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Guest Commentary: Business incentives are a wise investment in our future
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What makes companies choose to locate or remain in Collier County? You may be surprised to hear that for a major sector of businesses, it’s not “quality of life.”
Accessible transportation, labor costs and tax structure are far more important to corporate executives than golf courses and a warm climate. Quality of-life issues — especially crime rate and health care — are considerations, but a positive revenue stream is the bottom line, and if a company can make more money in another, less-desirable location than Collier County, it will do so.
So what does Collier County have that companies want? Take a look at the Top 10 site selection factors ranked by U.S. corporate executives below. Collier County is exceptionally well-positioned in terms of accessible highways, with the aggressive road-construction program that has expanded coastal roads as well as opened greater accessibility to eastern Collier County. Florida is a right-to-work state with favorable union and labor relations and our utilities maintain a steady energy supply. And thanks to the leadership of our county commissioners, coupled with programs at the state level, we have demonstrated that we remain committed to doing what is necessary to create an environment that is welcoming to businesses that addresses the need for lower costs, accessibility and strategic incentive programs directed toward the types of high wage jobs our community desires.
According to Area Development magazine’s 2007 Corporate Survey of Site Selection Factors, the top 10 factors are:
1. Highway accessibility
2. Labor costs
3. Energy availability and costs
4. Availability of skilled labor
5. Occupancy and construction costs
6. Availability of land
7. Corporate tax rate
8. State and local incentives
9. Environmental regulations
10. Tax exemptions
Incentives are commonly used to:
• Secure new and expanded business investment and employment that would not otherwise occur, thereby increasing the state and local tax base;
• Encourage growth in business sectors and special needs areas;
• Raise the prevailing average wage rate, thus increasing wealth generation.
Collier County and Florida’s incentive programs are performance-based, meaning state and local areas benefit from the project before any refunds are paid. Collier County and Florida’s incentives link tax relief and grants to quality job creation, high wages and new capital investment.
According to Area Development magazine, “Whether the impact of incentives is short-term in offsetting the up-front costs of an investment or longer term in reducing operating costs, the effects of inducements can have a significant impact upon the competitiveness of operations at alternative sites. We have seen numerous occasions where a company’s initial preferable location for investment was upended by the impact of incentives upon startup and operational costs. In some cases, the impact has been significant enough to reverse decisions that were far along in the corporate approval process.
“Incentives not only influence decisions regarding alternative locations for investment, but may also be the determining factor as to whether an investment with a single location option goes forward. ... State and local taxes and incentives will continue to be a key factor in location decision-making.”
The Collier County Economic Stimulus Program, established in 2003, has had an annual average allocation of $1.3 million. Companies participating in the program have only used approximately $420,000 of this annual average allocation, returning more than $5.6 million to the general fund in direct funding allocation.
As a result of the financial commitment to the Economic Stimulus Program, the companies participating in the program have impacted the local community by creating and retaining more than 1,500 jobs at an average wage of over $50,000. In addition, these companies will provide $103 million economic impact in just the first year of operation and annually pump more than $40 million into the local economy in employment and wages. For every $1,000 invested in these programs, our community realized a $50,000 return on that investment.
The recent real-estate downturn in our area and related job loss has demonstrated why now, more than ever, we need to focus on attracting and retaining targeted industry cluster businesses that will create high-wage jobs for our citizens and their children. We need to invest today in order to make our future economy diversified, vibrant and strong.
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According to the list, corporate welfare in the form of cash incentives and tax breaks are at the bottom of what "real" businesses want.
Let business know we have the other 8 factors and they will come.
#1 Posted by Bramble on May 4, 2008 at 4:58 a.m. (Suggest removal)
Tammy, Exactly who pays your salary and where does that money come from? What is your agenda? We don't need more corparate wellfare. If a business can't make it on thier own here in Naples they can't make it anywhere.
Many southern states gave big tax breaks and land to people like you promising good paying jobs. When the tax breaks ran out the jobs continued south to Mexico.
#2 Posted by bossman1 on May 18, 2008 at 4:40 p.m. (Suggest removal)
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