County businesses slow to join state economic development program
4/18/2014 Sebring, Fla. - RYAN PELHAM/STAFF
Michael Romero operates a concrete mixer at Sebring Precast Products on Friday morning. The company makes concrete septic tanks, grease traps and agricultural products.
Around the company grounds and in the warehouse, a slew of machinery and mechanical parts and heavy-duty tools are set up and stored - an all-encompassing industrial plethora of entrepreneurial progress. From the window of Warren Copeland's Sebring Precast Products office, tucked away in a niche of manufacturing warehouses off U.S. 98 about a mile and a half from the Sebring International Raceway, forklifts and hauling trucks can be seen transporting a host of fabricated, pre-cast concrete septic tanks. But through the window of the Florida Enterprise Zone systems - specifically, the Rural Enterprise Zones - Copeland has seen his company expand and now includes a farm division, which designs and manufactures watering troughs, drag bunk feeders, calf feeders, centerline and fence line feeders and cattle guards. Under state statutes, the Florida Department of Economic Opportunity allows Florida counties to create Enterprise Zones in economically distressed areas. And officials in Highlands County wish there were more business owners like Copeland who were aware of the program's benefits and would get involved. Copeland said one of the biggest incentives he took advantage of was the sales tax exemption on electricity, based on the percentage of electricity used to operate qualifying machinery or equipment.
"I wanted to find some incentives to offset some of my taxes and it worked for me," he said. In 1982, the Florida Legislature created the Florida Enterprise Zone Program to provide incentives to induce private investments in economically distressed areas of the state. Some of the program goals included revitalizing and rehabilitating those distressed zones, and encouraging businesses to open and expand in these areas, boosting employment among area residents and enhancing an area's general social and economic stability. The 2013 Florida Enterprise Zone Annual Report stated from July 1, 2012, through June 30, 2013, 5,306 businesses moved into or were created in enterprise zones, 6,989 businesses received technical assistance from the Enterprise Zone and 16,640 new jobs were created by businesses located in enterprise zones. During that time, $16,299,681 in state tax incentives were approved and 845 state tax incentive applications were passed. City and county governments received a substantial amount of federal and state support to supplement their revitalization efforts totaling more than $52 million. Around Highlands County, which is predominantly rural, there are designated Rural Enterprise Zones (REZ). Businesses locating within a REZ receive a higher tax credit for a longer period when creating new jobs and hiring zone residents - and that's one of the main benefits Stephen Weeks wishes more businesses would recognize. Weeks is the executive director of the Highlands County Industrial Development Authority (IDA), Economic Development Commission (EDC) and the Enterprise Zone Development Agency. He oversees about 23 miles of Enterprise Zones in Highlands County that have a designated Rural Enterprise Zone, which includes businesses like Copeland's. Copeland said a Jacksonville consulting firm told him about REZ and how they could help offset taxes on personal and tangible property. He also got tax credits for the new jobs created when his company expanded. Businesses located in a zone that collect and pay Florida sales tax are allowed a monthly sales tax credit for wages paid to new employees. Businesses located in a zone that pay Florida corporate income tax are allowed a corporate income tax credit for wages paid to new employees who have been employed for at least three months and are zone residents or residents of a rural county in rural enterprise zones. Copeland got sales tax credits of 30 to 40 percent for each new job created and is saving between $5,000 and $8,000 per month in wage tax credits and got a refund when he bought out a Leesburg-based precast farm equipment company. "It was an easy decision for me to make," he said. "It's definitely beneficial if there are tax credits and incentives available, as a small business, we fight for every dime we make. It doesn't come easy." From the IDA/EDC Avon Park office in the Jacaranda Hotel, Weeks spends time encouraging rural businesses to take advantage of the different business incentives available through the initiative such as building materials sales tax refunds, enterprise zone tax property tax credits, sales tax exemption for electricity, jobs tax credits on sales and corporate income taxes and business machinery and equipment sales tax refunds. Weeks, who began with the EDC in November 2012, said the REZ started in the county with three square miles and a handful of businesses and started off under the concept of the state Urban Enterprise Zones: different tax incentives given to businesses that choose to create employment within a specific geographic area targeted for economic revitalization. With so much of Highlands County rural land, it was necessary to get larger businesses to invest in what he called "low-income areas." Enterprise Florida classifies REZ areas as the county has a population of 75,000 or less or has a population of 100,000 or less and adjoins a county with a population of 75,000 or less; a municipality is located in a county with a population of 75,000 or less or is located in a county with a population of 100,000 or less and is next to a county with a population of 75,000 or less; or are Federal Enterprise Communities and Empowerment Zones. Weeks said as of Oct. 2013, about 50 companies have applied for inclusion in a REZ, but some larger ones - like Circle K and Winn-Dixie - are repeat applicants. Other national companies which have applied include Walgreen's and smaller companies such as Sebring Precast, Sebring Food Mart and Howard Fertilizer & Chemical have also signed on. At Howard Fertilizer, Bryan Sigrist, operations manager, said based on his experiences, he couldn't venture a guess why more industrial operations in Highlands County aren't using the REZ incentives. Howard Fertilizer & Chemical, a fertilizer and chemical production and distribution company, opened in Orlando in 1932. Sigrist said the company opened a facility in Lake Placid on 17.5 acres off S.R. 70 in Lake Placid in 2011 after citrus freezes pushed citrus acreage south of Frostproof. Sigrist said in November 2011, the IDA/EDC contacted Howard about the REZ tax incentives south of Orange County and the Orlando-based company immediately jumped on board and took advantage of a five-year tax abatement program, to reduce property tax payments. With 23 full-time employees, Sigrist also got jobs tax credits and business machine sales tax refunds, and has decreased capital expenditures. "I think it's (REZ) definitely pro business and Highlands County is an area that needs more employment opportunities," said Sigrist, who joined Howard in 2012. "There are a lot of vacant buildings even in rural areas that I think these programs would help. If you're in an Enterprise Zone, the money is there, so you should definitely take advantage of it. The EDC has been very helpful to us to identify the incentives for new and current businesses that are out there." Despite the evident advantages of REZ and Enterprise Zones in particular, The Florida Legislature Office of Program Policy Analysis & Government Accountability report low business interest statewide in getting involved. In Fiscal Years 2009-10 through 2011-12, businesses received $110.9 million in Enterprise Zone Program incentives. Enterprise Zone Program Incentives Decreased 74.5 percent in fiscal years 2009-10 and 2011-12, "primarily due to the 2010 Legislature's exclusion of condominiums as real property, which in turn made them ineligible for sales tax refunds for building materials," the report states. Enterprise Florida, Inc. (EFI), a public-private partnership between Florida's business and government leaders and the principal economic development organization for the state of Florida, has developed an Economic Development Strategic Plan for Rural Florida. Funded by the Legislature, the study was developed with the involvement of nearly 500 participants that included targeted interviews with numerous individuals directly involved with rural development in Florida. Nancy Blum-Heintz, vice president, strategic alignment and communications, EFI, said the organization is focused on bringing in more business to rural counties like Highlands through promoting Florida as a "top business destination." "One of the unique aspects about EFI is the strong partnerships it has forged not only between business and government, but between state and local partners as well, like those in Highlands County," she said. "These relationships are important because they provide the basis for achieving better coordination and outcomes for the state's economic development efforts." However, overall program participation still remains relatively low in most enterprise zones. In a Jan. 2011 report, the Program and Policy office suggested encouraging participation by lowering incentive eligibility thresholds; focusing on job creation by eliminating all incentives except jobs tax credits; establishing a one-year program moratorium on awarding incentives; abolishing the program to save an estimated $18 million annually; or just allowing the Florida Legislature to vote to sunset the program on December 31, 2015 - the one solution Weeks would hate to see happen. "I want anything I can use to incite job creation, particularly in Highlands County," Weeks said. "The reality is, if your business doesn't get involved, you're leaving money on the table; it's your money, so why give it away?" For information, call (863) 453-2818 or see www.highlandsedc.com. firstname.lastname@example.org (863) 386-5855