Sunday, April 22, 2018
Business

Software firm paid millions in state job-creation incentives to lay off hundreds

A real estate software company paid millions in state incentives to create jobs is laying off up to 744 workers statewide.

Digital Risk disclosed in a regulatory filing Tuesday that it is laying off up to 251 workers in two locations in its Maitland headquarters, along with 30 workers in Boca Raton, 148 in Jacksonville, and 315 in Lake Mary. The cuts are effective April 12.

The company, known for its mortgage risk analysis software embraced by lenders during the real estate bust, said in its filing that the layoffs are expected to be permanent.

A spokeswoman, however, said the firm anticipates shifting an unspecified number of affected workers back to full-time or on contract, part-time or temporary status after analyzing business conditions over the next 60 days.

"It's not a straight layoff," Digital spokeswoman Brandie Young said, calling it a "hybrid" workforce model. "What we're doing is restructuring a portion of the workforce … to support (our clients') fluctuating demand."

Young said she couldn't predict how many employees may be called back, even part time, if market conditions improve.

In its letter to the state, Digital Risk blamed the layoffs on "substantial, abrupt and unforeseen residential mortgage events," including a large decline in mortgage refinancings. With credit quality improving, "demand for Digital Risk services has materially decreased," the company said.

Currently, Digital Risk has 1,765 employees statewide, state officials said.

Enterprise Florida, the state agency that oversees doling out job-creation incentives, said Digital Risk has been paid $2.17 million so far in incentive awards for three different job-creation projects announced since 2009.

During its heyday in 2012, Digital Risk announced plans to add 1,000 more jobs statewide, triggering the latest round of government incentives.

Tampa Bay was poised to benefit from Digital Risk's expansion, potentially bringing up to 600 jobs here paying an average of $50,000. At the time, the company was considering opening a facility in the general downtown area, lured by an incentive package from Tampa and Hillsborough officials worth $900,000.

That never happened. The company does not have any employees in Tampa, Young said.

Gray Swoope, Enterprise Florida's CEO and president, said Digital Risk has successfully created about 1,000 jobs over the past several years and "demonstrated a commitment to the state" by investing $15 million in capital expenditures.

"Despite today's actions, Digital Risk is ahead of all of its performance requirements and has indicated a continued commitment to adhere to all incentive agreements with the state," Swoope said. "We will continue to hold them accountable to their commitment."

Swoope said his agency will work with the Florida Department of Economic Opportunity to monitor the company's performance measurements.

If Digital Risk fails to meet performance requirements by the end of 2014, it could face sanctions under its contract with DEO, he said.

Asked whether the company expects to meet job creation incentives, Young said: "Absolutely. They've been on target and fully expect to be on target at the end of this year as well."

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