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Retool Time

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  • | 3:00 a.m. January 21, 2011
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What. Economic development and regulatory reform.

Issue. Can less red tape and better budgeting spur economic growth?

Impact. Shooting for 700,000 jobs in seven years.

Rick Scott went into the governor's mansion to reform Florida government, and two key transition teams are pointing the way for him.

Their recommendations aim to tell corporate America that Florida is open for business — all business.

To that end, growth management laws and how the state manages economic development are in for major makeovers based on the recommendations of the economic development transition team and the regulatory reform transition team.

One Gulf Coast industry that might ultimately benefit is marine manufacturing, which has lost 55,000 jobs, and $4.7 billion of lost economic impact, according to the economic development team's report. Many of those jobs have gone to North Carolina taking with it Florida's bragging rights as “Yachting Capital of the World.”

One recommendation, and a top priority, calls for centralizing economic development efforts at the cabinet level.

That means the governor.

“All that's been missing is the determination to create the most favorable business climate in the world,” declared Gov. Rick Scott in his Jan. 4 inauguration speech.

The two teams' reports give Scott the ammunition to achieve that lofty goal, though the economic development team set its sights slightly lower. “Creating the Most Prosperous State in the Nation,” is the phrase used by the team for its mission statement for a long-term strategic vision.

The 49-member economic development transition team was headed by Wayne Huizenga, Jr., president of Fort Lauderdale-based Huizenga Holdings, Inc., a diversified real estate and investment company. Chris Corr, an executive vice president in AECOM's Orlando office, was chairman of the 29-member regulatory reform transition team. AECOM, a Fortune 500 company, provides technical and management support services worldwide to the private and public sectors.

The two teams included nearly a dozen members from the Gulf Coast. (See sidebar.)

“It's a structural problem at the state level that's making it difficult to do business in the state,” says Henry Rodriguez, a Sarasota developer and member of the economic development team.

Rodriguez says one idea on the table would have Enterprise Florida, headquartered in Orlando, more or less merged into the state's office of tourism, trade and economic development in Tallahassee. But Enterprise Florida is a public-private partnership, so it's not a simple matter to just fold into a state agency or department.

“The key thing is economic development is something that government hasn't spent a lot of time on,” says team member Allen Douglas, Florida legislative director for the National Federation of Independent Business. Douglas notes that economic development wasn't something the state had to work hard at in the past as long as 1,000 people a day were moving in.

The result, according to Douglas, is the state “ended up being a hodgepodge of different agencies. None were communicating very well with each other,” observes Douglas, who notes that other states around the South “are beating us pretty badly right now” when it comes to attracting new businesses.

The recommendations include making one state agency the lead agency on economic development “and remove duplicative efforts.” That could be a reconstituted commerce department, Douglas says, making it a secretarial level agency again. “We really need to look at what those other states are doing,” he says. “We need to get in the game.”

The agency would also coordinate with local and regional economic development groups such as the Tampa Bay Partnership, Lee County's Horizon Council and other local economic development councils.

It's such a priority that the team recommends that the first bill passed by the Legislature and signed by Scott be legislation “to appropriately structure economic development.”

Saying what's needed

Other recommendations for economic development fall into the category of spending money to make money. That's something easier said than done given the state's $3.5 billion budget gap to fill for next year's budget.

But the teams were asked to generate big ideas, not to figure out how to pay for everything.

Those big ideas range from increasing the governor's closing fund for economic development projects, lowering the thresholds for eligibility for the capital investment tax credit and a state sales tax exemption, adding a research and development tax credit, and a payroll tax rebate.

There are also proposals to reduce corporation taxes and fees, and to reduce the cost of unemployment compensation benefits to the state and unemployment compensation taxes to businesses. The state's unemployment compensation tax rate is set to rise 280% this year, according to the team's report.

Other business incentives listed include a moratorium on impact fees for 1-2 years and expanding an ad valorem tax exemption beyond manufacturing to other targeted industries.

Tourism interests on the team propose fully funding Visit Florida with an annual investment of $62.5 million from the state matched dollar for dollar by the Florida tourism industry.

Two state university presidents on the team, Bernie Machen from the University of Florida, and John Hitt at the University of Central Florida, are pushing a “New Florida Initiative.”

That proposal includes a statewide matching grants research program estimated to cost $50 million a year and generate 3,000 jobs annually. It would be modeled after the Florida High Tech Corridor Council's program that has funded 1,150 projects involving 330 companies, and contributed 127 patents since 1996.

University-based incubator programs are also part of the proposal, requiring $50 million to build state-of-the-art facilities and $12 million per year for operating expenses for up to 20 incubators.

Energy, transportation and marine industry interests want some attention too. One proposal supports renewable energy investment funded by ratepayers. Another calls for removing a regulatory cap acting as a barrier to hundreds of megawatts of new generating capacity.

Transportation advocates want to eliminate raids on the transportation trust fund, which have amounted to more than $3 billion since 1998. “The last thing we ought to be doing with gas tax is using it for something else,” says team member Doug Callaway, president of Tallahassee-based Floridians for Better Transportation.

Ports want a share of the shrinking pie, too. A recommendation to increase state funding a minimum of $50 million annually seeks to take advantage of predicted growth in containerized cargo following the completion of the Panama Canal expansion in 2014.

Asked about the combined costs of all the recommendations, Douglas laughs, saying he and Huizenga had a little chat about that. “That didn't go unnoticed by those of us at the table,” Douglas says. However, he adds, “Our charge wasn't to go in there knowing we're $3 billion in the hole ... the goal was to say what was needed.”

“Mammoth territory”

Given the budget issues, its regulatory reform that may get the most traction this year.

And it's a big priority for Scott, whose first act was to sign an executive order creating “a state office of fiscal accountability and regulatory reform to review all proposed and existing regulations to determine their impact on job creation.”

But Scott, in his inaugural speech, may have summed up the thoughts of many business people shackled by over-regulation: “We must retool government to be a facilitator instead of an albatross in making this essential transition to a new economy.”

Corr, the regulatory transition team's chairman, says, “It's a mammoth territory to cover. ... Our objective was to focus on the higher points.”

One idea, according to Corr, is for the departments of transportation, environmental protection and community affairs to line up under a common mission and leadership.

Some have taken that to mean one mega-agency, but Corr insists that's a misinterpretation. “We were never naïve enough to think we could just jam them all together,” Corr says. “The bigger point is those agencies ought to be working together toward a common mission.” A deputy chief of staff may be tasked to oversee all three agencies to accomplish that goal.

The Department of Community Affairs may look very different under new secretary Billy Buzzett, a panhandle attorney formerly with the St. Joe Co., a real estate and agriculture operation.

One regulatory program destined for revamping, if not the trash pile of history, is the development of regional impact (DRI) regulations that have cost individual developers millions of dollars for compliance.

“There's not a supporter of the DRI program left in the state,” says Corr. The DRI has outlived its useful purpose. That's low-hanging fruit. We need to go ahead and pull that plug.”

As difficult as that hurdle has been for developers, it's been the general attitude of state regulatory agencies that's made corporate life difficult for permit seekers. “The issue we hope gets the most immediate attention is just the mindset of all the regulatory agencies,” says Corr.

Already, he says, since Scott gave his inaugural speech, he sees attitudes changing for the better. “I'm already hearing reports of a different tone and different attitude from the agencies — the right attitude of just get it done.”

Idea Building

Key recommendations of the economic development and regulatory transition teams include:

• Create a cabinet level officer who will lead and coordinate all statewide economic development efforts

• Streamline responsibilities of department of community affairs, department of environmental protection, water management districts, fish and wildlife commission and Florida department of transportation

• Empower one state agency to be the lead on economic development and remove duplicative efforts

• Pass legislation to appropriately structure economic development and make sure it's the first bill passed/bill signed by the governor if possible

• Make job creation and the cost to business a consideration for all state agencies

• Reduce cost of unemployment compensation benefits to the state and unemployment compensation taxes to businesses

• Establish a robust re-employment program

• Create a statewide matching grants research program

• Build incubation facilities

• Double state university system funding over 5-7 years

• Increase annual degree production by 15,000

• Lower capital investment/job creation threshold for capital investment tax credit

• Tax credits/matching funds for research and development

• Moratorium on impact fees (1-2 years)

• Expand ad valorem tax exemptions to other targeted industries

• Fully fund Visit Florida $62.5 million annually with industry match

• Increase state funding to a minimum of $50 million annually for ports

• Regulatory authority for energy companies to build more renewable energy

• Stop future raids on the transportation trust fund

• Explore alternatives to the gas tax

• Allow permitting and concurrency requirements that accelerate the transportation project approval process

• Declare “State of Economic Emergency” and do work faster

• Marine industry to prepare list of projects to recapture 55,000 jobs

• Report DOT, DEP and DCA to common leader with one common mission

• Change the culture

• Modernize the organizational structure

• Streamline permitting

• Fast track strategic projects

• Instill fair, fast, final, fiscally responsible permitting

• Eliminate the development of regional impact process

• Eliminate transportation concurrency

• Create an environment of customer service in the DEP and water management districts

• Create consistent water policy

• Streamline and simplify permitting process

• Eliminate unnecessary additive state regulation duplicative to federal regulation

• Reduce government personnel and cost by creating uniform statewide land acquisition criteria

• Eliminate business license requirements for sole proprietors that have a professional license

• Enact recommendations of the Red Tape Review Group


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