 AREVA/Northrop Grumman Virginia $363,000,000 540 2008 GE Hitachi Nuclear Energy North Carolina $704,000,000 900 2008

Peak Sun Silicon Oregon $718,000,000 500 2008 REC Silicon Canada $1,200,000,000 300 2008

Hemlock Semiconductor Michigan $1,000,000,000 500 2007 LM Glasfiber Arkansas $150,000,000 1,000 2007 SolarWorld Oregon $400,000,000 1,000 2007

Alstom Tennessee $200,000,000 350 2007



Three of the 11 Clean Technology projects submitted by Enterprise Florida and/or local / regional economic development organizations located in Florida. Of the remaining eight projects, seven of the projects were lost, and one is unknown.


Jobs 30 to 800 Investment $1 million to $400 million

Competitors GA, KY, MI, MD, NC, NV, NY, OH, PA, SC, TN, TX, VA, International

COST OF DOING BUSINESS Companies in Clean Tech present different cost profiles. Firms are typically capital sensitive, although not all are start-ups. Equipment purchase will be a major expenditure, so Florida’s constrained exemption on sales tax for equipment purchase will be a drawback. On the operating side, energy and labor costs will be important factors in the site selection process. Florida energy costs are often higher than those in competing states. Florida will be mostly competitive with labor costs, particularly for those operations focused on natural resources in Florida and facility locations in less developed areas. The availability of labor will be of concern, meaning that recruitment, screening and training programs are valuable to prospects in mitigating risk and reducing start up costs. REAL ESTATE AND INFRASTRUCTURE For less developed areas that may see these projects, having a ready site will greatly enhance its competitiveness by allowing for professional and timely reaction and response to project requests for information. The ability to mitigate site costs will be something Florida’s competing locations will offer, whether it be directly from the community, or “allocating” closing funds to offset site costs. The cost and reliability of electricity will be an important operating factor as will transportation accessibility. Sites and communities with very good confluence of transportation assets including road, rail, air and water will be favored as transportation infrastructure is critical to this industry. TALENT AND TRAINING As with most manufacturing, support with recruitment, screening and training is important to ensure a good start to the facility operations. There will be a focus on specialty machinery as well as on various materials and material handling and mixing skills. Programs with specific skills are most appealing. INCENTIVES Although not all Clean Tech projects are start-ups, many are and so project and equipment financing will be well received. Even those projects within existing firms may respond well to offers of reduced cost of capital. Infrastructure will be focused on electricity, and infrastructure upgrades may be in the area of electric redundancy. This is a cost area often left to the prospect and is an area for high impact incentive support. Economic development rate riders as well as support to mitigate redundant feed demands will be important incentive opportunities.



ECONOMIC DEVELOPMENT ADMINISTRATION The administration has identified Clean Tech as an important sector under multiple umbrellas, including manufacturing, processing, technologies, and consulting. Florida’s key opportunities across these fields include solar, and biofuel or biomass energy; i.e., those that take advantage of Florida’s natural resources (sun, wood fiber, cane, other emerging materials). Expanded relationships between Enterprise Florida and the state Department of Agriculture to best identify advantages related to natural resource application and processing will be of value. This is an industry with business leaders that have a sense of being at the forefront of major changes in the global economy, and will respond well to state and community leadership that understands the exciting potential many of these operations represent. So this is an industry where the Governor and other economic development leaders can have a particularly strong impact. ECONOMIC DEVELOPMENT STRATEGY / BRANDING From a general manufacturing perspective, this target shares a common concern – Florida’s branding efforts as a great place to do business, in particular make things, is overwhelmed by the effectiveness of Florida’s tourism branding and marketing efforts. For Clean Tech in particular, supporting the industry and staying close to it, is very important, even during this current sag in activity due to expiration of tax subsidies to the industry. COMPETITIVE ISSUES Clean Tech has been a dynamic market sector, encompassing a wide array of activities including alternative energy production (wind, solar, geothermal, tidal), energy storage, mobility and vehicles, fuels, etc. A key issue for most of these firms is access to capital. Federal government funding has been utilized to mixed results, and future funding and financial support is expected to be at lower levels. States that are able to participate as funding partners, potentially equity partners, will have a competitive advantage, although such states should recognize the higher risk associated with such leading edge technology operations.

STATE BENCHMARK FINDINGS

• The Clean Technology industry is targeted by all benchmarking states. • Georgia, North Carolina, and Texas include non-renewable technologies in their energy

target industry. • Florida identifies biomass and biofuels as a niche sector within Clean Technology. Other

states with a biofuels focus include Alabama, Michigan, and North Carolina. • All benchmark states encompass a variety of operations within their Clean Technology

target industry, to include: manufacturing, research and development, related services, and energy generation.




Florida Clean Technology

Biomass and Biofuels Processing Energy Equipment Manufacturing Energy Storage Technologies Photovoltaics Environmental Consulting

Alabama Renewable Energy Bioenergy

Georgia Energy & Environment No niche sectors identified

Michigan Alternative Energy

Bio Energy and Fuels Wind Generation and Wind Energy Advanced Energy Storage / Advanced Batteries Solar Cells and Solar Energy

North Carolina Energy

Advanced Battery Development Biofuels Hydroelectric and Tidal Nuclear Smart Grid Solar Wind

Texas Energy

Renewable and Sustainable Energy Generation Solar Wind Oil and Gas Exploration and Production Electric / Coal / Nuclear Power Generation



FINANCIAL / PROFESSIONAL SERVICES Financial and Professional Services encompass a broad range of activities that includes money management services (credit unions and banks), credit card companies, insurance companies, consumer finance companies, stock brokerages, law firms, investment funds, engineering firms, and some government sponsored enterprises. In addition, support services such as tax preparation, consultancy expertise, planning, and other advisory services are equally important in this sector. The backbone of this industry that is many times overlooked is information technology. While a standalone target industry, the very presence of the financial and professional services sector requires development of IT support. Support services include financial transactions, data collection/processing, trading and brokerage services, mortgage processing, and several other operations that require a substantial presence of information technology professionals. Florida has a strong presence in this industry that has developed in part because of efforts on the part of the state or especially key metropolitan areas. Capitalizing on this will be a function of recognizing the growth opportunity and leveraging this unique opportunity. TARGET PROJECT HISTORY Over the last five years, there were no top economic development deals in the Financial / Professional Services target according to Site Selection. Of the six Financial/Professional Services projects submitted by Enterprise Florida and/or local / regional economic development organizations, three located in Florida and three located in another state.

Number of Projects 6 Results 3 Lost / 3 Won

Jobs 170 to 450 Investment $300,000 to $4.5 million

Competitors AL, NC, OK, TN, TX

COST OF DOING BUSINESS Cost of doing business is an advantage for Florida relative to the home location of many prospects – New York, Boston, Toronto, etc. The challenge is competing with other potential new locations, particularly south US metro areas such as Atlanta, Charlotte and Dallas. Florida’s tax climate, including no personal income tax, will be an important advantageous draw. Excellent air service is also a strength. One area of potential cost concern are utility and electric redundancy measures some mission critical operations may seek in order to account for natural disaster risk. REAL ESTATE AND INFRASTRUCTURE With the Great Recession and the real estate market adjustment, Florida real estate costs have become more competitive, and should remain that way for at least the short-term. Infrastructure concerns are primarily with electric reliability – locations protected with hardened infrastructure and adequate redundancy will be attractive. Transportation infrastructure concerns are focused on air and roads. Florida’s major cities are generally well served by domestic and international air service. Road networks in some areas are strained with commuter congestion; commitment to expanded mass/rapid transit will be beneficial.



TALENT AND TRAINING Labor availability is considered good, particularly in the major metro areas that already have a recognized presence in the industry. However, training, particularly in association with a large employment projects, is critical. Florida’s training program is not as quick to commit to offers, and generally offers less, than competing states. Increased state funding for training incentives, as well as a willingness of communities to participate and enhance the training and relocation incentive support, should be pursued. The multi-lingual nature of Florida’s population can be an important asset, particularly when recruiting financial services operations for, or from, Latin America. Cultural affinity and strong air service, as well as pervasive multi-lingual skills, are a competitive advantage for Florida. INCENTIVES Incentives tend to play an important part for financial services projects. Job based incentives are strong, but Florida will have a hard time competing with withholding tax rebate programs available in competitor states. The state and communities should be prepared to counter this competitive disadvantage with more aggressive use of the Quick Action Closing Fund and local grant support. ECONOMIC DEVELOPMENT ADMINISTRATION Cooperation between state and local economic development efforts has improved noticeably with the current administration. The role of the Governor can be an important one when presenting the benefits of Florida to the corporate decision makers in this industry, so continued involvement of the Governor is strongly recommended. ECONOMIC DEVELOPMENT STRATEGY / BRANDING Branding and marketing of Florida for financial services has made some progress, more so than most of the other targets. The state has established itself as an important location in the industry, but much more could be done to enhance and leverage that reputation. The Financial Florida Cluster Initiative can be an important source of marketing support (e.g., Wall Street South). COMPETITIVE ISSUES A significant competitive issue is the ability to recruit key management talent. This had become a critical concern with regard to housing costs, local education and crime, but these issues have mitigated to some degree. The personal advantage of no personal income tax is important in the recruitment consideration process. STATE BENCHMARK FINDINGS

• States with Financial and Professional Services as a targeted industry include Georgia, North Carolina, and Texas. States that do not target this industry include Alabama and Michigan.

• Georgia and North Carolina do not identify niche sectors within the target. • Texas rivals Florida in its level of detail in specifying niche sectors targeting. Both states

target banking, insurance, securities and investments, legal, and accounting services. • Florida is the only state to identify consulting services as niche sector.




Florida Financial / Professional Services

Banking Insurance Securities & Investments Engineering Legal Accounting Consulting

Alabama Financial / Professional Services

Not a targeted industry

Georgia Financial Services No niche sectors identified

Michigan Financial / Professional Services

Not a targeted industry

North Carolina Business & Financial No niche sectors identified

Texas Professional Services

Architectural & Engineering Services Legal Services Credit and Consumer Lending Security and Commodity Dealing Other Financial Investment Services Funds, Trusts, & Other Financial Vehicles Insurance Carriers Accounting Services



HOMELAND SECURITY / DEFENSE The Homeland Security / Defense sector has many of the same elements as Aviation / Aerospace. The end users are both the private and public sector – though, ultimately all services are for government. As a result, the competitiveness dilemma in this sector is political as well as a cost competitiveness issue. Both present very different approaches to marketing. The former (political) requires presence of mind and education of legislatures that can influence decisions in Washington, while the latter (cost) requires an understanding of what motivates this sector to locate/grow in a region. With the majority of the State’s border comprised of either the Atlantic Ocean or the Gulf of Mexico, there are unique opportunities to develop and test technologies that cannot be duplicated elsewhere. In addition, with the relative strength of the emerging Information Technology sector potentially taking off, there are synergies and capabilities that can be demonstrated as competitive advantages from a recruitment standpoint. TARGET PROJECT HISTORY Over the last five years, there were no top economic development deals in the Homeland Security / Defense target according to Site Selection. Of the three Homeland Security / Defense projects submitted by Enterprise Florida and/or local / regional economic development organizations, one located in another state. The results of the other two are unknown.


Jobs 10 to 250 Investment $200,000 to $50 million

Competitors Unknown

COST OF DOING BUSINESS Because of the wide variability in projects in this target, cost of doing business issues will vary as well. Labor will be a major cost driver, and for many projects, energy costs will be as well. REAL ESTATE AND INFRASTRUCTURE Site requirements will also very widely, from airport access sites to high tech machining operations in Class A Industrial Parks, to high tech information technology operations in secure new buildings in major cities. Infrastructure demands will also varying, but will probably be more focused on energy (electric and gas) and transportation (road for truck and commuting, possible rail for freight, possible water for freight, and air for customer access and access to government decision makers across the country. TALENT AND TRAINING Talent requirements will be across the board, from operators and assemblers to software designers. Recruitment, screening and training incentives will be important, and Florida will need to enhance its offerings to compete in this area.



INCENTIVES Incentives may be of critical importance as the cost profile of the new location may influence the selection of the company for a Defense or other government contract. However, incentive treatment for government contractors can create some challenges. For non-government contractors, financing and other capital incentives will be well received. Florida has the Qualified Defense Contractors Tax Refund Program, but it is not widely used. ECONOMIC DEVELOPMENT ADMINISTRATION Homeland Security opportunities are still very government focused, so state development officials should maintain strong cooperation with Florida’s Washington DC delegation in order to stay up to speed on opportunities, and to leverage state political strength in Washington DC. ECONOMIC DEVELOPMENT STRATEGY / BRANDING The state’s overall pro-business message suffers from the resources and effectiveness of Florida’s tourism marketing. Pro-business positioning in ads in the Washington DC market will begin to lay some public relations groundwork for strong consideration of Florida as a viable location for Homeland Security projects. COMPETITIVE ISSUES Companies in this sector, particularly defense contractors, like to locate in areas where there is a strong military/federal government presence, and Florida not only has a large number of active military but also retired military. The state has an active defense strategy, led by the Lt. Governor, but cooperation with the state’s federal delegation in order to identify and help secure projects will be the key competitive issue for this target. STATE BENCHMARK FINDINGS

• Alabama, North Carolina, and Texas combine Defense with the Aerospace and Aviation target industry.

• Georgia is the only benchmark state to identify unmanned systems singularly as a niche sector.

• Michigan is the only benchmark state to identify this target in a similar manner as Florida (by including Homeland Security), but the state does not further clarify niche sectors within the target as done by Florida.


Florida Homeland Security / Defense

Equipment Optical Instruments Navigation Aids Ammunition Electronics Transportation Military Vehicles Shipbuilding & Repair Technology Computer Systems Design Simulation & Training



Alabama Aerospace / Defense

Maintenance Repair & Overhaul Propulsion Systems Commercial Space Travel R&D

Georgia Defense Unmanned systems

Michigan Defense & Homeland Security


North Carolina Aerospace, Aviation & Defense


Texas Aerospace, Aviation & Defense

Aerospace Product and Parts Manufacturing Scheduled Air Transportation Support Activities for Air Transportation



INFORMATION TECHNOLOGY Information Technology is a core competency in several regions of the state that is present in numerous industries in the Florida economy. The establishment of Information Technology has been an outgrowth of the success of various industries that have evolved over time. However, its full potential has yet to be realized as either a standalone industry sector in its own right or as a catalyst for additional recruitment in other industries, particularly manufacturing. There is an abundance of IT professionals that support existing industries in Florida, and the ability to recruit standalone companies in the information technology sector is easier in Florida than most. Typically, recruiting professionals in knowledge-based industries is difficult since they are in high demand and their preferences revolve around quality of life issues far more than other industries. In this respect, Florida has an advantage over most other places in the country, but this is only an entry that allows the state to compete and in no way is enough to fully develop this sector from either a recruitment standpoint or entrepreneurial one. TARGET PROJECT HISTORY According to Site Selection, there have been nine top economic development announcements in the last five years in the area of Information Technology. Only one of the nine projects landed in the southeast (North Carolina).


eBay Utah $110,000,000 2,200 2011 Intel Arizona $5,000,000,000 1,000 2011 Intel Oregon $4,000,000,000 Unknown 2010 IBM Missouri $19,000,000 800 2010 IBM Iowa $93,000,000 1,300 2009

Foxconn Mexico $185,000,000 9,350 2008 Google North Carolina $600,000,000 210 2007 Ubisoft Canada $454,000,000 1,000 2007

International Sematech New York $600,000,000 450 2007 Of the 13 Information Technology projects submitted by Enterprise Florida and/or local / regional economic development organizations, only three located in Florida. Florida lost eight of the projects, and two are unknown – either they have yet to make a site decision or the project was cancelled.


Jobs 10 to 1,600 Investment $60,000 to $50 million

Competitors CA, GA, IL, IN, MI, OH, PA, TX, VA, International

COST OF DOING BUSINESS Cost of doing business is generally an advantage for Florida. Labor costs are competitive, and advantageous relative to many national IT centers (San Jose CA, Boston MA, etc.).



REAL ESTATE AND INFRASTRUCTURE As noted earlier, real estate costs have retreated to an acceptable level. Infrastructure concerns are primarily with electric reliability – locations protected with hardened infrastructure and adequate redundancy will be attractive. Transportation infrastructure concerns are focused on air and roads. With an urban preference of projects and employees, city quality of life and commitment to expanded mass/rapid transit will be beneficial. TALENT AND TRAINING The talent pipeline is the number one issue for IT firms in Florida. While there is a much stronger presence of IT skills in the labor force than is expected by outsiders, there is some concern among existing firms in being able to find enough quality employees for future expansions. The state should support local efforts to improve the networking infrastructure in IT, and then lead the effort to link these local networks into a more viable statewide network. INCENTIVES For IT services firms, the industry is competitive and so margins can be tight. Incentives can clearly impact the final decision because they can have significant impact to a project’s financials. Since these are employment oriented projects, job creation incentives for good paying jobs, such as Florida’s QTI, can be impactful. However, Florida does not have a personal income tax so cannot offer the withholding tax rebate program that many other states can, so Florida should be prepared to be especially aggressive with closing fund commitments. This may require some added flexibility to qualifying requirements. In addition, some prospects report the inability to capture all the value of a QTI program because of lack of tax liability. So there is interest from IT firms (high well paid employment, low capital investment, often small and low tax liability) in being able to monetize those credits that can’t be used as such. Local participation with grants, tax breaks, property support, even visit and relocation support, has been effective when combined with state incentives to match the offers from competing locations. ECONOMIC DEVELOPMENT ADMINISTRATION The economic development team should work toward better understanding, communication, and cooperation with all the resources available to support IT. This runs from STEM programs in local primary education to technical programs at community colleges, to universities. ECONOMIC DEVELOPMENT STRATEGY / BRANDING This is a target that calls for, and will benefit from, expanded marketing. In addition to enhancing the state’s overall business image, it is important for outside prospects and in-state companies to understand i) the broad presence of the industry, ii) the great number of IT-oriented employees in the workforce, and iii) the resources available in the public and private sectors to support the industry.



Florida has a strong presence of IT across the state, focused in major metro areas. But unlike an Austin or Boston, Florida does not have an “IT Capital” – one city with the IT cache of other places. So the state must establish itself at the state level as a competitor to Boston or Austin, and not just Orlando or Miami. COMPETITIVE ISSUES A key competitive issue for IT is awareness of the strength of the industry and talent in Florida, generating some awareness of Florida as an IT center. Significantly improved marketing resources will enhance the state’s opportunities for new prospects from outside the state. In addition, incentives that are more competitive for these high paying job projects will help land the prospects as they consider Florida. STATE BENCHMARK FINDINGS

• All benchmark states except Michigan identify Information Technology as a target. • Similar to Florida, digital or emerging media is identified as a niche sector in Alabama

and Georgia, while North Carolina and Texas’ software publishing and development niche sectors encompass media development.

• Florida and Alabama are the only states to explicitly identify modeling and simulation as niche sectors within this target.

• Texas utilized NAICS industry code classifications to identify the state’s niche sectors. State Target Niche Sectors

Florida Information Technology

Modeling Simulation & Training Optics and Photonics Digital Media Software Electronics Telecommunications

Alabama Technology

Bioinformatics Cyber-Security Data Centers Defense-Software Development Emerging Media Modeling & Simulation Enabling Technologies Nanotechnology Photonics Robotics

Georgia Information Technology

Data Centers Call Centers Film and TV Production Music Digital Entertainment

Michigan Information Technology Not a targeted industry

North Carolina Information & Communications Tech

Software Development & Personal Communications Technology Data Centers



Texas Information & Computer Technology

Semiconductors & Electronics Components Computers and Peripherals Manufacturing Electronic Instruments Manufacturing Communications Equipment Manufacturing Data Management, Hosting, and Related Services Software Publishing Internet Publishing and Web Search Portals Computer Systems Design and Related Services Nanotechnology



LIFE SCIENCES Florida is home to numerous pharmaceutical, medicinal manufacturing, and medical device companies, but biotechnology is not nearly as prominent as these other sectors. Typically the latter relies heavily on research and development that takes place in universities for biotechnology related research and development for human, plant, or animal studies. Of course, biotechnology research related to human and animal science/medical treatments require clinical trials and the observance of FDA compliance procedures that are exacting and stringent. Expertise in these disciplines is a differentiating factor for recruitment. The field of applied biology involves the use of living organisms and bioprocesses in engineering, technology, medicine, and other fields requiring bio-products – which also utilizes these products for manufacturing purposes. These activities cannot occur just anywhere. Biotechnology merges biological information with computer technology to advance research in other areas, including nanotechnology and regenerative medicine. While there are numerous commercial biotechnology firms that manufacture genetically engineered substances for a variety of mostly medical, agricultural, and ecological uses, recruiting them is very difficult without research and development activities or some cluster of similar activity. TARGET PROJECT HISTORY Eight Life Sciences projects have been top economic development deals over the last five years according to Site Selection. Of those eight, only two located in the southeast (South Carolina and Texas).


The Jackson Laboratory Connecticut $1,100,000,000 300 2011 Nephron Pharmaceuticals South Carolina $313,000,000 707 2011

Roche/Ventana Medical Systems Arizona $180,000,000 500 2010 Medtronic Texas $23,000,000 1,400 2009

MPI Research Michigan $330,000,000 3,300 2008 Shire Pharmaceuticals Massachusetts $394,000,000 680 2008

Lonza Biologics New Hampshire $300,000,000 350 2007 Amylin Pharmaceuticals Ohio $400,000,000 500 2007

Of the five Life Sciences projects submitted by Enterprise Florida and/or local / regional economic development organizations, one located in Florida and four located in another state.



Competitors AZ, KY, NJ, OH, SC, TX

COST OF DOING BUSINESS The primary cost of doing business issue for Life Sciences is labor costs. Florida represents some savings from traditional life sciences centers such as Boston and San Francisco, but not necessarily an advantage relative to Atlanta, Raleigh, and Birmingham.



REAL ESTATE AND INFRASTRUCTURE Available real estate has not been identified as an issue, although available lab space is always an asset and can be a strong attraction factor. Real estate costs have retreated to more acceptable levels than from two years ago. Key infrastructure assets will include adequate water and sewer (volumes and quality) and energy. TALENT AND TRAINING The pipeline for future talent is an area of concern in this industry in Florida. Like IT, life sciences has presence across the state, relatively concentrated in metro areas, but not a single life sciences center with a large concentration of employees. Firms often find themselves having to recruit for positions they would expect to be able to hire locally. INCENTIVES The most important incentive development would be to support funding for early stage companies. This could be a direct program, or state support for establishment of a life sciences investment fund. ECONOMIC DEVELOPMENT ADMINISTRATION Cooperation between state and local officials is necessary to i) continue to identify collaboration partners, and ii) in crafting high value, competitive incentives. Universities and hospitals are prime candidates in this area. State certification for clinical lab workers needs to be made much more efficient and timely. ECONOMIC DEVELOPMENT STRATEGY / BRANDING While Florida, like most states, has made an effort to establish itself in life sciences and biotech, the state is still not on the radar screen for many large mainstream bio-pharm firms. General business climate marketing along with focused marketing touting the successful presence of some life science firms will be useful (specialty pharma cluster, University of Miami Life Science initiatives, role of major institutes like Scripps and Planck in attracting new firms, etc.). In this very agglomerative industry, it is important that Florida establish an image as pro-business and successful in life sciences. COMPETITIVE ISSUES A key competitive issue is developing the network of related institutions to form collaborative partnerships. This has been a key component in some Florida attractions in this industry. A second critical issue is developing the availability of funds for companies going to trials, or in trials and ready to come out. Florida firms seek funding from bio tech centers such as Boston and San Francisco, and those investors will frequently encourage relocation for the next stage of the company to locations closer to home and in the midst of the large established bio clusters.




• The Life Sciences industry is targeted by all states in the benchmark analysis. • Except Michigan, all states identify niche sectors within the Life Sciences industry.

Similar to Florida, Georgia and Texas identify medical device manufacturing as a niche sector and North Carolina and Texas identify pharmaceuticals as a niche sector.

• North Carolina and Texas have the broadest industry targets within Life Sciences. North Carolina utilizes NAICS code definitions to define the state’s Life Science industry.


Florida Life Sciences

Biotechnology Pharmaceuticals Medical Devices Lab and Surgical Instruments Diagnostic Testing

Alabama Biosciences

Cancer/Oncology Genomics Neurosciences

Georgia Biosciences

Medical Devices Health IT Vaccines and Development Clinical Trials

Michigan Life Science No niche sectors identified

North Carolina Biotech, Pharmaceuticals & Life Science

Commercial Agriculture Biotechnology Chemicals, Rubber, and Plastics Pharmaceuticals

Texas Biotechnology & Life Sciences

Medical Equipment & Supplies Manufacturing Pharmaceuticals & Medicine Manufacturing Specialized Hospitals Medical and Diagnostic Laboratories Scientific Research & Development Services



MANUFACTURING Manufacturing is a very broad category that encompasses literally hundreds of industries. In the past, the state of Florida would create more investment and jobs in other sectors that supported tourism, entertainment, real estate development, retirement, and light industrial manufacturing than the more traditional heavy manufacturing. As a result, most of the laws and local ordinances were geared more toward to promoting as well as controlling this type of development – which resulted in very cumbersome regulations for industrial development. This stifled industrial development for large projects to such an extent that large projects requiring large property holdings considered Florida unworkable. Much of the best industrial property along the interstate highways, around ports, and at the intersection of railroad and other transportation infrastructure in the major metro areas are limited due to commercial and residential encroachment and incompatible land uses. In non-metro areas, the development of industrial property has been left in the hands of the private sector – whose return on investment criteria made this an illogical use of capital. The result was there was very little acceptable industrial property for large projects unless the community took this action upon themselves. This, however, has changed considerably since reforms have been enacted at the state level regarding permitting that bring schedule constraints more in line with competing states. If Florida wishes to achieve parity with other states, a much greater emphasis will have to be placed on developing the business climate. TARGET PROJECT HISTORY Out of the top economic development announcements over the last five years according to Site Selection, there were a total of 33 Manufacturing projects. Twenty four out of the 33, or 73%, located in the southeast, but none of these located in Florida.


Continental Tire South Carolina $534,000,000 1,650 2011 GE Transportation Texas $100,000,000 750 2011

Honda Mexico $800,000,000 3,200 2011 Navistar Alabama $87,000,000 1,800 2011

Sasol Louisiana $10,000,000,000 850 2011 Bridgestone Americas South Carolina $894,000,000 550 2011 Carpenter Technology Alabama $500,000,000 203 2011

Green Mountain Coffee Roasters Virginia $180,000,000 800 2011 Mazda/Sumitomo Corp. Mexico $500,000,000 3,000 2011

Electrolux Tennessee $190,000,000 1,200 2010 First Quality Tissue South Carolina $1,000,000,000 1,000 2010

Ford Kentucky $600,000,000 1,800 2010 Nucor Louisiana $3,400,000,000 1,250 2010

Samsung Texas $3,600,000,000 500 2010 Caterpillar North Carolina $426,000,000 392 2010

Caterpillar/Progress Rail Indiana $160,000,000 650 2010 Tesla/Toyota California Unknown 1,000 2010

Carbon Motors Indiana $350,000,000 1,550 2009 Fisker Automotive Delaware $193,000,000 2,500 2009

Hybrid Kinetic Motors Alabama $3,430,000,000 5,000 2009



NCR Georgia Unknown Unknown 2009 Nissan Tennessee $2,500,000,000 1,300 2009

Tianjin Pipe Texas $1,000,000,000 600 2009 Volkswagen Tennessee $1,000,000,000 2,000 2008

American Titanium Works South Carolina $435,000,000 330 2008 Austal Alabama $120,000,000 1,100 2008

Essar Steel Minnesota Minnesota $1,600,000,000 700 2008 Freightliner Mexico $300,000,000 1,600 2007

ThyssenKrupp Alabama $3,700,000,000 2,700 2007 Toyota Mississippi $1,300,000,000 2,000 2007

Eastman Chemical Tennessee $1,300,000,000 400 2007 PACCAR Mississippi $400,000,000 500 2007

Procter & Gamble Utah $315,000,000 300 2007 Of the 27 Manufacturing projects submitted by Enterprise Florida and/or local / regional economic development organizations, seven located in Florida. Florida lost 15 of the projects, and five are unknown – either they have yet to make a site decision or the project was cancelled.



Competitors AL, CA, CO, GA, IN, LA, MS, NC, NY, OK, PA, SC, TN, TX, International

COST OF DOING BUSINESS Because of the wide variety of activities that make up manufacturing, generalizations about the cost of doing business are necessary. Manufacturing is capital intensive, so land, site preparation and infrastructure costs are critical. Manufacturing is generally very competitive, so operating costs such as labor, utilities, transportation and taxes are critical. Finally, manufacturing management and technical talent is limited, so quality of life issues are critical in attracting the key people necessary to make a project successful. Florida land costs and development costs and schedules have improved somewhat, but could benefit from a more robust ready sites program. Florida infrastructure is a concern with regard to surviving natural disaster risks. The tax climate is favorable, although more uniform local participation in property tax abatement or refund programs would be an improvement. Electric rates vary throughout the state and are frequently mentioned by companies as a disadvantage for Florida manufacturing. Fuel mix trends, and more aggressive economic development rate riders (rate reductions for the first several years), should mitigate this disadvantage somewhat.

REAL ESTATE AND INFRASTRUCTURE Available and affordable real estate is improving, but land costs in Florida are still generally much higher than competing manufacturing states.



For more rural locations, which will see many of the manufacturing opportunities for Florida, provision of a spec building can be valuable. It is product that has a marketing impact – generating more traffic. It represents considerable savings in time and money and schedule risk for prospects. Finally, it fills a need for available buildings in areas where developers do not generally invest. TALENT AND TRAINING Labor availability for manufacturing can be a concern, but should be largely mitigated with a more aggressive and impactful recruitment, screening and training program. INCENTIVES Capital-oriented incentives are important – property tax reductions, and full exemption of sales tax on machinery and equipment are two areas for improvement. Continued funding for, and aggressive use of, the Quick Action Closing Fund can mitigate Florida disadvantages and contribute significantly to winning location decisions. Additional streamlining of incentive approvals is also recommended. Training incentives in Florida simply do not measure up in depth and financial value to its competitors for manufacturing projects. ECONOMIC DEVELOPMENT ADMINISTRATION More hands on state project management will help present Florida in a more positive light to industrial prospects who receive strong support from state project managers in competing states. Florida has local environmental regulations in addition to state and federal regulations. A liaison between Enterprise Florida and the environmental agency will help make permitting requirements more readily understood by prospects, and help existing industry with expansion planning. ECONOMIC DEVELOPMENT STRATEGY / BRANDING This is a major issue for all non-hospitality businesses in Florida, but perhaps most so for manufacturing. The message of Florida as a great place to do business and to make things, as well as a great place to visit, is an important first step in generating more opportunities. COMPETITIVE ISSUES In Florida as elsewhere in the US, workforce development is a critical strategic issue for manufacturing. In addition to stronger vocational-oriented programs throughout the education system, training incentive improvement is necessary to enhance the state’s competitiveness for manufacturing.



COMPETITIVE PACKAGE Manufacturing is typically capital intensive; i.e., it is associated with large amounts of investment spending on building, machinery and equipment. As a result, such projects are often most sensitive to property tax, as it taxes property value. Similarly, manufacturing firms are sensitive to sales tax, especially on machinery and equipment, since it usually represents the majority of a company’s investment. Capital Oriented Incentives Manufacturing operations often require large tracts of land and typically locate in suburban or rural locations. Land prices can be a competitive disadvantage and so an incentive offer that includes land at little or no cost is very impactful to the company decision. This is an area where communities in more rural locations can effectively compete with more expensive locations. Communities should plan ahead for such land incentives. Suitable industrial property can be taken by commercial and residential interests prior to a manufacturing opportunity. Reserving such property through public control can ensure there are viable choices for manufacturers interested in the community. One other preparation approach communities should consider is the development of a spec building. This can be especially useful in less developed locations where private developers are not likely to develop speculative industrial property. These buildings usually serve as an effective marketing tool, generating “foot traffic”. Such a program enables the community to consider offering the building at little or no cost as an incentive. For many parts of the United States, off-site infrastructure for development is considered a public responsibility. States and communities should be prepared to offer all infrastructure to the site at little or no cost to the company. For electric infrastructure, feasible and reasonable access to redundant sources of power is now a typical location requirement, so utilities should be prepared for this. Expense Oriented Incentives Property tax exemptions (machinery and equipment) and incentives (abatements) are often the most impactful to manufacturers. Communities should strive to offer maximum allowable property tax incentives in order to make it more attractive to the decision makers and, once the project locates, to add to the competitiveness of the operation. Manufacturing is highly competitive on a global scale, so local efforts to control costs add to the economic viability of the project. Electric rate incentives, reductions over the first several years of operation, will be impactful to all manufacturers. Job training incentives are important to these operations. Communities should consider local grants to complement the state training program.




• All states identify Manufacturing as a targeted industry. • Alabama, Georgia, and Texas include food processing as a niche sector within the

Manufacturing target industry. • Alabama, Georgia, North Carolina, and Texas include automotive as a niche sector

within the Manufacturing target industry. • Similar to Florida, Texas is the only benchmark state to include plastics and rubber as a

niche sector, though Alabama includes chemicals. • Both Alabama and Michigan clearly identify their Manufacturing target industry as being

advanced manufacturing only. State Target Name Niche Sectors

Florida Manufacturing

Food and Beverage Automotive and Marine Plastics and Rubber Machine Tooling

Alabama Advanced Manufacturing

Automotive (OEMs, suppliers, R&D) Steel/Metal (processing, fabrication, ship building) Forestry Products Ag Products/ Food Production Aquaculture Chemicals Ionic Liquids

Georgia Manufacturing

Automotive Food Processing Agribusiness

Michigan Manufacturing Advanced manufacturing

North Carolina Manufacturing

Automotive Truck and Heavy Equipment

Texas Manufacturing

Industrial Manufacturing Motor Vehicles, Parts, Body, and Trailer Ag, Mining, & Construction Machinery Industrial Machinery HVAC and Refrigeration Equipment Architectural and Structural Metals Other Fabricated Metals Food and Beverage Processing Food Manufacturing Beverage Manufacturing Petroleum Refining & Chemical Products Petroleum Products Chemical Plastics Paint, Coating, and Adhesives



CORPORATE HEADQUARTERS Corporate Headquarter opportunities will continue to occur in all of the major urban centers of Florida. When there is the influence of a single individual (or group of high level individuals within an organization), it is the exception rather than the rule that Florida is not considered provided that there are no burdensome geographic limitations (i.e. direct international flights, proximity to mega-population centers, etc.). The Florida lifestyle for executives, particularly for empty nesters, is very appealing. Of course, the reliability of communications and sustained operations in the face of hurricanes and inclement weather is a very real concern and is more often than not the deciding factor against a Florida location. The ability to recruit key support staff to Florida is somewhat favorable, although this varies significantly by metropolitan region. One of the key elements in every HQ move is that the cost is never a break-even proposition. In fact, HQ moves are very costly. The impetus that drives most HQ moves is usually centered on strategic initiatives such as efficiency, mergers, culture change, reorganizations, etc. As a result, when the final decision is made, cost is always one of the deciding factor and offsets have to come from somewhere. In the absence of lower operating costs or other efficiencies, it many times comes down to incentives. TARGET PROJECT HISTORY Nine Headquarters over the last five years were top economic development deals according to Site Selection. A third of those projects landed in the southeast, but none in Florida.


Halliburton Texas $50,000,000 1,500 2011 Panasonic New Jersey $190,000,000 1,000 2011 Navistar Illinois $205,000,000 2,100 2010

NCR Georgia Unknown Unknown 2009 Shaw Group Louisiana Unknown 1,500 2008

NetJets Ohio $200,000,000 735 2008 Amazon.com Washington $1,500,000,000 3,000 2007 Westinghouse Pennsylvania $400,000,000 931 2007

Canon New York $357,000,000 750 2007 Of the 14 Corporate Headquarters projects submitted by Enterprise Florida and/or local / regional economic development organizations, six located in Florida. Florida lost the remaining eight projects.



Competitors AL, CA, CO, GA, IN, LA, MS, NC, NY, OK, PA, SC, TN, TX, International



COST OF DOING BUSINESS For headquarters, the overall tax environment is a critical cost of doing business. Florida’s is generally favorable, although the state should proceed with full single factor apportionment (will result is a lower base of taxable income subject to state income tax). This is now common policy across the country. REAL ESTATE AND INFRASTRUCTURE Lease rates dropped from the prohibitive highs of two years ago. Air service and airport infrastructure is strong. Commuting networks struggle with overload in many of the larger cities. Concern with infrastructure reliability in the face of, or aftermath, of a natural disaster remains a concern. TALENT AND TRAINING Office occupation concentrations are good in the major metro areas which will be the focus of headquarters opportunities. Key talent issues will revolve around relocation and the perception of affordability and quality local education of potential relocating employees. INCENTIVES Job creation incentives for high paying jobs are good, but headquarters are not normally in rural areas so they do not benefit from the enhanced value afforded rural communities. Additionally, headquarters generally have very low capital investment, so they may have qualification issues for grant programs. An area for improvement is the creation of an incentive directly tied to mitigating relocation costs, which is one of the biggest cost items facing a headquarters projects. This is still an area with limited participation by competing locations. ECONOMIC DEVELOPMENT ADMINISTRATION Headquarters projects typically have an expectation, and respond well, to, participation by the Governor in the recruitment process. ECONOMIC DEVELOPMENT STRATEGY / BRANDING As with most non-hospitality projects, headquarters projects often think of Florida as a place to visit and play, not to move your operation and work. This is another sector that will benefit from pro-business branding and marketing. COMPETITIVE PACKAGE Office projects are typically low in capital investment (leasers of space and equipment) and moderate to high in employment. These projects can be especially sensitive to incentives that are tied to number of jobs and, for headquarters projects, wages and salaries.



Capital Oriented Incentives Capital costs are typically low for office projects as they usually lease space and equipment. However, lease subsidies offered by local government can be effective – this can be delivered by grant or perhaps through a tax credit arrangement, and can be very impactful to call center operations. Transportation and telecommunication infrastructure are the most critical. For active projects, telecommunication capability must typically be in place for consideration, but some communities may need to be prepared to pay for telecommunication infrastructure extensions to a particular site. Transportation infrastructure improvements would usually involve site ingress and egress issues. Expense Oriented Incentives Sales tax exemptions on lease transactions and equipment purchases are valuable incentives to office and mission critical operations. Job training incentives are important to these operations. Communities should consider local grants to complement the state training program. Tax credit programs associated with job creation can be significant. For headquarters projects, communities can recognize the value of the positions and salaries and develop an incentive grant, as well as welcoming services, to help mitigate relocation costs which are a major cost item for such projects. STATE BENCHMARK FINDINGS

• Similar to Florida, Alabama and Georgia are the only benchmark states that target Headquarters. Alabama identifies its target as Corporate Operations and includes regional headquarters and customer contact centers as niche sectors.

• Georgia is the most similar to Florida in that it identifies Corporate Headquarters as a target, but does not provide niche sectors.


Florida Corporate Headquarters No niche sectors identified

Alabama Corporate Operations

Regional Headquarters Customer Contact Centers

Georgia Corporate Headquarters No niche sectors identified

Michigan Corporate Headquarters Not a targeted industry

North Carolina Corporate Headquarters No niche sectors identified

Texas Corporate Headquarters Not a targeted industry



GLOBAL LOGISTICS The fact that the State of Florida is a peninsula of North America allows it to be geographically blessed with numerous ports that can serve several markets. The state is ideally positioned at the crossroads of Europe (an established trading partner) and Central/South America (growing economies with tremendous market potential). The ports are gateways of import and export trade. Upon completion of the widening of the Panama Canal and the onset of shipping via Panamax container ships, there will be a repositioning of container ship service in the Gulf and along the East Coast which will be dependent largely on which ports deepen their harbors sufficiently. While this may present opportunities for Florida to some degree, ports of call will most likely remain mostly unaffected in the long run. What can change trading patterns is the efficiency and the resulting cost competitiveness that occurs as a result of a state of the art network that is unmatched in the world. Synergies definitely exist with the intersection of other target industries such as Information Technology, Homeland Security / Defense, and even Corporate Headquarters. The first two (IT and Homeland Security / Defense) are obvious, but the Corporate HQ opportunity is more subtle. Full integration and involvement of Class I railroads, as well as the short lines that serve them, are crucial – especially in light of the fact that one of the five major Class I railroad companies is headquartered in Jacksonville. TARGET PROJECT HISTORY Site Selection named two logistics projects as top economic development deals over the last five years, with both locating in Tennessee.


Amazon.com Tennessee $350,000,000 3,500 2011 Amazon.com Tennessee $164,000,000 1,400 2010

Of the four Global Logistics projects submitted by Enterprise Florida and/or local / regional economic development organizations, two located in Florida and two located in another state.


Jobs 200 to 420 Investment $11.5 million to $55 million

Competitors GA, NC, SC

COST OF DOING BUSINESS Cost of business issues include site and building costs, labor, transportation and taxes. REAL ESTATE AND INFRASTRUCTURE Industrial property is still expensive in Florida compared to competing locations, but not necessarily prohibitive, especially with aggressive grant incentives to mitigate them. Infrastructure demands are primarily transportation and electricity. State and local support to enhance transportation infrastructure (site ingress and egress, key interchange improvements, turn lanes, etc.) will be expected by many prospects and provided in most competing locations.



Electric rates vary considerably throughout the state and can be higher than in competing states. TALENT AND TRAINING While the work inside distribution centers has become more sophisticated, it is still an operation that can attract and hire low to moderately skilled people. Overall availability is examined accounting for relatively high turnover. Training is most important. INCENTIVES Grants to mitigate real estate costs are important, as are job creation incentives. However, incentive qualifications should account for the fact that while these operations can hire 500 or more employees, wages will be close to local averages. These are “unemployment-reducing” projects more so than “average income raising” projects, so qualification for the grant programs should be modified to cover these projects, most of which will be in moderate to less developed parts of the state. ECONOMIC DEVELOPMENT ADMINISTRATION Projects in this target industry are often related to transportation infrastructure – specifically ports and airports. The economic development team should work in tandem with port and airport officials to make sure adequate resources are available to meet the needs of companies in this industry. Specifically, partners at ports and airports should be identified for economic development projects as well as having Project Managers keep up to date on issues logistics in the state. ECONOMIC DEVELOPMENT STRATEGY / BRANDING Marketing to the logistics industry will help dispel the notion that all of Florida is “one day’s drive from the continental United States”. Access to the growing southeast region, while being supplied by Florida products and imports received from the many Florida ports, make Florida a viable consideration for many distribution projects. COMPETITIVE ISSUES The biggest competitive issue for this target industry is cost. Distribution is a cost function and so cost reduction and mitigation is critical. COMPETITIVE PACKAGE Distribution is often a mix of significant capital investment ($50 to $100 million for large distribution centers) and high employment (500 to 700 employees). Distribution operations are typically a pure cost function for the company, so these projects can be especially sensitive to incentives that have a clear financial impact.



Capital Oriented Incentives As with manufacturing operations, distribution centers (DCs) often require large tracts of land and typically locate in suburban or rural locations. Land prices can be a competitive disadvantage and so an incentive offer that includes land at little or no cost is very impactful to the company decision. This is an area where communities in more rural locations can effectively compete with more expensive locations. Transportation and energy infrastructure are the most critical. For electric, feasible and reasonable access to redundant sources of power is often a location requirement, so utilities should be prepared for this. Transportation infrastructure improvements may be required and states and communities should be prepared to offer funding for and complete such improvements as turn lanes and intersection improvements. Expense Oriented Incentives Property tax exemptions (machinery and equipment) and incentives (abatements) are impactful to distribution operations. Communities should strive to offer maximum allowable property tax incentives in order to make it more attractive to the decision makers. It is important that incentive policy be clear that distribution operations, and distribution equipment, qualifies for these exemptions and abatements. Electric rate incentives, reductions over the first several years of operation, will be impactful to all distribution operations. Job training incentives are important to these operations. Communities should consider local grants to complement the state training program. Tax credit programs associated with job creation can be significant for distribution centers as many such operations will employ over 500 people. STATE BENCHMARK FINDINGS

• Michigan is the only state that does not include Logistics as a targeted industry. All other benchmark states include logistics in varying degrees. Alabama identifies the industry as Distribution / Logistics while Georgia and Texas include Transportation in the target. North Carolina’s target is focused singularly on Transportation, which allows it to include the manufacturing of transportation equipment.

• Alabama, Georgia, North Carolina, and Texas identify seaports and marine transportation as niche sectors within the Global Logistics industry.


Florida Global Logistics No niche sectors identified

Alabama Distribution / Logistics

Port Related Internet Fulfillment

Georgia Logistics & Transportation

Logistics and Transportation Air Transportation and Air Freight Hubs Ground Transportation Sea Ports



Michigan Global Logistics Not a targeted industry

North Carolina Transportation

Aerospace Automotive Transportation Trucks and Construction Equipment Marine Trades Motorsports

Texas Logistics & Transportation

Freight Transportation Arrangement Water Transportation Rail Transportation Support Services Process, Distribution & Logistics Consulting



Competitiveness Summaries



OVERVIEW OF COMPETITIVE SUMMARIES Throughout the process, six core competencies repeatedly came to the top of economic development practices. These competencies are cost of doing business, real estate and infrastructure, talent and training, incentives, economic development strategy/branding, and economic development administration. These issues cross all target industries. FLORIDA COMPETITIVENESS GRADE For each of the six core competencies, we have graded the company / consultant experience, the local / regional economic developers perception, and the state benchmark findings on a positive (+), negative (-), and neutral (=) scale.

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA This section summarizes the findings from the company and consultant interviews as well as the Site Selection Guild survey. This section also incorporates McCallum Sweeney’s experiences in Florida. LOCAL / REGIONAL ECONOMIC DEVELOPMENT PERCEPTION This section summarizes the findings from the interviews with state level officials, projects submitted for evaluation, and the local and regional economic developer survey. STATE BENCHMARK FINDINGS This section provides a brief synopsis of the benchmark findings. More in depth details on the benchmarking analysis can be found later in this report. RECOMMENDATIONS Each section concludes with our recommendations to make Florida more competitive.



COST OF DOING BUSINESS Florida has a reputation as a high cost location, but the research found that this is not the case. Real estate costs can be higher, especially in the major metro areas, but the overall business tax climate is generally neutral. The biggest negative for doing business in Florida is the permitting process. We have heard the process is improving, but it still remains a concern to both existing companies and prospective companies. Our recommendations in this area are items that will help Florida continue to level the playing field with the top competitors.

FLORIDA COMPETITIVENESS GRADE: COST OF DOING BUSINESS

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA Overall, the feedback received from companies and consultants on the cost of doing business in Florida was mixed. Some reported Florida having a slight cost advantage while others reported costs being higher. It was noted that energy costs are higher in Florida than competing locations. It was suggested that Florida eliminate sales tax on interstate phone calls and consider single sales factor for corporate income apportionment. LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION Local and regional economic developers commented that one of Florida’s weaknesses is the regulatory process. The process, especially permitting, needs to be streamlined to include all state and federal agencies and eliminate duplication where possible. It was also felt that taxes needed to be lowered for Florida to be competitive – especially property taxes, corporate income taxes, and unemployment insurance taxes. It was specifically mentioned that taxes on commercial leases needs to be eliminated as Florida is the only state with this type of tax. Overall, there needs to be a continued emphasis on Florida being a business friendly state. STATE BENCHMARK FINDINGS Labor Costs

• Florida’s labor costs are relative to benchmark states due to higher than average workers’ compensation costs and lower than average unemployment insurance costs. Workers’ compensation benefits are based on the state average weekly wage, of which Florida has one of the highest when compared to benchmark states ($803).

Tax Burden • Florida’s tax system is the most attractive when compared to benchmark states, from

both a tax administration and overall tax burden perspective. While the state has no individual income tax, Florida’s sales and property taxes are higher than most of the benchmark states, lower only than Texas’ sales tax and Michigan and Texas’ property tax.

Local / Regional ED Perception

Company / Consultant Experience

State Benchmark Findings

(+) POSITIVE (=) NEUTRAL (-) NEGATIVE



State Fiscal Strength • State fiscal strength can impact the state’s ability to provide adequate services to

companies. Florida has the highest state debt at $21.5 billion as well as per capita debt at $1,150 (state net tax supported debt). From a budgetary standpoint, Florida has the lowest reserve balances (0.5% of general fund expenditures), limiting its ability to respond to unforeseen fiscal circumstances.

Permitting

• Permitting has been streamlined in Florida, Alabama, and Georgia by providing the ability for environmental permit applications to be completed and submitted online. North Carolina and Texas do not provide the ability to submit environmental permit applications online. Non-modifiable permit forms are available online in all states, but while permit applications can be found and printed, completed submissions must be delivered physically, either through the mail or in person.

RECOMMENDATIONS Modernize Taxes

• Implement Single Factor Sales Apportionment Formula for Corporate Income Tax o Currently, 13 states, including three of the benchmarking states, have single

factor sales apportionment for all companies. In order to reduce the state income tax penalty on companies, Florida needs to implement a single factor sales apportionment formula for all companies and not just for those companies making $250 million in qualified capital expenditures.

o This change would be particularly impactful for companies doing business in multiple states (the companies that also have the most competitive location decisions) as well as multi-state firms with headquarters, or considering headquarters, in Florida.

• Eliminate Sales Tax on Commercial Leases o Florida is the only state in the country that collects a sales tax on commercial

leases. While making up 6% of sales tax collected (April 2012), this is a tax that is a distinct competitive disadvantage and should be eliminated or substantially mitigated.

Streamline Permitting Process

• The permitting process should be streamlined as much as possible to allow companies to get up and running as quickly as possible. While we have heard the permitting process has been improving, there is still room for improvement. State and local permitting approval timelines should never exceed federal permits.

• A best practices case should be designed that creates an information/marketing document with a permitting timeline, with each relevant agency identified, that can be adapted to each county in the state.

Establish Liaisons with Other State Agencies

• Identify and develop a contact at both the Department of Revenue and the Department of Environmental Protection to assist with economic development projects by answering questions and supplying needed information.

• One effort already underway is the Florida Economic Development Liaisons, which was re-established in April 2012 by the Florida Department of Economic Opportunity. These liaisons are high-level staff members that work closely with other agency liaisons to resolve interagency conflicts, expedite project review, and respond to issues and problems related to economic development.



REAL ESTATE AND INFRASTRUCTURE Florida faces many challenges in real estate and infrastructure, but some are the result of broad market forces. Real estate prices and development approval processes can be a significant deterrent. Infrastructure adequate for industrial projects is not always available. With 55 different utilities in Florida, electric rates vary significantly across the state, but the average rate in Florida is higher than the benchmark competitors. Several trends are already beginning to mitigate this. Florida utilities tend to have a heavy percentage of natural gas generation, so the decrease in natural gas prices, especially relative to coal, is helping Florida utilities. Also, the Public Service Commission has shown more interest and understanding in supporting efforts to be more competitive on industrial rates. Finally, many utilities have improved their overall commitment to economic development.

FLORIDA COMPETITIVENESS GRADE: REAL ESTATE AND INFRASTRUCTURE

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA The majority of companies and consultants interviewed mention the availability of sites and buildings with adequate infrastructure as a major factor in Florida being eliminated from projects. While some noted that Florida had property that met project needs, most noted that Florida did not have a competitive site or building available. Florida’s competitiveness related to real estate and infrastructure, leading to elimination from contention for project location, included a lack of suitable rail-served buildings, the lack of market accessibility, especially in rural regions, and high electric costs (one consultant noting that Florida was eight cents per kWh compared to the winning location of four cents per kWh). It was suggested that Florida needs to provide seed capital for smaller communities to erect shell buildings. LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION Local and regional economic developers commented that Florida needs a larger inventory of competitive buildings and sites, as there is a lack of existing product that meets project needs. In addition, there needs to be a better statewide building and site database that is kept up to date. For the buildings and sites that are available, there needs to be improved assistance through state-sponsored incentives to help with infrastructure costs. In general, the transportation infrastructure – roads, rail, airports, ports – needs to improve as a lack of connectivity to infrastructure hurts Florida’s recruitment activities. While electric rates range in the state, rates also need to be lower in some regions in order for Florida to be competitive.








• Grant programs to assist in upfront infrastructure improvement costs are available in Alabama (Site Development Grant), Georgia (REBA Grant), Michigan (Michigan Business Development Program), North Carolina (Industrial Development Fund) and Texas (Texas Capital Fund for Infrastructure and Real Estate Development). Florida’s Economic Development Transportation Fund provides grants tied to providing access and transportation related improvements for project location.

• Florida has the highest average industrial electricity price at 8.46 cents per kilowatt-hour. North Carolina and Texas have the lowest industrial electricity prices at 5.98 and 5.91 cents per kilowatt-hour, respectively.

RECOMMENDATIONS Improve Portfolio of Sites and Buildings

• Up-to-Date Database o With many companies and consultants doing a large amount of research online

before even reaching out to states and communities, it is imperative that states have an up-to-date database of all available sites and buildings. This database should be easy to navigate and also be readily available on economic development websites. Enterprise Florida currently has a statewide database under development to meet this need.

• Certified Sites Program o One of the most commonly cited reasons for Florida’s elimination from projects

was a lack of suitable buildings or sites. Therefore, we recommend a certified sites program to build up Florida’s inventory of ready sites.

Enhance Rural Economic Development Toolbox

• Develop Speculative Building Finance Program o As stated above, Florida lacks suitable building inventory. A finance program to

develop speculative buildings would help build inventory and drive traffic in rural areas as private developers rarely build speculative properties in rural areas.

Leverage Partnerships with Utilities

• Utilities can be the best allies for economic development. The benchmarking states rely heavily on their utility partnerships, and we recommend Florida build strategic partnerships with the utilities – primarily the electric utilities.

Increase Use of Utility Economic Development Riders

• Some of the utilities in Florida have recently enacted or redesigned economic development riders which are reductions in rates over a specific period of time. These riders need to continue to be aggressive and updated, but most importantly, the new riders need to be marketed and included in incentive offers.



TALENT AND TRAINING Talent and training had a starkly mixed set of responses, which is reflected in the contrasting grades shown below. The mixed responses were not readily correlated to a certain part of state nor to certain industries. One of the problems may stem from poor project management, i.e. showing locations with labor markets that cannot meet the needs of a particular project. Workforce training programs in Florida lag other Southeast competitors in all categories – financial value, experience, effectiveness, and funding. It was also discovered that some companies were pleasantly surprised at the talent they were finding in Florida, which means Florida needs to do a better job marketing the talent that is available. While there are some positives, there is lots of room for improvement in the area of talent and training.

FLORIDA COMPETITIVENESS GRADE: TALENT AND TRAINING

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA Company and consultant feedback on the availability of a skilled workforce in Florida that met their project’s needs was mixed. The positive responses were that Florida competed well on talent with a slight cost advantage, especially in hospitality and information technology. Contrarily, some interviewees stated that they were unimpressed with the labor pool in Florida and a lack of talent was the reason for elimination. An available workforce with skills in information technology was cited as being both a positive and negative in the state. Negative comments related more toward the economic developers’ ability to identify regions in the state that had a concentration of talent that the company required. LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION Like most areas of the country, there is room for improvement for an educated and skilled workforce as labor dynamics often have the largest impact on projects. K-12 education and availability of a more highly skilled workforce are two areas that need the most improvement according to local and regional economic developers. Specifically, it is felt that there needs to be more investment in workforce training through financial investment and more flexibility in how training is delivered. Wage thresholds for training eligibility either need to be relaxed or alternative training grants need to be made available for workers that do not meet current thresholds.


• All benchmark states have state-level job training programs to support new and expanding employers. Funding for job training ranges from $3 million in North Carolina to $48 million in Texas. Florida’s Quick Response Training Program (QRT) is second to North Carolina for the lowest funded job training program at $6 million.

• Services offered vary by state, though every state offers a similar foundation of services including pre-employment labor assessments and customized training programs with provided instructors and training materials.







• Florida and Michigan are the only states to require a company match to the training program (either cash or in-kind).

RECOMMENDATIONS Improve Quick Response Training (QRT)

• Increase Funding for Workforce Training o The budget for Quick Response Training (QRT) is not competitive with other

southeastern states and needs to be increased. The average training incentive per worker over the last few years for QRT was approximately $1,000. In comparison, other benchmarking states are multiple times that. Example: For Boeing in South Carolina, readySC offered $34 million in training assistance for approximately 6,000 jobs (approximately $5,666 per job).

• Establish Capability through Talent Acquisition o Hire talented workforce training professionals from existing organizations in other

states that excel in workforce training. Florida does not have time to develop this capability in light of the looming economic turnaround.

Improve Existing Industry Relationships

• The best marketers for your state are your existing industries. Therefore, improving existing industry relationships will help improve the message that Florida is a place to do business.

Market Current Talent Assets • Employers are often surprised at the talent they are able to obtain in Florida. The

current talent assets need to be promoted through marketing and also introducing prospects to existing industries.

• Workforce Florida is currently evaluating the means to establish a single workforce system brand for Florida. Per legislation, recommendations must be submitted to the Governor by November 1, 2012. The branding is intended to convey and promote a comprehensive, unified, and aligned system of services for job seekers, workers, and businesses to address their employment and training needs.

Improve Project Management Tactics

• Florida is not offering the best locations based on workforce needs. When offering locations for prospective industries, Project Managers need to take into consideration the needs of companies and suggest the best location for those companies to excel.

Align Training with Targets

• Compile Database o Education and target industries need to align. Therefore, a database of

existing education and training programs needs to be compiled for each of Florida’s target industries. Some areas of the state have already compiled their own databases, and these should be used as a basis for a statewide database.

• Collaborate with Education Institutions o Education institutions need to be educated about Florida’s targets so they are

better able to educate their students for jobs in the target industries.



INCENTIVES Florida has improved the primary incentive challenge, which was enhancing the actionable approval process between Enterprise Florida and the Department of Economic Opportunity. While giving complete incentive granting authorization to Enterprise Florida is unlikely to happen, Enterprise Florida must remain diligent in managing the timely cooperation and execution of incentive commitments. Given the challenges of higher real estate costs and the need for infrastructure enhancement for many projects, Florida should be prepared with a highly funded grant program(s) to enhance cost competitiveness. For existing incentives, eligibility rules need to be examined for some unintended consequences of making qualification difficult. Also, more consistency for the state-local match policy would add to the ability to market expected incentive value earlier in projects. Overall, Florida is on the right track regarding incentives, but there are definite areas of improvement.

FLORIDA COMPETITIVENESS GRADE: INCENTIVES

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA Company and consultant opinion of Florida incentives varied from “substantial” and “competitive” to “insufficient” and “of low value”. Key comments on the competitiveness of incentives and their effectiveness related to incentive administration and incentive eligibility. One of the biggest areas for improvement is administration. Many company and consultant interviewees mentioned the process of obtaining an incentive commitment was too bureaucratic. The incentives were conservative, formulaic, and not creative or progressive. One interviewee mentioned major concerns with both securing commitments and fulfilling documentation requirements. Getting timely responses on incentive eligibility and general efficiency of incentive administration and compliance was a concern. Conversely, it was mentioned by one person that capture had been effective, including resolution of issues, while another person mentioned that they were provided assistance with paperwork. It was noted that incentive policy has improved, but there is still room for improvement. It was mentioned that some projects did not qualify for incentives due to wage level eligibility requirements and that policies limiting eligibility were detrimental to Florida’s competitiveness. One consultant noted that existing wage threshold policy does not recognize bonus payments and that the timing of hiring created significant qualifying issues for the company. In addition, while QTI and the Governor’s Quick Action Closing Fund are competitive, Florida has difficulty matching the value of withholding tax incentives in other states. Overall, the feedback indicated that Florida has the incentive programs in place, but they need to be altered to allow for more flexibility.







LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION Overall, the perception from the local and regional economic developers is that state-level incentives need to be improved, though suggestions for improvement vary. Some economic development professionals feel that Florida needs fewer incentive programs while others find that more industry specific incentive programs are needed. Economic developers were also mixed on the accessibility of incentives for small businesses as some felt businesses needed more incentives while others thought they needed less. Most respondents did agree on the following:

• The incentive process needs to be streamlined; • Florida needs more discretionary incentives that offer upfront money, particularly for high

impact competitive projects; • Wage requirements are too high and need to be revised; • Incentives need to be more flexible in order to take capital investment into larger

consideration; and • Incentive programs need to be easier to use by being easily quantified and delivered.

There were a variety of comments regarding the lack of competitiveness of individual Florida incentive programs. Some economic development professional noted the need for additional incentives such as a sales tax exemption on computer equipment, while others noted that existing programs needed to be improved, such as incentives for business retention and expansion and incentives for rural manufacturing. Finally, it was felt that there are improvements that can be made to enhance existing incentive programs, such as removing the annual caps on existing incentive programs such as Research and Development credits or the Qualified Target Industry (QTI) tax refund. Another improvement noted is to expand the ability to sell or transfer credits. The general consensus was that incentive packages offered need improvement in value, eligibility, and flexibility, tailored to the costs associated with each project. STATE BENCHMARK FINDINGS

• Florida, Alabama, Georgia, and North Carolina offer tax incentives to offset corporate income tax liability, while Michigan and Texas do not. Michigan recently moved away from incentives and Texas does not have a corporate income tax.

• Florida, Georgia, and North Carolina offer incentives based on the number of jobs being created by a new or expanding business (Florida’s Qualified Target Industry Tax Refund).

o Florida’s incentive is a refund, while Georgia and North Carolina offer credits. o Florida’s incentive requires a local match (Georgia and North Carolina do not). o Florida does not allow for carryforward for the value of the incentive. o Florida’s QTI has the strictest wage requirement of 115% of the annual average

local wage. • Georgia and North Carolina utilize a county tier system to determine eligibility and value

of incentives based on the economic conditions of the county. Florida instead offers relaxed eligibility requirements in state-determined rural areas (RACEC) and in Enterprise Zones.

• All benchmark states have some form of “deal-closing” funds to support business recruitment. Other discretionary grant and loan programs are also available for infrastructure and transportation costs incurred upfront for project location.



RECOMMENDATIONS Streamline Incentive Authorization Process

• Continue Improvement between Enterprise Florida and Department of Economic Opportunity

o While Enterprise Florida and the Department of Economic Opportunity have improved their relationship and their processes recently with one example being the wait time for incentive decisions being reduced, there is still room for improvement.

• Increase Governor’s Authority to Offer Incentives o The Governor needs to have more authority to offer and approve incentives.

This includes having a larger closing fund and increasing the amount the governor has the ability to offer under his signature. A large closing fund with larger awards is one way to overcome the disadvantage of not having a withholding tax program that other states have.

Enhance Economic Development Toolbox

• Implement County Tier System o While Florida currently has a type of tier system based on RACEC counties and

Enterprise Zones, Florida needs to revise the tiers to further address the disparity between rural and urban areas when awarding incentives. An effective tier system gives policy makers the structure by which they can account for the different development status of each county and craft incentive policy that reflects geographic priorities (e.g., higher incentive value, and/or lower qualification thresholds, for less developed counties). The tier system should be based on counties and revised each year. Suggestions for ranking counties include unemployment rate, per capita income, percentage of residents below the poverty line, etc. Georgia, North Carolina, and South Carolina all have tiered counties to determine incentive eligibility and value.

• Revise Wage Levels for Incentive Eligibility o Wage levels for incentive eligibility are not competitive with other states and need

to be decreased. Improve Flexibility and Effectiveness of Existing Programs

• Eliminate Rarely Used Incentives o To simplify marketing of incentives, simplify administration, and increase funds

for action, the seldom used incentives, such as the High Impact Performance Incentive, should be considered for eliminated and the funds rolled into the Governors Action Closing Fund.

• Standardize Local Match Requirements o Local match requirements should be standardized across locations and projects.

The local match requirement could be based on the county tiered system recommended above to give more predictability and a small advantage to less development counties.

• Establish Carryforwards for Corporate Income Tax Incentives o Most benchmarking states that have corporate income taxes offer carryforwards

of five to ten years for incentives, but Florida does not. To be competitive and allow companies to utilize the incentives offered, Florida needs to offer a carryforward.



• Commit to Full Sales Tax Exemption on Machinery and Equipment o Florida should eliminate the productivity requirement on the sales tax exemption

for machinery and equipment. Almost every state now exempts production machinery and equipment from sales tax, and Florida can match this incentive with this small but important change.

Increase Up-front Incentives

• To overcome the lack of a withholding tax program, Florida needs to offer more up-front incentives to help with initial costs such as real estate, site prep, and infrastructure. The Quick Action Closing Fund should be increased in order to compete with the other benchmarking states.

Create Option for Local Sales Tax to Benefit Economic Development • Local communities need to be able to have a consistent funding mechanism for

economic development, including the ability to participate more fully in incentives. Allowing counties the option of instituting a local sales tax to solely benefit economic development would allow communities to offer grants and other assistance to projects.



ECONOMIC DEVELOPMENT STRATEGY / BRANDING The overall message that we heard is that Florida is not on most companies and consultants radar as a viable business location. Florida is seen as a great vacation place, but not as a place to do business. The strength of Florida’s tourist image and the power of the tourism marketing create a challenge for the business and economic development community. In addition, natural disaster risk (hurricane destruction and disruption) is still near the top of mind for many companies. The message is beginning to get out, especially among the consultant community, that Florida is a good place to do business, but economic development marketing needs to be substantially increased.

FLORIDA COMPETITIVENESS GRADE: ECONOMIC DEVELOPMENT STRATEGY / BRANDING

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA When asked about the overall perception of a Florida location, it was mentioned by a consultant that the state is not top of mind by company clients. This comment was not industry specific, but a general statement regarding the state as a competitive place to do business. One company interviewee noted that that it was not made clear to them the advantages of a Florida location. It was suggested that Florida improve their external focus of marketing efforts and also promote affordability. LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION While local and regional economic developers find that the perception of Florida as a business location is starting to change for the better, it needs to continue to improve and be continually reinforced. It was reported that Florida is not even on the radar of many prospects in the site selection process and that the perception of Florida as a place for business is dwarfed by comparison to the Florida tourism industry. Therefore, a marketing campaign to enhance Florida’s branding as a place to do business, especially to the targeted industries, was suggested. As part of the marketing campaign, elected officials and the media need to be educated on economic development competitiveness across states and what is needed to attract and retain investment and jobs. Overall, the message that Florida is a great place to visit and do business needs to be spread, and the marketing of the Florida business brand as vocal as the marketing for tourism. Economic developers suggested that improvements to the Enterprise Florida website’s content and functionality could help in enhancing the brand.








• Florida and Alabama are the only states to provide access to a statewide strategic economic development plan on their economic development website. The State of Florida Job Creation Plan was published in September 2011 and identifies economic development goals and strategies.

• Florida, Georgia, North Carolina and Texas clearly identify the state-level targeted industries on their website, providing additional content related to niche sectors within each target and describing assets in the state that support industry clustering. While Alabama and Michigan have state-level targeted industries, they are not identified clearly on the website, requiring more searching for valuable content.

RECOMMENDATIONS Increase Funding

• The marketing budget for Enterprise Florida needs to be increased drastically to ensure that the message gets out that Florida is a place to do business. More money does not always equal better marketing, so it is important that the message is tailored to specific target audiences.

o When funds are compiled into one statewide fund, a strong business brand can be created with Texas and Georgia being great examples. Texas's state marketing effort is led by TexasOne, a public-private cooperative marketing program, which raises $1.3 million each year from corporations and local EDOs to fund conference sponsorships and advertising. Georgia Allies, a partnership between state government and private corporations, also has a $1.3 million budget.

o Alternatively, large amounts of money can be spent with little change to the state’s business brand. Michigan spends $12 million each year on television and print advertising. New York State just unveiled "New York Open for Business,” a $50 million marketing campaign that includes a new marketing website and six new television commercials.

Promote Florida’s Business Brand • In all marketing, the message needs to clearly state that Florida is a place to do

business. The advantages of being in Florida – including affordability – need to be told. To start, Florida should reach out to companies and site consultants in their target industries. It is also important that state leadership as well as existing industries know the advantages of being in Florida.

Align Marketing to Target Industries

• As mentioned above, the budget for marketing needs to be refocused, and the marketing to the target industries is the best way to begin.

o Financial services is a target that will benefit greatly from enhanced marketing to their target companies, greatly improving the awareness of Florida as a successful alternative to the New York-Boston corridor.

o Similarly, promoting the presence of Information Technology talent will get Florida on the radar screen of companies that currently do not know of Florida as a location with available talent.

o Finally, the life sciences industry is only beginning to recognize Florida as a potentially strong location. Target marketing, including leverage the now firmly established institutes in Florida, should increase the number of prospects for Florida.



ECONOMIC DEVELOPMENT ADMINISTRATION Economic Development Administration at Enterprise Florida have come a long way from where they were a few years ago, but there is still room for improvement. In our research, many people noted the changing environment but still identified some weaknesses. Project management capability and execution as well as state and local coordination seem to be inconsistent from project to project. Additionally, there is still concern regarding incentives management and documentation processes. Overall, Enterprise Florida is headed in the right direction, and we have a few recommendations that will enhance the processes and capabilities of the economic development team.

FLORIDA COMPETITIVENESS GRADE: ECONOMIC DEVELOPMENT ADMINISTRATION

COMPANY / CONSULTANT EXPERIENCE IN FLORIDA The opinion on project management support ranged drastically from weak to outstanding, and the response depended largely on when the project was actively considering a Florida location. It was noted by numerous interviewees that the environment and process has changed in recent years at Enterprise Florida and is continuing to improve under new leadership. It was consistently heard from consultants that the leadership change administered at Enterprise Florida has significantly improved their impression of the economic development team’s professionalism and effectiveness. Some even went so far as to say that under the current leadership Florida may have won their project. While Florida has drastically improved over the past few years, it was noted that there is still room for improvement. It was suggested that stronger state level coordination is needed on projects, especially as it relates to the coordination between state and local economic developers and the quality of state and community visits. Travel and visit support has historically been weak, leading Florida to sometimes go from a leading contender to elimination due to a poor experience when visiting a community. Improved project coordination also means expanding involvement of state leadership (governor) on large projects, understanding clients – especially foreign cultures, and enhancing staff professionalism. A large number of interviewees noted the excellent job by the local economic developers. The state and local teams need to continue to work together to present a strong and comprehensive team. LOCAL / REGIONAL ECONOMIC DEVELOPERS PERCEPTION Local and regional economic development professionals are in agreement that the new economic development culture in the state is encouraging, but progress needs to continue. Specifically, better communication is needed between the state and locals. Customer service with prospects is paramount so experienced project managers are needed. It was suggested that a dedicated funding source for economic development is identified at both the state and local levels.








• Enterprise Florida is a public-private partnership, one of only two states in the benchmarking (Michigan’s Economic Development Corporation is the other). All other states have agencies or departments within the state government that administer business recruitment.

• Florida’s statewide economic development team is of similar size to benchmark states with 7 executives/senior staff and 8 project managers. The number of executives and senior staff and project managers align with Alabama and Texas, while Georgia, Michigan, and North Carolina are larger. Michigan has the most project managers at 25, followed by Georgia (15) and North Carolina (13). North Carolina has the most executive leadership positions in economic development (13), followed by Michigan (10). As a ratio of staff to population, both Florida and Texas have the least coverage of economic development staff manpower.

RECOMMENDATIONS Develop Staff

• Professional Development o Staff should continually be exposed to professional development opportunities

through conferences and training. o Project Managers should also work towards attaining Certified Economic

Developer (CEcD) status through International Economic Development Council (IEDC).

• Industry Expertise o Project Managers should gain expertise in one of Florida’s target industries.

Project Managers should receive industry publications and attend trade shows in the target of their expertise. They will not necessarily only work projects in their specific industry, but they will be a valuable resource for others on staff as needed for their industry of expertise.

Strengthen Ally Networks

• Regional/Local o Over a three year period, a Project Manager should participate in an ally visit to

all 67 counties to learn about the assets of that county. Project visits should not count as the ally visit.

• Utilities o Initiate and lead the creation of an economic development alliance between

utilities and Enterprise Florida that can fund marketing activities, consultant familiarization trips, and other statewide promotional opportunities.

Expand Project Management Team

• Prepare for Increased Interest in Florida o Plans for expanding the Project Management team should start now because

eight Project Managers are not going to be enough to meet the increased interest in Florida. The specific number of Project Managers needed is based on project load and will need to be analyzed annually. The number of Project Managers should allow Enterprise Florida to adequately cover all projects.



Improve Professionalism of Staff • Cultural Training

o Project Managers should undergo cultural training to understand the various cultures prospects are coming from. The book Kiss, Bow, or Shake Hands by Terri Morrison and Wayne A. Conaway should be a resource on hand for all Project Managers.

• Prospect Visits o Best practices should be developed for prospect visits. o When possible, project managers should accompany prospects from arrival to

departure.



Taxes



OVERVIEW OF TAXES The taxing structure in a state can have a significant impact on business location decisions. An overview of major taxes in Florida compared to the benchmark states is included in this section. Further evaluation of tax policy can be found in the Regulatory Climate section of this report.

TAX SUMMARY Florida Alabama Georgia Michigan North Carolina Texas

Corporate Income Tax Rate1 5.5% 6.5% 6.0% 6.0% 6.9% 1.0%

margin tax

Apportionment Formula Used To Calculate Taxable Income

25% Property/

25% Payroll

/50% Sales

25% Property/

25% Payroll

/50% Sales

100% Sales

100% Sales

25% Property/

25% Payroll

/50% Sales

100% Sales

Property Tax Collections Per Capita

$1,593 $506 $1,062 $1,445 $867 $1,461

Real Property Effective Tax Rate Range2

2.10% - 2.42%

0.73% - 1.36%

1.61% - 1.69%

2.58% - 3.21%

0.84% - 1.01%

2.15% - 2.46%

Tax on Inventory No No Yes No No Yes State Sales & Use Tax Rate 6.00% 4.00% 4.00% 6.00% 4.75% 6.25%

Average Local Sales Tax Rate 0.65% 4.64% 2.87% None 2.10% 1.89%

State Unemployment Insurance Tax Liability per Employee3

$216.00 $216.00 $222.70 $256.50 $244.80 $243.00

Individual Income Tax Rate (Single Payer)

None

2% to 5%; $500 (low

income bracket)

and $3,001 (high

income bracket)

1% to 6%; $750 (low

income bracket)

and $7,001 (high

income bracket)

4.35%; will decrease

to 4.25% in 2013

6% to 7.75%; $12,750

(low income bracket)

and $60,001

(high income bracket)

None

1 All states in this benchmark levy corporate income tax except Texas. 2 Range is comparison between Tier 1 (large metro) and Tier 2 (small metro) cities in each state; Source: The Tax Foundation, Location Matters, 2012. 3 State Unemployment Liability is calculated multiplying the UI tax rate by the taxable wage base.



TAX RATES BY INDUSTRY The Tax Foundation and KPMG published a report in 2012 comparing corporate tax costs in the 50 states. Model firms were designed representing various industries and tax bills were generated by state for both newly established firms (with incentives) and for mature firms (without incentives). The resulting rates are total effective tax rates, providing a glimpse at state tax competitiveness by industry. Corporate Headquarters: regional headquarters creating 200 jobs and with $10 million capital investment. Company leases 60,000 square feet of Class A space in the downtown area of a large metro. R&D Facility: pharmaceutical R&D facility creating 50 jobs and with $4 million in capital investment. Company leases 30,000 square feet of Class A suburban space in a small metro area. Distribution Center: distribution center operated by a third party logistics provider creating 95 jobs and with $11 million in capital investment. Company leases 350,000 square feet of Class B suburban industrial space in a small metro. Manufacturing: capital-intensive manufacturer such as a steel company creating 200 jobs and with $300 million in capital investment. Company purchases a 250,000 square foot building in a small metro.

Industry Type Firm Type Florida Alabama Georgia Michigan4 North

Carolina Texas

Overall Rank (50 States) (lower = better)

19 13 3 n/a 7 12

Total Effective Tax Rate Corporate HQ

(large metro area) New 17.4% 16.0% 15.2% n/a 9.9% 19.1%

Mature 13.5% 14.9% 14.0% n/a 13.5% 13.3% R&D Facility

(large metro area) New 19.6% 16.9% 7.5% n/a 15.4% 21.3%

Mature 13.0% 15.5% 8.6% n/a 11.8% 12.8% Distribution Center (small metro area)

New 43.6% 25.5% 22.3% n/a 25.9% 45.0% Mature 27.9% 18.6% 25.9% n/a 20.6% 30.9%

Manufacturing (small metro area)

New 20.1% 8.2% 8.5% n/a 8.8% 18.3% Mature 12.9% 10.4% 7.5% n/a 9.8% 9.9%

FINDINGS Florida’s overall rank, out of 50 states, was 19th, the lowest rank of all benchmarking states. The state’s competitiveness in taxation varied by industry however, having effective tax rates that ranged from 12.9% for a mature manufacturer to 43.6% for a newly established distribution center. The Tax Foundation report found that the most favorably ranked states with the most attractive tax rates were those that had low corporate income tax rates and corporate income tax apportionment formulas that are heavily weighted on sales or are single-factor sales. A single-factor sales apportionment formula is advantageous for firms that sell their products out of state, as only the firm’s home-state sales will be taxed. This was an important factor when calculating the tax burden for corporate headquarters and manufacturing. The presence of an R&D tax credit was important when calculating the tax burden for a newly established R&D facility while property tax rates, inventory tax exemptions, and property tax abatements were important when calculating tax burden for newly established distribution centers.

4 The Tax Foundation’s Location Matters report does not reflect the substantial tax and incentive restructuring that took place in the state of Michigan in May 2011.



CORPORATE INCOME TAX

Florida Alabama Georgia Michigan North Carolina Texas

Corporate Income Tax Rate

5.5% 6.5% 6.0% 6.0% 6.9% None

Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income

No Yes; 100% Yes; for in-state tax paid

No No No

Section 199 Deduction (9%) Income Attributable to Domestic Production

Yes Yes No No No No

Franchise/Privilege Tax None 0.175% AL

net worth

$10-$5,000

based on GA net worth

0.29% MI net capital (financial

institutions)

0.15% highest of 3

state determined

asset bases

1.0% margin

tax

Apportionment Formula Used to Calculate Taxable Income

25% Property/

25% Payroll

/50% Sales

25% Property/

25% Payroll

/50% Sales

100% Sales

100% Sales

25% Property/

25% Payroll

/50% Sales

100% Sales

Throwback applies to tangible property sales

No Yes No No No No

FINDINGS

• In addition to Florida, all benchmark states except Texas levy corporate income tax on profit. Texas levies a margin (franchise) tax on the gross margins of businesses. In 2011, Michigan eliminated the state’s modified gross receipts tax and replaced it with a 6 percent corporate income tax, effective January 1, 2012.

• Florida has the lowest corporate income tax rate of the benchmark states levying corporate income tax at 5.5%. North Carolina has the highest tax rate at 6.9%.

• Florida is the only state with a corporate income tax exemption, currently set at $25,000, but increasing to $50,000 effective Jan. 1 2013. The exemption is an effort by the Governor to eventually phase out the state corporate income tax.

• Florida and Alabama are the only states in the comparison that allow a Section 199 Deduction (9%) attributable to domestic production.

• Florida along with Alabama and North Carolina utilize a three-factor apportionment formula: property factor (25%), payroll factor (25%) and sales factor (50%). Georgia, Michigan, and Texas utilize a single factor apportionment formula calculated at 100% from sales factor.

• The state of Florida recently enacted House Bill 143, adding a single sales factor apportionment election for qualified corporate taxpayers. Companies must invest at least $250 million in qualified capital expenditures over a two-year period to qualify.

• Since many businesses make sales into states where they do not have a nexus, businesses can end up with “nowhere income,” income that is not taxed by any state. Alabama is the only state in the comparison with a throwback rule, which captures the tax from this income.



PROPERTY TAX


Property Tax Collections Per Capita $1,593 $506 $1,062 $1,445 $867 $1,461

Real Property Effective Rate Local Tier 1 City 2.421% 1.358% 1.668% 3.207% 1.089% 2.460% Local Tier 2 City 2.103% 0.730% 1.609% 2.584% 0.836% 2.149% Personal Property Effective Rate Local Tier 1 City 2.421% 1.358% 1.668% 2.607% 1.089% 2.460% Local Tier 2 City 2.103% 0.730% 1.609% 1.984% 0.836% 2.149% Tax on Inventory No No Yes No No Yes

FINDINGS

• Florida has the highest property tax collections per capita compared to benchmark

states at $1,593. Property tax collections per capita are calculated by dividing property taxes collected in each state by population. Alabama has the lowest per capita property tax collection at $506 followed by North Carolina ($867), Georgia ($1,062), Michigan ($1,445), and Texas ($1,461).

• Real property effective tax rates range when looking at select local level rates in each benchmark state. The highest effective property tax rate was found in Detroit, Michigan at 3.207% and the lowest in Montgomery, Alabama at 0.730%. Florida’s effective property tax rates range from 2.103% in Gainesville to 2.421% in Miami.5

• All states in comparison except Michigan have the same rate on personal property tax as on real property.

• Georgia and Texas are the only benchmark states to levy property tax on inventory. Both states offer Freeport tax exemption so that localities in the state may choose to not impose the tax.

5 Rates may be higher or lower than figures provided. The Tax Foundation calculated total effective property tax rates for two local areas in each state, a Tier 1 city (large metro) and a Tier 2 city (small metro). See Location Matters report for more information at http://www.taxfoundation.org/news/show/28006.html.



SALES AND USE TAX


State Sales & Use Tax 6.00% 4.00% 4.00% 6.00% 4.75% 6.25%

Average Local Rate 0.65% 4.64% 2.87% None 2.10% 1.89%

Local Rate Range 0.0% - 1.5%

0.0% - 6.5%

1.0% – 3.0% N/A 2.0% -

2.5% 0.0% – 2.0%

Maximum Sales Tax State + Local 7.50% 10.50% 7.00% 6.00% 7.25% 8.25%

Tax Treatment on Business Inputs Manufacturing Machinery & Equipment Exempt6 Taxable

(reduced) Exempt7 Exempt Exempt Exempt

Construction Materials Taxable Taxable Taxable8 Taxable Taxable Taxable Electricity Exempt Taxable Exempt9 Exempt Exempt Exempt Natural Gas Exempt Taxable Exempt Exempt Exempt Exempt

FINDINGS

• Alabama and Georgia have the lowest state sales tax rate in the comparison at 4% while Texas has the highest at 6.25%. Florida’s state sales tax (6%) falls in the middle of the benchmark states, higher than North Carolina at 4.75% and the same as Michigan.

• Other than Michigan, which has no local sales tax, Florida has the lowest average local option sales tax at 0.65%. Other benchmark states are much higher than Florida, from 1.89% in Texas up to 4.64% in Alabama.

• State and local tax combined, the highest sales tax rates are found in Alabama at 10.5% and Texas at 8.25%. Michigan is the lowest due to no local sales tax, followed by Georgia at 7%. Florida and North Carolina are in the middle, both with the highest combined state and local sales tax at 7.5%.

• Each state in the benchmark analysis has varying degrees of sales taxation on business-to-business transactions. Alabama does not offer a sales tax exemption on machinery and equipment, though the rate is reduced to 1.5% from the standard 4%. North Carolina exempts machinery and equipment from sales tax but has a 1% excise tax with a maximum of $80 per item. Florida exempts sales tax on machinery and equipment, but only for new manufacturers or if existing manufacturers increase their output by 5%.6

6 Applies to property that has depreciable life of 3 years or more. Machinery for a new business must be ordered before the start of productive operations and received within 12 months. Expanding businesses must show a minimum 5% increase in productive output (not required for spaceport businesses). 7 Qualifying machinery or equipment must be purchased for a new manufacturing facility, as replacement machinery in an existing manufacturing facility, or for the upgrade or expansion of an existing manufacturing facility. 8 GA HB 386 makes sales and use tax for construction materials a discretionary exemption. This statute gives GA the option to offer a sales and use tax exemption for competitive projects with regional significance. Projects must meet certain criteria and be certified by the state’s commissioner of economic development. Exemption applies to both state and local portions of the sales and use tax. It is retroactive to Jan. 1, 2012 and expires June 20, 2014. Source: www.georgia.org 9 GA HB 386 eliminates the sales and use tax on energy used in manufacturing, directly or indirectly. The tax will be phased out over 4 years, although criteria exists for which an immediate phase-out can be offered if GA is competing with another state for a project with potentially significant economic impact. Takes effect Jan. 1, 2013. Source: www.georgia.org



MOTOR FUEL


Gasoline (cents per gallon) State Excise Tax 4.0 16.0 7.5 19.0 38.9 20.0 Other State Taxes / Fees 31.0 4.9 21.9 20.4 0.3 0.0

Total State Taxes / Fees 35.0 20.9 29.4 39.4 39.2 20.0 Diesel (cents per gallon)

State Excise Tax 4.0 19.0 7.5 15.0 38.9 20.0 Other State Taxes / Fees 26.5 2.9 24.4 22.9 0.3 0.0

Total State Taxes / Fees 30.5 21.9 31.9 37.9 39.2 20.0

FINDINGS • Florida has the lowest excise tax on gasoline at 4 cents per gallon, however to make up

the difference the state charges 31 cents per gallon in other state taxes and fees. Other taxes include the state sales tax and the average of county option taxes in addition to the State Comprehensive Enhanced Transportation System tax (ranges from $0.055 to $0.066). Various state environmental import taxes total $0.022 cents per gallon.10

• Texas has the lowest combined state taxes and fees on gasoline at 20 cents per gallon followed by Alabama (21.9 cents per gallon), and Georgia (29.4 cents per gallon). The highest gasoline taxes and fees are in Michigan and North Carolina at 39.4 cents per gallon and 39.2 cents per gallon, respectively.

• Diesel excise tax varies from gasoline in Alabama and Michigan. All other states including Florida have the same excise tax. Other taxes and fees for diesel vary from gasoline in all states but North Carolina and Texas. The highest diesel taxes and fees are in North Carolina (39.2 cents per gallon). The lowest diesel taxes and fees are in Texas (20 cents per gallon). Florida’s diesel taxes and fees are comparable to the benchmark states.

10 Source: American Petroleum Institute: http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/Fuel-Taxes.aspx



OTHER TAXES


State Unemployment Insurance SUI Tax Rate 2.70% 2.70% 2.62% 2.70% 1.20% 2.70% SUI Taxable Wage Base $8,000 $8,000 $8,500 $9,500 $20,400 $9,000

SUI Tax Liability per Employee $216.00 $216.00 $222.70 $256.50 $244.80 $243.00

Individual Income Tax Rate

Individual Income Tax Rate (Single Tax Payer)

None

2% to 5%; $500 (low

income bracket); $3,001 (high

income bracket)

1% to 6%; $750 (low

income bracket)

and $7,001 (high

income bracket)

4.35% flat rate

6% to 7.75%; $12,750

(low income bracket)

and $60,001

(high income bracket)

None

Local Income Average Effective Tax Rate

None 0.08% None 0.13% None None

FINDINGS

• State Unemployment Insurance:

o Florida’s Unemployment Insurance taxable wage base increased from $7,000 (equal to the Federal Unemployment Tax Act requirements) to $8,000 in 2012.

o Florida’s State Unemployment Insurance liability per employee to employers is $216.00, equal to Alabama, and the lowest of all benchmark states.

o Michigan has the highest State Unemployment Insurance tax liability per employee in the comparison.

• Individual Income Tax: o Both Florida and Texas do not withhold personal income. Michigan is the only

state in the comparison with a flat rate individual income tax (4.35%), while Alabama, Georgia, and North Carolina all impose varying rates based on income level. North Carolina has the highest rate at 6% to 7.75%.

o Alabama and Michigan are the only two states in the comparison with a local option income tax.



Tax Incentives



OVERVIEW OF TAX INCENTIVES Every state in the benchmarking analysis has some mix of incentives to entice companies to locate, though the state of Michigan moved away from tax-based incentives in 2012 with the elimination of the Michigan Business Tax. Incentives to offset tax liability typically utilize jobs and/or capital investment criteria to determine the value of the incentive. Incentives provide a credit, refund, discount, or rebate toward state or local taxes. The benchmark states vary in their approach of offering tax-based incentives based on the state’s taxing structure. While Florida closely resembles Alabama, Georgia, and North Carolina; Michigan and Texas have more unique programs. INCENTIVE PROGRAM SUMMARY


Corporate Income Tax Job Creation (per job incentive) ✔ ✔ ✔ ✔11

New Investment ✔ ✔ ✔ ✔ Research and Development ✔ ✔ ✔ ✔

Sales and Use Tax ✔ ✔ ✔ ✔ ✔ ✔

Property Tax Incentives ✔ ✔ ✔ ✔ ✔ ✔

Industry Specific / Other

Digital Media / Animation ✔ ✔ ✔ ✔ ✔ ✔ Renewable Energy12 ✔ ✔ ✔ Space Industry ✔ Port-Usage ✔ ✔ ✔

11 Texas has a per job sales and use tax refund for manufacturers; see sales and use tax incentive section for more information. 12 Renewable energy tax incentives included are those identified as “Industry Support” incentives on the Database of State Incentives for Renewables and Efficiency website; www.dsireusa.org. States may have other programs to support renewable energy development (i.e. loan funds, energy efficiency rebates) not included in this report.



JOB CREATION TAX INCENTIVES FLORIDA’S TAX INCENTIVE: Qualified Target Industry Tax Refund

$3,000 to $6,000 per job COMPARES TO:

Alabama Georgia Michigan North Carolina Texas None

Comparable Job Tax Credit None Comparable

Credit for Creating Jobs (Article 3J)

None Comparable

$750 - $3,500 per job (by county tier) $750 - $12,500 per job

(by county tier)

KEY ELEMENTS • Incentive Type. Florida’s incentive is a tax refund, provided after jobs have been created

and maintained. Georgia and North Carolina offer tax credits based on the projected number of jobs that will be created. Up to 50% of tax liability can be covered utilizing tax credits every year in both Georgia and North Carolina, and 100% of tax liability can be covered in Georgia’s lowest tiered counties.

• Value of Incentive. Florida has a base per job refund of $3,000 ($6,000 in rural counties) while both Georgia and North Carolina have sliding scales based on county tier level. Georgia ranges from $750 to $3,500 per job per year. North Carolina ranges from $750 to $12,500 per job per year.

• Local Contribution. Florida is the only state to have a local match on job tax incentives, requiring local communities to contribute 20% of the total tax refund. Local match is waived for rural counties.

• Jobs requirement. Florida and Georgia have minimum job creation requirements for eligibility while North Carolina only requires a minimum number of jobs for headquarters projects. Florida requires 10 jobs (or 10% expansion of employment for established employers) while Georgia ranges from 5 to 25 jobs based on the tier status of the county.

• Wage requirement. Florida has the strictest requirement of wages being 115% of the average annual local wage, though wage rates are lowered for rural counties. North Carolina’s requirement is that wages are equal to or higher than the county’s wage standard. Georgia requires that the average wage must be above the county with the lowest average wage in the state.

• Duration of Incentive and Carry Forward. Florida’s refund is provided in installments over a minimum 4-year period. Georgia’s credit lasts for 5 years and allows carry-forward of credits 10 years. North Carolina offers credits over a 4-year period following the year that jobs are created and allows a carry-forward period of 5 years.

• Bonuses or Add-Ons. All three states have per job tax incentive bonuses, or add-ons, to the base incentive. Florida has per job incentive bonuses for those companies that have high-wage jobs at 150% and 200% of the county average wage, a bonus for increased port or airport tonnage, and a high impact sector bonus. Georgia has bonuses for companies that locate in counties that are part of a regional development authority and bonuses for companies that increase port usage. North Carolina has bonuses for companies that locate in specialized zones and if companies hire local residents or long-term unemployed workers in those zones.

• Alternative Amounts. Both Florida and Georgia have alternative per job incentive amounts based on specialized criteria. Florida offers a $6,000 per job refund for companies who locate in Enterprise zones or rural areas. Georgia offers a $2,500 to $5,000 per job tax credit for companies whose average wage is 110% or greater of the county’s average wage.



Georgia also has a specialized program for mega projects – those that create at least 1,800 jobs in the first year. This credit is worth $5,250 per job.

Florida Georgia North Carolina

Tax Offset Corporate income; sales; ad valorem; intangible personal property; insurance premium

Corporate income (50% to 100% liability based on economic tier of county); GA withholding tax (tier 1

counties)

state income and/or franchise tax (50% liability)

Minimum Jobs Created

10 new jobs or expand employment by 10% (can be waived in rural community,

brownfield area, or enterprise zone)

5 to 25 based on economic tier of county 75 (headquarters)

Minimum Wage Requirement

Yes; 115% of the average annual local wage

No; Quality Jobs Tax Credit separate credit program

Yes; greater or equal to applicable wage standard of county; no wage

standard in Tier 1 counties

Economic-level/ tier structure of communities or county

Yes; rural counties receive higher incentive per job created,

lower wage threshold and do not require a local match.

Yes; 4 Tiers based on economic conditions (status based on

unemployment rate, per capita income, % residents whose

incomes are below poverty level)

Yes; 3 Tiers based on economic conditions; Urban Progress Zones (UPZ) and Agrarian Zones (AGZ) receive additional enhancements

Incentive Amount (per job)

$3,000

$1,250 (Tier 4) $1,750 (Tier 3) $3,000 (Tier 2) $4,000 (Tier 1)

$750 (Tier 3) $5,000 (Tier 2) $12,500 (Tier 1)

Incentive Bonuses (per job)

$1,000 bonus (150% average annual wage) $2,000 bonus (200% average annual wage) $2,000 bonus (designated high impact sectors or port/airport usage increase) $2,500 (brownfield area)

$1,250 Port Tax Credit Bonus (increase imports or exports by 10% over previous year)

$1,000 (UPZ or AGZ) $2,000 if job is filled by a resident of the zone or a long-term unemployed worker (in UPZ or AGZ only)

Incentive Amount Alternatives (per job)

$6,000 (Enterprise Zone or rural county)

$2,500 -$5,000 (Quality Jobs Tax Credit; average wage 110% + of county average annual wage) $5,250 (Mega Project Tax Credit; create 1,800 new jobs; either $150 million annual payroll or $450 million investment.

None

Additional Comments

There is a cap of $5 million per applicant in all years. No more than 25% of the total refund approved may be paid in any single fiscal year.

10-year carry forward; incentive amount per job includes $500 bonus for counties forming partnerships. Companies creating jobs in tier 1 counties can use excess over 100% of corporate income tax credited to GA withholding tax. Job creation in Less Developed Census Tracts, Opportunity Zones or Military Zones are treated with tier 1 status and can be used for any industry.

5-year carry forward; taxpayer must offer qualifying health insurance for all full-time positions at the establishment and pay at least 50% of employee premiums; taxpayer must not have received significant environmental violations with NC Dept. of Environment and Natural Resources within prior 5 years; taxpayer must not have received any willful or failure to abate OSHA violations within last 3 years; no overdue taxes



INVESTMENT TAX INCENTIVES FLORIDA’S TAX INCENTIVE: Capital Investment Tax Credit

5% of eligible costs COMPARES TO:

Alabama Georgia Michigan North Carolina Texas

Income Tax Capital Credit

Investment Tax Credit

None Comparable

Credit for Investing in Property (Personal & Real)

(Article 3J)

None Comparable

5% of eligible costs 1-8% of eligible costs

Personal: 3.5-7% of eligible costs

Real: 30% of eligible costs

KEY ELEMENTS • Value of Incentive. Both Florida and Alabama offer a credit equal to 5% of the eligible

investment value per year for 20 years. Georgia’s credit ranges from 1% to 8% based upon the tier of the county and type of investment. North Carolina’s credit ranges from 3.5% to 7% for personal property and 30% for real property.

• Industry Eligibility. Florida, Alabama, and North Carolina offer the incentive to new or expanding companies, while Georgia only allows the incentive for existing industry. Eligibility is limited to targeted industries in all states. Florida’s eligibility is limited to “high impact portions” of a select number of sectors, to include clean energy, biomedical research, financial services, information technology, silicon technology, transportation equipment manufacturing or corporate headquarters.

• Investment Requirement. All states have minimum investment ranges that determine the eligibility of projects. Florida has an across-the-board minimum investment of $25 million in eligible capital costs. Georgia has a minimum of $50,000 in investment.13 North Carolina has a minimum investment range depending upon the location of the investment (tier status of county) and Alabama has a range depending upon the ownership and type of project investment.

• Job Requirement. Florida has the strictest job creation requirement for investment credit eligibility, requiring at least 100 jobs. Alabama requires up to 50 jobs (range from 5 to 50 depending on project type), while Georgia and North Carolina both have no job threshold requirement.14

• Wage requirement. Both Florida and Georgia do not have a wage requirement for eligibility while Alabama and North Carolina have a wage standard based upon the average wage of the county where the company is locating.

• Duration of Incentive and Carry-Forward. Florida and Alabama do not allow carry forward or back.15 Georgia and North Carolina allow carry-forward, 10 years and 5 years respectively.

• Tax Liability Offset. North Carolina allows credits to offset up to 50% of tax liability, Alabama 100%, and Florida and Georgia allow up to 100% depending upon the amount of investment (Florida) or the economic tier of the county (Georgia).

13 Georgia has an Optional Investment Credit that can be taken in place of the investment tax credit. The credit is based on a 3-year tax liability average. Minimum investment is from $5 million to $20 million based on county tier. 14 North Carolina requires $10 million investment within 3 years and 200 jobs within 2 years to be eligible for the Real Property Investment credit. Real Property Investment credit is only available in Tier 1 counties and allows a 15 to 20 year carry-forward depending upon investment amount. 15 Florida allows a 10-year carry forward when investment is at least $100 million.



RESEARCH AND DEVELOPMENT TAX INCENTIVES FLORIDA’S TAX INCENTIVE: Research and Development Credit

10% of increase in R&D expenses COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Income Tax Capital

Credit R&D Credit None Comparable R&D Credit None

Comparable

5% of eligible costs 10% of increase in R&D expenses 1.25 to 3.25% of total

R&D expenses

KEY ELEMENTS • All states except Michigan and Texas have a research and development tax incentive.16

Florida instituted a Research and Development Tax Credit applicable for tax years beginning on or after January 1, 2012.17

• Structure. Florida, Georgia and North Carolina have R&D tax credits that mimic federal R&D credit guidelines as outlined in IRS Code Sec. 41, identifying qualified research and development expenses and credit pass-through rights.

• Requirements. Neither Florida nor Georgia’s programs have minimum investment, job creation, or wage requirements, as long as they meet federal guidelines. Alabama’s incentives to support R&D investment are included in the state’s Income Tax Capital Credit. Alabama’s Capital Credit is the only R&D tax incentive program in this comparison that has performance standards (investment, job creation and wage requirements). Unlike Florida and Georgia, Alabama’s program is not tied to the federal R&D credit program.

• Value of Incentive. Florida and Georgia’s credit is 10% of the value of increase in R&D expenses while North Carolina’s credit ranges from 1.25% to 3.25% of the value of total research expenses, depending upon the amount of expenses and tier of the county. There is a 35% R&D credit for qualified research and development in North Carolina’s Eco-Industrial Parks. Alabama’s credit is 5% of qualified research activity costs.

• Eligible R&D expenses. Florida, Georgia and North Carolina utilize the federal R&D credit program’s guidelines for defining qualified R&D expenses; IRS Code Sec. 41.

• Calculating expenses. Florida and Georgia calculate the base credit value by determining increases in R&D expenditures: the excess of the taxpayer’s qualifying in-state R&D expenses in the current year over a base amount. Alternatively, North Carolina’s credit is based on total research expenses.

• Carry–forward. Florida, Georgia, and North Carolina’s R&D credit programs carry-forward: Florida 5 years, Georgia 10 years, and North Carolina 15 years. Alabama does not allow carry-forward.

• Incentive Cap. Florida is the only state in the benchmarking comparison that has a cap on the total value of R&D credits available. The Florida R&D credit is capped at $9 million.

16 Texas’ R&D credit program (created in 1999 and eliminated after the state moved from a franchise tax to the margin tax) was not reinstated in the 2011 Legislative Session, though the state is studying the costs and benefits of reinstating the R&D credit by examining R&D programs in other states. Source: Texas Economic Development Council, 82nd Legislative Wrap Report, https://www.texasedc.org/. 17 Florida H.B. 143



SALES AND USE TAX INCENTIVES FLORIDA’S TAX INCENTIVE: Exemptions (exclusions apply):

Manufacturing M&E18, Raw Materials, Electricity (manufacturing), Pollution Control Equipment

COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Exemption Electricity19; Raw materials; Pollution Control Equipment

Exemption Manufacturing M&E; Primary handling equipment in DCs; Construction materials; Electricity used in manufacturing; Raw materials; Pollution Control Equipment;

Exemption Manufacturing M&E; Electricity used in manufacturing; Raw materials; Pollution Control Equipment

Exemptions Manufacturing M&E; Electricity used in manufacturing; Raw materials

Exemptions Manufacturing M&E; Electricity used in manufacturing; Raw materials; Pollution Control Equipment

Discount Manufacturing M&E

Discount Pollution Control Equipment

Abatements Construction materials

Refund Construction materials

Refund Sales Tax in Enterprise Zones

Additional exemptions may apply; Eligibility exclusions apply to most sales and use tax-offset programs KEY ELEMENTS • Exemptions are the most common type of sales and use tax incentive, but Alabama, North

Carolina and Texas also utilize discounts, abatements, or refunds. In Texas, the sales tax refunds in Enterprise Zones are based on the number of jobs being created (see Enterprise Zones in Other Incentives section).

• Select manufacturing machinery and equipment is exempt in all states but Alabama, which has a discounted rate (1.5%). North Carolina charges an excise tax of 1%. Florida limits the exemption to new manufacturers and to expanding businesses showing a minimum 5% increase in productive output.

• All states in the benchmarking analysis exempt electricity used in the manufacturing process from sales tax, Michigan and North Carolina being the only states that currently exempt it without contingencies. Florida’s exemption is available only to businesses classified under certain industry groups that use 50% or more of the electricity or steam to operate qualifying machinery and equipment. Alabama offers an exemption of utility gross receipts tax. Georgia and Texas both exempt electricity if the manufacturer can show that at least 50% of the electricity (or natural gas) consumed is used directly in the manufacturing process. However, Georgia will be eliminating this sales and use tax, phasing it out over four years beginning Jan. 1, 2013.

• Sales and use tax on raw materials used in the manufacturing process are exempt in every state, though a variety of exclusions apply in each state.

• Sales and use tax on pollution control equipment is exempted in every state except North Carolina, which has a discounted rate (1%).

18 Machinery and equipment 19 Alabama offers an exemption of utility gross receipts tax for electricity used in the manufacturing process.



• Construction materials are not exempt from sales and use tax in any state, though Alabama has an abatement of transaction taxes associated with construction (with investment requirements) and North Carolina provides a refund for certain industries with high levels of investment. Georgia made its sales and use tax on construction materials discretionary in 2012, available for high impact projects.



PROPERTY TAX INCENTIVES FLORIDA’S TAX INCENTIVE: Property Tax Abatements (local option) Inventory Tax Exemption

COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Abatements (local option)

Abatements (local option)

Abatements (local option)

No Abatements Abatements (local option)

Exemption Inventory; Pollution Control Equipment

Exemption Freeport Tax

Exemption Inventory

Exemption Inventory

Exemptions Freeport Tax; Pollution Control Equipment

Credits/Rebates Value Limitation and Credit

KEY ELEMENTS • Though property tax is local in nature, abatement programs are structured at the state level

in Florida, Alabama, Michigan and Texas. Georgia’s property tax abatement structure varies by county, making it difficult to compare at the state level. North Carolina does not allow property tax abatements, but local units of government can provide property tax credits (rebates) to companies meeting locally determined criteria.

• Abatements are discretionary in nature and offered at the local level, though Michigan requires joint local/state approval of abatement incentives.

• Abated property types differ across states. All benchmarking states except North Carolina abate real property improvements (i.e. investment in buildings) and personal property (i.e. investment in machinery and equipment). Alabama, Texas, and select counties in Georgia also abate taxes on the value of land. The duration of property tax abatements ranges from 10 years (Florida, Alabama, Texas) to 12 years (Michigan), and can vary in Georgia (some counties up to 20 years).

• Twenty-eight of the 67 counties in Florida have local option ad valorem tax abatements available countywide while 29 counties have no abatement option. Ten counties have abatement programs limited to Enterprise Zones or some cities within the county.

• In addition to Florida, states that exempt inventory from taxation include Alabama, Michigan, and North Carolina. Both Georgia and Texas tax inventory, but administer a Freeport Tax Exemption, exempting finished goods destined for shipment outside the state, which can be adopted by local taxing entities. 20

• In Texas, an appraised value limitation may be extended to a taxpayer who agrees to build or install property and create jobs in exchange for an 8-year limitation on the taxable value of the property. The value limitation applies to the local school district maintenance and operations tax (M&O) portion of the property tax.

• States that exempt pollution control equipment from property taxation include Alabama and Texas.

20 GA HB 48 enables local communities to compete with jurisdictions outside the state that may not have an inventory tax by expanding the Freeport Exemption allowed under current law and authorize a call for a referendum to approve the creation of a Level Two Freeport Exemption, which would exempt from local property tax any business inventory or real property not covered in the current Freeport Exemption. HB 48 is effective immediately. www.georgia.org.



INDUSTRY-SPECIFIC TAX INCENTIVES FLORIDA’S TAX INCENTIVE:

Digital Media / Entertainment: Entertainment Industrial Financial Incentive Program Space Industry: Manufacturing and SpacePort Investment Incentive

Qualified Defense and Space Contractor Tax Refunds Port Usage: Port Tax Credit Bonus

COMPARES TO:

Alabama Georgia Michigan North Carolina Texas

Digital Media/ Entertainment

Entertainment Industry Incentive Act of 2009

Film, TV and Digital Entertainment Tax Credits

Film Production Incentive

Interactive Digital Media Tax Credit

Moving Image Industry Program

Renewable Energy21 None None None

Equipment Manufacturer’s Tax Credit

Solar & Wind Energy Business Franchise Tax Exemption

Space Industry None None None None None

Port Usage None Port Tax Credit

Bonus None NC Ports Tax Credit None

KEY ELEMENTS • Digital Media. All states have tax incentives for the entertainment industry, specifically film

production and digital media development. Credits or rebates range from 15% (North Carolina) to 40% (Michigan) of qualified production expenses. Minimum investment to qualify ranges from $50,000 in Michigan and North Carolina to $625,000 in Florida. Qualified expenses include production expenses, but also may exclude payroll expenses (Alabama). Credits are transferable in Florida and Georgia.

• Renewable Energy. Alabama, North Carolina, and Texas have incentives designed to support the manufacturing of renewable energy equipment. While Georgia does not have a specific incentive program, it added alternative energy products (solar, wind, biofuel, electric vehicle) to its list of industries eligible for statutory tax credits in 2012. North Carolina provides a 25% tax credit to renewable energy equipment manufacturers while Texas provides a 100% franchise tax exemption to solar and wind equipment manufacturers. Other renewable energy incentives (not considered “industry support”) are evaluated in the Regulatory Climate section of this report.

• Space Industry. Florida is the only state to offer tax incentives for companies engaged in the space industry, specifically spaceflight and space vehicle manufacturing. Incentives include a sales tax exemption on machinery and equipment (expires end of 2012) and a tax refund for high impact defense or space-related projects.

• Port Usage. Florida, Georgia and North Carolina incentivize increased cargo import and export at ports in the state through tax credits, a job tax credit bonus in Florida and Georgia and a credit equal to the increase in wharfage in North Carolina.

21 Renewable energy tax incentives included are those identified as “Industry Support” incentives on the Database of State Incentives for Renewables and Efficiency website; www.dsireusa.org. Other programs to support renewable energy or energy efficiency not included in this list may exist in benchmark states.



Other Incentives



OVERVIEW OF OTHER INCENTIVES Not all state-level incentive programs are tied to reducing tax liability. States offer a variety of other incentives to support economic development, which typically take the form of grants or loans. Incentive programs to be compared across states in this section include “deal closing” funds for high-impact projects, other targeted grant programs based on factors such as investment, jobs or activity, infrastructure and site development funding, Enterprise Zones, and workforce training. While there are additional financing programs available in all of the benchmark states, (i.e. small business revolving loan programs, CDBG funding, and industrial revenue bonds) this section will review only those programs considered state-level and with significant impact. OTHER INCENTIVE PROGRAM SUMMARY


“Deal Closing” Funds ✔ ✔ ✔ ✔ ✔ ✔ Other high-impact targeted fund programs ✔ ✔ ✔ ✔ ✔ ✔

Infrastructure & Transportation ✔ ✔ ✔ ✔ ✔ ✔

Enterprise Zones ✔ ✔ ✔ ✔ ✔ ✔ Workforce Training ✔ ✔ ✔ ✔ ✔ ✔



DEAL CLOSING FUNDS FLORIDA’S INCENTIVE: Quick Action Closing Fund (QACF) COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Economic

Development Fund

EDGE Fund / REBA Grant

MI Business Development

Program (MBDP)

One North Carolina Fund

Texas Enterprise Fund

KEY ELEMENTS • Process. The approval process in all states begins with project application submittal by a

local economic development agency, followed by some level of review and approval at the state level. In all states except Michigan, the Governor either has final approval or is on a committee with approval authority. In Michigan, the Strategic Fund Board, which is comprised of 11 members, gives approval.

• Fund amount. Total fund amount varies year to year. In 2011, Florida’s QACF was $42 million, but the QACF is part of the $111 million SEED fund for 2012. Of the programs with a single fund appropriated for deal closing, funds range from approximately $45 million in Georgia (EDGE; FY2013) to $150 million in Texas (biennium: 2012-2013). North Carolina has a budget carry-forward at $54 million in addition to $10 million appropriated in FY2011-2012. The 2013 budget proposal in NC shows a reduction of the fund by $30 million.

• Fund Source: Florida, North Carolina, and Texas appropriate deal closing funds through the State General Fund. Alabama and Georgia set aside funds from alternative funding sources, the State Oil and Gas Trust Fund in Alabama and the Tobacco Settlement Fund and Federal Mortgage Fraud Settlement funds in Georgia. Michigan’s Business Development Program is funded through the Michigan Strategic Fund.

• Applicants. The funding applicant is either a local economic development agency who may pass funds through to the project and/or the applicant is the qualified business who receives funds directly from the state. Georgia and North Carolina require funds to be passed through a local entity while Florida, Alabama, Michigan, and Texas allow funds to be provided directly to the qualified business.

• Use of funds. All state fund programs have verbiage that require projects to have a positive economic impact on the state, is competitive, and requires financial assistance to locate. Florida and Texas require that projects be in a targeted industry. Georgia and North Carolina require funds be used for publicly owned improvements needed to complete the project (i.e. land acquisition, site development, infrastructure, and machinery and equipment purchase).

• Performance. All benchmarking states require job creation and/or investment, though most allow requirements to vary on a project basis. Florida requires that recipients pay an average wage at least 125% of the area wide or statewide private sector annual wage (can be waived in rural areas). Michigan requires a minimum of 50 jobs (25 in rural areas or for high tech). North Carolina recipients must meet an average wage test and provide health benefits. Alabama, Georgia, and Texas have no standardized rule but state that job and investment requirements will be included in the funding agreement. Texas includes that most recipients create at least 50 to 100 jobs depending on location.

• Accountability. All benchmarking states use claw-back provisions, requiring that the state be reimbursed should the recipient not meet requirements. States also perform impact studies to ensure that the value of the grant will result in a positive economic impact to the locality.



OTHER HIGH-IMPACT TARGETED FUND PROGRAMS FLORIDA’S INCENTIVE: High Impact Performance Incentive Grant (HIPI) Innovation Incentive Program COMPARES TO:

Alabama Georgia Michigan North Carolina Texas None

Comparable None

Comparable MI Business Development

Program (MBDP)

Job Development Investment Grant

Emerging Technology Fund

KEY ELEMENTS • Other grant programs are available for high-impact projects in Florida, North Carolina and

Texas. These programs could be considered additional “deal-closing” funding programs based on their eligibility requirements and discretionary nature. While not all programs are comparable, both Florida and Texas have funding programs to support research and development and investment in innovation.

• Florida’s High Impact Performance Incentive Grant (HIPI) is unique to the state and cannot be compared to any one program in any of the benchmark states. HIPI requires minimum job creation and investment (50 jobs and $50 million investment over 3 years) in order to receive a discretionary grant from the state. Eligibility is relaxed for research and development activities (25 jobs and $25 million investment). Grants are available to “high impact portions” of specified targeted industries.

• Florida’s Innovation Incentive Program provides grants to companies that invest in high value research and development and innovation. The program is designed to support innovation in the state and foster the growth of targeted industries. This funding program most closely aligns with Texas’ Emerging Technology Fund, which provides grants, loans, and matching awards for investment in high value research and development and innovation. Texas’ program is available both to higher education institutions and to start-up companies for commercialization. Funds can also be provided to support public-private partnerships in emerging technology development.

• North Carolina’s Job Development Investment Grant is the only grant program in the comparison available to companies measured against their withholding tax liability (ranging from 10% to 74% of liability). Companies must create at least 20 jobs (10 in tier 1 counties). Up to 25 grants are available annually, capped at $15 million per year over a 12-year period.

• Michigan’s Business Development Program is designed to provide grants, loans, or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or provide investment. Businesses must create at least 50 jobs (25 if a rural county or if the facility qualifies as a high-technology activity).



INFRASTRUCTURE AND TRANSPORTATION PROGRAMS FLORIDA’S INCENTIVE: Economic Development Transportation Fund Rural Infrastructure Fund COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Site Development Grants (grant) AL Industrial Access Road and Bridge Program (grant)

Regional Economic Business Assistance (REBA) Grant Program (grant)

MI Business Development Program

NC Industrial Development Fund (grant) Industrial Road Access Program (grant) Rail Industrial Access Program (grant)

TX Capital Fund Infrastructure & Real Estate Development (grant) TX Industry Development Loan Program (loan)

KEY ELEMENTS • Every benchmarking state has a funding program available for infrastructure improvements

tied to high-impact projects. In all states, awards are made to the local government on behalf of the project business and the funds are to be used for public improvements required for the project to be feasible.

• Granted funds available specifically for transportation improvements are available in Florida, Alabama, and North Carolina. State departments of transportation administer these funds with partnership from economic development entities. The programs are designed to provide adequate public access tied to a specific project. Florida provides up to $3 million per project to eradicate location-specific transportation problems on behalf of the company.

• Granted funds are to be used for public infrastructure improvements to a varying level of degree in each state. Florida’s Rural Infrastructure Fund, Alabama’s Site Development Grant program, Georgia’s REBA grant program, North Carolina’s Industrial Development Fund, and Texas’ Capital Fund program are all tied to site development and preparation.

• Award amounts are at the discretion of the local entity and state-awarding agency. Most programs allow the funding amount to be flexible to project needs as long as jobs and investment are adequate. Alabama’s Site Development Grants are more defined, basing funding amount on a percentage (0.75% to 5%) of eligible capital costs based on the level of investment.

• Both Florida’s and Texas’ infrastructure grants are available only in rural areas. Florida has a fund that assists with costs associated with planning, preparing, and financing infrastructure projects. Awards are up to 40% of total costs and available in Rural Areas of Critical Economic Concern (RACECs). Texas Capital Funds are available only in non-entitlement areas (rural areas) for companies that commit to creating or retaining jobs, particularly for low-moderate income individuals. Texas also has an Industry Development Loan Program that is more broadly available for infrastructure improvements related to economic development projects. Loans have favorable terms, are low-cost and long-range, and are made to the local community.



ENTERPRISE ZONE PROGRAMS FLORIDA’S INCENTIVE: Urban and Rural Enterprise Zones COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Enterprise Zone Tax Credit and Exemptions

Enterprise Zones

Renaissance Zones

Urban Progress Zones/ Agrarian Zones

Enterprise Zones

KEY ELEMENTS • While all benchmarking states offer a variety of zone-based benefit programs, the Enterprise

Zone (EZ) program is particularly prevalent in economic development in targeted rural and urban areas of the state. Florida, Alabama, Georgia and Texas actively promote Enterprise Zone programs while North Carolina has Urban Progress and Agrarian Zones and Michigan utilizes Renaissance Zones.

• Like Florida, Alabama, Georgia, and North Carolina have programs that are designated in economically distressed geographic areas, identified through state-level criteria. Texas offers EZ incentives both within EZ geographic areas and outside EZ geographic areas.

• Type of Incentives. Income tax incentives are available in Florida, Alabama, and North Carolina. Property tax incentives are offered in Georgia. Sales and use tax incentives are offered in Florida, Alabama, and Texas. Georgia offers additional fee reductions that would otherwise be imposed on qualifying businesses. Florida is the only state to differentiate the level of incentives between urban EZs and rural EZs.

• Industry. Florida and Texas qualify any business that locates in the EZ (meeting other performance standards), while Alabama, Georgia, and North Carolina require businesses to be in targeted industries.

• Performance Standards. Alabama, Georgia, and North Carolina require that at least 5 jobs be created to qualify while Texas requires 10 jobs. Florida has no set number of jobs, but requires for credits against wages paid to workers that the total number of fulltime jobs has to be greater than the total was 12 months before the application date and sustained for at least 3 months. Alabama and Texas have minimum investment requirements, $10,000 and $40,000 respectively.

• Employment Requirements. All states have stipulations for the employment of low to moderate income individuals or residents of the EZ. Florida requires that workers who are in a welfare program receive $4 to $8 an hour above the federal minimum wage, Alabama requires 35% of workers to be from the EZ and on public assistance, Georgia requests that 10% of new employees be low-moderate income, and Texas requires 25% to 35% of new employees be economically disadvantaged or from the EZ.

• Flexibility. Texas’ program appears to be the most flexible – allowing the designation of EZ’s on a per project basis, also allowing projects to qualify for EZ incentives even when they are physically outside an Enterprise Zone.



TRAINING PROGRAMS FLORIDA’S INCENTIVE: Quick Response Training Program (QRT) $6 million annual funds COMPARES TO:

Alabama Georgia Michigan North Carolina Texas Program Name

Alabama Industrial Development Training Program (AIDT)

Georgia Quick Start

Michigan Works! Customized Training Program

Skills Development Fund

Annual Funding

$35.7 million

$12.5 million Various state and federal sources

$3 million $48 million

KEY ELEMENTS • Like Florida, all benchmark states have a state-level job training program designed to

support the needs of business, both new business location and expansion. All states but Michigan have a dedicated state-level program designed specifically for this purpose. Michigan Works! is a state-level program that administers programs with both federal and state funding for workforce development, not specific to new employer job training programs.

• Funding for job training ranges from $3 million in North Carolina to $48 million in Texas. Funding is appropriated through the technical or community college system (Georgia, North Carolina), through the commerce/economic development department (Alabama22), or through the state workforce agency (Florida). Michigan has a variety of funding sources and total funds vary by region.

• Florida, Georgia, and North Carolina specify the industries eligible for job training while Alabama, Michigan, and Texas offer services to all new or expanding businesses. Florida requires that businesses produce exportable goods or services. Georgia offers job training to manufacturing operations, warehouse/distribution centers, national and international headquarters, information technologies, and customer service operations. North Carolina offers job training to manufacturing, technology intensive industries, regional or national warehousing and distribution centers, customer support centers, air courier services, national headquarters with operations outside NC and civil service employees providing technical support to U.S. military installations located in NC.

• All benchmarking states advertise their job-training program as “no cost” to eligible businesses though there are stipulations for free services. Florida and Texas require businesses to post job announcements on the state-level job posting website. Florida and Michigan require a company match to the training program (either cash or in-kind).

• All benchmarking states require that full-time jobs be created. Michigan requires at least 50 jobs to qualify for state funding. Texas gives priority to small businesses (<100 employees) and suggests that funding support be for approximately 60% job retention and 40% job creation per proposal. Florida’s goal is for training to create high-quality jobs (at least 115% of local or state private sector wage), but does not require a specific wage for eligibility.

22 The Alabama Industrial Development Training program was merged with the Department of Commerce in June 2012.



• Services offered vary by state, though every state offers a similar foundation of services including pre-employment labor assessments and customized training programs with provided instructors and training materials.

• The duration of job training can range from a certain number of months to as long as it takes for training needs to be met. Texas has the shortest duration of training at 12 months (additional training beyond 12 months requires special consideration). Florida allows up to 24 months and North Carolina up to 36 months. Alabama and Georgia do not set a time limit on job training while Michigan’s programs vary in duration based on the source of funding and type of services being offered.



Regulatory Climate



REGULATORY CLIMATE OVERVIEW Included below is a description of policy decisions affecting the cost of doing business in a state. The regulatory climate in a state is considered to be attractive when policy does not add undue burden to companies operating in the state. An attractive regulatory climate is one that is effective, efficient, responsive and fair. The regulatory issues identified fall into six categories and are summarized below for each state. Topics include: Tax Policy, Fiscal Policy, Labor & Employment Policy, Environment & Energy Policy, and Judicial & Legal Policy.

Policy Areas Subcategories Description

Tax Policy Tax Administration Business Tax Climate

Compares state’s tax administration procedures and overall business tax burden.

Fiscal Policy State Fiscal Strength State Funding Priorities

Compares state-level fiscal health by examining state general obligation bond ratings and debt as well as funding priorities by examining state expenditures by function (i.e. transportation).

Labor & Employment Policy

Employment-at-will Workers’ Compensation Unemployment Insurance Right to Work

Compares state policies regulating employment including, disability compensation, unemployment compensation, minimum wage, and union membership (right-to-work).

Environment & Energy Policy

Environmental Permitting Process Energy Costs Renewable Energy Policy

Compares state regulatory process for environmental permitting, energy cost burden to business through energy costs and generation sources, as well as policies supporting renewable energy.

Judicial & Legal Policy Litigation Environment

Compares state litigation environments based on the experience of corporate attorneys and their assessment of procedures important to business location.



TAX POLICY TAX ADMINISTRATION Property tax administration is assessed on a state-by-state basis based on three different fair property tax administration procedures.23

• Standardized Procedures – a fair property tax system must have standardized filing,

remittance, and appeal procedures throughout the state. • Fair Property Tax Appeal Procedures – the appeal process for property tax disputes must

be before an independent tribunal, in a de novo24 hearing, without a pay-to-play requirement for disputed property taxes.

• Residential Property Tax Burden vs. Business Property Tax Burden – the property tax burden must be balanced and uniform and not shifted onto business taxpayers.

TAX ADMINISTRATION

GRADE Florida Alabama Georgia Michigan North Carolina Texas

OVERALL SCORE B+ C- B+ B - B- B-

Standardized Procedures B B A B B- B Fair Property Tax Appeal Procedures A- C+ A- C C+ A-

Residential Property Tax Burdens vs. Business Property Tax Burdens

C D C C- A C-

FINDINGS • Florida has the most attractive and fair tax administration procedures when compared to the

benchmarking states and ranks highly when compared to states across the country. • Florida’s highest score (A-) was for the state’s fair property tax appeal procedure. This score

is based on four subcategories, to include: a fair and reasonable initial appeal deadline, a reasonable burden of proof to sustain an appeal, availability of de novo review before an independent tribunal after completion of administrative review at both the state and local level, and the ability of the disputed portion of the property tax to be escrowed or partial payment of the tax allowed in the event of a dispute.

• Florida’s lowest score (C) came in the balance of residential and business property tax burden. This score is based on three subcategories: assessment ratios on various types of property, tax assessment caps, and equal property tax burdens. North Carolina had the highest score (A) in this category.

23 The COST “The Best and Worst of Property Tax Administration: Scorecard on State Property Tax Administrative Practices” report can be found at: http://www.cost.org/Page.aspx?id=75196 (May 2011). The Council on State Taxation (COST) is a nonprofit trade organization consisting of nearly 600 multistate corporations. 24 De novo means a new trial by a different tribunal.



TAX POLICY BUSINESS TAX CLIMATE The Tax Foundation publishes a State Business Tax Climate Index to enable business leaders, government, policymakers, and taxpayers to gauge how their state’s tax systems compare.25 The 2012 index ranks Florida as having the 5th best overall business tax climate in the nation and the best ranking when compared to the benchmark states.26 Texas is the only other state in the Top 10 (ranked #9). North Carolina is the only benchmark state to be ranked in the lowest 10 (#44 in the nation).

TAX CLIMATE RANK (lower = better) Florida Alabama Georgia Michigan North

Carolina Texas

OVERALL RANK 5 20 34 18 44 9 Corporate Tax 12 16 9 49 29 37 Individual Income Tax 1 18 40 11 43 7 Sales Tax 19 41 12 7 47 35 Unemployment Insurance Tax 5 11 22 44 7 15

Property Tax 24 6 39 30 35 31

FINDINGS • Florida has the lowest overall tax burden (#5) when compared to the benchmark states,

followed by Texas (#9). Florida’s lack of an individual income tax helps in determining the favorable score. The remaining benchmark states ranked in order: Michigan (#18), Alabama (#20), Georgia (#34) and North Carolina (#44).

• Florida’s corporate tax score is second only to Georgia thanks to its relatively low tax rate. Florida is the only state with an Alternative Minimum Tax (AMT), which is said to add complexity to the tax structure, and may have reduced its score.

• Florida’s sales tax score falls in the middle with both Georgia and Michigan ranking higher. Alabama and Georgia have amongst the lowest state sales tax rates in the country at 4%. Ranks take into consideration sales tax on business-to-business transactions and excise tax on gasoline and diesel.

• Florida has the best score for unemployment insurance tax (with North Carolina close behind). Florida’s unemployment insurance tax scores score well due to a rate structure with lower minimum and maximum rates and a wage base at the federal level, in addition to a simple experience formula and charging methods, and uncomplicated system with benefit add-ons and surtaxes.

• Florida has the second best property tax score, though all states drastically trail Alabama’s rank of 6th best in the nation.

25 The Tax Foundation 2012 State Business Tax Climate Index report can be found at http://www.taxfoundation.org/research/show/22658.html (January 2012). The Tax Foundation is a nonpartisan tax research group established in 1937 to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government. For more information about The Tax Foundation and the State Business Tax Climate methodology see the link above. 26 Michigan passed corporate and individual tax changes in 2011. These changes are not reflected in the State Business Tax Climate scores.



FISCAL POLICY STATE FISCAL CONDITIONS A state’s fiscal conditions can impact its ability to provide adequate public services to vital programs such as education and transportation. Maintaining adequate balance levels helps states to mitigate disruptions to state services during an economic downturn.

STATE FISCAL CONDITIONS Florida Alabama Georgia Michigan North

Carolina Texas

State General Obligation Bond Rating27 Moody’s Aa1 Aa1 Aaa Aa2 Aaa Aaa S&P AAA AA AAA AA- AAA AA+ Fitch AAA AA+ AAA AA- AAA AAA

State Net Tax Supported Debt Per Capita28 (2011)

$1,150 $856 $1,103 $762 $782 $612

Total Balances (as a % of General Fund expenditures)29 (2012)

0.5% 7.9% 6.6% 3.2% 1.9% 15.1%

FINDINGS • All states in the analysis are rated to have low to minimal credit risk. Georgia and North

Carolina have the highest quality obligations and are rated to have minimal credit risk, apparent in their ratings of Aaa from Moody’s and AAA from S&P and Fitch. Florida is the next highest in quality, with an Aa from Moody’s, also signifying high quality and very low credit risk. Michigan carries the lowest credit rating of Aa2 and AA- from Moody’s and S&P/Fitch respectively.

• Though Florida has one of the highest credit ratings it also has the highest state debt at $21.5 billion dollars (net tax supported debt) as well as the highest debt per capita at $1,150 per person. Georgia closely follows Florida at $1,103 debt per capita while Texas has the lowest debt per capita at $612.

• Florida has the lowest total General Fund balances at 0.5% of General Fund expenditures, meaning it is the least equipped to respond to unforeseen fiscal circumstances. In addition to Florida, Michigan and North Carolina carry balances below the suggested 5% fiscal cushion.

27 Source: Moody’s Investors Service, Standard & Poor’s, Fitch Ratings; June 2012 28 Source: Moody’s Financial Services, 2011. Net Tax-Supported Debt is defined as debt secured by state operating resources that could otherwise be used for state operations. Any debt to which state resources are pledged for repayment is considered to be net tax-supported debt. 29 Total balances include both ending balances and the amounts in states’ budget stabilization funds (rainy day funds) and reflect the funds that states may use to respond to unforeseen circumstances. A rule-of-thumb is that states should build up total budget reserve balances to a level that equals at least 5% of total general fund expenditures in order to provide a relatively adequate fiscal cushion. Fall 2011, The National Governors Association and the National Association of State Budget Officers’ 2011 Fiscal Survey of States found at http://www.nasbo.org/publications-data/fiscal-survey-of-the-states.



FISCAL POLICY STATE FUNDING PRIORITIES State expenditures were evaluated by function to determine state-level funding priorities. Expenditures evaluated are considered total state expenditures and include general fund, other state funds, federal funds, and bonds. It is important to note that sources of funding for these important functions are oftentimes shared between state and local entities. The level of local spending is not reflected in this analysis. In addition, some programs may be excluded from these figures.30

State Expenditures Florida Alabama Georgia Michigan North Carolina Texas

Expenditures by function31 Transportation Expenditures (as a % of total state expenditures)

9.4% 8.2% 6.2% 7.4% 7.1% 7.2%

K-12 State Expenditures (as % of total state expenditures)

20.5% 24.3% 24.6% 28.4%32 19.3% 29.3%

State and Local Governments Academic R&D Funding at Public Universities33 Funding Amount ($1000s) & Share of total R&D funds to universities

173,093 (12.5%)

44,542 (6.0%)

52,754 (5.0%)

58.470 (3.4%)

186,824 (16.2%)

499,209 (14.6%)

FINDINGS • Transportation. Compared to benchmark states, Florida spends the most proportionately

on transportation (as a percent of total state expenditures), followed by Alabama, Michigan, and Texas. Georgia spends the least at 6.2% of total state expenditures.

• K-12 Education. North Carolina spends the least proportionately on K-12 education, at 19.3%. Florida follows North Carolina at 20.5%, which is the same as the average of all 50 states. Texas spends the most on K-12 education at 29.3% of total state expenditures, followed by Michigan (28.2%), Georgia (24.3%), and Alabama (24.3%).

• Academic R&D Funding. In sum, the state of Texas spends the most on research and development funding to public universities at $499 million. Florida and North Carolina trail second and third, followed by Michigan, Georgia, and then Alabama. As a percent of total R&D funds to public universities, the state of North Carolina contributes the most significant amount of funding at 16.2%, followed by Texas (14.6%). Florida ranks higher than Alabama, Georgia, and Michigan in its contribution to public university R&D at 12.5%.

30 Higher Education figures are not compared in the benchmarking because they are not comparable across benchmark states. The exclusion or inclusion of expenditures such as student loan programs, tuition and fees, and university research grants are variable across states. 31 Source: NASBO FY 2010. The average of all 50 state for percent of state expenditures on Transportation is 7.7%; K-12 education in 20.5%. See http://www.nasbo.org/publications-data/state-expenditure-report for more information. Total state expenditure sources include the general funds, other state funds, federal funds, and bond funds. 32 Michigan partially excludes employer contributions to pensions and employer contributions to health benefits from total expenditures. 33 Data Source: National Science Foundation; 2009; see www.statsamerica.org. Funding figures are for science and engineering academic R&D funding only. STATS America is a service of the Indiana Business Research Center at Indiana University’s Kelley School of Business.



LABOR AND EMPLOYMENT POLICY EMPLOYMENT AT WILL The “Employment-at-Will” doctrine means that parties, the employer or employee, can break their relationship without liability unless there is an employee contract expressing otherwise. Government involvement by allowing exceptions to this employer-employee power can add burden to the employer’s cost of doing business. There are three types of exceptions to the doctrine and each state has its own policy providing for these exceptions: • Public policy exception: employer may not fire an employee if it would violate state or federal

statute. • Implied contract exception: employer may not be fired when an implied contract is formed

between parties even though no express, written instrument regarding the employment relationship exists.

• Covenant of good faith and fair dealing exception: employee may not be fired without “just-cause”; termination of employment cannot be made in bad faith or motivated by malice.

EMPLOYMENT

AT WILL Florida Alabama Georgia Michigan North Carolina Texas

Public Policy Exception

3 limited conditions

– see below

No exceptions

No exceptions

Yes exceptions

Yes exceptions

Yes exceptions

Implied Contract Exemption

No exceptions

Yes exceptions

No exceptions

No exceptions

No exceptions

No exceptions

Covenant of Good Faith & Fair Dealing Exception

No exceptions

Yes exceptions

No exceptions

No exceptions

No exceptions

No exceptions

Source: Bureau of Labor Statistics Monthly Labor Review (2000); various online resources

FINDINGS

• Florida, Michigan, North Carolina and Texas allow exceptions to employment at will based on public policy. Florida’s 3 limited conditions can override an at-will agreement based on public policy: An employer may not take any retaliatory personnel action against an employee because the employee has:

(1): disclosed (or threatened to disclose) an activity, policy, or practice of the employer that is in violation of a law, rule, or regulation; must be brought in writing to employer with opportunity for employer to correct the action; (2): provided information to, or testified before, any appropriate governmental agency conducting an investigation, hearing, or inquiry into an alleged violation of a law, rule, or regulation by the employer; (3) objected to, or refused to participate in, any activity, policy, or practice of the employer which is violation of a law, rule, or regulation.

• Alabama is the only state to allow Implied Contract and Covenant of Good Faith and Fair Dealing exceptions.



LABOR AND EMPLOYMENT POLICY WORKERS’ COMPENSATION

WORKERS COMPENSATION34 Florida Alabama Georgia Michigan North

Carolina Texas

Mandatory Coverage for Private Employers

4 or more employees

5 or more employees

3 or more employees

3 or more employees

3 or more employees

Elective for all private employers

Maximum Weekly Temporary Total Disability (TTD) Benefit Payment

$803 100%

SAWW

$771 100%

SAWW

$500 no SAWW provision

$775 90%

SAWW

$862 110% SAWW

$787 100%

SAWW

Maximum TTD Compensation Rate (as a % of the worker’s average weekly wage)

66 2/3% 66 2/3% 66 2/3% 80% of after tax earnings

66 2/3% 70% - 75%

Minimum Weekly TTD Benefit Payment

$20 no

provision

$212 27.5% SAWW

$50 no

provision

$215 25%

SAWW

$30 no provision

$118 15%

SAWW Maximum TTD Benefit Duration 104 weeks Duration of

disability 400 weeks Duration of disability

Duration of disability 104 weeks

Administration of Workers Compensation

Division of Dept.

Financial Services

Division of Dept. of

Industrial Relations

Separate Agency (State

Board of Workers’ Comp.)

Division of Licensing & Regulatory

Affairs

Separate Agency

(Industrial Commission)

Division of Dept. of

Insurance

TDD = Temporary Total Disability; SAWW = State Average Weekly Wage; AWW = Worker’s Average Weekly Wage FINDINGS • All states but Georgia base their maximum weekly compensation for temporary total

disability (TTD) on the state average weekly wage (SAWW). Florida, Alabama, and Texas compensate 100% of the average weekly wage. North Carolina compensates at 110% and Michigan compensates at 90%. Florida’s maximum weekly compensation for TTD benefit payment is the second highest at $803, behind North Carolina at $862. Georgia has the lowest compensation maximum at $500.

• Florida has the lowest minimum weekly benefit payment at $20, followed by North Carolina ($30) and Georgia ($50). Alabama, Michigan and Texas base their minimum compensation on the state average weekly wage making minimum benefits higher (from $118 to $215).

• Alabama, Michigan, and North Carolina do not set limits on the duration of benefits, while Florida and Texas set a maximum of 104 weeks and Georgia at 400 weeks.

• The administration of workers’ compensation differs from state to state. Florida, Alabama, Michigan, and Texas have workers’ compensation divisions within larger departments while Georgia and North Carolina have separate agencies for workers’ compensation.

• Texas is the only state that allows any private sector employer the option of not purchasing workers’ compensation coverage for employees (known as non-subscription).

34 Source: state workers’ compensation departments or agencies and the Texas Department of Insurance Workers’ Compensation Research Group’s Comparison of State Workers Compensation Systems report, 2004.



LABOR AND EMPLOYMENT POLICY UNEMPLOYMENT INSURANCE

Unemployment Insurance35 Florida Alabama Georgia Michigan North

Carolina Texas

Weekly Benefit Amount (Minimum-Maximum)

$32 - $275 1/26 HQW

$45 - $265 1/26 avg of 2 highest

qtrs

$44 - $330 1/42 of wages

in highest 2 qtrs or 1/21

HQW

$117 - $362 4.1% HQW + $6 for each dep up to 5

$45 - $522 1/26 HQW

$61 - $426 1/25 HQW

Number of Benefit Weeks 9-23 15-26 6-26 14-20 13-26 10-26

Size of Payroll (length of employment/wages paid)

20 weeks or $1,500 in any qtr


20 weeks or $1,500 in any

qtr

20 weeks or $1,000 in

calendar year



Tax per Employee (tax rate x wages subject to taxes)

$216.00 $216.00 $222.70 $256.50 $244.80 $243.00

HQW = High Quarter Wage; Dep = Dependent; Avg = Average; Qtrs = Quarters FINDINGS • Florida compares to North Carolina in how they compute the weekly unemployment benefit

amount at 1/26th of the high quarter wage. Florida has the lowest minimum unemployment weekly benefit amount at $32. North Carolina has the highest maximum benefit amount at $522, nearly double Florida’s maximum benefit amount.

• All benchmark states have similar coverage requirements. Coverage is determined by the size of the employing unit’s payroll or the number of days or weeks worked during a calendar year.

• Michigan has the highest unemployment insurance tax on employers at $256.50 per employee and Florida and Alabama has the lowest at $216.00.

OTHER POLICIES


Right-to-Work Yes Yes Yes No Yes Yes Minimum Wage36 $7.67 None $5.15 $7.40 $7.25 $7.25

FINDINGS • All states but Michigan are right-to-work, meaning employees have the right to decide for

themselves whether or not to join or financially support a union. • Florida has the highest minimum wage compared to all benchmark states at $7.67. North

Carolina and Texas have minimum wage standards set at the federal minimum wage of $7.25. Georgia’s minimum wage is the lowest standard at $5.15 while Alabama has no minimum wage standard.

35 Employment and Training Administration, Office of Unemployment Insurance, U.S. Dept. of Labor: Significant Provisions of State Unemployment Insurance Laws, eff. January 2012. 36 Wage and Hourly Division of Department of Labor, January 2012



ENVIRONMENT AND ENERGY POLICY STREAMLINING ENVIRONMENTAL PERMITTING37


E-Permitting (Option to submit online)

Air Hazardous Waste Title V (Air)

Coastal/Inland water permits, Wastewater Monitoring

Reports

None None

Permit Forms Accessed Online, but are Non-modifiable

Water Water, Waste, Air

Hazardous Waste, Land, Solid Waste,

Water

Air, Waste, Water

Air, Waste, NPDES, Water

Air, Waste, Water

FINDINGS • All benchmarking states but North Carolina and Texas offer the option for at least some

environmental permit applications to be completed and submitted online. Both Florida and Georgia offer the ability for companies to submit air permit applications online. Florida’s Electronic Permit Submittal and Processing System (EPSAP) is available on the Department of Environmental Protection website. Georgia’s Title V permits are available as a software application for both initial applications and modifications to existing Title V permits.

• Michigan’s air, waste, and water permit applications are available online, but as modifiable word documents. The status of Coastal and Inland water permits can be accessed online (CIWPIS online). .

• Non-modifiable permit forms are available online in all states. While permit applications can be found and printed, completed submissions must be delivered physically, either through the mail or in person.

37 Source: ECOS Green Report, February 2012. http://www.ecos.org/content/article/detail/4690?PHPSESSID=9590d7057544eaf640eb08ed69bb8998



ENVIRONMENT AND ENERGY POLICY ENERGY COSTS State energy costs were compared by evaluating nationally sourced data related to energy consumption, energy generation, and average industrial electricity prices. Specifically as it relates to electricity prices, it is important to note that data is a state-level average and that rates within the state will vary.

ENERGY COSTS38 Florida Alabama Georgia Michigan North Carolina Texas

Total Energy Consumed by the Industrial Sector (billion Btu) and Percent of U.S. Consumption

486,591 (1.7%)

788,524 (2.8%)

719,962 (2.5%)

611,811 (2.1%)

546,716 (1.9%)

5,502,161 (19.3%)

Average Industrial Electricity Price (12/2011) Cents/kWh

8.46 6.64 6.23 7.37 5.98 5.91

Net Electricity Generation by State (thousand MWh) - % Share of U.S. Total Net Electricity Generation

16,845 (5%)

13,262 (3.9%)

9,376 (2.8%)

9,164 (2.7%)

9,167 (2.7%)

33,689 (10%)

Petroleum-Fired 26 (2.3%)

14 (1.2%)

18 (1.6%)

10 (0.9%)

15 (1.3%)

12 (1.1%)

Natural Gas-Fired 10,932 (12.6%)

4,519 (5.2%)

2,077 (2.4%)

1,390 (1.6%)

1,176 (1.4%)

15,901 (18.4%)

Coal-Fired 3,356 (2.5%)

3,448 (2.6%)

3,846 (2.9%)

4,413 (3.3%)

3,494 (2.6%)

11,956 (9%)

Nuclear 1,700 (2.4%)

3,709 (5.2%)

2,897 (4%)

2,963 (4.1%)

3.746 (5.2%)

2,813 (3.9%)

Hydroelectric NM 1,278 (5.2%)

275 (1.1%) 119 (0.5%) 549

(2.2%) 114

(0.5%)

Other Renewables 403 (2.4%)

265 (1.6%)

296 (1.7%) 267 (1.6%) 184

(1.1%) 2,544

(14.9%) FINDINGS • Florida’s industrial sector consumes less total energy than industrial sectors in any of the

benchmark states and accounts for the least percentage of U.S. total consumption at 1.7%. Texas’ industrial sector consumes more than all benchmark states combined, accounting for 19.3% of total U.S. industrial consumption.

• Based on statewide averages, Florida has the highest average industrial electricity price at 8.46 cents per kilowatt-hour. North Carolina and Texas have the lowest industrial electricity prices at 5.98 and 5.91 cents per kilowatt-hour, respectively.

• Florida generates more electricity than any benchmark state except Texas, accounting for 5% of total U.S. electricity generation. The most significant generation source in Florida is natural gas-fired, accounting for 12.6% of total U.S. electricity generated from natural gas.

• Florida generates the least amount of electricity from coal and from nuclear when compared to benchmark states, accounting for 2.5% of total U.S. electricity generated from coal and 2.4% from nuclear.

• Florida produces more electricity from petroleum than the benchmark states, and more renewable sources (other than hydroelectric) than any benchmark state other than Texas, accounting for 2.4% of total U.S. electricity generated from renewables.

38 Source: the Energy Information Administration (EIA), www.eia.gov; 2009 annual; average electricity price 12/2011.



ENVIRONMENT AND ENERGY POLICY RENEWABLE ENERGY POLICY In April 2012, Florida passed comprehensive energy policy to include renewable energy legislation. Key elements of HB 7117 were the reintroduction of tax credits for renewable energy production, sales tax exemptions, and the expansion of eligibility for Target Industry Tax Refunds to renewable energy producers.

RENEWABLE ENERGY (RE)

POLICY39 Florida Alabama Georgia Michigan North Carolina Texas

Renewable Portfolio Standard (RPS)

No40 No No Yes; 10% &

1,100 MW by 2015

Yes; 12.5% by 2021 (IOUs), 10% x 2018

Yes; 5,880 MW by 2015

Tax Incentives for RE Production Yes No No No No No

Tax Incentives for Industry Support41 No42 No No No Yes Yes

Interconnection Standard Yes No Yes Yes Yes Yes

RE Grant / Loan Programs Yes Yes Yes Yes Yes Yes

FINDINGS • RPS. States with Renewable Portfolio Standards (RPS) include Michigan, North Carolina,

and Texas. In addition to Florida, neither Alabama nor Georgia has RPS mandates. Florida legislation in 2012 repealed a previously established statute that allowed the Public Service Commission to propose RPS.

• RE Production. Florida is the only state with a per kilowatt tax credit on the production of renewable energy (2012). The credit is a re-enactment of the program that expired in 2010.

• Industry Support. North Carolina and Texas are the only states to have tax incentives for manufacturers of renewable energy equipment, though in 2012 Georgia added renewable energy manufacturing to its list of job tax credit eligible industries. Florida re-enacted the Renewable Energy Technologies Sales Tax Exemption in 2012, but only for equipment, machinery, and other materials used in the distribution of renewable fuels (biodiesel, ethanol, other) and for gasoline fueling station pump retrofits for biodiesel.

• Interconnection Standards. All benchmarking states except Alabama have regulation requiring utilities to allow independent renewable energy power producers access to the electric grid. Standards vary based on size of system being connected.

• RE Grants/Loans. All states have various grant, loan or loan guarantee program to support renewable energy or energy efficiency installation or investment.

39 Source: Database of State Incentives for Renewables & Efficiency, www.dsireusa.org. 40 Local Only: JEA Clean Power Program in JEA utility market to generate 7.5% capacity from green energy sources by 2015. See http://www.jea.com 41 States are considered to have tax incentives for industry support based on information provided at www.dsireusa.org. Some RE tax incentive programs may be excluded. 42 Local Only: Miami-Dade County targeted jobs incentive fund provides financial incentives for solar thermal and photovoltaic manufacturing, installation and repair companies. Relocating companies must create 10 jobs and invest $3 million.



JUDICIAL AND LEGAL POLICY LITIGATION ENVIRONMENT The legal system in each state and its level of business-friendliness was evaluated across benchmark states. State rankings below reflect how reasonable, fair, and balanced the state tort liability systems are perceived to be by general counsel and senior litigators in U.S. business.43 The most important issues from an economic development standpoint were determined to be (1) tort reform issues in general, (2) cap/limits on damages, (3) timeliness of decisions, (4) eliminating unnecessary lawsuits, and (5) limits on discovery.

FINDINGS • Florida’s overall rank was amongst the lowest in the nation (42nd out of 50 states), but in

company with the fellow benchmark states of Alabama (47th) and Texas (36th). Georgia and Michigan were considered to be moderate at 27th and 30th respectively, while North Carolina was one of the best in the nation and had the highest rank of benchmark states at 17th.

• Though not reflected in its score, Texas was considered to be one of the worst jurisdictions by survey respondents, having one of the least fair and reasonable litigation environments.

• Florida’s highest rank was a tie between “Having and Enforcing Meaningful Venue Requirements” and “Judges’ Impartiality”. Florida’s lowest rank was “Timeliness of Summary Judgment or Dismissal”.

43 US Chamber of Commerce 2010 State Liability Systems Ranking Study, to view further details including study methodology and limitations see http://www.uschamber.com/reports/ranking-states-lawsuit-climate-2010

LITIGATION ENVIRONMENT Survey Findings (Rank out of 50 States (lower = better)


OVERALL RANK 42 47 27 30 17 36 Overall Treatment of Tort and Contract Litigation 40 46 22 30 19 31

Having and Enforcing Meaningful Venue Requirements

38 46 21 19 6 34

Treatment of Class Action Suits and Mass Consolidation Suits

41 44 14 19 15 23

Damages 41 46 21 23 19 34 Timeliness of Summary Judgment or Dismissal 44 45 32 35 19 27

Discovery 41 45 25 31 9 29 Scientific and Technical Evidence 39 46 14 34 21 26

Judges’ Impartiality 38 47 31 28 24 43

Judge’s Competence 42 47 27 34 16 38

Juries’ Fairness 40 47 22 27 26 41



Economic Development Practices



ECONOMIC DEVELOPMENT PRACTICES Each state has a different approach to economic development, so it is often difficult to compare economic development practices. The table below is a summary of some of the key aspects.


Primary Recruitment Organization

Enterprise Florida

Dept. of Commerce

Dept. of Economic

Development

Michigan Economic

Development Corp.

Dept. of Commerce

Economic Development and Tourism

Type of Organization

Public - Private Public Public Public –

Private Public Public

Population 18,801,311 4,779,735 9,687,660 9,883,635 9,535,475 25,145,561 Executives / Senior Staff 7 7 6 10 13 8

Project Manager 8 5 15 25 11 10

Certified Sites Program

No No Yes Yes Yes No

FINDINGS

• Florida and Michigan are the only two benchmarking states with a public-private partnership. The other four benchmarking states have public organizations.

• Florida has the second lowest number of project managers with Alabama the only state having fewer. Florida is the second largest state, only behind Texas, of the benchmark states.

• Three of the states – Georgia, Michigan, and North Carolina – have certified site programs.



Appendix A

Review Current Policies, Practices, and Resources



REVIEW CURRENT POLICIES, PRACTICES, AND RESOURCES Step 1 of the Florida Target Industry Competitiveness Study was to “review current policies, practices, and resources.” As part of this step, we interviewed the following state-level officials:

• Andra Cornelius, Senior Vice President, Business and Economic Development Opportunities, Workforce Florida

• Michelle Dennard, Director, Division of Strategic Business Development, Florida Department of Economic Opportunity

• Amy Evancho, President and CEO, Florida Economic Development Council • Melissa Medley, Senior Vice President and CMO, Enterprise Florida • Griff Salmon, Executive Vice President and COO, Enterprise Florida • Ed Schons, Chair, Florida Economic Development Council and Director of Economic

Development, University of Central Florida • Crystal Sircy, Senior Vice President, Business Retention and Recruitment, Enterprise

Florida • Rob Sitterley, Vice President, Business Development, Enterprise Florida • Gray Swoope, President and CEO, Enterprise Florida • Marty Wilson, Vice President, Competitive Programs and Policies, Enterprise Florida

In addition to the interviews above, we also delved into Florida’s current state of competitiveness by reviewing current incentives, studies that have been conducted in the state, and current legislation. The list below, while not comprehensive, gives an idea of the depth of research conducted by the consulting team. STATE AND REGIONAL STUDIES REVIEWED

• 2010-2015 Strategic Plan for Workforce Development • Florida Chamber Foundation – The Elements of Reform • Florida Chamber Foundation Six Pillars Framework • Florida Economic Action Plan • 2001-2011 Announcements • EFI Strategic Plan • JEDC Downtown Action Plan • Real Estate Brochures and Maps • 2003-2006 JAXPORT Marine Statistics • 2005-2010 Air Cargo Traffic Reports • 2010 JEA Electric Tariffs • 2005-2010 Worksource Strategic Plan • Workforce Florida Inc. Strategic Plan • Spotlight on the Audience • AFTA Creative Industries Report • Cultural Council Economic Impact Report • Spark Downtown Initiative Plan • Urban Focus Executive Summary • 2011 Book of Lists • 2003-2009 Tourism Economic Impact Reports • CDMP Economic Element 2006 • South Florida CEDS - 2007 • 2008 Annual Visitor Profile and Economic Impact Study • 2010-2015 Strategic Plan for Workforce Development • Broward County Targeted Industry Study Executive Summary



• City of Miami Target Industry Study Chapters 5 & 6 • Greater Miami and the Beaches 2010 Visitor Industry Overview • Knight Foundation – Soul of the Community Study • List of Completed Projects 2000 to Present • Mayor’s Economic Summit II Report – January 2002 • Miami River Marine Industry Economic Assessment and Profile • Miami-Dade Aviation Department Facts At-a-Glance • Miami-Dade County: Economic and Demographic Profile – October, 2010 • One Community One Goal Update • One Community One Goal: A Targeted Industry Study for Miami-Dade County • One Community One Goal: Original OCOG Reports 1997-1999 • One Community One Goal Target Industry Strategic Plan • Qualified Targeted Industries List • Target Industry Update Final January 2010 • WorldCity’s Who’s Here Global Economic Impact Study

INCENTIVES REVIEWED

• Quick Action Closing Fund (QACF) • Qualified Target Industry Tax Refund (QTI) • High Impact Performance Incentive Grant (HIPI) • Qualified Defense and Space Contractor Tax Refund (QDSC) • Capital Investment Tax Credit (CITC) • Quick Response Training Program (QRT) • Incumbent Worker Training Program (IWT) • Economic Development Transportation Fund • Rural Incentives • Urban Incentives • Brownfield Incentives • Enterprise Zones • Jobs for the Unemployed Tax Credit Program (JUTC) • Local Government Distressed Area Matching Grant Program (LDMG) • Manufacturing and Spaceport Investment Incentive Program (MSII) • Property, Sales, & Use Tax Exemptions • Expedited Permitting • Local Incentives • Local Ad Valorem Tax Exemption Programs • Local Impact Fee Deferrals • Corporate Income Tax Exemption • Innovation Incentive Fund • Research & Development Tax Credit • Research Commercialization Matching Grants • Florida State Economic Development Trust Fund (SEED) • Renewable Energy Production Tax Credit



Appendix B

Consultant and Company Research



COMPANY AND CONSULTANT RESEARCH Step 2 of the Florida Target Industry Competiveness Study was to “talk to corporate decision makers and site consultants.” To begin, we asked Enterprise Florida and local and regional economic development organizations to submit information about projects that would be of interest to the consulting team for this project. We received 42 projects from Enterprise Florida and 68 projects from the local and regional economic development organizations for a total of 110 projects. Of those project, 14 projects were submitted by both groups which left 96 unique projects. The map below shows the counties that were considered for projects included in the company and consultant research process.

In addition to specific project research, we also surveyed the Site Selection Guild. We received eight responses from the following site selection consultants:

• Bob Ady, Ady International Company • Darin Buelow, Deloitte Consulting LLP • Dennis Donovan, Wadley Donovan Gutshaw Consulting, LLC • Deane Foote, Foote Consulting Group, LLC • Bob Hess, Newmark Knight Frank • Andy Mace, Cushman & Wakefield Global Business Consulting • Jerry Szatan, Szatan & Associates Inc. • Matt Szuhaj, Deloitte Consulting LLP



We also conducted interviews with companies or consultants in each of Florida’s target industries. The following are the individuals and companies interviewed:

• Mike Bennett, Jones Lang Lasalle • Tracy Hyatt Bosman, Biggins Lacy Shapiro • Will Eglin, IEM • Lee Higgins, Site Selection Group (two projects) • John Krug, Seminole County, FL (two projects) • Larry Kutscher, TravelCLICK • Hartley Powell, KPMG • John Sestito, TBEA • Roger Van Horn, Enterprise



Appendix C

Florida Economic Developers Survey



FLORIDA ECONOMIC DEVELOPERS SURVEY Step 3 of the Florida Target Industry Competiveness Study was to talk to regional and local economic developers. For this, we sent out a survey via Enterprise Florida to all the regional and local economic developers in Florida. We received 49 responses, and the map below shows the counties represented in the local economic developers survey.

A summary of the survey results can be found on the following pages. The survey results are also incorporated throughout the report.



TARGET INDUSTRY RANKING Rank Enterprise Florida’s target industries by the frequency you see projects in your community. (1 = most frequent, 8 = least frequent) As you can see in the chart below, Manufacturing was the target industry with the highest average ranking based on frequency of projects, followed by Information Technology, Aviation/Aerospace, and Financial/Professional Services. Clean Tech and Homeland Security/Defense had the lowest ranking.

CORPORATE PROSPECTS’ PERCEPTIONS Based on your experience, please rate corporate prospects’ perceptions of the following business location factors: When survey respondents were asked to rate corporate prospects’ perceptions of the State of Florida, quality of life was ranked highest followed by tax burden and workforce value/cost. Incentives, workforce skills, and real estate cost were ranked the lowest; however, overall perceptions fell into the “neutral” category.

3.08!

3.13!

3.21!

3.27!

3.40!

3.54!

3.56!

3.58!

3.60!

3.73!

3.98!

4.48!

0! 1! 2! 3! 4! 5!

Incentives!

Workforce skills!

Real estate cost!

Workforce availability!

Brand as a place to do business!

Infrastructure!

Business-friendly government!

University graduates!

University research!

Workforce value/cost!

Tax burden!

Quality of life!

Based on your experience, please rate corporate prospects’ perceptions of the following business location factors:!

1 = Very Negative!2 = Somewhat Negative!3 = Neutral!4 = Somewhat Positive!5 = Very Positive!

STATE%OF%FLORIDA%

5.90!

5.87!

5.68!

4.80!

4.50!

4.40!

4.26!

4.17!

2.49!

0! 1! 2! 3! 4! 5! 6! 7! 8!

Clean Tech!

Homeland Security/Defense!

Headquarters!

Logistics!

Life Sciences!

Financial/Professional Services!

Aviation/Aerospace!

Information Technology!

Manufacturing!

Rank Enterprise Florida’s target industries by the frequency you see projects in your community. !

(1 = most frequent, 8 = least frequent)!



Based on your experience, please rate corporate prospects’ perceptions of the following business location factors: When survey respondents were asked to rate corporate prospects’ perceptions of their own community, quality of life was ranked highest followed by workforce value/cost and tax burden. University research, university graduates, and workforce skills were ranked the lowest, however overall perceptions fell into the “neutral” category.

PROJECT IMPACT In general, please rate the impact the following issues have on your projects: According to survey respondents, positive impact issues include property tax abatements, availability of tax-reducing incentives, and corporate income tax rate. Issues with a negative impact include state regulations/permitting and utility rates availability/capacity.

2.79!

3.11!

3.15!

3.21!

3.38!

3.49!

3.51!

3.66!

3.81!

3.98!

4.11!

4.51!

0! 1! 2! 3! 4! 5!

University research!

University graduates!

Workforce skills!

Brand as a place to do business!

Incentives!

Infrastructure!

Workforce availability!

Real estate cost!

Business-friendly government!

Tax burden!

Workforce value/cost!

Quality of life!

Based on your experience, please rate corporate prospects’ perceptions of the following business location factors:!

1 = Very Negative!2 = Somewhat Negative!3 = Neutral!4 = Somewhat Positive!5 = Very Positive!

YOUR%COMMUNITY%

1.77!

1.98!

2.02!

2.15!

2.19!

2.21!

2.29!

2.29!

2.44!

2.48!

2.50!

0! 1! 2! 3!

State regulations/permitting!

Utility rates and availability/capacity!

Local regulations/permitting!

State apportionment formula for taxable income!

Local property tax rate!

Availability of up-front cash incentives!

Depreciation schedules on equipment!

Telecommunications!

Corporate income tax rate!

Availability of tax-reducing incentives!

Property tax abatements!

In general, please rate the impact the following issues have on your projects:!

1 = Negative Impact!2 = No Impact!3 = Positive Impact!!



INCENTIVE PROGRAM IMPACT Which incentive programs have the largest impact on your ability to win multi-state competitive projects? Quick Response Training Program (QRT) and Local Incentives were indicated as high-impact programs. Qualified Defense and Space Contractor Tax Refund (QDSC) and Research & Development Tax Credit have the lowest impact.

FLORIDA COMPETITIVENESS When survey respondents were asked to identify what changes are needed to make Florida more competitive for investment and jobs, changes to the incentives program was cited most often. Identifying a dedicated source of funding, commitment to education, infrastructure improvements, and rebranding/increased marketing were also listed.

1.67!

1.91!

2.00!

2.06!

2.12!

2.25!

2.53!

2.57!

2.64!

2.69!

2.75!

2.78!

0! 1! 2! 3!

Qualified Defense and Space

Research & Development Tax Credit!

High Impact Performance Incentive

Capital Investment Tax Credit (CITC)!

Innovation Incentive Fund!

Enterprise Zones!

Local Property Tax Abatements!

Incumbent Worker Training Program

Qualified Target Industry Tax Refund

Quick Action Closing Fund (QACF)!

Local Incentives!

Quick Response Training Program

Which incentive programs have the largest impact on your ability to win multi-state competitive projects?!

1 = No Impact!2 = Low Impact!3 = High Impact!!



Appendix D

Tax Profiles by State



TAX PROFILE: FLORIDA

TAX TYPE Component Florida

Corporate Income

Corporate Income Tax Rate 5.5%

Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income No

Sec 199 Deduction (9% Income Attributable to Domestic Production) Yes


Property (25%) Payroll (25%) Sales (50%)

Throwback applies to tangible property sales No

Property

Property Tax Collections Per Capita $1,593 Real Property Effective Rate

Local Tier 1 (Miami) 2.42% Local Tier 2 (Gainesville) 2.10%

Personal Property Effective Rate Local Tier 1 (Miami) 2.42% Local Tier 2 (Gainesville) 2.10%

Tax on Inventory No

Sales and Use

State Sales and Use Tax Rate 6.00% Average Local Rate 0.65% Local Rate Range 0.00% - 1.50% Maximum Sales Tax (State + Local) 7.50% Tax Treatment on Business Inputs44

Manufacturing Machinery Exempt Construction Materials Taxable Electricity Exempt Natural Gas Exempt

Motor Fuel

Gasoline State Excise Tax 4.0¢ per gallon Other State Taxes / Fees 31.0¢ per gallon

Total State Taxes / Fees 35.0¢ per gallon Diesel

State Excise Tax 4.0¢ per gallon Other State Taxes / Fees 26.5¢ per gallon

Total State Taxes / Fees 30.5¢ per gallon

Other

State Unemployment Insurance (SUI) Tax Rate 2.70% State Unemployment Insurance Taxable Wage Base $8,000 SUI Tax Liability per Employee $216.00 Individual Income Tax Rate (Single Tax Payer) None Local Income Tax None

44 Source: Tax Foundation and Commerce Clearing House; some exceptions may apply



TAX PROFILE: ALABAMA

TAX TYPE Component Alabama

Corporate Income

Corporate Income Tax Rate 6.5% Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income Yes; 100%

Sec 199 Deduction (9% Income Attributable to Domestic Production) Yes



Throwback applies to tangible property sales Yes

Property

Property Tax Collections Per Capita $506 Real Property Effective Rate

Local Tier 1 (Birmingham) 1.36% Local Tier 2 (Montgomery) 0.73%

Personal Property Effective Rate Local Tier 1 (Birmingham) 1.36% Local Tier 2 (Montgomery) 0.73%

Tax on Inventory No

Sales and Use


Manufacturing Machinery Taxable; 1.5% (reduced rate) Construction Materials Taxable Electricity Taxable Natural Gas Taxable

Motor Fuel

Gasoline State Excise Tax 16¢ per gallon Other State Taxes / Fees 4.9¢ per gallon


State Excise Tax 19¢ per gallon Other State Taxes / Fees 2.9¢ per gallon


Other

State Unemployment Insurance (SUI) Tax Rate 2.70%

State Unemployment Insurance Taxable Wage Base $8,000

SUI Tax Liability per Employee $216.00

Individual Income Tax Rate (Single Tax Payer) 2% to 5% (low income bracket); $3,001 (high income bracket)

Local Income Tax (average effective rate) Yes (0.08%)




TAX PROFILE: GEORGIA

TAX TYPE Component Georgia

Corporate Income

Corporate Income Tax Rate 6.0% Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income Yes, for in-state tax paid

Sec 199 Deduction (9% Income Attributable to Domestic Production) No

Apportionment Formula Used to Calculate Taxable Income Sales (100%)


Property


Local Tier 1 (Atlanta) 1.67% Local Tier 2 (Macon) 1.61%

Personal Property Effective Rate Local Tier 1 (Atlanta) 1.67% Local Tier 2 (Macon) 1.61%

Tax on Inventory Yes, same rate applies; some counties exempt (Freeport Tax Exemption)

Sales and Use


Manufacturing Machinery Exempt Construction Materials Taxable Electricity Taxable Natural Gas Taxable

Motor Fuel





Other



SUI Tax Liability per Employee $222.70

Individual Income Tax Rate (Single Tax Payer) 1% to 6%; $750 (low income bracket) and $7,001 (high income bracket)

Local Income Tax None




TAX PROFILE: MICHIGAN

TAX TYPE Component Michigan

Corporate Income

Corporate Income Tax Rate 6.0% Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income No




Property


Local Tier 1 (Detroit) 3.21% Local Tier 2 (Saginaw) 2.58%

Personal Property Effective Rate Local Tier 1 (Detroit) 2.61% Local Tier 2 (Saginaw) 1.98%

Tax on Inventory No

Sales and Use

State Sales and Use Tax Rate 6.00% Average Local Rate None Local Rate Range Not Applicable Maximum Sales Tax (State + Local) 6.00% Tax Treatment on Business Inputs47


Motor Fuel





Other



SUI Tax Liability per Employee $256.50 Individual Income Tax Rate (Single Tax Payer) 4.35%; drop to 4.25% in 2013 Local Income Tax (average effective rate) Yes (0.13%)




TAX PROFILE: NORTH CAROLINA

TAX TYPE Component State

Corporate Income

Corporate Income Tax Rate 6.9% Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income No





Property

Property Tax Collections Per Capita $867 Real Property Effective Rate

Local Tier 1 (Raleigh) 1.09% Local Tier 2 (Wilmington) 0.84%

Personal Property Effective Rate Local Tier 1 (Raleigh) 1.09% Local Tier 2 (Wilmington) 0.84%

Tax on Inventory No

Sales and Use


Manufacturing Machinery Exempt; 1% excise tax per item, with $80 cap per item

Construction Materials Taxable Electricity Exempt Natural Gas Exempt

Motor Fuel





Other

State Unemployment Insurance (SUI) Tax Rate 1.20% State Unemployment Insurance Taxable Wage Base $20,400 SUI Tax Liability per Employee $244.80

Personal Withholding Tax Rate (Single Tax Payer) 6% to 7.75%; $12,750 (low income bracket) and $60,001 (high income bracket)





TAX PROFILE: TEXAS

TAX TYPE Component State

Corporate Income

Corporate Income Tax Rate 1.0%

Federal Income Tax Deduction Allowed Prior to Calculating Taxable Income No




Property


Local Tier 1 (Dallas) 2.46% Local Tier 2 (Lubbock) 2.15%

Personal Property Effective Rate Local Tier 1 (Dallas) 2.46% Local Tier 2 (Lubbock) 2.15%

Tax on Inventory Yes; same rates apply

Sales and Use



Motor Fuel





Other

State Unemployment Insurance (SUI) Tax Rate 2.70% State Unemployment Insurance Taxable Wage Base $9,000 SUI Tax Liability per Employee $243.00

Personal Withholding Tax Rate (Single Tax Payer) None





Appendix E

Tax Incentive Profiles by State



TAX INCENTIVE PROFILE: FLORIDA

Program Name or Incentive Type Description of Incentive

Tax Refunds

Qualified Target Industry Tax Refund (QTI)

Pre-approved applicants who create jobs receive refunds of $3,000 per net new full-time equivalent job created; $6,000 in an Enterprise Zone or rural county. For businesses paying 150 percent of the average annual wage, add $1,000 per job; for businesses paying 200 percent of the average annual salary, add $2,000 per job. The local community where the company locates contributes 20 percent of the total tax refund. There is a cap of $5 million per single qualified applicant in all years, and no more than 25 percent of the total refund approved may be taken in any single fiscal year. New or expanding businesses in selected targeted industries or headquarters are eligible.

Qualified Defense and Space Contractor Tax Refund (QDSC)

Serves to attract new high-quality, high-wage jobs for Floridians in the defense and space industries. Tax refunds are made to qualifying, pre-approved businesses bidding on new competitive contracts or consolidating existing defense or space contracts. All QDSC projects include a performance-based contract with the State of Florida, which outlines specific milestones that must be achieved and verified by the State prior to payment of refunds.

Tax Credits

Capital Investment Tax Credit

Annual credit, provided for up to twenty years, against the corporate income tax. Eligible projects are those in designated high-impact portions of the following sectors: clean energy, biomedical technology, financial services, information technology, silicon technology, transportation equipment manufacturing, or a corporate headquarters facility. Projects must also create a minimum of 100 jobs and invest at least $25 million in eligible capital costs. Eligible capital costs include all expenses incurred in the acquisition, construction, installation, and equipping of a project from the beginning of construction to the commencement of operations. The level of investment and the project’s Florida corporate income tax liability for the 20 years following commencement of operations determine the amount of the annual credit.

Research & Development Credit

Credit is equal to 10 percent of the amount a business’s qualified R&D expenses in the current taxable year exceeds the business’s average R&D expenses over the previous 4 taxable years. An R&D tax credit may not exceed 50 percent of a business enterprise’s corporate tax liability in a taxable year, after any other corporate tax credits have been applied. To qualify for the tax credit, a business enterprise must be a target industry. A business may carry forward any unused tax credit for up to 5 years. A business may transfer or sell its unused credits to another business within 1 year after they were originally approved.

Tax Exemptions

Machinery & Equipment Sales Tax Exemption

Sales tax exemption for manufacturing machinery and equipment is available for new or expanding businesses. The exemption applies to property that has depreciable life of 3 years or more. Machinery for a new business must be ordered before the start of productive operations and received within 12 months. Expanding businesses must show a minimum 5% increase in productive output. Not required for spaceport businesses.

Semiconductor, Defense & Space Technologies Sales Tax Exemption

Allows for an exemption of sales tax on manufacturing equipment purchased by these businesses. The role of Enterprise Florida and DEO in this exemption is to validate the applicants are producing qualifying products allowed under the exemption statute.

Tax Abatements

Property Tax Abatements

Local option ad valorem tax abatements available countywide in 28 of 68 Florida counties and in Enterprise Zones or some cities within 10 counties. Abatements available up to 10 years. Eligible property (real and/or personal) varies by county.



TAX INCENTIVE PROFILE: ALABAMA


Tax Credits

Capital Investment Tax Credit • Manufacturing • R&D • Headquarter • Warehousing • Renewable energy production

Credit up to 5% of initial capital costs of qualifying projects to new and expanding companies. Available each year for 20 years. To qualify, project must be industrial, warehousing, or research activity; or, recycling facilities, headquarters facilities, data processing centers, renewable energy facilities, R&D facilities, or projects owned by utilities that produce electricity from alternative energy or hydropower. Minimum investment of $2 million for non-utility owned projects; $1 million for small business expansion projects; $500,000 for projects located in favored geographic areas. At least 50 new employees for HQ projects; at least 20 new employees for all other projects except small business expansion (15), and projects located in favored geographic areas (5). Average wage of new employees must meet the lesser of $15 per hour or the average hourly wage of the county.

Employer Education Credit

Available to employers who provide approved basic skills education programs to AL resident employees. Credit is 20% of the actual costs limited to the employer’s income tax liability.

Tax Exemptions Property Tax Exemptions

• Air and water pollution control devices • Inventory

Sales Tax Exemptions

• Raw materials used by manufacturers or compounders as an ingredient or component part of their manufactured or compounded product • Pollution control equipment

Utility Gross Receipts Tax Exclusion

• Sewer costs are exempt • Water used in industrial manufacturing in which 50% or more is used in industrial processing is exempt • Utility services used in certain types of manufacturing and compounding processes including electricity or natural gas used in the manufacturing process

Tax Abatements


For qualifying industries it is possible to abate the non-educational portion of property tax. These abatements are valid for a maximum of 10 years. For new projects there is no threshold or limiting investment amount except for projects owned by utilities, which produce electricity from alternative energy. Major expansions qualify if the added capital investment is equal the lesser of 30% of the original cost of the currently existing industrial property or $2 million.

Sales Tax Abatement

Abatement of state and local non-educational portion of construction related transaction taxes associated with constructing and equipping a project.

Brownfield Development Tax Abatements

Gives cities and counties the ability to abate non-educational city and county sales and use taxes; non-educational state, city and county property taxes (up to 20 years), and/or mortgage and recording taxes. The property must be in the AL Department of Environmental Management’s voluntary cleanup program to qualify. There is no threshold or limiting investment amount.



TAX INCENTIVE PROFILE: GEORGIA


Tax Credits

Job Tax Credit

Depending on the community’s tier, companies must create between 5 and 25 net new jobs per year to qualify. For each year (up to 5 years) the jobs are maintained, qualified companies can claim a tax credit with a value of $750 - $3,500 per job, per year. An additional $500 credit is offered in counties that participate in a multi-county joint development authority. Unused credits carry forward 10 years. Credits may be taken against 100% (Tier 1 or 2) or 50% (Tier 3 or 4) of corporate income tax liability.

Quality Jobs Tax Credit

Companies that create at least 50 jobs in a 12 month period that each pay wages at least 110% of the county average are eligible to receive a tax credit of $2,500 - $5,000 per job, per year, for up to 5 years. New quality jobs created within 7 years can qualify. Credits may be used to offset the company’s payroll withholding once all other tax liability has been exhausted and they may be carried forward for 10 years. New jobs may count toward either the Jobs Tax Credit or the Quality Jobs Tax Credit.

Opportunity Zone Job Tax Credit

Local governments which undertake redevelopment and revitalization efforts in certain older commercial and industrial areas can now qualify those areas for the state’s maximum state job tax credit. The Department of Community Affairs will consider designations for areas that are within or adjacent to a census block group with 15% or greater poverty where an enterprise zone or urban redevelopment plans exists. Eligibility requirements include at least 2 net new jobs created; employer must offer health insurance, and average wage higher than county average. Excess credit may be applied towards withholding.

Retraining Tax Credit A company’s direct investment in training can be claimed as a tax credit. The amount of the credit is equal to 50% of the employer’s direct cost of training up to $500 per full-time employee, per approved training program. The total amount of credit cannot exceed $1,250 per employee per year.

Port Tax Credit Bonus

The port tax credit bonus rewards Georgia companies that increase imports or exports through a Georgia port by at least 10 percent over the previous year. As companies increase imports and exports, they may also be creating jobs or increasing overall investment. Port tax credit bonus can be either an addition of $1,250 per job to a job tax credit, over five years; or an adjustment in the calculation of an investment tax credit, so that the credit amount is based on the equivalent of a Tier 1 location.

Mega Project Tax Credits

Mega project tax credits benefit Georgia companies that: employ a minimum of 1,800 “net new” employees; and have either a minimum annual payroll of $150 million OR make a minimum $450 million investment in Georgia. Companies meeting both requirements may claim a tax credit of $5,250 per job per year for the first five years of each net new job position. The credits are first applied to the company’s state income tax. Excess credits are eligible to be used against payroll withholding. In all cases, mega project tax credits may be carried forward for 10 years.

Investment Tax Credit

Companies in manufacturing or telecommunications support that have operated in Georgia for at least three years are eligible to earn investment tax credits for upgrades or expansions. Credit earned amounts to 1 percent to 8 percent of qualified capital investments of $50,000 or more. The credit is calculated using two factors: location and type of investment.



Angel Investor Tax Credit

Georgia now offers an income tax credit for qualified investors who invest in certain qualified businesses in Georgia in calendar years 2011, 2012 and 2013. The credit is claimed two years later, in 2013, 2014 and 2015, respectively. The credit is 35 percent of the investment with an individual investor cap of $50,000 per year. The aggregate annual cap for this program is $10 million. The qualified investor must get approval from the Georgia Department of Revenue before claiming the credit.

Research & Development Tax Credit

Available to any company that increases its qualified research spending. Available to new or existing companies. The tax credit earned is a portion of the increase in R&D spending. The credit can be used to offset up to 50 percent of net Georgia income tax liability, after all other credits have been applied. Any unused R&D tax credits can be carried forward for up to 10 years. In addition, new business enterprises in their first five years of operation can use excess R&D tax credits against state payroll withholding.

Film, TV and Digital Entertainment Tax Credit

Tax credits of up to 30 percent for companies producing feature films, television series, music videos and commercials, as well as interactive games and animation. Georgia’s Entertainment Industry Investment Act provides a 20 percent tax credit for companies that spend $500,000 or more on production and post-production in Georgia, either in a single production or on multiple projects. The state grants an additional 10 percent tax credit if the finished project includes a promotional logo provided by the state. Credits are transferable.

Tax Exemptions

Sales and Use Tax Exemption 100% if eligible

Manufacturing production machinery, machinery or components bought to upgrade or replace existing machinery, re-manufacturing of aircraft engines and components, primary material handling equipment in distribution centers (company must invest $5 million in new facility), computer equipment purchased or leased for use at a high tech company (at least $15 million value), machinery and equipment used in a clean room 100 or less, and electricity interacting directly with a manufactured product if the cost of electricity is more than half the cost of all materials used in making the product.

Inventory: Freeport Exemption 100% of inventory exempt in local-option “Freeport” municipalities

Tax Abatements Property Tax Abatement

Local-option property tax abatements; varies across counties.



TAX INCENTIVE PROFILE: MICHIGAN


Michigan Business Development Program (Public Act 250 of 2011)

Michigan no longer provides tax incentives as part of its economic development program. The new Michigan Business Development Program is available from the Michigan Strategic Fund (MSF), in cooperation with the Michigan Economic Development Corporation (MEDC). The program is designed to provide grants, loans, or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and or provide investment. See the non-tax incentive section of this report for further information about this new program.



TAX INCENTIVE PROFILE: NORTH CAROLINA


Tax Refunds

Sales and Use Tax Refunds

Bioprocessing, pharmaceutical and medical manufacturing and distribution, aircraft manufacturing, computer manufacturing and semiconductor manufacturing companies may receive a refund of sales taxes on purchases of building materials, fixtures, and equipment if the facility costs at least $50 million in tier one counties and $100 million in tier two and three counties.

Tax Credits

Article 3J Tax Credits

Offer three types of tax credits to eligible taxpayers that undertake qualifying activities in North Carolina. (1) Credit for creating jobs - companies who meet a minimum threshold of new full-time jobs created during the taxable year may claim a credit. (2) Credit for investing in business property - companies can claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year. (3) Credit for investment in real property - companies located in a tier one county that invest at least $10 million in real property within a three-year period and create at least 200 new jobs within two years are allowed a credit equal to 30% of the eligible investment. These credits may be combined to offset up to 50% of the taxpayer’s annual state income and / or franchise tax liability, and unused credits may be carried forward for up to five years (15-year carry forward applies to credit for investing in real property). Eligibility based on industry and average wage of full-time workers.

Technology Development Tax Credit

As part of the Technology Development (TD) Tax Credit, taxpayers that have qualified North Carolina research expenses during a taxable year are allowed a credit equal to a percentage of those expenses determined in the following manner: Small business (annual receipts less than $1 million): If the taxpayer is a small business as of the last day of the taxable year, the business is allowed a credit of 3.25 percent; Low-tier research: For expenses for research performed in a Tier 1 county, a business is permitted a credit of 3.25 percent; Eco-Industrial Park: For expenses with respect to research performed in an Eco-Industrial Park certified under N.C. §143B-437.08, the business is allowed a credit of 35 percent.

Property Tax Credits (Rebates)

Property tax abatements are not allowed under the North Carolina Constitution, but local units of government can provide property tax credits (rebates) to companies meeting locally determined criteria.

Tax Exemptions and Discounts

Sales and Use Tax Exemptions

Industrial machinery and equipment is exempt from sales and use tax, but is subject to an excise tax. This rate is 1% with a maximum of $80 per item. Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax. Packaging containers and items that become part of a manufactured product and are delivered with the product to the customer are exempt from sales and use tax. Sales of electricity and eligible business property to an internet service provider or web search portal business that invests at least $250 million in private funds are exempt from sales and use tax.

Sales and Use Tax Discounts

Parts and accessories to manufacturing machinery, which include most supplies used in the manufacturing process but not becoming a part of the manufactured product, including pollution abatement equipment, are taxed at 1%. Coal, coke, and fuel oil used in manufacturing is taxed at 1%.



TAX INCENTIVE PROFILE: TEXAS


Tax Credits Value Limitation and Tax Credits (TX Economic Development Act)

An appraised value limitation may be extended to a taxpayer who agrees to build or install property and create jobs in exchange for an eight-year limitation on the taxable value of the property. The value limitation applies to the local school district maintenance and operations tax (M&O) portion of the property tax and a tax credit.

Tax Exemptions

Sales and Use Tax Exemptions

Available to taxpayers who manufacture, fabricate or process tangible property for sale. The exemption generally applies to tangible personal property involved in the manufacturing process. Texas manufacturing companies may be exempt from paying state sales and use tax on electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property.

Inventory Tax (Freeport) Exemption

A freeport exemption is a property tax exemption. Freeport property includes various types of property that are detained in Texas for a short period of time (175 days or less) to be transported out of Texas. The goods must be in Texas for certain purposes. Available in select cities, counties, and school districts which agree to participate.

Pollution Control Equipment Exemption

Property tax exemption for property used for pollution control purposes.

Renewable Energy Exemptions and Deductions

Exemption from franchise tax for entities engaged solely in the business of manufacturing, selling, or installing solar and wind energy devices. Businesses may deduct from its apportioned margin 10 percent of the amortized cost of a solar or wind energy device.

Tax Abatements


Local taxing entities, with the exception of school districts, have in place tax abatement policies for new industrial construction. The maximum abatement is 100% for ten years. The actual abatement is negotiated with the taxing entities for each project.



Appendix F

Other Incentive Profiles by State



OTHER INCENTIVES PROFILE: FLORIDA

Incentive Type and Incentive Name Incentive Description

High Impact Performance Incentive Grant (HIPI)

Negotiated grant; project must operate within designated high-impact portions of the following sectors: clean energy, biomedical technology, financial services, silicon technology, transportation equipment manufacturing or be a corporate headquarters facility supporting international, national, or regional operations; create at least 50 new full-time equivalent jobs (if a R&D facility, create at least 25 new full-time equivalent jobs) in Florida in a three-year period; and make a cumulative investment in the state of at least $50 million (if a R&D facility, make a cumulative investment of at least $25 million) in a three-year period. Once recommended by Enterprise Florida, Inc. (EFI) and approved by the Department of Economic Opportunity, the high impact business is awarded 50 percent of the eligible grant upon commencement of operations and the balance of the awarded grant once full employment and capital investment goals are met.

Innovation Incentive Program

Grants for investment in high-value research and development, innovation business, and alternative and renewable energy projects to support industry cluster growth. Recipients must remit a portion of their royalty revenues back to the State for reinvestment in existing State Trust Funds.

Local Government Distressed Area Matching Grant

Created in 2010 to stimulate economic activity and enhance the ability of distressed communities to attract new job creation opportunities. Grants available to local governments up to $50,000 maximum with pass through to the business.

Deal Closing Funds: Quick Action Closing Fund

Created by the 1999 Legislature as a discretionary “deal closing” tool in highly competitive negotiations where Florida’s traditional incentives are not enough to win the deal. This tool is critical to the state’s ability to attract projects where Florida is at a significant competitive disadvantage. All Closing Fund projects include a performance-based contract with the State of Florida, which outlines specific milestones that must be achieved for grant payment, sanctions and penalties for non-performance, as well as annual compliance requirements. Closing Fund awards are generally paid out after the business has made a substantial capital investment in the project toward tangible personal property.

Zone-based benefits: Enterprise Zones

Florida offers an assortment of tax incentives to businesses that choose to create employment within an Enterprise Zone, which is a specific geographic area targeted for economic revitalization. These include a sales and use tax credit, tax refund for business machinery and equipment used in an Enterprise Zone, sales tax refund for building materials used in an Enterprise Zone, and a sales tax exemption for electrical energy used in an Enterprise Zone.

Zone-based benefits: Brownfield Incentives

Florida offers incentives to businesses that locate on brownfield sites, which are underutilized industrial or commercial sites due to actual or perceived environmental contamination. The Brownfield Redevelopment Bonus Refund is available to encourage brownfield redevelopment and job creation. Approved applicants receive tax refunds of up to $2,500 for each job created.

Infrastructure: Economic Development Transportation Fund

Incentive tool designed to alleviate transportation problems that adversely impact a specific company's location or expansion decision. The award amount is based on the number of new and retained jobs and the eligible transportation project costs, up to $3 million. The award is made to the local government on behalf of a specific business for public transportation improvements.

Workforce Training: Quick Response Training Program (QRT)

Reimbursement-based employer-driven training program designed to assist new value-added businesses and provide existing Florida businesses the necessary training for expansion. A state educational facility - community college, area technical center, school district, or university - is available to assist with application and program development or delivery. The educational facility will also serve as fiscal agent for the project. The company may use in-house training, outside vendor training programs, or the local educational entity to provide training. Reimbursable training expenses include: instructor and trainer wages, curriculum development, and textbooks/manuals. This program is customizable.



OTHER INCENTIVES PROFILE: ALABAMA


Deal Closing Funds: Economic Development Grant

The discretionary grant fund is available to the State of Alabama when competing with another location outside of the state for an economic development project. The program is funded by oil and gas tax proceeds and is awarded by the Governor upon recommendation from the Alabama Development Office. Discretionary funds in Alabama are allocated as a partnership between state and local entities.

Zone-based benefits: Business Privilege Tax Enterprise Zone Credit or Exemption

Credit or Exemption of State Business Privilege Tax for those companies locating in areas considered to have depressed economies. Employers could also receive an exemption from Alabama sales and use tax on the purchases of the materials used in the construction of a building or any addition or improvement thereon for housing any legitimate zone business and on machinery and equipment used in the zone. Employer must expand its labor force and make new capital investment. Employer must also certify annually that at least 35% of its employees are resident of the hosting Enterprise Zone county – other requirements apply.

Infrastructure: Site development grants (AL Act No. 91-635) with amendments in 1997, 1999, 2006, 2007

Alabama Site Preparation Grants; $11 million annually; source of revenue is bonds, using cigarette tax for repayment; purpose is site development, including surveying, clearing, and drainage; grants are awarded to cities, counties, and industrial boards - no match required; eligible for industrial, warehousing, or research firms only. The size of the grant depends upon the amount of capital investment, from 5% of capital costs for investments less than $200,000 to 0.75% of capital cost for investments greater than $10 million.

Infrastructure: Alabama Industrial Access Road and Bridge Program

Industrial access funds are intended to provide adequate public access to new or expanding distribution, manufacturing, and industrial firms. The industry must be committed to new investment and the creation of new jobs. The new access must be on public right-of-way for public use (state, city, or county) and the project sponsor (city or county) must maintain the completed facility unless the facility consists of turn lanes, crossovers, etc., that are located on state highways. Industrial access funds are limited to construction, construction engineering, and inspection costs.

Infrastructure: Alabama Infrastructure Grant Program

Program provides funds for infrastructure improvements including the extension of water, sewer, and road facilities.

Workforce Training: Alabama Industrial Development Training (AIDT)

AIDT offers pre-employment selection and training, leadership development, on-the-job training, continuous/process improvement assessments, maintenance assessments, and industrial safety assessments and training, specific to a company’s needs.



OTHER INCENTIVES PROFILE: GEORGIA


Deal Closing Funds: EDGE Fund

$15 million annually; revenue from tobacco settlement fund; purpose is deal closing for site development, infrastructure, and machinery and equipment cost; local government works with business to apply; clawback provisions require grant to be returned if job goals not met

Zone-based benefits: Enterprise Zones

In qualified Enterprise Zones: Property tax exemptions and abatement or reduction in occupation taxes, regulatory fees, building inspection fees, and other fees that would otherwise be imposed on qualifying business.

Infrastructure: Regional Economic Business Assistance (REBA) Grant Program

Specialized economic- development tool that may be used to enhance Georgia’s competitiveness in attracting significant economic development projects and as a vehicle for significant local, regional or state-wide initiatives that will have either short- or long-term economic development benefits. REBA should not be used when other state or federal programs could be used or when local funds are sufficient to accomplish economic development goals. Generally, REBA funds are targeted for projects in non-rural counties. All applications must include a recommendation from a state agency whose statutory powers include community and economic development (e.g., the Georgia Department of Economic Development). REBA projects should retain or create jobs in Georgia and result in new private investment in Georgia. Eligible applicants for REBA funding are general-purpose local governments, local-government authorities, regional development centers, state agencies and state authorities. Eligible activities include, but are not limited to: (1) public land acquisition and site development, (2) public infrastructure improvements, (3) publicly owned machinery and equipment, and (4) publicly owned / privately leased fixed assets and machinery and equipment. The maximum amount available for economic development projects varies. The grant is capped at $10,000 per job.

Workforce Training: Quick Start Job Training Assistance

Quick Start provides customized training for new employees in skill-based jobs at no cost to qualifying companies. The training program is given to the company for its future use. Quick Start provides training space, instructors and all needed materials related to the program, potentially saving companies millions of dollars in training costs.

Workforce Training: Georgia Work Ready

Georgia Work Ready is available for companies meeting minimum hiring requirements and is easy to access through the state’s network of technical colleges. Georgia companies can implement Work Ready two ways - through job profiling and Work Ready Certificates. Work Ready job profiles identify the job tasks and skill levels necessary to be successful in any job. Companies match those profiles to employees’ Work Ready Certificates, which measure core skills, to ensure the right person is placed in the right job.

Workforce Development: HOPE Scholarship and Grant

The HOPE Scholarship provides tuition assistance at one of Georgia’s 35 public colleges or universities for graduating Georgia high school seniors with a B or better average. The HOPE Grant provides an opportunity for all Georgians to receive degree or certificate programs at a low cost through Georgia’s technical colleges and schools. These programs can be advantageous to relocating families with children, and for a company training employees through local technical colleges.

Entrepreneur and Small Business Loan (ESB) Guarantee Program

In partnership with the One Georgia Authority, the state can provide loan guarantees to spur entrepreneurial growth in specified rural communities throughout Georgia. The guarantee amounts can range between $35,000 and $250,000, can be used for hard assets or for start-up and working capital, and require a 10 percent cash equity injection by the borrower.



OTHER INCENTIVES PROFILE: MICHIGAN


Michigan Business Development Program (Public Act 250 of 2011)

The Michigan Business Development Program (MBDP) is available to eligible businesses that create qualified new jobs and/or make qualified new investment in Michigan. The qualified new jobs must be held by Michigan residents and be in addition to those maintained in Michigan prior to the project. Eligible investment includes investment made by the business in Michigan in support of the project and approved by the Michigan Strategic Fund (MSF). Preference may be given to businesses in need of additional assistance for deal-closing and second stage company gap financing. Any business seeking to qualify for MSF support on the basis of job creation must create a minimum of 50 qualified new jobs. If a project is in a rural county (a county with a population of 90,000 or less) or qualifies as a high-technology activity, the business must create a minimum of 25 qualified new jobs. High-technology activities are defined in the Michigan Economic Growth Authority Act, Public Act 24 of 1995, although it does not include tool and die unless the eligible business meets a different high-technology definition. MSF support in the form of a grant will be performance based, with preference given to eligible businesses seeking to locate or expand in Michigan rather than in another state. Grants will include flexible terms and conditions, and will include repayment provisions under circumstances approved by the MSF. MSF support in the form of a loan shall also be performance based, with preference given to qualified businesses needing assistance to expand in Michigan. Loans may include flexible terms and conditions, including below market interest rates, extended grace and repayment provisions, forgivable terms and flexible security requirements. Loans will also include provisions requiring repayment of loan funds under circumstances approved by the MSF. A commitment of staff, financial, or economic support by the local municipality is required for all projects. The MSF may consider the following factors when considering a project for MSF Support: Out-of-state competition, net-positive return to Michigan, level of eligible investment in the project, near-term projects with identified financial support, business diversification, re-use of existing facilities, near-term job creation, level of wages for new jobs, employer provided benefits, strong links to Michigan suppliers, and whether the project is in a distressed or targeted community MSF support for any project may not exceed $10,000,000. For incentive assistance using loans – reasonable closing fees will apply and be determined on a project by project basis.



OTHER INCENTIVES PROFILE: NORTH CAROLINA


Job Development Investment Grant (JDIG)

The Job Development Investment Grant (JDIG) is a discretionary incentive that provides sustained annual grants to new and expanding businesses measured against a percentage of withholding taxes paid by new employees. Proposed project must add jobs, must increase opportunity for employment and strengthen the state’s economy, must be consistent with the economic development goals of the state, must be competitive, and must be in need of financial assistance to complete the project. Grants can result in payments to a business for up to 12 years. The total amount paid out in any one of those years cannot exceed $15 million, giving the committee up to $180 million to allocate in benefits to the 25 businesses over a 12-year period. The statute authorizes awards from 10% to 75% of withholdings for eligible positions.

Deal Closing Funds: One North Carolina Fund

The One North Carolina Fund currently consists of nonrecurring appropriations made by the North Carolina General Assembly for companies seeking to undertake new expansion or locate new operations in the state. The fund is designed to increase the state’s competitiveness so the project location or expansion must be in competition with another location outside the state. Companies can receive money for: Installation or purchase of equipment; structural repairs, improvements, or renovations of existing buildings to be used for expansion; and Construction of or improvements to new or existing water, sewer, gas or electric utility distribution lines, or equipment for existing buildings. For a company to be considered the company must agree to meet an average wage test and local units of government (city or county) must agree to match financial assistance to the company.

Infrastructure: North Carolina Industrial Development Fund

$15 million annually sourced from general fund; deal closing fund with 4 eligible uses, including buildings, equipment, and infrastructure; local government must provide matching financial assistance to company; grant amount of $1,000 per job changed to discretionary amount, company receives grant in installments as jobs are added.

Infrastructure: Industrial Road Access Program

Administered by the North Carolina Department of Transportation (NCDOT), this program provides funds for the construction of roads to provide access to new or expanded industrial facilities. An access review committee comprised of representatives of the NCDOT performs a technical review of a requested project and makes recommendations about traffic and safety concerns. Approval is based upon the resulting economic benefits of the project including the number of new jobs created, the amount of capital investment, highway’s use, and the area’s economic conditions.

Infrastructure: Rail Industrial Access Program

The NCDOT administers the Rail Industrial Access Program for businesses that want to locate or expand their facilities in North Carolina. This program ensures that industries have the tracks needed to transport freight and materials and also assists in refurbishing tracks. Grant funding is contingent upon approval prior to the company making a decision to locate or expand in North Carolina and a private and/or local source match of funds. Approval is also based upon the economic benefits of the project including the number of new jobs created, the amount of capital investment, rail use, and the area’s economic conditions.

Workforce Training: Customized Training Program

The North Carolina Community College System offers free, customized job training for new and expanding businesses. Comprised of 58 colleges across the state, it is the third largest community college system in the country, and has earned accolades from the economic development, business and industry, and educational communities worldwide. North Carolina’s Customized Training Program includes: Pre-employment training; Instruction by a statewide network of skilled professionals with industry-specific expertise; No expense or assistance offsetting costs where an instructor is a company employee; Use of nearby college facilities, including transportation of training equipment; Access to the North Carolina Information Highway, a real-time, interactive distance learning system; Cost of training supplies and materials including customized training materials; Continued support as a training partner once your site becomes operational.



OTHER INCENTIVES PROFILE: TEXAS


Emerging Technology Fund (ETF)

The Emerging Technology Fund (ETF) was created by the Texas Legislature in 2005 at the urging of Governor Perry to provide Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies. ETF grants are awarded in the following three areas: (1) Research Superiority Acquisition -- funds for Texas higher education institutions to recruit the best research talent in the world. (2) Commercialization Awards -- funds to help companies take ideas from concept to development to ready for the marketplace. (3) Matching Awards -- funds create public-private partnerships that leverage the unique strengths of universities, federal government grant programs, and industry.

Texas Industry Development Revolving Loan Program

Provides capital to Texas communities and eligible 501(c) 3 corporations at favorable market rates. The program supports eligible tax-exempt public purpose projects that stimulate economic development within the community. The loans are available with low cost, variable rate long term financing with the term of the loan not extending beyond the useful life of the assets and up to bond maturity in 2025.

Deal Closing Funds: Texas Enterprise Fund (TEF)

The fund can be used for a variety of economic development projects, including infrastructure development, community development, job training programs and business incentives. Before funds can be awarded, the Governor, Lieutenant Governor and Speaker must unanimously agree to support the use of the Texas Enterprise Fund for each specific project. Funds are used primarily to attract new business to the state or assist with the substantial expansion of an existing business as part of a competitive recruitment situation. To be eligible for Texas Enterprise Fund support, a project must demonstrate a significant return on the state's investment and strong local support. The review process will consider a variety of factors associated with each project, including job creation and wages, capital investment, the financial strength of the applicant, the applicant's business history, analysis of the relevant business sector, and public and private sector financial support.

Zone-based Benefits: Enterprise Zone Program

Designated projects are eligible to apply for state sales and use tax refunds on qualified expenditures. The level and amount of refund is related to the capital investment and jobs created at the qualified business site. In addition, local communities must offer incentives to participants under the enterprise zone program, such as tax abatement, tax increment financing, and one-stop permitting. Local communities must nominate a company as an Enterprise Project to be eligible to participate in the Enterprise Zone Program. Legislation limits allocations to the state and local communities per biennium. The state accepts applications quarterly with deadlines on the first working day of March, June, September and December.

Infrastructure: Texas Capital Fund Infrastructure Program

Administered by the Texas Department of Agriculture, this program is designed to provide financial resources to non-entitlement communities. Funds from this program can be utilized for public infrastructure (water, sewer, roads, etc.) needed to assist a business, which commits to create and/or retain permanent jobs, primarily for low and moderate-income persons. The minimum award is $50,000 and the maximum is $750,000. The award may not exceed 50 percent of the total project cost.

Infrastructure: Texas Capital Fund Real Estate Development Program

Designed to provide financial resources and encourage business development and expansions in non-entitlement communities. Funds must be used for real estate development (acquisitions, construction and/or rehabilitation) to assist a business, which commits to create and/or retain permanent jobs, primarily for low and moderate-income persons. The minimum award is $50,000 and the maximum is $750,000. The award may not exceed 50 percent of the total project cost. Funds are provided with no interest accruing and with payments based on a 20-year amortization schedule.

Workforce Training: Skills Development Fund

The Skills Development Fund program assists businesses and trade unions by financing the design and implementation of customized job training projects. Businesses and trade unions must partner with an eligible applicant in order to be considered for Skills Development Fund grants. Eligible applicants are public community or technical colleges, the Texas Engineering Extension Service or a community-based organization, with 501(c)(3) status, working in partnership with one of these institutions.



Appendix G

Benchmarking Sources



BENCHMARKING SOURCES STATE RESOURCES Florida

• Enterprise Florida, http://www.eflorida.com/ • Florida Department of Environmental Protection,

http://www.dep.state.fl.us/secretary/info/permitting.htm • Florida Department of Revenue, http://dor.myflorida.com/dor/ • Florida Department of Financial Services, http://www.myfloridacfo.com/wc/ • Florida Legislative Information, http://www.leg.state.fl.us/statutes/ • Workforce Florida, http://www.workforceflorida.com

Alabama

• Alabama Department of Commerce, http://commerce.alabama.gov/default.aspx • Alabama Department of Environmental Management,

http://www.adem.state.al.us/PermitWizard/default.aspx • Alabama Department of Revenue, http://revenue.alabama.gov/ • Alabama Department of Industrial Relations, http://dir.alabama.gov/ • Alabama Legislative Information,

http://alisondb.legislature.state.al.us/acas/ACASLoginFire.asp • Alabama Industrial Development Training Program, http://www.aidt.edu/

Georgia

• Georgia Dept. of Economic Development, http://www.georgia.org • Georgia Environmental Protection Division, http://www.gaepd.org/ • Georgia Department of Revenue, https://etax.dor.ga.gov/ • Georgia State Board of Workers’ Compensation, http://sbwc.georgia.gov/ • Georgia Legislative Information, http://www.legis.ga.gov/en-US/default.aspx • Georgia Quick Start, http://www.georgiaquickstart.org/

Michigan

• Michigan Economic Development Corporation, http://www.michiganadvantage.org/ • Michigan Department of Environmental Quality, http://www.michigan.gov/deq • Michigan Department of Treasury, http://www.michigan.gov/treasury/ • Michigan Workers’ Compensation Agency, http://www.michigan.gov/wca/ • Michigan Legislative Information, http://www.legislature.mi.gov/ • Michigan Works!, http://michiganworks.org/

North Carolina

• Economic Development: North Carolina Dept. of Commerce, http://www.thrivenc.com/ • NC Department of Environment and Natural Resources,

http://portal.ncdenr.org/web/guest • North Carolina Department of Revenue, http://www.dornc.com/ • North Carolina Industrial Commission, http://www.ic.nc.gov/ • North Carolina Legislative Information, http://www.ncleg.net/ • North Carolina Community Colleges,

http://www.nccommunitycolleges.edu/Business_and_Industry/CustomizedTraining.htm



Texas • Economic Development: Texas Economic Development and Tourism,

http://www.texaswideopenforbusiness.com/ • Texas Commission on Environmental Quality, http://www.tceq.texas.gov/ • Texas Comptroller’s Office, Texas Taxes, http://www.cpa.state.tx.us/taxes/ • Texas Department of Insurance, Division of Workers’ Compensation,

https://www.tdi.state.tx.us/wc/indexwc.html • Texas Legislative Information, http://www.statutes.legis.state.tx.us/ • Texas Skills Development Fund, http://www.twc.state.tx.us/svcs/funds/sdfintro.html

STATE COMPARISON REPORTS OR STUDIES

• Bureau of Labor Statistics, Monthly Labor Review, Evaluation of Employment at will policies, 2000, www.bls.gov/opub/mlr/2001/01/art1full.pdf

• Council on State Taxation (COST), The Best and Worst of Property Tax Administration, May 2011, http://www.cost.org

• ECOS Green Report, Simplifying the Permit Process: States Make Strides on E-Permitting, 2012, http://www.ecos.org/section/publications

• National Governors Association and the National Association of State Budget Officers, Fall 2011 Fiscal Survey of States, http://www.nasbo.org/publications-data/fiscal-survey-of-the-states

• The Tax Foundation, Location Matters, 2012, http://taxfoundation.org/article/location-matters/article/location-matters

• The Tax Foundation, 2012 State Business Tax Climate Index, http://taxfoundation.org/article/2012-state-business-tax-climate-index

• Texas Department of Insurance Workers’ Compensation Research Group, Comparison of State Workers Compensation Systems, 2004, http://www.insurance.tx.gov/wc/regulation/

• U.S. Chamber of Commerce, 2010 State Liability Systems Ranking Study • U.S. Department of Labor, Employment and Training Administration, Significant

Provisions of State Unemployment Insurance Laws, January 2012, http://ows.doleta.gov/unemploy/statelaws.asp#Statelaw

ADDITIONAL DATA

• American Petroleum Institute, http://www.api.org/ • Deloitte State Tax Matters, http://www.deloitte.com/us/tax/stm • DSIRE, Database of State Incentives for Renewables and Efficiency, http://dsireusa.org/ • Energy Information Administration, State Energy Fact Sheets, http://www.eia.gov/state/ • Fitch Ratings, http://www.fitchratings.com • Moody’s Financial Services, http://www.moodys.com/ • National Science Foundation, 2009, http://www.nsf.gov/ • Standard & Poor’s, http://www.standardandpoors.com/ratings/en/us/

Target Industry Competitiveness Study

September 13, 2012St. Pete Beach, FL

Mark Sweeney, McCallum Sweeney Consulting

Agenda

• Introduction to MSC and Avalanche• Project Overview and Process• Target Industry Analysis• Competitiveness Issues

2

Thank you to the following companies for funding this study for Florida and its communities:

Introduction to McCallum Sweeney Consulting and

Avalanche Consulting

3

MSC Clients

4

KasleSteel

Boy Scouts of AmericaSGL Automotive CarbonFibers LLC joint venture

American Titanium Works

Avalanche Experience

6

20+ U.S. States80+ RegionsEuropeMexicoSouth America

Project Overview and Process

7

Project Overview

8

This is an opportunity to enhance Florida’s competitiveness for its target industries and beyond.

STEP 1:Review Current

Policies, Practices, and Resources

STEP 2:Talk to Corporate Decision Makers

and Site Consultants

STEP 3:Talk to Regional

and Local Economic Developers

STEP 4:Conduct In‐House

Benchmarking Analysis

STEP 5:Develop Final

Report

Step 1: Reviewed Current Policies, Practices, and Resources (Incentives)

• Quick Action Closing Fund (QACF)• Qualified Target Industry Tax Refund (QTI)• High Impact Performance Incentive Grant

(HIPI)• Qualified Defense and Space Contractor

Tax Refund (QDSC)• Capital Investment Tax Credit (CITC)• Quick Response Training Program (QRT)• Incumbent Worker Training Program (IWT)• Economic Development Transportation

Fund• Rural Incentives• Urban Incentives• Brownfield Incentives• Enterprise Zones• Jobs for the Unemployed Tax Credit

Program (JUTC)

9

• Local Government Distressed Area Matching Grant Program (LDMG)

• Manufacturing and Spaceport Investment Incentive Program (MSII)

• Property, Sales, & Use Tax Exemptions• Expedited Permitting• Local Incentives• Local Ad Valorem Tax Exemption Programs• Local Impact Fee Deferrals• Corporate Income Tax Exemption• Innovation Incentive Fund• Research & Development Tax Credit• Research Commercialization Matching

Grants• Florida State Economic Development Trust

Fund (SEED)• Renewable Energy Production Tax Credit

Step 1: Reviewed Current Policies, Practices, and Resources (State and Regional Studies)

10

• 2010-2015 Strategic Plan for Workforce Development

• Florida Chamber Foundation – The Elements of Reform

• Florida Economic Action Plan• 2001-2011 Announcements• EFI Strategic Plan• JEDC Downtown Action Plan• Real Estate Brochures and Maps• 2003-2006 JAXPORT Marine Statistics• 2005-2010 Air Cargo Traffic Reports• 2010 JEA Electric Tariffs• 2005-2010 Worksource Strategic Plan• Workforce Florida Inc. Strategic Plan• Spotlight on the Audience• AFTA Creative Industries Report• Cultural Council Economic Impact Report• Spark Downtown Initiative Plan• Urban Focus Executive Summary• 2011 Book of Lists• 2003-2009 Tourism Economic Impact

Reports• CDMP Economic Element 2006• South Florida CEDS - 2007

• 2008 Annual Visitor Profile and Economic Impact Study• 2010-2015 Strategic Plan for Workforce Development• Broward County Targeted Industry Study Executive

Summary• City of Miami Target Industry Study Chapters 5 & 6• Greater Miami and the Beaches 2010 Visitor Industry

Overview• Enterprise Florida Incentive Descriptions• Knight Foundation – Soul of the Community Study• List of Completed Projects 2000 to Present• Mayor’s Economic Summit II Report – January 2002• Miami River Marine Industry Economic Assessment and

Profile• Miami-Dade Aviation Department Facts At-a-Glance• Miami-Dade County: Economic and Demographic

Profile – October, 2010• One Community One Goal Update• One Community One Goal: A Targeted Industry Study

for Miami-Dade County• One Community One Goal: Original OCOG Reports

1997-1999• Qualified Targeted Industries List• Target Industry Update Final January 2010• WorldCity’s Who’s Here Global Economic Impact Study

Step 1: Reviewed Current Policies, Practices, and Resources (Other)

• Taxes• Regulatory Climate• Economic Development Practices

11

Step 2: Talked to Corporate Decision Makers and Site Consultants

• Conducted interviews with companies and/or consultants in each of Florida’s target industries– Received 42 projects from Enterprise Florida and 68 projects from

others (utilities, regional groups, locals, etc.)

• Surveyed the Site Selection Guild

12

Step 3: Talked to Regional and Local Economic Developers

• Interviewed top level state officials– Enterprise Florida - Chief Executives: Gray Swoope, Melissa Medley,

Griff Salmon– Enterprise Florida – Business Development: Crystal Sircy, Rob

Sitterley, Marty Wilson– Florida Economic Development Council (FEDC): Amy Evancho, Ed

Schons– Department of Economic Opportunity (DEO): Michelle Dennard, Director,

Division of Strategic Business Development– Workforce Florida: Chris Hart, President / CEO; Andra Cornelius, Vice

President of Business and Workforce Development Opportunities

• Surveyed regional and local developers

14

Step 4: Conducted in-house benchmarking analysis

• Benchmarking States– Alabama– Georgia– North Carolina– Michigan– Texas

• Analysis– Target Industries– Taxes– Incentives– Regulatory Climate– Economic Development Practices

16

Target Industry Analysis

17

Aviation / Aerospace

• Key Competiveness Issues• Continued growth in the sector with growing regional competition.• Opportunities in large and small aircraft, these activities can cross over into

advanced materials and related supplier parts production.• Aggressive high value incentives at state and local level will be important

• Enhancements for Florida• Increase portfolio of ready sites, particularly those with runway access• Training is key critical driver for companies and winning states are putting multi-

thousands of dollars per job into training, and also enhancing training capability• Incentive enhancements would follow these issue – significantly enhanced

industrial training resources, and developing a portfolio of ready airport sites

18

Niche Sectors: Aircraft & Aircraft Parts Manufacturing, Maintenance Repair & Overhaul of Aircrafts, Navigation Instrument Manufacturing, Flight Simulator

Training, Space Vehicles and Guided Missile Manufacturing, Satellite Communications, Space Technologies, and Launch Operations

Clean Technology

19

• Key Competiveness Issues• Broadly defined dynamic sector with cutting edge and often risky technologies;

focus on renewable energy generation, energy storage, green activities including mobility, lighting, etc.

• Opportunities in solar and wind energy generation, energy storage; these activities can cross over into advanced materials and process improvements associated with more traditional products.

• Florida presents a very large “local market” to prospects

• Enhancements for Florida• Up front costs and finance are important, so FL-focused capital funds as well as

elimination of sales tax on machinery and equipment will be important.• Recruitment of specialized engineering talent and upper management are

important and so call on FL to enhance its business image relative to tourism• Electric reliability and costs are often critical as well

Niche Sectors: Biomass and Biofuels Processing, Energy Equipment Manufacturing, Energy Storage Technologies, Photovoltaics,

and Environmental Consulting

Financial / Professional Services

20

• Key Competiveness Issues• Large important office sector in which Florida has and continues to have

success.• Cost savings relative to major finance centers (NY and SF), established

presence of workforce (concentrations in Broward and S. Florida as well as Tampa and “Wall Street South”), and record of success in spite of disaster risk are all strengths of Florida

• Enhancements for Florida• Infrastructure costs will be focused on electric reliability and costs, and road

infrastructure as it relates to commuting.• Job-based incentives will be impactful, supported by training incentives• Continued improvement of FL’s business brand will help overcome executive

reluctance to relocate critical operations (or him/herself) to FL

Niche Sectors: Banking, Insurance, Securities & Investments, Engineering, Legal, Accounting, and Consulting

Homeland Security / Defense

21

• Key Competiveness Issues• Broadly defined dynamic sector with cutting edge and often risky technologies;

typically tied to direct or indirect federal government funding• Opportunities in aviation (unmanned vehicles) and information technology will

be primary sources of projects and be realized in such areas as aviation, shipbuilding, simulations, etc.

• Florida’s federal representatives will play an important role

• Enhancements for Florida• Portfolio of sites, large and small, airport access and Class A, urban sites in info

tech centers, even large remote sites, may all be sought by different prospects in this sector, so a strong diverse portfolio of ready sites is an advantage.

• Recruitment of specialized engineering talent and upper management are important and so again calls on FL to enhance its business image relative to tourism

• Electric reliability and costs are often critical as well• Land incentives will be well received by prospects

Niche Sectors: Optical Instruments, Navigation Aids, Ammunition, Electronics, Military Vehicles, Shipbuilding & Repair, Computer Systems

Design, and Simulation & Training

Information Technology

22

• Key Competiveness Issues• Challenge for Florida is its surprisingly strong presence of IT skills in the

workforce, but lack of a concentration of stand alone IT firms. (No “Silicon Peninsula” positioning.)

• Image and communication are critical• Capital sources find promising opportunities in FL but tend to tie investment with

relocation to hubs such as CA and MA

• Enhancements for Florida• Aggressive development of local, regional and statewide information technology

networks, including physical urban concentrations• Better direct communication between universities and their resources and

young IT firms• Electric reliability and costs are often critical as well, and tie to broader concern

re disaster disruption risk, so infrastructure hardening is important• Development of capital sources friendly to keeping start up firms in FL.

Niche Sectors: Modeling, Simulation & Training, Optics and Photonics, Digital Media, Software, Electronics, and Telecommunications

Life Sciences

23

• Key Competiveness Issues• Florida appears poised for potential increase in activity in Life Sciences.

Leveraging the impact of the major research instititutions of Scripps and Planck is showing success

University of Miami is in the marketplace with its Life Science center• Capital sources find promising opportunities in FL but tend to tie investment with

relocation to hubs such as CA and MA• Natural disaster risk is front of mind for large life science projects

• Enhancements for Florida• Better direct communication between universities and their resources and

young Life Science firms• Electric reliability and costs are often critical as well, and tie to broader concern

re disaster disruption risk, so infrastructure hardening is important• Development of capital sources friendly to keeping start up firms in FL.

Niche Sectors: Biotechnology, Pharmaceuticals, Medical Devices, Lab & Surgical Instruments, and Diagnostic Testing

Manufacturing

24

• Key Competiveness Issues• Challenge for Florida is its geography – parts of Florida are one days drive to

the mainland.• Florida targets are those operations that will serve Florida, and high value

products for whom shipping is a modest relative cost.

• Enhancements for Florida• Development of broad statewide portfolio of ready sites• Ease of incentive granting for sites and infrastructure• Increased funding for, and Governor’s authority over, Quick Action Closing Fund• Upgrade of state industrial training resources and training incentives• Communities prepared to offer ready sites with all infrastructure at no cost to

the prospect.

Niche Sectors: Food and Beverage, Automotive & Marine, Plastics & Rubber, and Machine Tooling

Corporate Headquarters

• Key Competiveness Issues• Primary challenge for Florida is image – a great place to come have

fun, not recognized as a place to come establish your HQ. (The “fun” image actually works against the “work image.)

• Strengths include very good air service both domestic and international excellent regarding Latin America, weal regarding Asia)

• Florida successfully targets those operations seeking a hemispheric presence from which to serve North and South America

• Lack of F500 HQ concentration, so some concern re headquarters level legal and financial services

• Enhancements for Florida• Image and campaign.• Promotion of air service assets• Promotion of Florida’s Quality of Life assets (more than just their visit

assets)• Relocation cost incentives (prime target for enhanced Closing Fund)

25

Global Logistics

• Key Competiveness Issues• Challenge for Florida is its geography – parts of Florida are one day’s

drive to the mainland.• Florida targets are those operations that will serve Florida

International and perishable goods best fit for FL distirbution• Locations in northern Florida that provide access to Florida and much

of southeast US within one day’s drive time.

• Enhancements for Florida• Development of broad statewide portfolio of ready sites, particularly

distribution focused in the northern part of the state• Ease of incentive granting for sites and infrastructure

Electric (including redundant power) and transportation most critical• Upgrade of state industrial training resources and training incentives• Communities prepared to offer ready sites with all infrastructure at no

cost to the prospect.

26

Competitiveness Issues

27

Cost of Doing Business

Recommendations• Modernize Taxes

– Implement Single Factor Sales Appointment Formula for Corporate Income Tax

– Eliminate Sales Tax on Commercial Leases• Streamline Permitting Process• Establish / Strengthen Liaisons with Other State Agencies

28


Real Estate and Infrastructure

29

Recommendations• Continue to Develop Portfolio of Sites and Buildings

– Up-to-Date Database– Certified Sites Program

• Enhance Rural Economic Development Toolbox• Leverage Partnerships with Utilities• Increase Use of Utility Economic Development Riders

Talent and Training

Recommendations• Improve Quick Response Training (QRT)

– Increase Funding for Workforce Training– Establish Capability through Program Talent Acquisition

• Improve Existing Industry Relationships• Market Current Workforce Talent Assets• Improve Project Management Tactics• Align Training with Targets

– Compile Database– Collaborate with Education Institutions

30

Incentives

Recommendations• Streamline Incentive Authorization Process

– Continue Improvement between Enterprise Florida and Department of Economic Opportunity

– Increase Governor’s Authority to Offer Incentives• Enhance Economic Development Toolbox

– Implement County Tier System– Revise Wage Levels for Incentive Eligibility

31

Incentives, continued

Recommendations• Improve Flexibility and Effectiveness of Existing Programs

– Eliminate Rarely Used Incentives– Standardize Local Match Requirements– Establish Carry-forwards for Corporate Income Tax Incentives– Commit to Full Sales Tax Exemption on Machinery and Equipment

• Increase Up-front Incentives• Create Option for Local Sales Tax to Benefit Economic

Development

32

Economic Development Strategy / Branding

Recommendations• Increase Funding• Promote Florida’s Business Brand• Align Marketing to Target Industries

33

Economic Development Administration

Recommendations• Develop Staff

– Professional Development and Industry Expertise• Strengthen Ally Networks

– Regional/Local and Utilities• Expand Project Management Team / Prepare for Increased

Interest in Florida• Improve Professionalism of Staff

– Cultural Training and Prospect Visit Management

34

Mark M. SweeneySenior Principal

[email protected]

McCallum Sweeney Consulting550 South Main Street, Suite 550

Greenville, SC 29601

864-672-1600 (main)864-672-1610 (fax)

www.mccallumsweeney.com

35

MSC Contact Information

table of contentsfcmavoice.com/2012competitivenessstudy.pdf · florida target industry...

Documents