Economic Development – Some Promise and Some Thoughts
This week, news came out that Citigroup was considering adding a significant number of new jobs locally:
The New York money center bank Citigroup, already a powerhouse employer in this market, is considering a plan to add up to 1,163 jobs averaging a hefty $75,000 and $90 million in capital investment at its Sabal Park campus near Interstate 75 in Hillsborough County.
It’s not a done deal. Citigroup has other locations where it could place such high-paying jobs, which involve work in accounting, legal, human resources and operational support. The deal here depends on whether state and local authorities can agree on an incentive package of just under $15 million — and whether Citigroup finds a better deal elsewhere.
That is a large number of jobs with what appears to be good salaries (of course, it could be few very high salaries among a large number of lower ones.) So what are the details?
Even if the Citigroup deal lands in Tampa, there is no guarantee all of the jobs will materialize. That’s why the state and local incentives are largely designed to be paid out over time, after the promised jobs arrive, said Hillsborough director of economic development Lindsey Kimball.
Wednesday’s meeting will require county commissioners to consider three different incentives. One, part of the QTI or Qualified Target Industry incentive, involves a county commitment of up to just under $1.4 million. The other two incentives, one for up to $1.4 million and the other for $600,000, are tied to job creation and performance standards. Combined, the county commitment could reach $3.4 million, spread over 10 years. With the state’s commitment, if it is approved, the total package would top out at a shade under $15 million.
From the reporting, the deal appears sound. We agree with this Times editorial:
Both the state of Florida and Hillsborough County have a dismal track record in making investment choices in attempts to create new jobs. In one of its most recent negotiating debacles, the county agreed to pay $6.25 million to entice Bass Pro Shops to locate near Westfield Brandon mall. In exchange, Hillsborough will get an influx of low-wage jobs and the negligible cachet of having a destination retailer that already has nine locations in Florida, including a store in Orlando and plans for another in Sarasota.
But the Citigroup deal is different. It is smartly structured to appeal to a company that already has a sizable local workforce. The deal also is designed to release incentive money gradually for higher-paying jobs, and it would build on an established office park near Interstate 75. Commissioners should commit the resources to help make Florida’s offer an attractive and competitive bid.
Given all the money the County has dished out over the years for far less worthy endeavors, it sounds like a bargain. (And just to show what a folly the Bass Pro Shops subsidy was, there was an article this week about various big box retailers looking for locations in the area – with no mention of asking the public to subsidize them.) And, in due course, the Commissioners approved the proposed incentive deal unanimously. (We’ll see what Citigroup does.)
Which leads us to an interesting item in the Business Journal.
The argument normally saved for private discussion and online forums gained stage time during the region’s first Startup Week earlier this month. On trial: how valuable is a developer’s “multiplier effect”?
Apparently, just counting the actual job numbers is not enough. So what is the debate?
Fostering high-paying jobs begets more jobs in services these spenders can now afford, Kimball said. She believes these jobs created by the multiplier effect also need measuring to better show economic development’s success.
As we have said on numerous occasions, yes, high-paying jobs lead to other jobs, which makes them a better target. On the other hand, we are not sure how you can accurately count the multiplier. Why not just wait for the spin-off jobs to materialize and then count them? Anything else seems like a bit of a fudge that serves rhetorical purposes far more than it does anything useful.
Now the other side:
“One great [product] developer making a great wage is a positive way of selling a message,” he said. “One great [product] developer making a great wage and supporting five people not making a livable wage is not what I want my Tampa Bay to be.”
He wants an organization such as Startup Week to measure the number of jobs created by the local startup scene. He wants local promoters of the startup space to better tell past and current successes.
We also agree with much of his point. Branch offices are easily trimmed and money does go out of the area. (Like this from this week.) On the other hand, the appeal of a headquarters is that many of those issues should not apply. (Subsidizing retail seems to play not part in the conversation – and it shouldn’t.) We do not really care if the HQ is a start-up HQ or a company moving here, though obviously it is easier for government officials to tout a big number of jobs of an existing company moving here. (It would be great if startups grew and kept their HQs here.) And that is really the point. Do not fudge the numbers. Count the jobs that actually exist (not just what is promised or speculated about – whether from a company moving or a “multiplier.”). And push on all fronts. Help the startups to grow the local economy and bring in other companies. Given our low income levels and the amount of competition from other areas, can there be another strategy?
We are not sure what there is to debate.
Downtown – Endorsement, Speculation & Branding
There was news about the Lightning owner’s project.
First, the Board of Governors of the university system recommended funding for moving the USF med school downtown, which was expected. (And if you are curious, here is an executive summary of the proposal. There are more documents here.) Now the legislature must actually fund it, which we figure will happen.
In other news,
“If we’re going to be serious about securing a headquarters user, we have to have product ready to go,” Abberger said Thursday. “So we’re in active discussions with our partner about making that decision.”
That “partner” in Vinik’s billion-dollar development plans is Cascade Investment LLC, the investment firm controlled by Microsoft Founder Bill Gates. SPP is working on getting the office component to “permit ready” status, Abberger said.
And some details on the idea for the building:
That building is to rise at the corner of Channelside Drive and N Morgan Street, across from the arena. It’s expected to be 400,000 to 500,000 square feet and taller than the 12-story USF building, which would be built on a much wider base. The new corporate headquarters would also have its own parking garage.
We are not going to comment on the business decision of whether to build a speculative building, and we certainly do not know the status of their discussions with potential clients. We will just have to see.
Finally, that leads us to a piece in the Times regarding possible names for the development. You can read the whole article for all the names, but there was this – which has a lot of merit:
“From where I sit as a mid 20s-something member of the ‘creative class’ (read: hipster) from a conservative family background, it feels like both young and old alike are looking for an authentic experience, not overt artifice,” Zac Taylor emailed about the Tampa project.
“This area already has a name. Actually, it has several names: downtown Tampa, the Channel District and, less formally, Channelside. Why can’t we stick to one and reinforce the growing ‘completeness’ of our downtown, rather than look for another gimmick?
“I don’t mean to sound overly cynical,” Taylor said. “Actually, I’m very enthusiastic to see Vinik act as a leader, and see rich opportunities in a project of this scope. Let’s push for the best project we can.”
Indeed. We’re ok with Channelside. (and we’re fine with beer, too.)
Economy – The Housing Market
There was an interesting article in the Tribune about rising rents and whether they will get more people to buy. We are not going to get into all that. There was one thing that is an interesting corrective to the real estate numbers that come out.
Of the 906 homes sold in Hillsborough County in November, 45 percent were purchased for either second homes or rental income. In Pinellas County, of 1,697 homes sold, 54 percent were purchased for second homes or investment, according to RealtyTrac, one of the nation’s leading sources for housing data.
A portion of the purchases most certainly is due to the flock of snowbirds that make their way to the Sunshine State each year and purchase second homes, said Daren Blomquist, vice president of RealtyTrac. But most of it is due to what are known as institutional investors, he said.
So about half of all purchases are not owner occupied. To us, that means that, even if houses are sold and prices go up, there is a weakness in the local economy – unless you are in real estate and, in particular, investing in properties with rising rents. While you should always expect some investors and second homes, a strong local economy would have a higher rate of owner occupancy.
Economic Development/Transportation – The Editorial
Last week, we discussed the County looking at expanding the urban services boundary. The Tribune had an editorial on the subject. We will not quote the whole thing, but it echoed much of our thoughts:
Hillsborough County City-County Planning Commission officials say the changes in Lutz and Balm — which are much further along in the review process — would address development that, thanks to past commission decisions, is taking place anyway. They believe it would result in more efficient use of the land.
County officials say that if the urban service boundary is extended below the Little Manatee River, the county would likely establish a special taxing district, where residents in the area would pay for improvements.
Extending the boundary might benefit a few select landowners and developers but won’t improve the county’s economic prospects or quality of life. Indeed, it would signal to business leaders and residents alike that Hillsborough is still wedded to the short-sighted growth policies that created the transportation mess now smothering the county.
Transportation – The Meetings Begin
Speaking of transportation, the first of the 36 outsourced public meetings took place this week:
Like Reyes, the more than 40 people who attended the first “Go Hillsborough” meeting Tuesday night had specific transportation issues they wanted to share with county officials. For Reyes, it was safety.
Quite the turnout. Even if you more than double the 40 to 100 for all 36 meetings, you have only spoken to 3600 people out of 1.2 million. In any event:
Tuesday’s meeting was the first of 36 workshops the county will hold as it works to develop a transportation strategy for coming decades. Unlike typical meetings where an audience sits and listens to a discussion leader, attendees at Tuesday’s meeting were free to walk around, look at exhibits and suggest road or transit options.
One board listed different categories of transportation and transit improvements, from smart traffic signals to expanded bus routes. Participants could stick red dots under the categories they thought were important.
Actually, over the years, there have been numerous meetings (not outsourced) where people could examine maps and boards, talk to planners, and draw all over maps. (and those meetings had many of the items in the outreach website.) They have led to where we are now – doing it again. Hopefully, this time will have a better result, but given the recycling of ideas, we are not sure.
At least there was this:
In addition to seeking people’s opinions, county officials also want to use the workshops as a means to educate the public about the condition of Hillsborough’s road system. For instance, one display titled “What are the conditions of our roads?” said over 30 percent of county-maintained roads are either in poor condition or getting there.
The not-so-subtle message: The county does not have enough money to keep up current roads, much less construct large thoroughfare expansions. To have large road, trail, bridge and mass transit improvements will require a tax increase.
And that is the point. Planning has been so bad (not to mention the failure of the impact fees process) that the County is in a huge hole. No one wants to pay more taxes, but there is no money to do what is needed, let alone move forward. At least that is telling the truth, which is good for the process. Though one has to wonder when you see this:
Betty Kinsey, who attends Mt. Olive A.M.E. Church where the meeting was held, placed her dots under intersection improvements, street enhancements and new and expanded bus routes. Kinsey said she’d also like to see more sidewalks in her neighborhood and around the church. “We need to make the streets work better, not only for passengers but for buses,” she said. “We also need sidewalks because a lot of students ride their bicycles. They need more protection.”
On the board where Kinsey was carefully placing her red dots, there was no category column for light rail. Someone grabbed one of the many available markers and drew a line and “Light rail” halfway down one of the columns. The new category soon had a cluster of red dots.
So light rail is not even an option the County is considering? Given that, the recycled ideas, and the political climate locally, having optimism in the results of this process is difficult. Of course, time will tell, but there needs to be far more leadership if anything truly useful is to get done.
Transportation – Did This Need To Be Said?
We wrote last week about the travails of the ferry proposal. As part of that, the County was said to be exploring different options for a station in South County. Then:
Hillsborough County Commissioners reaffirmed their support for high-speed ferry service between Apollo Beach and MacDill Air Force Base but cautioned that recent environmental and operational questions about the project need to be answered.
Commissioners approved 7-0 continuing the county’s agreement with HMS Ferries and Southswell Development until March 1, 2016. The agreement means the county will continue studying proposed sites for the ferry terminal and boat basin.
Commissioner Ken Hagan made the motion to continue supporting the project noting that the initial proposed terminal site at the Fred and Idah Schultz Preserve has drawn opposition, most recently by Port Tampa Bay Executive Director Paul Anderson.
It would have been very odd indeed to start looking for other locations (and spending money) if the County was not still interested in the project, but now support has been confirmed. Maybe this is why some felt the move was necessary:
Commissioner Al Higginbotham said he wanted to dispel “whispering” that he opposed the project, which, if approved, would call for the county to spend $20 million on construction of the terminal and purchase of ferry boats.
First, making sure ridership projections make some sense is fine. Second, any business can fail, but one can put items into any agreement that provide some protections. (For instance – and this is just an off-the-cuff idea and we have no idea if anyone would agree to it – the company could buy the ferries and the County pay for them over time so that if the service fails within that period, the taxpayers are not on the hook for more.) Third, speaking generally, many concerns about whether various Commissioners support any transit arise because historically (not just the two mentioned) many (most) Commissioners have so often failed to be actually supportive of real transit. Being more actively engaged and constructive may help alleviate that concern.
In any event, the service is still worth considering.
Ybor City – If A First You Don’t’ Succeed, Try Again
The Business Journal reports that City has put out an RFP for land in Ybor City.
The city wants to transform vacant, city-owned property along 7th Avenue. Specifically, the RFP is for a vacant, city owned parcel located on the northeastern corner of E. 7th Ave and Nuccio Parkway to be purchased and redeveloped with a variety of uses, meaning a combination of residential, retail, and/or office space, a release from the city said.
That may be true to some degree, but there are already a number of proposed projects in Ybor, so it is not clear the City needs to get rid of any land to begin the transformation. In any event, the RFP can be found here.
Although not noted in the article, this seems to be the same land for which the City put out an RFP in 2013. As reported in 2014:
The best, officials say, came from the Liberty Group, a Tampa-based hotel investment, development and management company with $300 million in assets. It proposed an $11.3 million hotel with 70 guest rooms and suites, interior lap pool, ground-floor lounge and rooftop bar.
Tampa economic opportunity administrator Bob McDonaugh, who briefed the City Council on Thursday, said he doesn’t know where the second site is. And city officials won’t have any hard feelings if the sale falls through.
“If he’s unable to come to some type of arrangement with the other property owner, perhaps we would re-engage,” McDonaugh said. “But the whole idea … was to induce someone to investigate constructing a hotel in Ybor City. If it’s on the city’s land or somebody else’s land, I’m okay either way. The end result is getting more rooms in Ybor City.”
Since that report, a hotel proposal was announced. (It is not clear what the status of that project is.)
We are not opposed to selling public land for a project, but it needs to be a special project. If the private sector is doing the job on private property, why get rid of a public asset? (Not to mention that as private land is developed, the public property becomes more valuable, so why sell it now?)
If the City does not need to get rid of the taxpayers’ land, it shouldn’t. You never know what good, public purpose the land can be used for later. Why limit the options?
Bro Bowl – History
There was an article in the Times this week that indicated that the funding is finally in place for the City to destroy the Bro Bowl and then build the EPCOT replica. While it has never been explained why the City was so determined to destroy the Bro Bowl, there was little doubt that it would get its way eventually. Interestingly, though not surprisingly, while the article mentions the move to get historical status for the Bro Bowl, it completely ignores the effort to actually save it. Though it does give us this:
“Very, very, very, very, very, very, very, very good news,” Tampa economic opportunity administrator Bob McDonaugh told the City Council last week. A trailer and fencing are to be delivered to the 11-acre site starting Feb. 23. “We will see the mobilization of the contractor, and construction will begin the first week of March.”
Indeed. Needlessly destroying someone’s history rather than saving it through an easy compromise for a reason, if it exists, that you are not willing to reveal is certainly a reason to celebrate. We cannot say we are surprised. That is part of the local DNA that has not changed.
All those quirky, skateboarding techies in Silicon Valley will certainly be impressed.
USF – Some More Money
There was another big donation at USF.
The retired Raymond James Financial executive comes from a long line of them, including her great-grandfather, who was a county auditor, clerk and justice of the peace, and her grandmother, who ran the books at a Cleveland department store in 1900.
With a lengthy family heritage of finance behind her, Pippenger, 76, landed her first gig as a grocery clerk, established a career at Raymond James and, this week, earned a spot on stage at USF’s Muma College of Business, where she announced her $10 million donation to the newly named Lynn Pippenger School of Accountancy.
Once again, we thank her for her generosity.
List of the Week
Our list this week is the Airports Council International rankings for 2014. We all know that TIA is a great airport, so how does it rank in this year’s survey?
In the Best Airport by Region (North America), the top five are Indianapolis , Tampa, Jacksonville, Sacramento, and Ottawa.
In the Best Airport by size (15-25 million passengers), the top five are Seoul Gimpo, Wuhan, Hangzhou, Cancun, and Tampa.
Those are both very good rankings, and we are not surprised. The airport has long been an example of what this area can do when it really wants to and does not settle.