Forget those pricey state economic incentives used like catnip to persuade companies to expand to Florida.
Want Fortune 500 corporations to replant their headquarters in the Sunshine State? Buy their CEOs nice beachfront vacation homes.
That seems as likely a lure as the millions in incentives waved at companies playing one state off another in the relocation game. Besides, it may prove more cost-efficient in the leaner times ahead.
In the new state budget, Tallahassee legislators approved a paltry $45 million in new economic incentives for the state. Not quite the $279 million Gov. Rick Scott asked for.
Car rental giant Hertz Global Holdings — No. 293 on this year's Fortune 500 ranking of the country's largest public corporations — this month announced it would uproot its New Jersey headquarters after 25 years and move it to tiny Estero in Lee County, between Fort Myers and Naples. Some 700 employees will relocate by 2015 from New Jersey and Tulsa, Okla., where Hertz recently bought the Dollar Thrifty Automotive Group.
Hertz CEO Mark Frissora said Florida's lower business expenses, cheaper cost of living, major tourist and rental car economy, and about $85 million in state and local incentives and tax credits all combined to make the relocation a win-win for Hertz.
Take heart, Florida. Consider New Jersey's loss, where the Hertz headquarters town of Park Ridge is losing its No. 1 taxpayer. And Hertz's announced departure is just the latest in a series of corporate shifts away from the region.
"It was kind of an easy decision," Frissora told reporters. After a nine-month selection process, "everything pointed to Lee County."
Then there's that beachfront home. Frissora and wife, Jennifer, already owned a condo assessed at $4.5 million in nearby Naples at the upscale Le Rivage condo tower.
It's a suspiciously convenient commute from there to what will be a new 300,000-square-foot headquarters to be built on 34 acres in Estero.
Frissora denied in earlier press coverage that the location of his personal condo influenced the relocation. Nor, he said, did he know that Gov. Scott also calls Naples home.
Still, it's curious Hertz did not shop around Florida's bigger metro areas for a potential headquarters site. Apparently Tampa Bay was neither considered nor even contacted about the possible Hertz relocation, despite this market's more convenient access to other major U.S. markets via Tampa International Airport, and an array of cultural and educational options more in synch with folks moving from northern New Jersey.
Instead, Hertz beelined for Estero. The town boasts a population less than a tenth the size of Tampa's, and only 10 percent of its households have children under the age of 18, a far cry from family-oriented suburban New Jersey.
Florida is awash in relocated businesses, drawn here from northern climates by their owners and CEOs who vacationed here and found it worthy of bringing their company along behind them.
But Hertz isn't some private business that presumably relocates at the whim of a top executive. Only eight Fortune 500 companies headquartered in Florida are bigger in revenues than Hertz. None of the 15 other Fortune 500 companies that call Florida home come remotely close to Hertz based on global recognition.
Lee County officials must be stunned at the windfall of a corporate relocation of a prominence not seen in generations in Florida. The county tried and failed in 2008 to lure Maine's high-profile Jackson Lab, a biotech research business, with a substantial incentives package. Jackson Lab said no thanks, ultimately relocating to Connecticut.
Lee County Commissioner Frank Mann called the relocation of the Hertz world headquarters — bringing 700 jobs averaging $102,000 — the most significant economic moment in the area's history, according to the Fort Myers News-Press. Even bigger than the local Florida Gulf Coast University making it to this year's NCAA Sweet 16 basketball tournament.
Now enthusiastic leaders in southwest Florida are starting to think big: How can they leverage the Hertz relocation to help their regional economy?
Think bigger. How can all of Florida showcase the rare headquarters of a major corporation with a household name? Companies of all sizes that suffered the recent recession are rethinking their costs of doing business. New Jersey is expensive, as are California, New York and Illinois. Florida is cheaper. Come on down.
The bad news for Gov. Scott and Enterprise Florida is the budget for corporate incentives was sharply cut this spring by state legislators wary of the sloppy handling of public money on business recruitment.
"The reduction in the subsidies budget could be related to Enterprise Florida's built-in conflicts of interest and questionable results," said Dan Krassner, executive director of the independent government watchdog group Integrity Florida. "Lawmakers may be losing confidence in the entity and its failure to prove the subsidies strategy works."
But legislation also passed that is supposed to improve both the transparency and accountability of corporate incentives deals. That should help, Krassner added.
In light of how the Hertz deal went down, perhaps Enterprise Florida should reimagine its recruiting strategy.
Sure, Florida's cheaper and has no state income tax, the new strategy could say. But here's our real competitive edge: Florida's listings of waterfront homes for executives are unsurpassed!
Robert Trigaux can be reached at [email protected]