Enterprise Florida: Economic Development or Corporate Welfare?

Today, Integrity Florida, an independent ethics watchdog group, in partnership with Americans for Prosperity – Florida, released a research report titled “Enterprise Florida: Economic Development or Corporate Welfare”.

According to co-authors Ben Wilcox and Dan Krassner, “The report illustrates Enterprise Florida’s apparent conflicts of interest, appearance of pay-to-play and its practice of picking of winners and losers in the marketplace.”

The report states:

“Floridians have entrusted Enterprise Florida, a public–private partnership focused on economic development, with significant public resources to deliver high quality job creation results, yet the organization has failed to accomplish its goals. Why has Enterprise Florida struggled as an economic development program? To better understand its operations, we take a close look at the incentive agreements executed by Enterprise Florida in the 2012 fiscal year. We selected 2012 because it presents the most recent data. It’s also a year that the Florida Secretary of Commerce has boasted of being an exemplar of success, referring to previous years’ efforts as “marginal at best.”

In addition to illustrating the failure to meet legislative expectations, this report documents Enterprise Florida’s apparent conflicts of interest, the appearance of a pay-to-play scheme for winning favorable treatment and its repeated practice of picking winners and losers in the marketplace through targeted business, favoritism, and selective incentive deals.” [My emphasis]

The report finds:

1. Enterprise Florida has failed to meet its job creation objective: In 1992, the Florida Legislature created Enterprise Florida with an initial objective of creating 200,000 high-wage jobs by 2005. After operating for twenty years and despite negotiating more than 1,600 transactions involving economic development incentive agreements worth more than $1.7 billion,iv Enterprise Florida reports that only 103,544 jobs have been delivered since 1995 – half of their original target and eight years beyond its original target date.

2. Enterprise Florida has failed to obtain its required level of private sector support: As a public-private partnership, Enterprise Florida is expected to obtain private sector support to help pay for its costs of operation. The Florida Legislature required Enterprise Florida to obtain 50% private sector contributions by Fiscal Year 2000-01. As of Fiscal Year 2010-11, more than 85% of Enterprise Florida’s funding comes from government and less than 15% comes from the private sector.

3. Enterprise Florida has the appearance of pay-to-play: Enterprise Florida, while subject to the dominion and control of the Florida Legislature,viii collects on average $50,000 each from corporate members for about half of the seats on the organization’s board of directors.ix Several Enterprise Florida board member companies received incentive agreements and vendor contracts following negotiations with Enterprise Florida staff during the 2012 fiscal year giving the appearance of pay-to-play.

4. Enterprise Florida has apparent conflicts of interest: The Enterprise Florida Board of Directors and the organization’s staff have a relationship that may be a conflict of interest. Enterprise Florida staff bonus pay of nearly $500,000 ($427,500 for staff, $70,000 for President/CEO) in 2012 was provided by Enterprise Florida board member companies that were also Enterprise Florida vendors and others that were recipients of incentive deals in the 2012 fiscal year.

5. Enterprise Florida is picking winners and losers: A number of executed agreements detailed in the 2012 Enterprise Florida Incentives Report demonstrate clear state government favoritism of some companies and industries. Enterprise Florida issues unnecessary benefits packages to entice businesses that should already be attracted Florida’s business friendly environment. These benefits are not necessarily enjoyed by competitors across an industry or all businesses moving to or expanding in Florida.

Click here to read the full report.