Wed October 30, 2013
Enterprise Florida Meets In Coral Gables Amid Accusations Of Corruption
Florida’s public-private economic development agency is holding a two-day meeting in Coral Gables this week.
Enterprise Florida (EFI) is a partnership between business and government to lure companies and jobs to the state. It’s funded by Florida taxpayers as well as private-sector businesses.
The meeting will include updates from Gov. Rick Scott, EFI President & CEO Gray Swoope, Florida Department of Transportation Secretary Ananth Prasad and “jobs success stories.”
It comes on the heels of a highly critical report by the D.C.-based research group Good Jobs First. The report found “that privatization of economic development agency functions is an inherently corrupting action which states should avoid or repeal.”
“Specifically we find that privatized development corporations have issued grossly exaggerated job creation claims,” said Greg LeRoy, executive director of Good Jobs First and lead author of the study. “They have created pay-to-play appearances for insider dealing for subsidies or conflicts of interest. They’ve paid executive salaries and bonuses at amounts far higher than governors. They have resisted basic oversight and reduced transparency.”
The government watchdog group Integrity Florida may be EFI’s most vocal critic, claiming the partnership has failed to achieve its original jobs goal.
“After signing deals worth more than $1.4 billion since 1996 and paying out more than $700 million to corporations, Enterprise Florida’s less than halfway to its goal of 200,000 higher paying, high-tech jobs, supposedly by 2005,” said Integrity Florida’s Dan Krassner. “More than 60 percent of projects have produced zero jobs.”
“Enterprise Florida is our state’s most glaring example of cronyism and institutional corruption,” Krassner said. “The organization engages in pay-to-play: it sells seats on its board to corporations for $50,000 and then gives away taxpayer-funded subsidies and vendor contracts to them in return.”
Corporate sponsors who serve on the board contribute $50,000 to support the activities of EFI, which is allowable under state statute.
EFI also has its share of critics who say CEO Gray Swoope is too highly compensated. A plan to boost his salary to $275,000 - with an annual bonus up to $100,000 – will be voted on by the board this week. EFI will also release its fiscal year 2012-13 annual report to board members.
Among the report's highlights:
· 25,393 new and retained jobs and $1.955 billion in capital investment. The capital investment represents a 76 percent increase from fiscal year 2010-11.
· Provided 5,750 export-counseling sessions to Florida companies and saw an increase of 20 percent in international event participation.
· Announced projected export sales as reported by companies of $725.9 million, a 12.4 percent increase since FY 2010-11.
EFI’s Sean Helton says the Good Jobs First report contains “misinformation and inaccuracies.” In fact, Helton says EFI offers a return on investment that’s even better than the state expected.
In 2010, the state legislature’s Office of Economic and Demographic Research estimated EFI’s four-year rate of return on incentive agreements was $6.52 for every $1 spent. The actual rate of return was $12.12, according to EFI - almost double the estimated amount.
As for transparency, Helton notes that EFI’s board meeting materials and information about trade missions are posted online. Meetings are televised on The Florida Channel and open for public comment. The Department of Economic Opportunity (DEO) has an online portal with information about “non-confidential, incentivized jobs projects.”
Addressing the accusations of cronyism in contract negotiations, Helton said, “EFI complies with Florida statutes requiring a board member with a potential conflict to recuse him or herself from that approval process.”
“Since its inception, EFI has received a clean opinion on its financial statements as conducted by its independent auditors,” Helton said. “Decisions to award incentives are based on the economic benefit of the project alone, according to state statute. Incentives are negotiated by the staff of EFI and approved by DEO after a rigorous vetting and approval process.”
The EFI board of directors has 61 voting members from the public and private sector. Members include elected state leaders, lawmakers, appointees, and corporate sponsors.
The EFI board and its stakeholders will meet at the Biltmore Hotel in Coral Gables Oct. 30-31.