recession recovery study findings draft 3.11.2011

Recession Recovery and Beyond – Study Report 3.11.2011 1

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Jacksonville Community Council 19

Recession Recovery and Beyond Study Findings 20

Draft Date: March 11, 2011 21

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PLEASE DO NOT DISTRIBUTE 23

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1 Table of Contents 2 3

EXECUTIVE SUMMARY ................................................................................................................................................... 3 4

FINDINGS ....................................................................................................................................................................... 4 5

Introduction..................................................................................................................................................... 4 6

Regional Overview ........................................................................................................................................... 4 7

Northeast Florida’s Job Creation Strategy ....................................................................................................... 8 8

Attracting Businesses And Jobs ....................................................................................................................... 9 9

o Educational attainment and building a qualified workforce ............................................................. 9 10

o Visioning and branding: Choosing “who we are” and “what we want to become” ....................... 10 11

o Regionalism: Working cooperatively and speaking with one voice ................................................ 11 12

o Quality of life: Living, playing, working, and doing business in Northeast Florida .......................... 12 13

o Many sectors and communities working together to encourage business development .............. 14 14

o Job creation priorities and opportunities: Bringing new businesses to Northeast Florida ............. 15 15

o Quality public education systems and higher education offerings ................................................. 16 16

o How we do business regulation, taxes and incentives.................................................................... 20 17

Creating New Businesses And Jobs Locally ................................................................................................... 22 18

o Small business and entrepreneurship development and support at all levels ............................... 22 19

o A thriving community of fast growing firms ................................................................................... 23 20

o Growing existing businesses and industries ................................................................................... 24 21

o Access to capital .............................................................................................................................. 25 22

Retaining Businesses And Jobs ...................................................................................................................... 25 23

o Recognition and utilization of local businesses .............................................................................. 26 24

o Training people for the jobs that are available ............................................................................... 27 25

o Identification of and support for second stage, growth companies ............................................... 27 26

CONCLUSIONS ............................................................................................................................................................. 29 27

RECOMMENDATIONS .................................................................................................................................................. 29 28

APPENDIX ..................................................................................................................................................................... 30 29

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EXECUTIVE SUMMARY 1

Key elements 2

Major themes 3

Recurring negatives/positives 4

Bullet point summaries of findings, conclusion, and recommendations 5 6


FINDINGS 1

Introduction 2

In December 2007, the United States entered into a recession. While the economists state that 3 the official end of the recession was June 2009, the country (and Northeast Florida) continued 4 to struggle economically. At the end on 2010, Northeast Florida was down over 80,000 (need to 5 verify) jobs from the pre-recession peak. Unemployment rates in the region at the end of 2010 6 ranged from 9.9 percent in St. Johns County to 15.5 percent in Flagler County. Both a JCCI 7 community survey and a statewide Leadership Florida Sunshine State Survey conducted in 2010 8 showed that jobs and job creation were the top concern among respondents. 9 10 The study committee set out to discover how Northeast Florida might: 11

1. Retain existing jobs; 12 2. Rapidly create new jobs; and 13 3. Position the region for long-term economic growth. 14

15 In the process of exploring Northeast Florida’s strengths and challenges in retaining and 16 expanding existing local businesses, attracting business relocations, and encouraging business 17 start-ups, study committee members visited the seven counties identified as part of the 18 Northeast Florida Region (Baker, Clay, Duval, Flagler, Nassau, Putnam, and St. Johns.) 19 Committee members examined existing job development plans and economic development 20 strategies for the region, and met with economic development organizations, business support 21 organizations, and other key public and private players in job creation, retention, and 22 marketing. 23 24 Like Florida’s other 60 counties, Northeast Florida’s seven partner counties are suffering 25 economically as a result of the national recession, which exposed Florida’s dependence on 26 steadily increasing population as a driver for economic growth. Many of the issues that the 27 study committee found were hindering the region’s ability to bounce back from the jobless 28 recovery pre-date the recession, and have only been exacerbated by the economic downturn 29 and corresponding fiscal crises in local and state government. At the same time, the study 30 committee found working regional partnerships and strong community assets in each of the 31 partner counties, which provide a platform from which the region can grow. 32 33

Regional Overview 34

Northeast Florida is a region of 1.1 million people, living in 27 municipalities covering 4,428 35 square miles. The seven counties of Northeast Florida are home to a diverse collection of 36 communities, including rural, urban, and suburban areas. This diversity is one of the 37 characteristics of the region that makes it an attractive place to live; any number of lifestyles is 38 possible. 39 40 Arguably, the best known cities in the region are Jacksonville, the region’s major urban center 41 and St. Augustine, the country’s oldest city and a major tourist destination. The region has 42 highly valued quality of life assets like beaches, the St. Johns River, good climate, low housing 43


costs, and abundant healthcare facilities. The region also has many factors appreciated by 1 business concerns, including the availability of land, low taxes, low labor costs, excellent 2 highway accessibility, two deepwater ports, and local and state incentives. According to the 3 Northeast Florida Regional Council the region is 43 percent dedicated to agriculture, 2 percent 4 to industry and commercial use, and 13 percent urbanized. The counties surrounding the urban 5 center are mostly rural, relying on agriculture and service sectors, with a limited industrial base. 6 These communities however are becoming increasingly urbanized and becoming more 7 economically diverse. 8 9 Duval County is the most populous county with 900,000 residents, while Baker County is the 10 least populous with 26,000 residents. The racial makeup of the counties varies, with some 11 counties being more homogenous than others. Overall the region’s minority population is 25 12 percent, which is closely aligned with the state of Florida and the United States. Northeast 13 Florida is also a relatively youthful region with the average age being 39 years old. Both the 14 minority population and the population of young people are disproportionately unemployed in 15 Northeast Florida. 16 17 Educational attainment and education outcomes are factors that influence both a community’s 18 intellectual infrastructure and its workforce capacity. These factors vary from county to county 19 in Northeast Florida. The Florida Department of Education rates public education districts using 20 results from the Florida Comprehensive Assessment Test (FCAT). As of the 2009-10 school year, 21 the region had four “A” rated districts, two “B” rated districts, and one “C” rated district. High 22 school graduation rates ranged from 66 to 92 percent in the region. Measures of adult 23 educational attainment show that 89 percent of all people in the region over the age of 25 have 24 earned a high school diploma, and 21 percent have obtained a bachelor’s degree or a higher 25 educational credential. The rate varies across counties, with 37.6 percent of St. Johns County 26 residents having earned a bachelor’s degree or higher, compared to 6.7 percent of Putnam 27 County residents. 28 29 Industries like tourism and construction with low skill, low wage entry points thrived in pre-30 recession Northeast Florida. Many of those industries have shed thousands of jobs regionally. 31 The workers who benefited most from those jobs are at a particular disadvantage when it 32 comes to finding work. The unemployment rate among college graduates in the region has 33 averaged 3.9 percent from 2005 to 2009 as compared to 12 percent for those with no high 34 school education and 6.7 percent for those who have a high school diploma. 35 36 The regional economy is as diverse as the people who live in Northeast Florida. The major 37 industries in the region, are Trade, Transportation, and Utilities; Education and Health Services; 38 Professional and Business Services; Government, and Leisure and Hospitality; and Financial 39 Activities. These industries employ 78 percent of the region’s population. However, the largest 40 employers in five of the seven counties are the county public school systems. Small business 41 also figures prominently in the region’s mix of businesses with firms employing less than one-42 hundred employees, making up 96 to 98 percent of all Northeast Florida companies. 43 Throughout the study, three industries – health and biosciences, logistics, and the military – 44


were discussed as industry sectors that the region should focus upon to create and retain jobs. 1 Assets in those areas are as follows. 2 3 Northeast Florida has… 21 hospitals and over 1,500 medical facilities.

2 deepwater ports, 3 major interstates, and an international airport and several regional and commercial airports.

3 military installations - Navy (2), Marines (1) - and is home to the Florida Air National Guard and Coast Guard Sector Jacksonville.

4 The cohesiveness of the region as an economic entity is driven by the Cornerstone Regional 5 Development Partnership, a private, nonprofit division of the Jacksonville Regional Chamber of 6 Commerce. Cornerstone is Jacksonville and Northeast Florida's regional economic 7 development marketing initiative. Many of the region’s seven counties also have other geo-8 economically important relationships: 9 10

Residents in Nassau County Florida (5 percent) work in several South Georgia communities 11 and vice versa. 12

Baker and Putnam Counties are members of the 14 county North Central Florida Rural Area 13 of Critical Economic Concern (RACEC) that extends westward to Jefferson County. 14

Flagler and Putnam Counties belong to the Florida High Tech Corridor Council that 15 encompasses Central Florida. 16

Flagler County shares economic ties with Volusia County. 17 18

With these extra-regional partnerships, the Cornerstone counties connect to economic regions 19 beyond Northeast Florida - north to Georgia, south to Orlando, and west to Tallahassee. 20 21 The national recession has taken a toll on the economic viability of Northeast Florida. At the 22 close of 2010, the region’s unemployment rate was 11.7 percent. Flagler County had the 23 highest unemployment rate in the region, where 15.5 percent of the labor force was without 24 work. The number of unemployed persons in the region stands at 80,000 (need to verify) as of 25 December 2010. These unemployment figures do not include people who are underemployed 26 or those who have simply given up the search for work. To reach full employment (3-4 percent 27 regionally) approximately 60,000 (need to verify) people will need to find jobs in Northeast Florida. 28 29 Northeast Florida like many regions in countries around the world has entered a new era of 30 austerity. Market and public policy uncertainty have fueled the reluctance of big businesses to 31 hire workers and make capital expenditures, while capital for existing and start-up small 32 businesses is extremely limited. Both of these realities limit private investment. Likewise local 33 governments are faced with falling tax revenues due to depreciated property values, which 34 limits public investment. The result is stalled economic growth, which threatens the region’s 35 quality of life and future, long-term economic competitiveness. 36 37 38


1 BAKER COUNTY

Population

25,899

Labor Force

12,178

Unemployment Rate

10.9%

Top 3 Private Employers

Northeast Florida

Hospital

Wal-Mart Food

Distribution Center

Macclenny Nursing &

Rehabilitation Center

Top 3 Public Employers

Baker County School

Board

Baker Correctional

Institute

Baker County Medical

Services

Average Wage

$29,503

CLAY COUNTY

Population

185,208

Labor Force

95,766

Unemployment Rate

10.5%


Orange Park Medical

Center

Jacksonville Kennel

Club

HCA Patient Account

Service Center


Clay County School

Board

Clay County Sheriff's

Office

Average Wage

$31,843

DUVAL COUNTY

Population

900,518

Labor Force

446,118

Unemployment Rate

11.7%


Baptist Health

Blue Cross & Blue

Shield of Florida

Mayo Clinic


Naval Air Station

Duval County Public

Schools

Naval Station

Mayport

Average Wage

$44,034

FLAGLER COUNTY

Population

94,901

Labor Force

33,498

Unemployment Rate

15.5%


Palm Coast Data Ltd.

Florida Hospital

Flagler

Hammock Beach

Resort


Flagler County School

System

Flagler County

Sheriff's Office

Flagler County Clerk

of Courts/Justice

Center

Average Wage

$30,486

NASSAU COUNTY

Population

72,588

Labor Force

36,317

Unemployment Rate

10.9%


Amelia Island

Plantation

The Ritz-Carlton

Amelia Island

Smurfit-Stone


Nassau County School

Board

Federal Aviation

Administration

Nassau County

Average Wage

$34,981

PUTNAM COUNTY

Population

74,608

Labor Force

33,226

Unemployment Rate

12.6%


Georgia Pacific

Corporation, Palatka

PRC

Seminole Generating

Plant, a Division of

Seminole Electric

Cooperative


Putnam County School

Board

St. Johns River

Management

Putnam County

Government

Average Wage

$33,908

ST. JOHNS COUNTY

Population

183,572

Labor Force

97,450

Unemployment Rate

9.5%


Northrop Grumman

Flagler Hospital

Florida School for

the Deaf & Blind


St. Johns County

School District

St. Johns County

U.S. Air National

Guard

Average Wage

$35,758

Sources

Population - Bureau of

Economic and Business

Research (BEBR) 2009

Labor Force 2010 and

Unemployment Rate 2010 –

Florida Research and

Economic Database, Labor

Market Statistics, Local

Area Unemployment

Statistics Program

Employer information –

Cornerstone Regional

Partnership as of April

2009

Average Wages - Florida

Agency for Workforce

Innovation Quarterly

Census of Employment &

Wages, 2009 – County

Summary Totals

2 3


Northeast Florida’s Job Creation Strategy 1

Job creation is a complex enterprise that involves multiple groups and various strategic efforts. 2 Private enterprise, governments, and the individuals who need jobs each have a role to play. 3 4 Businesses create new jobs when it makes economic sense to do so. The projected economic 5 benefits need to be greater than the initial investment, ongoing costs, and perceived risks. 6 Businesses also need access to capital to invest in growth, a market for their products and 7 services, and a regulatory environment that is responsive and predictable. 8 9 While governments do not directly create jobs within the private sector, all business is licensed 10 by government, and the various levels of government can create conditions that make it easier 11 and more efficient for the private sector to create or expand existing businesses. Governments 12 also have access to incentive programs and tax credits meant to encourage business 13 development, expansion, or relocation. Still, one resource speaker made the point that 14 government tax credits to incent hiring mean nothing if consumers are not making purchases. 15 16 Individuals also have a role to play in job creation. Workers, through education and training, 17 can prepare themselves for the jobs that are available. According to the Bureau of Labor 18 Statistics one-third of the fastest growing jobs will require workers to have postsecondary 19 credentials; therefore those individuals who are undereducated and those communities with 20 large populations of non-degreed/non-credentialed residents will continue to fare poorly even 21 as the employment situation improves. In 2010, at the same time that the nation was 22 experiencing record numbers of long-term unemployed, over two million jobs remained 23 unfilled because worker skills did not match job 24 requirements. 25 26 Job creation strategies include bringing new businesses 27 into a community; growing jobs through the support and 28 development of small businesses and entrepreneurial 29 enterprises; and encouraging existing businesses to stay 30 local. Research indicates that up to 80 percent of new jobs 31 are created by existing businesses, while 70 to 80 percent 32 of a community’s jobs are created by small businesses. At 33 the same time 50 percent of such businesses fail within the 34 first five years, according to the Small Business 35 Administration. Focusing job creation efforts on just one 36 approach - attracting, developing, or retaining businesses - 37 can limit a community’s economic development efforts. 38 39 The regional issues identified over the course of the study 40 as having a great impact on attracting, developing, and/or 41 retaining jobs are workforce development; visioning and 42 branding; small business and entrepreneurship; regulation, 43 incentives, and taxes; regional leadership; quality of life; 44

Site Selection Factors

Availability of advanced

information technology services

Availability of Land

Availability of Skilled Labor

Corporate Tax Rate

Energy Availability and Costs

Highway Accessibility

Inbound/outbound shipping cost

Labor Costs

Occupancy or Construction Costs

Proximity to Major Markets

State and Local Incentives

Tax Exemptions

Quality of Life Factors

Climate

Colleges and Universities in the

Area

Cultural Opportunities

Healthcare Facilities

Housing Availability

Housing Costs

Low Crime Rate

Ratings of Public Schools

Recreational OpportunitiesArea Development Magazine 2009

List is not ordered by importance


partnerships; job creation priorities and opportunities; and education. 1 2 Attracting Businesses And Jobs 3 Attracting new businesses to the regional community provides an opportunity to diversify the 4 economy by seeking new businesses, drawing specific types of industries into the market place 5 (i.e. high tech, high wage companies), and increasing the wealth of the community. Companies 6 interested in relocating or expanding their operations will seek communities with 7 comparatively low costs (i.e. labor, energy, utilities, and taxes) and a high quality of life to 8 encourage employee relocation and satisfy hiring needs. 9 10 Area Development Magazine provided a list of both the site selection criteria and the quality of 11 life considerations that businesses weigh when making location choices. Many of the factors on 12 the lists, like land availability, geographic location, and climate, are beyond the control of the 13 community and outside the dictates of public policy or community advocates. 14 15 Educational attainment and building a qualified workforce 16 Educational attainment, like the quality of public schools, informs employers about the quality 17 of the local workforce. The percentage of persons who have earned a college degree is 18 indicative of the region’s economic competitiveness. For a community to compete successfully 19 in the knowledge-based economy 30 to 40 percent of the residents should hold a bachelors 20 degree. 21 22

Educational Attainment in Northeast Florida by County 23 Population 25 and older 24

POPULATION 25 YEARS AND

OVER BAKER CLAY DUVAL FLAGLER PUTNAM NASSAU

ST.

JOHNS

NORTHEAST

FLORIDA

Less than high school

graduate 21.4% 10.2% 12.7% 10.5% 22.4% 14.6% 8.4%

14.3%

High school graduate 78.6% 89.8% 87.5% 89.4% 77.7% 85.2% 91.6%

85.7%

Some college, no degree 15.0% 25.3% 22.9% 26.3% 17.1% 20.5% 22.4%

21.4%

Associate's degree 8.0% 10.2% 8.7% 9.0% 6.2% 6.7% 8.2%

8.14%

Bachelor's degree or

higher 6.7% 22.9% 25.2% 20.8% 12.9% 20.3% 37.6%

20.9%

Source: Survey: American Community Survey S1501-Educational Attainment. 25 Data Set: 2005-2009 American Community Survey 5-Year Estimates. 26

27 Educational attainment at the postsecondary level in Northeast Florida varies across counties. If 28 a highly qualified workforce is a primary consideration, then business prospect would be drawn 29 to the counties in the region with the most degreed (associates and bachelors) residents – St. 30 Johns (46%), Duval (34%), Clay (33%), and Flagler Counties (30%). Associates degrees are 31 included here because the credential indicates that the possessor has at least basic competency 32 in writing, math and computer skills and/or has specialized technical or industry training. 33 34

<Include chart here that details the percent of college graduates in other communities and in other countries> 35 36 The region is also home to 50,000 active duty, reserve and Department of Defense civilian men 37 and women. Of the personnel who exit the military each year, more than 3,000 choose to 38


remain in the region, providing a steady stream of skilled workers for area businesses. Similarly, 1 80 percent of military personnel who get out of the service in Jacksonville stay local. 2 3 In most cases, degreed individuals have also been less likely to face unemployment than their 4 counterparts who have earned only a high school diploma. 5 6

Percentage of unemployed persons by education level in Northeast Florida ages 16 - 64 7

County

Less than

high school

graduate

High school

graduate

(includes

equivalency)

Some college or

associate's

degree

Bachelor's

degree or

higher

Baker 16.8% 2.6% 6.6% 3.1%

Clay 8.8% 6.6% 5.0% 3.2%

Duval 13.5% 7.3% 5.5% 3.3%

Flagler 12.2% 6.8% 5.9% 6.6%

Nassau 15.2% 7.5% 6.6% 3.3%

Putnam 9.9% 10.5% 6.2% 3.5%

St. Johns 7.6% 5.3% 5.0% 4.3%

Northeast

Florida

12.0% 6.7% 5.8% 3.9%

Source: U.S. Census Bureau, 2005-2009 American Community Survey

8 The perception of the region being undereducated persists. Various examples were provided by 9 resource speakers where business prospects were concerned about the quality and capacity of 10 the workers in the region. At present only one county in the region has close to the percentage 11 of bachelors-degreed residents needed to signal to the world that Northeast Florida is able to 12 compete in a knowledge-based economy. 13 14 Visioning and branding: Choosing “who we are” and “what we want to become” 15 Cornerstone and each county’s economic development organization have an extensive 16 catalogue of characteristics that make the region an appealing destination for business - the 17 starting point for defining the region’s capacity. Whether the region is referred to as Northeast 18 Florida, the Jacksonville Region, Florida’s First Coast, or America’s Logistics Center, the region’s 19 assets have not been grouped or disaggregated in a way to make it clear to internal or external 20 audiences why the region is a great place to do business or a great place to live. The region 21 does not have a clear or consistent brand. The lack of regional and local-county identity was 22 pointed out at every partner county site visit. 23 24 Northeast Florida has many stories to tell using its assets to solidify a unique place among its 25 competitors - quality of life, logistics capabilities, health/medical resources, military facilities 26 and personnel and more. The future of the region depends on being able to leverage those 27 positive stories (assets) in a way that is appealing to those who have a negative impression of 28 the region and others who are unfamiliar with Northeast Florida. When CEO’s are considering 29 relocating or expanding their firms, the regions that get the most favorable look are those who 30 have values and branding reflective of their organizations. 31 32


Visioning, the precursor to branding, has gone wanting in Northeast Florida. Communities must 1 have both a long-term vision and an implementable plan for getting to the future. Having 2 leaders with the will to carry out that plan over a period of many years, without regard fro 3 changes in political climate, is also critical. Recent efforts by the Northeast Florida Regional 4 Council have provided an opportunity for regional leaders and residents to consider what is 5 important economically and in other key areas. 6 7 In 2009, The Northeast Florida Regional Council sponsored Reality Check First Coast to inform 8 the update to the Strategic Regional Policy Plan (SRPP) which is required by Florida statute. This 9 exercise engaged about 500 people in the seven-county region to discuss future job, housing, 10 transportation, infrastructure, and recreation needs. The Regional Community Institute (RCI), a 11 non-profit spinoff of the NEFRC, is in the process of convening regional residents to develop a 12 vision for the region. The regional vision will be tied to the implementation of Reality Check 13 First Coast, which is being directed by Region First 2060 an ongoing partnership of the Reality 14 Check First Coast entities. 15 16

Asset development, visioning, branding, funding, and implementation 17 A sustained vision for Indianapolis for almost four decades: Indianapolis is the “only” major 18 city in Indiana and is very comparable to Jacksonville in terms of population and size, though 19 Indianapolis has far fewer obvious natural amenities than Jacksonville. Despite not having the 20 great natural assets or strategic geographic advantages of some other cities Indianapolis has 21 experienced success due to a focused agenda and consistent leadership. Indianapolis is driven by 22 strong leadership in both its public and private sectors. Over the past 36 years there have been 23 four strong mayors – Democrats and Republicans – who each picked up where the last mayor left off 24 in building downtown – and with it, the region. Each mayor remained focused by sustaining the 25 vision. One difference between Jacksonville and Indianapolis is Indianapolis has benefited from 26 strong philanthropic support in developing its long-range plan. Eli Lilly and Company, a Fortune 27 500 pharmaceutical company headquartered in Indianapolis, has a charitable foundation that lists 28 enhancing quality of life as one of its missions. 29 30 Lake Nona Medical City, Orlando’s efforts to brand its medical and life sciences industry: In an 31 effort to compete for the Scripps Research Institute in 2003, the Tavistock Group agreed to aside 32 650 acres for a planned medical city complete with retail stores and housing at Lake Nona. 33 Orlando lost the Scripps deal to Jupiter, Fla., a decision made due in part to its lack of a 34 medical school. Three years later, when Burnham Institute for Medical Research in exchange for a 35 $310 million incentive package and an opportunity to be collocated with the University of Central 36 Florida new College of medicine. Construction is underway on Nemours Children's Hospital and the 37 Orlando VA Medical Center. Both facilities are scheduled to open in 2012. In addition, the 38 University of Florida recently broke ground on a Lake Nona academic and research center, which 39 will house a Comprehensive Drug Development Center, the UF College of Pharmacy doctoral program 40 and biomedical research laboratories. 41 42 Regionalism: Working cooperatively and speaking with one voice 43 The Northeast Florida region has worked successfully and collaboratively as an economic unit. 44 During the partner county site visits the message was consistent regarding Cornerstone’s 45 effectiveness marketing the region to attract business. As of 2010, the region was also 46 designated as an Economic Development District. However, other collaborative efforts are rare 47 even though there are intersecting concerns where a regional effort might be appropriate for 48 the purpose of greater economic competitiveness, including education, branding, 49 transportation, and tourism. 50 51 During the study, an educator suggested that the time has come to have a regional discussion 52 about the role of k-12 education in making Northeast Florida more competitive. A regional 53


visioning process is underway; however determining the region’s brand essence is work that 1 remains to be done. The region has several vital areas for tourism – St. Augustine, Amelia 2 Island, and Palm Coast, but those areas are not promoted as a regional unit. Northeast Florida 3 also has two deepwater ports, which operate independently. Regional transportation may 4 become a reality now that the Jacksonville Transportation Authority (JTA) has been directed by 5 the Florida legislature to develop a plan for a regional transportation authority. Northeast 6 Florida is the only region in the state without a Regional Transportation Commission. According 7 to a 2009 Regional Transportation Agency Study, this is a limitation that prohibits the region 8 from taking full advantage of its multi-modal transportation capacity. 9 10 The seven counties being discussed in this study are tied together economically via Cornerstone 11 and the Regional Council. The counties are different and have different assets associated with 12 being primarily rural, suburban, or urban. There is a sense of place that undergirds those 13 communities along with a sense of community pride. In the rural counties, meeting participants 14 spoke of wanting to keep the character of their communities intact. This type of community 15 identification can be leveraged in the quest to define the region. On the other hand, community 16 identity can create tension among the counties especially as it relates to quality of life. Those 17 counties watching their more urban neighbors struggle with crime, education, traffic 18 congestion do not want to have those issues invade their communities. At the same time, the 19 region’s urban center is the business and cultural center of Northeast Florida and the relative 20 short time that it takes to travel from urban to rural communities in the region is an asset. 21 22 The subtext that results from identifying the region’s winners and losers can devalue the region 23 as a whole. A resource speaker offered insight on why this is problematic, sharing a story about 24 area realtors steering newly relocated executives to St. Johns County by drawing the conclusion 25 that children cannot receive a quality education in Duval County. One of the messages this 26 sends to an executive is that his/her workforce, the majority of which live in Duval County will 27 be subpar. 28 29 Quality of life: Living, playing, working, and doing business in Northeast Florida 30 During each partner county site visit, residents in every community said their communities had 31 a high quality of life, often citing the county’s natural beauty, rural charm, outdoor recreation, 32 abundant waterways, high quality healthy care, the Jacksonville Jaguars, educational 33 opportunities, plus arts, culture, and entertainment amenities. 34 35 Other quality of life factors can be added to that list as well, including falling crime rates, 36 decreases in housing prices, and the availability of healthcare facilities. 37 38 From 2008 to 2009 the rate of index crimes has decreased in all but two Northeast Florida 39 Counties. 40 41 42 43 44


Northeast Florida Index Crime Rates

Baker Clay Duval Flagler Nassau Putnam St. Johns Northeast

Florida

Percent Change

in Crime Rate

2008 - 2009

25.9% 6.6 9.7 6.0 19.2 12.5 7.0 3.3%

Index Crime Rate

- Crimes Per

100,000

Population 2009

1,706.6 3,057.6 5,814.0 2,724.9 2,928.9 5,679.0 3,114.3 3575.0

Index Crime Rate

- Crimes Per

100,000

Population 2008

1,355.7 3,275.4 6,435.7 2,571.5 3,623.7 6,491.6 3,346.9 3871.5

Source: Florida Department of Law Enforcement

1 Housing prices have also fallen, and while this is good news for those seeking to buy homes, it 2 does not bode well for property tax collections. 3 4

Northeast Florida Median Home Sales

Baker Clay Duval Flagler Nassau Putnam St. Johns Northeast

Florida

Median Sales

Price Single

Family Homes

2009

$146,500 $168,350 $170,000 $165,000 $215,000 $111,000 $249,450 $175,042

Median Sales

Price Single

Family Homes

2008

$160,000 $190,000 $174,000 $185,450 $316,500 $128,750 $260,450 $202,164

Source: Florida Housing Data Clearing House

5 Healthcare facilities including hospitals, nursing homes, clinics and other licensed facilities are 6 abundant in the region. 7 8

Northeast Florida Hospitals and Medical Facilities

Baker Clay Duval Flagler Nassau Putnam St.

Johns

Northeast

Florida

Hospitals 2 2 12 1 1 1 1 21

Other Medical

Facilities

Licensed by AHCA

19 168 1,008 100 64 73 151 1,583

Source: Agency for Health Care Administration (AHCA)

9 The Cornerstone Regional Partnership, which markets Northeast Florida nationally and 10 internationally, focuses on the region’s quality of life as a key selling point highlighting many of 11 those same areas that were touted during the partner county site visits. The study committee 12 also heard that a community’s quality of life, while important, is not the make or break factor 13 for business prospects and site selectors. In some cases this is true because the company’s 14 owners will not live in the local community and in other instances the business case for 15 relocation or expansion outweighs the quality of the community. 16 17 Though site selection factors may take primacy over a community’s quality of life factors, it is 18 not likely that companies are willing to invest in undesirable communities with poor education, 19 health, and public safety outcomes among others. When communities are not willing to invest 20


in a quality future, there is a risk that private enterprise (new and existing businesses) will forgo 1 investment as well. 2 3

Funding an improved quality of life 4 In the early 1990s, the leaders of Oklahoma City were faced with a decision: to compete or 5 retreat. The city was in the wake of the oil bust and had lost a bid for a United Airlines 6 maintenance facility. The decision was made to compete, and a visionary project was launched, 7 which would forever change the face of Oklahoma City. That plan is Metropolitan Area Projects 8 (MAPS), an ambitious program that is one of the most aggressive and successful public-private 9 partnerships ever undertaken in the United States. The amount spent in this public/private 10 partnership exceeds $3 billion. 11 12 MAPS was funded by a temporary one-cent sales tax approved by city voters in December 1993. The 13 tax expired on July 1, 1999. During the 66 months it was in effect, more than $309 million was 14 collected. In addition, the deposited tax revenue earned about $54 million in interest. All of 15 the public projects were funded by a self-imposed, five-year, one-cent sales tax. The tax was 16 extended by a vote of the people for six months to cover cost increases during construction. The 17 tax is complete and the projects are all debt-free. 18 19 In December 2009, a record number of Oklahoma City voters went to the polls and voted YES to 20 continue Oklahoma City's future through the $777 million MAPS 3 initiative. MAPS 3 includes eight 21 projects that will work to increase the quality of life for all Oklahoma City citizens, as well 22 as create economic growth through private investment and the creation of jobs. The eight projects 23 include improvements to the Oklahoma River, 57 miles of new walking and biking trails, 24 improvements to State Fair Park, sidewalks, senior health and wellness aquatic centers, a new 25 convention center, a world-class destination park, and a modern downtown streetcar. The temporary 26 one-cent sales tax for MAPS 3 began April 1, 2010 and will be in effect for 93 months. 27 28 Many sectors and communities working together to encourage business development 29 A region’s economic competitiveness is enhanced by the partnerships between the entities that 30 control the various component pieces of economic development including those who have an 31 interest in the workforce, innovation, regulation, taxes, business development, and the buying 32 and selling of products or knowledge. Those entities might include economic development 33 agencies, higher education, government, and private enterprise. In Northeast Florida the 34 relationship among these groups is said to be strong; often cultivated via board memberships, 35 interagency participation, Cornerstone, the Northeast Florida Regional Council, WorkSource 36 among others. 37 38 The relationships that do exist are used for maximum advantage when promoting the assets of 39 the region. At present, however, these alliances are relatively informal. Furthermore, a formal 40 partnership arrangement between government, private enterprise, and higher education for 41 the purposes of attracting or and creating businesses in Northeast Florida does not yet exist. As 42 a result, leveraging the research power of the University of Florida has been a casualty. While 43 the university provides services to Northeast Florida, the institution became a leading partner 44 in Central Florida’s economic development efforts along with the Universities of Central and 45 South Florida. The question arises: Should the University of Florida look north, how would that 46 institution, or any other, bring its resources to bear for the economic development future of 47 Northeast Florida? 48 49

Growth results from business, government, and education partnerships 50 The Research Triangle Park was founded in January 1959 by a committee of government, university, 51 and business leaders as a model for research, innovation, and economic development. By 52 establishing a place where educators, researchers, and businesses come together as collaborative 53 partners, the founders of the Park hoped to change the economic composition of the region and 54 state, thereby increasing the opportunities for the citizens of North Carolina. The vision was to 55 provide a ready physical infrastructure that would attract research oriented companies. The 56


advantage of locating in RTP would be that companies could employ the highly-educated local work 1 force and be proximate to the research being conducted by the state’s research universities. 2 3 CONNECT was formed in 1985 by the City of San Diego, UC San Diego and the private sector to 4 stimulate the commercialization of science and technology discoveries from local research 5 institutions. CONNECT has assisted in the formation and development of more than 2,000 companies 6 and is widely regarded as the world's most successful regional program linking investors and 7 entrepreneurs with the resources they need for commercialization. Key to our success has been the 8 unique "culture of collaboration" between industry, capital sources, professional service 9 providers, and research organizations. 10 11 The Florida High Tech Corridor Council (FHTCC), founded in 1993, is a regional economic 12 development initiative of the University of Central Florida (UCF), the University of South 13 Florida (USF) and the University of Florida (UF) whose mission is to grow high tech industry in 14 the region through research, workforce development and marketing programs. The partnership 15 involves more than 25 local and regional economic development organizations (EDOs) and 14 16 community colleges. The Council is co-chaired by the presidents of UCF, USF and UF. The unique 17 partnership has resulted in a strategic approach to high tech economic development that involves 18 matching funds research, workforce development and a marketing program leveraging governmental, 19 EDO and corporate budgets on a regional rather than local basis. 20 21 Job creation priorities and opportunities: Bringing new businesses to Northeast Florida 22 Northeast Florida has significant opportunities to strategically focus its business development 23 efforts. Cornerstone, following the lead of Enterprise Florida, but taking into consideration 24 Northeast Florida’s unique assets, targets the following industries for business relocation and 25 new business development - advanced manufacturing, aviation and aerospace, finance and 26 insurance services, headquarters, information technology, life sciences, and logistics and 27 distribution. Determining which targets are right for Northeast Florida includes a review of the 28 businesses that are already concentrated in the region as well research based analysis. Each 29 county also tweaks those targets based on the unique capacity of their communities. The target 30 industries are re-assessed every three years and provide a framework for business 31 development. 32 33 Limited resources require this targeted approach to attracting business because taking a 34 “shotgun approach” is inefficient. The State of Florida also provides incentives (Qualified Target 35 Industry Tax Refund) for companies that create high wage jobs in targeted high value-added 36 industries. This incentive includes refunds on corporate income, sales, ad valorem, intangible 37 personal property, insurance premiums, and certain other taxes. Both new and expanding 38 businesses in selected targeted industries or corporate headquarters are eligible. Other 39 incentives for target industries include the Qualified Defense and Space Contractor Tax Refund, 40 Capital Investment Tax Credit, and High Impact Performance Incentive Grant. 41 42 In addition to creating jobs, attracting headquarters to the region has the added benefit of 43 creating wealth in the community. When headquarters are located in the region, it means that 44 Northeast Florida is always of mind when decisions are being made with regard to expansion, 45 investment, and philanthropic giving. Jobs within headquarters also have a tendency to pay 46 higher salaries. High level executives also add to the region’s civic, social, and political capacity 47 as well. The region could benefit from efforts to attract small fast growing companies with 48 annual revenues of $50 to $100 million as well as Fortune list companies. 49 50


Quality public education systems and higher education offerings 1 One of the most oft discussed quality of life issues during this study was k-12 public education 2 as it relates to both the quality of the workforce and the quality of the region’s communities. 3 Quality public education can be measured in a variety of ways, including high school graduation 4 rates and postsecondary education continuation rates. In the past three years, graduation rates 5 have steadily climbed in most districts and the average for region has improved significantly. At 6 the same time, graduation requirements have become more rigorous. 7 8

Northeast Florida’s High School Graduation Rates 9 Counties 2009-10 2008-09 2007-08

Baker 75.9% 85.3% 74.9%

Clay 78.4% 75.3% 70.5%

Duval 66.6% 64.5% 61.3%

Flagler 83.5% 81.3% 80.9%

Nassau 89.5% 76.3% 70.9%

Putnam 74.6% 70.4% 71.1%

St. Johns 92.1% 89.3% 87.1%

Northeast

Florida

80.1% 77.5% 73.8%

Source: Jacksonville Community Council Inc., Community

Snapshot uses the National Governor’s Association Graduation

Rate. Note: The NGA rate accounts for students who transfer

into a cohort and students who transfer out; it is not based

specifically on dropouts. Thus, the NGA rate acknowledges

that students transfer out of state, to private schools, to

home schools, and other educational settings. It does not

imply that all students are either graduates or dropouts.

10 11

Northeast Florida’s Postsecondary Continuation Rates 12 Follow-up of prior year graduates attending a postsecondary education program 13

District 2008-09 2007-08 2006-07

Baker 45.8% 50.5% 67.1%

Clay 57.6% 57.9% 64.2%

Duval 61.5% 61.0% 62.1%

Flagler 56.4% 61.9% 55.2%

Nassau 56.2% 58.9% 63.7%

Putnam 55.9% 52.8% 62.2%

St. Johns 70.2% 69.7% 57.9%

Northeast

Florida

57.7% 58.9% 61.8%

Source: Florida Department of Education, Florida

Schools Indicator Report (FSIR)

14 The percentage of high school students attending college declined in Northeast Florida from 15 2006 through 2008 according to the latest data provide by Florida Education and Training 16 Placement Information Program (FETPIP). The exceptions were in Flagler and St. Johns 17 Counties. Over 50 percent of the region’s graduates consistently opt to go directly to work after 18 high school from year to year. Of those who pursue a college or postsecondary degree, over 19 one-half of those students work as well. This may be due in part to the cost of higher education 20


and the recession. High school graduates who forgo college or postsecondary training may do 1 so because earning a living takes precedence. On average less than 5 percent of the region’s 2 graduates enter the military. 3 4 The State of Florida also rates public school systems by student performance on the Florida 5 Comprehensive Assessment Test (FCAT). In the seven-county region the majority of the 6 county’s districts received a rating of “B” or better. Putnam County was the only “C” rated 7 district during the last testing cycle. During the partner county site visits, the success of the 8 school districts in some counties - based on the state’s grades - were readily mentioned. In 9 other counties participants were concerned that their poorly perceived school districts 10 negatively affect business recruitment efforts. Participants in Putnam County suggested that 11 progress is being made, and a recent grant from the U.S. Department of Education for $7.3 12 million will provide additional support to support high performing teachers. Duval County also 13 received $9.5 million to implement a similar program. 14 15

District Ratings Based on Florida Comprehensive Assessment Test Scores 16 COUNTY BAKER CLAY DUVAL FLAGLER NASSAU PUTNAM ST. JOHNS

# of Schools 11 46 188 20 23 26 50

2009-2010 B A B A A C A

2008-2009 B A B A A B A

2007-2008 B A B A A C A

Source: Florida Department of Education – School Grades District: ST JOHNS, BAKER, CLAY, NASSAU, FLAGLER, PUTNAM, DUVAL, Years: 2009-

2010, 2008-2009, 2007-2008

17 To prepare students for the challenges of tomorrow’s world work, the school systems in 18 Northeast Florida have not tracked for vocational education or college preparatory work in 19 decades. All students participate in curriculums that prepare them for work or postsecondary 20 success. The prevailing idea is that colleges and employers are looking for the same set of skills. 21 Once a student graduates from high school he or she should be worthy of investment by either 22 academia or the business world according to an education speaker. To make high school 23 education relevant to young people and prepare, the region’s career academies provide job 24 relevant education that may provide students with an industry relevant certification so that 25 they can go to work after high school as well as an academic direction should those students 26 continue their education in the field of study. The academies have been credited with 27 supporting high academic outcomes in St. Johns County where the career academies have ties 28 to both postsecondary institutions and local industries, including Stellar, Northrop Grumman, 29 Flagler Hospital, and Embry–Riddle Aeronautical University. 30 31 The intermingling of work and college preparation addresses several regional realities. At least 32 one-half of the region’s high school graduates will go directly to work. Average college 33 attainment regionally is low compared to other communities at 21 percent. Most people in the 34 United States do not attend college; the national average is 30 percent. Secondary education 35 that exposes students to work and the educational path needed to move along in a career can 36 be beneficial. 37 38


Career academies…provide training in high school. Some students must work…Opportunity cost 1 of attending college vs. work. For some attending college immediately after high school is not 2 the right choice, but still need skills to get a job. Only 30 percent of the U.S. public has a college 3 degree, everyone will not attend college, but everyone needs skills. Future jobs will require 4 postsecondary training. 5 6 While graduation rates are improving and grades based on the FCAT indicate that the school 7 districts in the region are doing well, there is a disconnect when it comes to the college 8 readiness of students in the region. This disconnect is indicative of workforce readiness as well, 9 since high school curricula no longer prepares students for work or college, but both 10 simultaneously. Common placement tests results vary widely depending on the district and the 11 high school from which students graduate. 12

In 2009, 21 percent of the 1,002 St. Johns County graduates taking the common placement 13 tests in math, reading, and writing required remediation, 78.9 percent did not. 14

During the same year 74 percent of the 90 William Raines High School graduates who took 15 the common placement tests required remediation – the highest in the region, while 1.3 16 percent of the Staton College Preparatory School’s 228 graduate required the same – the 17 lowest in the region. 18

19 There is also a correlation between the higher education institution graduates attend and the 20 likelihood of needing remediation. Graduates attending a state university are less likely to need 21 remediation than their peers attending a community or state college. This may be a reflection 22 of the fact that Florida’s state colleges are open enrollment institutions, while the state 23 universities have more stringent entrance requirements. 24 I 25 n 2009, 49 percent of the students graduating from a high school in Northeast Florida and 26 attending Florida State College at Jacksonville (FSCJ) required remediation as did 50 percent of 27 the region's students attending St. Johns River Community College (SJRSC). Those numbers 28 have not varied much since 2007. 29 30 Over the same period, less than 5 percent of the region's graduates attending the University of 31 North Florida required remediation. Duval County graduates made-up the greatest proportion 32 of FSCJ and UNF students, while Clay County graduates made up the greatest proportion of 33 SJRSC students. 34 35 From 2007 to 2009, on average, 35 percent of high school graduates in Northeast Florida 36 attending a state college or university required remediation in math, reading, or writing. 37 38

Northeast Florida High School Graduates Performance on Common Placement Tests 39 Students scoring at or above the cutoff do not require remediation 40

Counties Baker Clay Duval Flagler Nassau Putnam St.

Johns

Northeast

Florida

2009 # Tested in math,

reading, and

writing

102 1,112 3,094 392 337 129 1,002 6,168


% Scoring at or

above cutoff

score in all

three subjects

62.7% 68.1% 60.1% 70.4% 57.9% 55% 78.9% 64.7%


reading, and

writing

102 1,148 3,072 335 320 146 990 6,113

% Scoring at or

above cutoff

score in all

three subjects

67.6% 65.9% 61.1% 66.9% 63.4% 54.8% 77.6% 65.3%


reading, and

writing

105 1,139 3,122 335 334 220 979 6,234

% Scoring at or

above cutoff

score in all

three subjects

62.9% 67.4% 61.9% 64.8% 57.8% 53.6% 76% 63.5%

Source: Florida Department of Education, Performance on Common Placement Tests

Note: These reports include performance information for students who graduated from a public

high school in Florida and attended a public college or university in Florida during the

academic year immediately following high school graduation. Students who did not go to college

or who attended private or out-of-state colleges are not included in these reports. The CPT,

SAT-I, and ACT are the assessments used to place students in English and Math courses at

colleges and universities in Florida.

1 In addition to the two state colleges and public university mentioned previously, Northeast 2 Florida also has two private colleges, one private law school, several public and private 3 college/university satellite campuses, a wide range of technical schools, and various private 4 proprietary institutions. The graduates from these institutions, when they remain local, 5 contribute to building a stronger regional workforce by increasing the number of degreed 6 residents. Retaining this talented workforce is often a function of the community’s quality of 7 life as well as the availability of high paying jobs. According to Next Generation Consulting, ‘the 8 key is to identify and capitalize on the community’s unique strengths in efforts to attract and 9 retain the next generation workforce.’ In its 2009-10 list of Next Cities with more than 500,000 10 people, Jacksonville ranked 14 out of 20 cities. Other Florida cities making the list were 11 Gainesville (#10 of 20 among cities with a population between 100,000 - 200,000) and Orlando 12 (#20 of 20 among cities with a population of 200,000 to 500,000). 13 14

Higher Education Academic Degrees Awarded 15 Duval County Institutions Only 16

Year Associates Bachelors Graduate Total

2009-10 4,070 4,106 1,062 9,238

2008-09 3,211 3,847 1,001 8,059

2007-08 3,239 3,674 934 7,847

2006-07 3,031 3,548 1,088 7,667

2005-06 2,860 3,102 943 6,905

Source: Quality of Life Progress Report for Jacksonville

and Northeast Florida

Note: Includes data from Edward Waters College, Florida

State College at Jacksonville, Jacksonville University,

University of North Florida, and the Florida Coastal

School of Law

17 Higher Education Institutions in Northeast Florida by Student Enrollment 18

Jacksonville Business Journal 2009-2010 Book of Lists 19


1. Florida State College at Jacksonville

2. University of North Florida

3. St. Johns River State College

4. University of Phoenix

5. Jacksonville University

6. Flagler College

7. Webster University Graduate School North

Florida

8. Florida Coastal School of Law

9. Nova Southeastern University

10. First Coast Technical College 11. Columbia College 12. St. Leo University

13. Keiser University 14. ITT Technical Institute 15. University of St. Augustine for Health

Sciences

16. Jones College 17. Trinity Baptist College 18. University of Florida College of Pharmacy –

Jacksonville Campus

19. Troy University 20. Logos Christian College and Graduate School 21. Southern Illinois University Carbondale 22. DeVry University

Note: Though not listed on the JBJ list, Florida Gateway College in Columbia County and Daytona

State College in Volusia County also serve Northeast Florida residents.

1 How we do business regulation, taxes and incentives 2 On more than one occasion, the study committee heard resource speakers state that it is 3 difficult to do business in the State of Florida and the Northeast Florida region. “Rather than 4 specific regulations being at fault the committee was told that failed processes and/or the 5 absence of processes for decision making are at fault.” Too often, businesses are not able to get 6 their doors opened quickly due to an anti-business regulatory attitude. These statements, made 7 with regard to what happens in Tallahassee, is important at the regional level because the 8 difficulty of doing business in Florida has a “trickle down effect” that negatively impacts local 9 economic development efforts. 10 11 At the same time, the regulatory environment in the state, as measured by outside interests, 12 produce mixed results. In several recent studies, Florida fares poorly or in the middle of the 13 pack with regard to business climate, which includes regulation. 14

U.S. Economic Freedom Index (2008), Pacific Research Institute: All 50 states are ranked in 15 five areas: fiscal policy, regulatory policy, judicial climate toward business, the size of 16 government, and welfare spending. Florida ranks #45 in regulatory category and #28 17 overall. 18

Freedom in the 50 States: An Index of Personal and Economic Freedom (2009), Mercatus 19 Center at George Mason University: The categories measured were fiscal policy, regulatory 20 policy, personal freedom and economic freedom. In the regulatory category, Florida ranked 21 #19 and #22 overall. 22

The Best States for Business (2010), Forbes magazine: The study examined business costs, 23 labor policy, regulatory environment, economic climate, growth prospects and quality of 24 life. In the regulatory ranking, Florida ranked #22 and #26 overall. 25

26 Top 10 States for Business 27

Forbes Magazine 2010 28 Overall

rank

State 1Business

costs

rank

2Labor

supply

rank

3Regulatory

environment

rank

4Economic

climate

rank

5Growth

prospects

rank

6Quality

of life

rank

Population Gross

state

product

1 Utah 8 5 6 1 20 18 2,811,600 $87B

2 Virginia 24 3 2 4 14 6 7,927,400 $329B

3 North

Carolina

3 15 3 18 9 32 9,460,300 $322B

4 Colorado 33 1 15 6 6 9 5,059,500 $201B

5 Washington 28 2 5 11 4 29 6,705,100 $265B


6 Oregon 18 4 34 14 12 21 3,857,500 $144B

7 Texas 26 21 17 2 1 38 250,107,00 $912B

8 Georgia 31 7 1 30 7 35 9,919,300 $324B

9 Nebraska 6 23 28 12 40 14 1,800,900 $66B

10 Kansas 23 18 11 13 30 27 2,829,800 $97B

26 Florida 37 14 22 36 3 39 18,589,000 $588B

Source: Forbes Magazine, 2010 Best States for Business - Notes: 1) Index based on cost of labor, energy and taxes. 2) Measures educational 1 attainment, net migration and projected population growth. 3) Measures regulatory and tort climate, incentives, government integrity, 2 transportation and bond ratings. 4) Reflects job, income and gross state product growth as well as unemployment and presence of big 3 companies. 5) Reflects projected job, income and gross state product growth as well as business openings/closings and venture capital 4 investments. 6) Index of schools, health, crime, cost of living and poverty rates 5 6 The State of Florida is known for its low taxes, which is a benefit when businesses consider the 7 Region. There is no personal income tax and the corporate tax rate (5.5 percent) is among the 8 lowest in the nation. Nevada, Washington, and Wyoming are the only states in the nation 9 without a corporate income tax. Florida may soon join those states as Governor Rick Scott 10 campaigned on a promise to eliminate this tax altogether as an enticement for businesses to 11 come to Florida. In some states, corporate income taxes are paid on a sliding scale relative to 12 income. Depending on the business structure, types of goods or services sold, and the purpose 13 for doing business, Florida’s businesses in addition to corporate taxes, may also have to pay 14 sales and use taxes and unemployment taxes among others listed by the Florida Department of 15 Revenue. 16 17

List of Taxes Paid by Florida Businesses 18 Communications services tax 19 Corporate income tax 20 Discretionary sales surtax 21 Documentary stamp tax 22 Fuels tax 23 Gross receipts tax on utility services 24 Insurance premium taxes and fees 25 Motor vehicle warranty fee 26 Pollutants tax 27 Solid Waste taxes and fees 28 Unemployment taxes 29 Source: The Florida Department of Revenue 30

31 Incentives are an investment that communities make to attract businesses. While these tax 32 incentives, refunds, grants, and credits are not primary businesses attractors, they are a 33 differentiating factor when the business case is relatively equal among communities. 34 Consequently, incentives come into play at the end of the site selection process, rather than the 35 beginning. In Northeast Florida the incentives offered to businesses are local, based on the 36 funds available within county and/or municipal economic development budgets. The State of 37 Florida also offers incentives to businesses that meet certain criteria, especially with regard to 38 targeted industries, workforce training, and hiring specific classifications of workers (i.e. high 39 wage, low wage in distressed communities). Generally speaking, Florida communities often fall 40 short when it comes to offering incentives when compared to Texas, North Carolina, and other 41 states able to offer generous cash grants and financial support for capital improvements. 42 43 INCENTIVE PROGRAMS MANAGED AT THE STATE 44 LEVEL 45 Economic Development Transportation Fund 46

Qualified Target Industry Tax Refund 47 (QTI), Florida Statutes 48


Qualified Defense Contractor Tax Refund 1 (QDC) 2

Brownfield Bonus Program 3 Quick Response Training (QRT) 4 Sales Tax Exemptions (as-of-right) 5 Tax Exemptions on Inventories and 6

Personal Property (as-of-right) 7 No State Corporate Franchise Fee/Tax (as-8

of-right 9 No State or Local Personal Income Tax / 10

No State Property Tax (as-of-right 11 Enterprise Zone Program (Applicable to 12

certain portions of Duval and Putnam 13 Counties only) 14

15 SPECIAL STATE INCENTIVE PROGRAMS AVAILABLE 16 ONLY FOR HIGH ECONOMIC IMPACT PROJECTS 17 High Impact Performance Incentive (HIPI 18

Capital Investment Tax Credit CITC) 19 Florida Quick Action Closing Fund (QACF) 20 Florida Clean & Renewable Energy 21

Technology Sector Programs 22 23 INCENTIVE PROGRAMS MANAGED AT THE LOCAL 24 LEVEL 25 Tax Increment Economic Development Grant 26 Targeted Economic Development Area 27

Special Funds (Duval County only) 28 Development Site Land Cost Write Down 29 Free Trade Zone (FTZ) 30 Industrial Development Revenue Bonds 31

(IDB’s) 32 Recovery Zone Facility Bonds 33 Recruiting, Screening, Placement 34

Assistance (as-of-right) 35

Source: Cornerstone Regional Development Partnership 36

37

Creating New Businesses And Jobs Locally 38 Local job creation requires the recognition and support of businesses at every level from start-39 up (Stage 0-1) to mature businesses (Stage 4). Start-up companies may stay forever small or 40 become the next great international business. Growing both strong and entrepreneurial 41 businesses also serve as a way to attract new business into the regional community. Businesses 42 want to be domiciled in communities with successful peer companies. A community of 43 successful entrepreneurs attracts those with the same goals and financiers as well. 44 45 Fast growing entrepreneurial firms are well positioned to hire new workers by virtue of being in 46 an expansion mode. On the other hand, the single person consultancies, small service agencies, 47 “mom and pop” stores, and local restaurants also have a role in reducing unemployment, 48 creating jobs, and hiring workers. The power of small businesses was illustrated by a resource 49 speaker example – “if every small business in the region hired one employee the 50 unemployment rate would be zero.” 51 52 Northeast Florida also has multiple options to leverage existing business assets for future job 53 creation. Many of those opportunities come with a price, specifically, an investment in 54 visioning, planning, and money is required for these projects to come to fruition. However, the 55 return on investment may yield thousands of jobs. 56 57 Small business and entrepreneurship development and support at all levels 58 Northeast Florida is home to nearly 38,000 employers according to data provided by the 59 University of North Florida’s Small Business Development Center1. Of those businesses, 98 60 percent employ fewer than 100 people and 59 percent employ less than 5 people. The largest 61 group of workers in the region is employed in Stage 1 businesses that employ 2-9 employees. 62

1 The number of businesses listed here is based on U. S. Census information that excludes data on self-employed

individuals, employees of private households, railroad employees, agricultural production employees, and most government employees.


Because of the higher proportion of small businesses to large ones (>100 employees) it is likely 1 that a significant number of the new jobs created in the region will come from these smaller 2 firms. 3 4 With jobs in short supply, many people have elected to start businesses. Many of these small 5 businesses owners will be "lifestyle entrepreneurs" or self-employed people who have found a 6 way to replace their income. These start-up businesses and Stage 1 firms require a broad 7 support platform, including technical assistance, financing, training, and networking. Some of 8 these firms will remain small businesses and others may grow to employ hundreds of people. 9 No matter the case, preventing these businesses from failing is a prime consideration. Such 10 firms are as important to a community’s economic diversity as fast growing, innovative gazelle 11 firms that will become tomorrow’s big tech firm or dynamic new food service chain. 12 13 There are at least 39 organizations in Northeast Florida that support the success of small 14 businesses throughout Northeast Florida. These include chambers of commerce, state colleges, 15 technical assistance programs, and networking groups that help business owners operate more 16 effectively. Some of the organizations listed in the appendix have come together to form the 17 Small Business Assistance Providers group, which exists to share information, exchange ideas 18 regarding small business issues, coordinate assistance activities, and advocate on behalf of their 19 small business members and clients. 20 21 Small business development is not the primary focus of any economic development 22 organization in the region. The degree of focus on small business development as a job creator 23 also varies from county to county. The Jacksonville Economic Development Commission had the 24 most extensive list of resources and programs followed by Enterprise Flagler and the Nassau 25 County Economic Development Board. The region’s extensive chambers of commerce network 26 provides extensive support to their small business members through networking, education 27 programs, and other member perks. 28 29 A thriving community of fast growing firms 30 Entrepreneurial firms are defined as those small 31 businesses that are fast growing and innovative. These 32 second stage or gazelle firms create jobs because they 33 are in a growth mode. The Kauffman Foundation 34 study, High-Growth Firms and the Future of the 35 American Economy, states that fast-growing gazelles (3 to 5 years old) make up less than 1 36 percent of all businesses, yet account for approximately 10 percent of net new jobs in any given 37 year. Of the 157,000 firms in the seven-county region, 4.7 percent are at this growth stage 38 according to the Edward Lowe Foundation. 39 40 Attracting and growing more of these businesses in Northeast Florida requires at least two 41 considerations, more venture capital firms and an environment that encourages 42 entrepreneurship. Creating this environment starts with building partnerships between the 43 region’s universities, venture capital, and private enterprise. At present there is one venture 44

Definition: Venture capital is a

type of private equity provided to

early-stage, high-potential, growth

companies in the interest of

generating a return through an IPO

(initial public offering) or the

sale of the company.


capital firm in Northeast Florida – Springboard Capital, however the region has several higher 1 education institutions and due to existing geo-economic relationships the region has expanded 2 reach beyond the seven counties. Universities in this extended region include the University of 3 Florida, Florida State University, Florida A&M University, and the University of Central Florida. 4 Like-attracts-like, creating a strong entrepreneurial culture will attract entrepreneurs and 5 capital. 6 7 As discussed earlier, formal partnerships between business, government, and education are a 8 key component for creating a more competitive region. With this theme in mind, along with the 9 reality of Northeast Florida’s de facto super-region, which extends “north to Georgia, south to 10 Orlando, and west to Tallahassee”, a precedent exists for formalizing partnerships with other 11 urban economic centers, including but not limited to Tallahassee, Gainesville, and Orlando, 12 tapping into their higher education systems and venture capital networks. 13 14 Growing existing businesses and industries 15 At least three job growth focus areas were presented over the course of this study – improved 16 logistics capabilities enhanced by the expansion of JAXPORT, a health and biosciences cluster 17 anchored by a medical school, and continued support of the military in Northeast Florida. 18 Maximizing the potential in two of these areas requires significant investment. To some degree 19 regional leaders have limited direct influence over what happens next regarding the region’s 20 military presence and the expansion of JAXPORT. 21 22 Decisions about military spending for expansion projects depend on operational needs within 23 the United States Department of Defense. Though the region has enviable medical/health 24 resources and institutions, the consolidation of the various component pieces anchored by a 25 medical school or university research facility are improbable in the short term. The expansion of 26 JAXPORT is dependent on state and federal agency approvals to dredge the Jacksonville 27 channel, plus funding in excess of $1 billion. The port’s expansion is considered the most critical 28 of these options due to the number of jobs that could be created. At every partner county site 29 visit the expansion of JAXPORT was said to be integral to future economic development. 30 Without dredging to become Post-Panamax ready and other port improvements, JAXPORT will 31 remain a second tier port. 32 33

INDUSTRY/PROJECT INVESTMENT

NEEDED

EXISTING

ASSETS

PROJECTED JOBS

CREATED

ECONOMIC IMPACT

HEALTH AND

BIOSCIENCES**

$50 million 21 hospitals 30,000 $7.6 billion

annually

MILITARY Maintain and

cultivate

relationships

with military

leadership

locally and

nationally.

3 military bases in

Northeast Florida

and 1 in Kings Bay

~2,000*

(This growth in jobs

will occur over

approximately 14 years.

Jobs at Mayport are

expected to decrease

from 2012-2022)

~$4.5 billion

annually

LOGISTICS $1.1 billion

(JAXPORT

Expansion)

2 deepwater ports,

3 interstates, plus

international and

regional airports

75,000 $3 - $6 billion

annually

Sources: Speaker presentations. *Military personnel only. **College of Medicine combined with a 34 life sciences cluster. 35


1 Job creation opportunities are inherent in other existing Northeast Florida’s industries as well, 2 namely tourism, financial services, and manufacturing. To date less discussion has taken place 3 on how to best develop these industries. In a diverse seven-county region, where the target 4 industries are adjusted to fit the community, it follows that the three focus areas above may 5 need to be expanded. A salient point brought up by the study committee was the need for 6 balance in job creation. A focus on one industry over another, could lead to a community of 7 logistics workers and very little else, for example. 8 9 Access to capital 10 Small and large business access to capital is limited due to the fallout from the national 11 recession. Financial institutions are necessarily focused on their institutional survival in a time 12 when bank failures are not unheard of in communities across the nation. Regulatory changes 13 and greater prudence in lending practices mean that businesses will be able to qualify for loans 14 unless they have strong have a strong cash position and are highly credit worthy. Traditionally, 15 small businesses start-ups have also relied on the owner’s personal financial reserves and the 16 generosity of family and friends to invest in new ventures, but with the high unemployment 17 and depletion of personal savings, this is less likely today. 18 19 Very small firms, which often rely on the credit worthiness of their owners, have few avenues. 20 When Jacksonville was a banking and financial center in the 1980’s and 1990’s and community 21 banks where better situated before 2007, small business owners were more likely to work with 22 a local banker who had the leeway to consider factors beyond the balance sheet. Today, small 23 business owners options are somewhat limited if bank financing is the goal. However, the Small 24 Business Administration 7 (a) loan program is an option and many of the region’s banks are 25 actively engaged in lending through this vehicle. Borrowing against assets and collateral is 26 another option for businesses as well. In addition to the SBA, the region’s small business 27 organizations also include agencies that can assist business owners who are seeking financial 28 assistance. The financial crisis has provided business owners with an opportunity to become 29 more effective and efficient by examining their processes and capacities, according to one 30 speaker. The resulting savings could very well improve the business’ access to cash, which can 31 be used for investment or collateral purposes. 32 33 Retaining Businesses And Jobs 34 Approximately 100,000 firms in Northeast Florida employ more than two persons according to 35 the Edward Lowe Foundation. Efforts to keep these firms local and support to help them thrive 36 are beneficial to the region. As noted earlier, there are many organizations that support 37 business development in the region. Many of these organizations also work to retain local 38 businesses as well, including Cornerstone’s Business Development Committee. Retention 39 efforts are intrinsic to some of the state’s incentive programs, particularly those geared toward 40 target industries and workforce training. The region’s economic development organizations 41 have limited capacity – funding and staff – to engage in wide ranging retention efforts. 42 43


Per the University of Minnesota, retention efforts employ both short and long term tactics to 1 retain businesses. There are some indications that Northeast Florida’s regional communities are 2 embracing the tactics mentioned, including consideration for buying local and creating 3 stronger, more competitive, businesses. 4 5 Short Term…

Demonstrate community support for local firms

Help resolve immediate business concerns

Long Term…

Build community capacity to sustain business growth and development through creation of broad-based coalitions

Increase the competitiveness of local firms

Establish and implement a strategic plan for economic development

6 Recognition and utilization of local businesses 7 Campaigns to support local businesses have been discussed in Baker, St. Johns, and Duval 8 Counties via the chambers of commerce. The only regional effort to date is being undertaken by 9 the Jacksonville Regional Chamber of Commerce that encourages chamber members to buy 10 from on another. Such efforts are thought to bring attention to and help those businesses 11 succeed. According to the Baker County Chamber, “When you support local businesses, you are 12 also supporting your local government, and the money you spend will most likely be used by 13 that business again in our local economy and it just might find its way back to you and your 14 business.” The Amelia Island-Fernandina Beach-Yulee Chambers of Commerce also has a local 15 buying initiative, the Buy Nassau campaign has been in effect since 2009. 16 17 In 2009, the State of Florida launched its Backyard Economics initiative to encourage spending 18 within the state. The effort was spawned by a Florida Tax Watch report, which asserted that 19 every $100,000 spent via the internet with companies outside the state costs a Floridian his or 20 her job. The program was rolled out through various economic development organizations 21 throughout the state, but is now defunct. 22 23 Buy Local Jacksonville (www.buylocaljacksonville.com), operating independently of any 24 business or government group lists the benefits of buying from local locally owned and 25 operated companies. 26

Buying from locally owned and operated businesses keeps local money in the local 27 economy. 28

Buying local helps to create and sustain a more vibrant local economy. 29

Locally owned businesses are more likely to utilize local banks. 30

Locally owned businesses are more likely to utilize locally owned services. 31

Locally owned businesses help foster uniqueness and economic diversity in neighborhoods 32 where they are located. 33

Locally owned businesses are more likely to actively participate in local issues involving 34 schools, taxes, development, roads, zoning, and a myriad of other local issues. 35

http://www.buylocaljacksonville.com/


A thriving, locally owned and operated business environment prevents blight and brings 1 character to the City of Jacksonville and its surrounding areas. 2

3 Training people for the jobs that are available 4 Though the unemployment rate is high in Northeast Florida and many people have been out of 5 work for an extended period of time, there are job openings in the region. However, the jobs 6 available do not always match the skills of those seeking employment. Jobs in high demand 7 fields often require technical 8 expertise, a postsecondary credential 9 or a college degree. 10 11 Addressing the skills gap in Northeast 12 Florida is important for attracting 13 businesses, but equally so for 14 retaining business where losing an 15 employer because workers do not 16 have the needed skills can be 17 damaging for the economy and the 18 perception of the region. 19 20 WorkSource, the region’s publically 21 funded workforce development agency, offers job seekers several tools to improve their skills 22 and find work. The region’s community colleges and various non-profit organizations and for-23 profit institutions also offer job training and workforce readiness skills training to people who 24 are unemployed and underemployed. WorkSource received federal stimulus funds and has 25 provided training scholarships for over 2,200 displace workers in the region. The training 26 resulted in degrees or certifications in high demand occupations. 27

28 Identification of and support for second stage, growth companies 29 Support for the region’s second stage and gazelle firms is important for creating and retaining 30 jobs and, because they have a history in the community, they are more likely to remain local 31 given the necessary support. Indentifying these companies and providing needed technical 32 assistance and resources is important to the region’s economic viability. Economic Gardening, 33 which began in Littleton Colorado, is the phrase used to describe the process of focusing 34 resources on growing and retaining local high-growth firms. The program helped entrepreneurs 35 double the job base in Littleton from 15,000 to 30,000 and triple the retail sales tax from $6 36 million to $21 million over a period of 20 years. At the same time, the population only grew 23 37 percent over those two decades. Littleton’s project began with the idea that "economic 38 gardening" was a better approach than "economic hunting." This means growing jobs locally 39 through entrepreneurial activity, rather than recruiting those jobs. Recruiting typically 40 represents less than 5 percent of the jobs created in most local economies 41 42 The three basic elements of Economic Gardening are: 43

1. Providing critical information needed by businesses to survive and thrive. 44


2. Developing and cultivating an infrastructure that goes beyond basic physical 1 infrastructure to include quality of life, a culture that embraces growth and change, and 2 access to intellectual resources, including qualified and talented employees. 3

3. Developing connections between businesses and the people and organizations that can 4 help take them to the next level — business associations, universities, roundtable 5 groups, service providers and more. 6

7 Nationally, it is estimated that 40 to 80 percent of all new jobs are created by small businesses, 8 particularly second stage companies that are defined as firms having revenues between $1 9 million and $50 million. These are firms that have grown past the startup stage but have not 10 grown to maturity. These growing, but relatively small businesses are considered 11 entrepreneurial because of their high growth potential. 12

13 In 2008, according to the Edward Lowe Foundation’s online database (youreconomy.org) 4.73 14 percent of businesses (7,463 firms) in Northeast Florida were second stage businesses, which 15 employed 28 percent of the region’s workers. According to IMPACT the Jacksonville Regional 16 Chamber of Commerce’s second stage, economic gardening initiative, the investment required 17 to create a new jobs at existing companies is less than the investment required to recruit 18 companies from other areas. The list of organizations that provide assistance to small 19 businesses listed in the appendix also serve the needs of second stage companies. 20 21 22

Jobs and Businesses in Northeast Florida Based on DUNS Reporting - 2008 23 Counties BAKER CLAY DUVAL FLAGLER NASSAU PUTNAM ST JOHNS TOTALS

ESTABLISHMENTS

2008

1,775 16,405 94,628 10,272 7,219 6,221 21,266 157,786

NONCOMMERCIAL 8.7% 4.7% 5.3% 3.5% 6.6% 8.0% 4.7% 5.93%

NONRESIDENT 2.0% 3.0% 3.9% 1.4% 2.3% 2.6% 2.2% 2.49%

RESIDENT 89.3% 92.3% 90.8% 95.0% 91.0% 89.5% 93.1% 91.57%

SELF EMPLOYED

(1)

37.9% 36.1% 29.6% 35.9% 35.8% 35.4% 35.0% 35.1%

STAGE 1 (2-9) 58.1% 58.9% 63.5% 60.3% 59.6% 59.1% 60.1% 59.94%

STAGE 2 (10-99) 3.7% 4.8% 6.5% 3.7% 4.4% 5.3% 4.7% 4.73%

STAGE 3 (100-

499)

0.3% 0.2% 0.4% 0.1% 0.2% 0.2% 0.2% 0.23%

STAGE 4 (500+) 0.0% 0.01% 0.04% 0.0% 0.03% 0.0% 0.03% 0.02%

Counties BAKER CLAY DUVAL FLAGLER NASSAU PUTNAM ST JOHNS TOTALS

JOBS 2008 7,611 74,917 612,31

0

38,063 34,016 27,723 94,211 888,851

NONCOMMERCIAL 23.8% 11.8% 12.3% 10.8% 11.0% 18.8% 13.9% 14.63%

NONRESIDENT 8.9% 19.6% 19.9% 11.7% 20.8% 12.8% 9.1% 14.69%

RESIDENT 67.4% 68.5% 67.8% 77.6% 68.2% 68.4% 77.0% 70.7%

SELF EMPLOYED

(1)

11.7% 10.6% 6.1% 11.9% 10.1% 10.4% 9.5% 10.04%

STAGE 1 (2-9) 49.5% 47.9% 37.8% 53.3% 46.9% 49.2% 45.7% 47.19%

STAGE 2 (10-99) 23.7% 31.3% 30.9% 26.2% 26.5% 32.7% 27.9% 28.46%


STAGE 3 (100-

499)

15.1% 8.5% 13.6% 8.7% 7.0% 7.7% 11.8% 10.34%

STAGE 4 (500+) 0.0% 1.8% 11.6% 0.0% 9.5% 0.0% 5.0% 3.99%

Source: The Edward Lowe Foundation. www.youreconomy.org 1 2

Key terms for the chart above 3 Noncommercial Educational institutions, post offices, government agencies and other

nonprofit organizations.

Nonresident Businesses that are located in the area but headquartered in a different

state. The reason for this distinction: residents have more influence on job

creation than establishments headquartered outside of the state.

Resident Either stand-alone businesses in the area or businesses with headquarters in

the same state.

Self

(1 employee) This includes small-scale business activity that can be conducted in homes

(cottage establishments) as well as sole proprietorships.

Stage 1

(2-9 employees) This includes partnerships, lifestyle businesses and startups. This stage is

focused on defining a market, developing a product or service, obtaining

capital and finding customers.

Stage 2

(10-99 employees) At this phase, a company typically has a proven product, and survival is no

longer a daily concern. Companies begin to develop infrastructure and

standardize operational systems. Leaders delegate more and wear fewer hats.

Stage 3

(100-499

employees)

Expansion is a hallmark at this stage as a company broadens its geographic

reach, adds new products and pursues new markets. Stage 3 companies

introduce formal processes and procedures, and the founder is less involved

in daily operations and more concerned with managing culture and change.

Stage 4

(500+ employees) At this level of maturity, an organization dominates its industry and is

focused on maintaining and defending its market position. Key objectives are

controlling expenses, productivity, global penetration, and managing market

niches.

4 5 6 7 8

CONCLUSIONS 9

Develop value judgments (conclusions) based on the agreed upon findings. 10 Meeting dates: 4.6.2011 and 4.13.2011 11 12 13 14 15

RECOMMENDATIONS 16

Develop a set of recommendations, guided by the findings and conclusions that will create 17 community change once implemented. 18 Meeting dates: 4.20.2011, 4.27.2011, and 5.4.2011 19 20 21

http://www.youreconomy.org/


APPENDIX 1 2

Small Business Assistance Organizations in Northeast Florida 3 Baker County Chamber of Commerce 4 Beaver Street Enterprise Center 5 BETA-1, Business & Emerging Technology 6

Accelerator 7 Better Business Bureau of Northeast Florida 8 Center for Business Excellence 9 Essential Capital (Formerly JEDCO) 10 European American Business Club 11 First Coast African-American Chamber of 12

Commerce 13 First Coast Hispanic Chamber of Commerce 14 Flagler Small Business Incubator Program 15 Florida Business Development Corporation 16 Florida Export Directory 17 Florida First Capital Finance Corporation (FFCFC) 18 Florida State College Small and Emerging 19

Business Training & Development Program Small 20 Business Workshops at the Chamber's Small 21 Business Center 22

Jacksonville Asian American Alliance 23 Jacksonville Entrepreneurship Center 24 Jacksonville Regional Chamber of Commerce 25

Small Business Center 26 Jacksonville Women's Business Center 27 Indo-US Chamber 28

National Association of Minority Contractors, 29 North Florida Chapter 30

Procurement Technical Assistance Center (PTAC 31 Puerto Rico Chamber of Commerce of Northeast 32

Florida 33 SBDC at Daytona State College 34 SCORE 35 Small Business Resource Network 36 Small Business Workshops at the Small Business 37

Development Center at UNF 38 Small Business Development Center (SBDC) at 39

University of North Florida (UNF) 40 U.S. Small Business Administration 41 UNF Small Business Blog 42 Women Business Owners of North Florida 43 WorkSource 44 Clay County Chamber of Commerce 45 St. Johns County Chamber of Commerce 46 Flagler County Chamber of Commerce 47 Enterprise Flagler 48 Flagler County Chamber of Commerce 49 Greater Nassau County Chamber of Commerce 50 Amelia - Fernandina Beach - Yulee Chamber of 51

Commerce 52 Nassau County Economic Development Board 53

Note: This list is not all inclusive. Other small business resources may be available in the community in addition to 54 those listed above. 55 56 57 58

recession recovery study findings draft 3.11.2011

Documents

o recognition

o visioning

o access

o regionalism

o small business

o quality of life

o educational attainment

o job creation priorities