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Roundup 6-14-2013

June 14, 2013

Economic Development – Amazon

There was late word this week that there is a possibility that a large warehouse will get built in Hillsborough County. Because it came so late, we have not had time to fully consider it, but this is our initial reaction.  First, what is the proposal?

Amazon officials couldn’t be reached Thursday, but details of the proposal were included in a packet of information provided to Hillsborough County commissioners.

As part of the agreement, Hills­borough officials will be asked next week to approve nearly $6.6 million in financial incentives for Amazon.

In exchange, Amazon would create 1,000 jobs in the South Shore area of Ruskin near State Road 674 and Interstate 75, and invest up to $200 million in a massive “state of the art facility.”

Of the 1,000 jobs, 375 would be “higher-wage quality jobs,” according to the county, with average annual pay of $47,581.

First, aside from the sales tax issue, we are fine with Amazon building a distribution center. (It will be one of around 50 in the US, so not so unique. Here is list, though we are not sure how accurate it is.)  We think the number of jobs is good.  We do not think that the “higher-wage jobs” are really what we mean by high wage jobs.  (In fact, that average is less than the average non-degree STEM job in the Tampa Bay area. ) and let us be clear, that average that creates “higher-wage” jobs is only drawn from only about a third of the jobs; what happens when you include all the jobs? (We doubt the average goes up.)   The real value of the project would be its scale, not the quality of the jobs.  It is good to have those jobs, but they are not going to make our economy boom.

What is more interesting is the reaction by County Commissioners:

“This is a grand slam for South Shore,” said commission Chairman Ken Hagan. “It’s an extraordinary opportunity for Hillsborough County.”

Commissioner Sandra Murman, who represents the area where the distribution center is being considered, said she’s “ecstatic.”

“This is the big silver bullet we’ve needed to kick off our economic development efforts,” Murman said.

Sounds almost exactly like the hyperbole that we were told about the Estuary/Bass Pro Shops deal, which actually makes us less enthusiastic about this project. (And we just have to note that maybe the County should have saved the money given to the Estuary/Bass Pro Shops project so they could pay for this proposal.)

Once again, we are not against the proposed idea (we have not had enough time to consider the incentives), but let us be clear: this is a warehouse, not a programming center or research and development hub.  How is it different from any other big retail warehouse?  (Just because it is by Amazon does not make it tech.)  How is it going kick off economic development efforts unless those efforts have nothing to do with knowledge based, high tech jobs?  And with all due respect, a warehouse is not a grand slam; a head quarters is.  (That is why young professionals move to Seattle, where Amazon is building a new HQ.)

We are fine with the warehouse but are not sure about the incentives. (We really do not appreciate the timing of announcing possible incentives less than a week before a vote on them.) What we would really like to know is what spin-off work will come from this?  (For instance, will Amazon start using the Port to bring in goods?)  That would make a difference.

Downtown CRA – Money Grab ?

There was an interesting article in the Tribune about the Downtown Tampa Community Redevelopment Agency.  First, what is the CRA?

The pot of money in question belongs to the Downtown Tampa Community Redevelopment Area, a special taxing district under Tampa City Council control that funds projects to improve downtown. That district keeps a cut of the property taxes generated downtown through a complex process called tax-increment financing, or TIF.

Its cut of the property tax pie is no small sum, nearly $13 million this fiscal year.

At the moment, most of that money is spoken for. The Community Redevelopment Area, or CRA, currently uses nearly all of that $13 million to pay down bonds for the Tampa Convention Center. However, by 2015 those bonds will be paid off and the money will be freed up.

Ok, a program with targeted money collected to improve downtown.  Easy enough.  What is the issue?

In October 2011, a group of businessmen from the Tampa and St. Petersburg chambers of commerce was studying how to pay for a new Rays stadium. The group approached Buckhorn’s staff at the city and asked them how much Tampa, theoretically, could put toward a stadium.

The answer: as much as $100 million. The city theoretically could raise that much by issuing bonds, paid for with that $12 million or $13 million in annual property tax revenue.

That got the public’s attention, but it came with a few caveats.

First, Buckhorn and his staff stressed that they weren’t committing to anything and were just speculating about what is possible. Second, Buckhorn has said the city might be willing to commit tax dollars to the roads and infrastructure surrounding a new stadium, but less likely to help pay for the stadium itself.

Finally, Buckhorn has insisted that he isn’t trying to lure the Rays away from St. Petersburg.

So, in theory, the money could be used on a Rays stadium.  Just an idea.  What is the issue?

Crist, the county commissioner, said Hillsborough County deserves a cut of the money generated downtown through tax-increment financing. About half of the $13 million raised every year actually comes from county taxes, while roughly the other half comes from city taxes, said Bonnie Wise, Hillsborough County’s chief financial administrator.

Up to now, the County Commission has allowed the city to keep all of the money to use for important downtown projects, such as the Tampa Convention Center. However, the Downtown Tampa Community Redevelopment Area must be reauthorized in 2015, and the city and county are in early negotiations about the issue. For now, it’s not clear the County Commission will forgo its cut of the money any longer

Crist, for example, yearns for a major renovation of the blighted neighborhoods around the University of South Florida in Tampa. Perhaps, Hillsborough County could keep some or all of the money it turns over to the city every year and use the savings on the university area and other county needs, he said.

“In previous years, the county has just said yes and gotten nothing in return,” Crist said last week. “If it’s that important to the city and the mayor, why not make it a fair exchange?”

Huh?  The money is supposed to go downtown.  How is taking it and using it somewhere else – this being Hillsborough County, most likely to subsidize roads for a developer – a fair exchange?  That is no exchange at all; it is simply reducing the money for downtown.  We have no problem if the County keeps the money but it is ACTUALLY used downtown, but why would the money go somewhere else?  The real question is why the County has money to subsidize developers and strip malls while claiming poverty. On the flip side, another commissioner is way too specific about projects downtown:

Hagan wants to consider the county’s needs for the money, but he also wants a provision written into the Community Redevelopment Area’s new contract, naming a Rays stadium or any major project by Vinik as priorities for the money. He specified Vinik because the Lightning owner has poured about $40 million of his money into renovating the Forum.

What is the purpose of having a specific provision for spending the money on two theoretical ideas that no one knows any details about?  While either project may, at some point, be worthwhile, why be specific at this point?

Whether CRA money is used on a stadium or otherwise is a discussion to be had.  Since there are no detailed ideas out there, we can’t really have it now.

Our view is simple – reauthorize the CRA. Then determine what the best use is.  There are a number of possible uses, and some that probably haven not been considered yet.  There is no need to specifically target the program to a project that does not even exist yet.

Pinellas – Leading Again

For a while now we have been saying that Tampa should have changed its code to require more urban designs a long time ago.  While it takes some time,  it can be done in house without paying consultants.  There is no question that Tampa is thought of as a sprawl-centric city – mostly because it is. (See Coming Out Watch below) Even when buildings are built to the sidewalk, they often do not face the street – for instance, they often have no door to the street, which is necessary for any walking neighborhood.  Any idea of transit or creating vibrant areas will require changing the code – and not settling.  Until now, nothing has really happened.  (We have not said anything elaborate about Hillsborough County, which lives for sprawl, because, as it functions now, there is little hope that it would do anything useful in that respect.)

As with transit, Pinellas County is once again embarrassing Hillsborough.  Pinellas County is reviewing its codes with an eye to creating a more urban environment, especially in light of its possible adoption of rail in 2014:

One of the key arguments for building a light rail system in Pinellas County is that it would kick start urban renewal. People could live closer together, walk to buy their morning coffee and take the train to work.

But for any of that to happen, the county’s antiquated land use and zoning policies need to be rewritten, a process county officials have already begun.

Pinellas’ land codes, which tell developers what they can build where, still read as though the county was full of open territory with for sale signs sunk into the grass. But there’s little of that land left — less than 6 percent of the unincorporated area is vacant — and what does remain is often untouched for a reason.

To promote redevelopment, county officials are planning to tweak the codes to make Florida’s most densely populated county feel that way.

Developers would be encouraged to build commercial properties next door to or on the ground floor of residential buildings. New buildings could sit closer to the street instead of placing vast parking lots between their front doors and foot traffic. And, if commissioners approve, the county might increase the number of units allowed per acre.

So what are the ideas?

Currently, Pinellas allows a maximum of 12.5 units to be built per acre, but many cities within the county have an upper limit of 30 units, the new standard the County Commission will debate. The board is meeting Thursday to review the proposed land use changes.

County officials are also hoping that new land use codes will encourage developers to buy up and revive vacant strip malls and shopping centers

Other proposals are aimed at making the county more pedestrian-friendly. They include encouraging developers to install windows on the ground floor of buildings — an attempt to prevent boxy, anonymous architecture — and regulations calling for better sidewalk design.

Those are generally fine, but the issues will be in the details and the execution.

Unfortunately, much of Pinellas County is not governed by the Pinellas County code; cities rule.  The problem with that can be seen in Largo, which is soon going to see a Wal-Mart built  right next to the proposed location of a light rail stop. (See map here)  That would be theoretically ok if the Wal-Mart were built in an urban way and one did not have to navigate a sea of parking, but we doubt that will be the case.  More likely this will be just another example of the Tampa Bay area’s counterproductive settling for transit disoriented development.

Nevertheless, the real point is that Hillsborough County (and Tampa) are way behind on transportation and, apparently, changing the codes. While they dally, others are acting.

Coming Out Watch/Economic Development

As a continuation of our last Coming Out Watch, we have another reference to a recent book, The Unwinding.  This reference arises in the context of the increasing popularity urbanism in the United States in light of the wishes of millennials, who are supposedly a main target of our economic development efforts.  From the Financial Times article entitled “The future of the American city”,  specifically discussing the problems with suburbia:

“In suburbia no one can hear you scream,” says a character in The Unwinding, a new book by George Packer that explores America’s changing undercurrents. As another of Packer’s characters says about Tampa, one of the most suburban, multi-lane cities in the US: “No encounters ever happen by accident in Tampa. Or if they do, they’re traumatic.”

Apparently the RNC did not have marketing effect that was advertised.

Speaking of economic development efforts, particularly knowledge based industries, there was another quote from the Financial Times article that was of interest:

In despair over City Hall’s standard revival package – often little more than tax breaks for new sports stadiums and Vegas casinos – the new urbanists believe the only worthwhile goal is to attract talent. Good jobs will follow. As Michael Bloomberg, mayor of New York, told the FT last year: “Talent attracts capital, not the other way round.”

(Whatever you think of some of the policies of the Mayor of New York, he knows about capital.)  In other words, wealth flows toward talent, and, as the rest of the article discusses, talent flows towards real cities with urban environments and a variety of choices of lifestyle.  Are the County Commission and City listening?  How many more articles in the national and international press that present the image of our area as backward and unappealing to those you say you want to attract do you have to see before you change the code and fix transportation?

Economic Development – Looking at Wages

The Times ran a column about the Tampa Bay area’s economic performance.  It is all interesting, but the section on wages comes close to what we keep saying:

Tampa Bay’s personal income: In 2009, Tampa Bay’s per capita personal income (that’s personal income divided by population) was $35,839. That figure rose nicely in 2010, climbing 6.2 percent to $38,048. It rose again in 2011, although at half the previous year’s pace, up 3.2 percent to $39,261.

Is that good? In 2011, personal income grew an average 5.2 percent across all larger metro areas in the country. That means Tampa Bay lost significant ground against other metros areas. Per capita personal income for the nation in 2011 averaged $41,560, or nearly 6 percent higher than here.

We don’t have 2012 data yet to see how Tampa Bay personal income fared. Statewide last year, personal income rose 3.2 percent (still slower than the national 3.5 percent gain) to $40,344.

Translation: While we are creating jobs, they are mostly lower-wage positions. That trend raises some questions.

First, Tampa Bay’s housing prices are starting to rise, climbing 10 percent in the past year. Unless income keeps pace, more would-be buyers will be squeezed out. That could lower the demand for homes amid a still-vulnerable housing recovery, and dampen the enthusiasm of relocating businesses if they sense area housing affordability is weakening.

The dominance of lower-wage work also sends a message to young people that better-paying opportunities may lie elsewhere.

And second, Florida Gov. Rick Scott has pinned his record as governor and his principal argument to be re-elected in 2014 on Florida’s jobless rate falling dramatically during his term. But too many of those are low-paying jobs.

The United States keeps adding jobs that pay more. Tampa Bay needs to try to close the gap.

The main thing that we would change in the quoted section is that Tampa Bay does not need to just try to close the gap – we need to close the gap or the brain drain will continue.  And we need to stop subsidizing retail and other low paying jobs because “[t]he dominance of lower-wage work also sends a message to young people that better-paying opportunities may lie elsewhere.”

When you add to that the idea that talent attracts capital and urban environments with real transit attract talent, you see the problem we actually have.  Low wages and poor planning lead to a brain drain, which leads to less capital, which leads to fewer high wage jobs and less money to invest in infrastructure and planning.  And so on, year after year, while our competitors move forward.

Economic Development – This is Not an Excuse for Diminished Expectations

Continuing the theme of wages, we have often noted that the Tampa Bay area has low average wages and needs to work hard to develop its higher wage and knowledge based economy.  Local governments have also said that such development is a goal of theirs, though what they actually do may not show it.  We have also often said that this area settles for the easy way, hyping it up, and ignoring its deficiencies.

Recently, the Brooking Institute issues a report on STEM jobs nationwide. (And we feel the need to point out that not all knowledge based industries are STEM industries). The report examined various metropolitan areas, looking at the number of STEM jobs, including “hidden” STEM jobs.

Workers in STEM (science, technology, engineering, and math) fields play a direct role in driving economic growth. Yet, because of how the STEM economy has been defined, policymakers have mainly focused on supporting workers with at least a bachelor’s (BA) degree, overlooking a strong potential workforce of those with less education but substantial STEM skills. 

We have no problem with that.  As Bill Gates shows, you do not need a degree to be successful in STEM fields.  On the other hand, we find it hard to believe that on average STEM workers without college degrees generate the same revenue and income that those with degrees do.  Moreover, having a higher number of productive workers with degrees creates more opportunities for those without by creating a bigger STEM base generally, not to mention the increase in economic activity by having both higher and lower wage jobs.

In an article entitled “Lower-tier STEM jobs may benefit Tampa area,” (they may, but is it at a rate higher or lower than the rest of the country?) the Tribune laid out some facts:

STEM wages for jobs that require a bachelor’s degree averaged $79,933 in the region, compared with non-STEM jobs requiring bachelors degree of $62,985.

For jobs requiring an associate degree or less, STEM jobs averaged $49,141 compared with the non-STEM average of $30,442.

This just makes our argument for us.  While there definitely should be training support to fill the lower level jobs, the higher level jobs are the real drivers of growth and economic development.  And, as we said, attracting the higher level jobs will create more demand for the supporting lower level jobs.  It is not at all clear that the converse is true.

More to the point, how does the Tampa Bay area rank?

The Brookings report indicated the Tampa-St.Petersburg-Clearwater metropolitan area had 207,470 STEM jobs in 2011, 19.2 percent of all jobs in the area. The local metropolitan area ranks 66th among 100 major U.S. areas in STEM job share.

Same percentage (though clearly not same number of jobs) as Little Rock.   Not very good (though as a percentage of all jobs better than Miami at 17.2% and Orlando at 17.9%.  Of course, they have larger tourism sectors that may skew the numbers).  And doing a quick comparison of STEM job salaries in the Tampa Bay Area and some other areas, we note that the average wage in the Bay area is $63,996 compared to Austin at $70,161, Charlotte at $70,486, Raleigh at $67,176, Houston at $73,585, Minneapolis at $73,819, Phoenix at $68,175, Denver at $74,135, Salt Lake City at 65,481, Miami at $66,540, Jacksonville at $63,167, and Orlando at $60,739 .

The point is this – we appreciate that local economic development officials have identified STEM jobs as important.  Setting aside whether they are really working effectively to attract them, they need to be targeting the higher wage jobs that support the lower wage jobs, and we need to get the average wage higher to attract more talent.  We should not settle for just targeting the lower tier or think that is the best we can do.  And we should definitely not think that subsidizing low wage retail is a rational economic development policy.

TIA – Compare and Contrast

A while back we wrote about the new master plan for Tampa International, which included scrapping plans for a second landside complex for a while and renovating the present landside terminal so it can handle growth at the airport.  This week, we learned that things are not quite as smooth in Orlando.

Nearly a year’s worth of talks have broken down between leaders of Orlando International Airport and its biggest, most important airlines over how much rent and other fees the carriers must pay — costs that ultimately could be passed on to travelers.

* * *

Key to the dispute is the airlines’ firm opposition to a proposed $2.1 billion expansion at the airport.

The airlines sent off the first memo to airport board Chairman Frank Kruppenbacher on May 30. Covering five pages, it called the airport’s plan for a second terminal, parking garage, train depot and related roads and utilities flawed and unneeded.

“No domestic or international carrier has voiced any desire to move their operation to the proposed, new south terminal,” said the memo, which was collectively signed by the 14 busiest airlines at the airport.

Among the carriers opposing airport plans are Delta, Southwest, JetBlue, United, British Airways, Virgin Atlantic and CopaAirlines.

You can read the article for all the details of the dispute.  We are just happy that those in charge of TIA have avoided problems like this.  Hopefully, we will get some international flight announcements soon.

PTC – Free Market, What Free Market?

Once again, there are (good) questions about the Hillsborough County Public Transportation Commission (see website here).

When 100 or so young professionals came together for last week’s Emerge Tampa Bay town hall meeting, most questions were about mass transit.

Then downtown resident Vinny Tafuro took the microphone.

How, he asked, can we “help generate the political will” to get rid of the Hillsborough County Public Transportation Commission?

During the Republican National Convention, he said, the PTC embarrassed Tampa by forcing Uber, a private-driver service that lets patrons use a smartphone app to call for a ride, charge at least $50 for a lift from downtown to Ybor City — triple its lowest charge in New York City. The reason: The PTC treated San Francisco-based Uber like a limousine service, not a less-expensive taxicab company.

Outraged, fans of Uber took to Twitter to denounce the sky-high fares, and Tampa’s creative class winced.

“It really didn’t look good,” Tafuro said, “so how can we remedy that?”

“We can eliminate the PTC, for starters,” said Mayor Bob Buckhorn, one of the Emerge Tampa Bay panelists.

So what is the PTC?

The PTC was created by a special act of the Legislature to regulate vehicles-for-hire in Hillsborough County — taxicabs, limousines, vans, basic life support ambulances and tow trucks.

It is notable that in all of Florida, only Hillsborough County has such a body.  There is bi-partisan support for getting rid of it.

In 2010, then-state Sen. Ronda Storms pushed for the elimination of the PTC, saying the agency had been “mired in scandal and controversy.” She compared it to Jabba the Hut, with “tentacles everywhere.” But nothing came of her effort.

* * *

Another Emerge Tampa Bay panelist, state Rep. James Grant, R-Tampa, said what happened with Uber “really bothered me.”

“It was certainly something that I felt was embarrassing for our city,” he said. “I think it sent as many chilling messages about innovation and our failure to embrace innovation as a region as it did (about) draconian regulations.”

Grant said he shared “the mayor’s sentiment and would love to work with some of you all as we go into next session, maybe see if I can get it done.”

And see here.  So it is old, archaic, and has bi-partisan support to get rid of it.  Why is it still here?  Aside from that being par for the course in Hillsborough County, the official reason:

Hillsborough County Commissioner Victor Crist, who chairs the PTC’s board, said people who criticize the agency don’t know anything about it.

“The bottom line is this: Hillsborough County has the highest customer service, the highest consumer protection, the highest industry standards of any county in this state,” Crist said.

“When you are in need of a taxi, a limo, a tow truck or another vehicle regulated by the PTC, you are going to get far better quality, service and security than you’re going to get anywhere else,” he said. “The reason is because we have the PTC, and we demand the highest standards of any county.”

The real reason:

Finally, Crist said, “there are reasons why we have hoops to jump through for companies that come in from the outside.”

“Gypsy companies” that come in for big events like the Republican National Convention “basically steal business from companies that are here trying to survive,” Crist said.

If local officials don’t protect local companies from being squeezed during the big events, then they won’t be able to survive during the slow times.

In other words, the PTC exists to stifle competition.  (Not to mention it is just another example of Hillsborough County not viewing this area as a region (see HART)).  We doubt that other cities have a complete dearth of cabs and tow trucks when there are no major events taking place.  And where is the evidence that there is a rash of muggings by cabbies in the rest of Florida?

And what services are we not getting because of this protectionism? Things like a local “gypsy company” that was squeezed by local cab companies  (here and here) And who knows what else?  (Obviously Uber and there are rumors floating around that one of the reasons there is not better shuttle service from some other counties and the airport is because of the PTC)

It is time to get rid of the PTC.

List of the Week I

Because we are trying to stick with our overall theme this week, our first list of the week is actually from November 2012 and is Forbes’ List of Cities With the Highest Average Paycheck.   As far as we can tell, this does not take into account taxes and cost of living.

The Top 20 are: San Jose; San Francisco; Bridgeport-Stamford-Norwalk, CT; DC; Houston; Hartford; Seattle; NYC, Oxnard, CA; Boston; San Diego; Sacramento; LA; Dallas; Raleigh; Baltimore; Denver; Detroit; Bakersfield, CA; and Titusville-Melbourne, FL.

Miami is 41st, Jacksonville is 55th, the Tampa Bay area is 57th

List of the Week II

Our second list of the week is the Culpepper Compensation Survey’s list of the U.S. Metro Areas with the Highest Salary Increases in 2013.

First place is Houston; followed by Austin, San Francisco, San Jose, NYC, Boston, Seattle, Charlotte, and DC (We have no idea why they list only nine.)

No Florida.

One Comment leave one →
  1. EJB permalink
    June 14, 2013 10:14 PM

    Where (what pot) is the money coming from for Amazon?

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