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Clearwater wants to offer tax breaks for job-creating businesses

CLEARWATER — City officials want to offer big tax breaks to businesses that promise jobs and local investment, mimicking a program approved in other cities that has shown few positive results.

Under the incentive plan proposed Monday to the City Council, a company pledging at least 10 new jobs and $100,000 in investments could be exempted from paying any taxes on property improvements for up to a decade.

A business investing $10 million in equipment, fixtures or site improvements, for instance, could earn more than half a million dollars in tax breaks. That money would have otherwise gone toward the city's operating fund, which has been shrunken by sinking home values.

If approved by the council, the program would go to city voters in a November referendum. Similar measures have passed in more than half of Florida counties and 20 Florida cities, including St. Petersburg and Tampa, where voters overwhelmingly approved the tax breaks last year.

Clearwater's proposal stands out for its generosity. While St. Petersburg and Tampa cap their annual tax breaks at $1.5 million to $2 million, Clearwater's proposal has no cap. And businesses here could earn the tax breaks for 10 years, twice as long as the other cities.

"We want to be as competitive as possible," said Rod Irwin, assistant city manager for economic development. "This might be something to make the difference to close a deal."

The breaks would go to industries like manufacturing, health care and information technology, not retail giants like Walmart. New jobs would need to pay more than Pinellas County's average salary, $40,000.

The city's eroded business base needs all the help it can get, officials say. Clearwater has lost a fifth of its jobs since 2006. The city is also built out, leaving little room for new construction. And tourism and service jobs, its bread and butter, are too vulnerable to economic shifts like the recent recession and the Gulf oil spill.

Property tax revenue has plummeted 30 percent in the last five years, a loss of $15 million. In that time the city government also shed more than 275 jobs, including positions in the parks, fire and police departments.

Local tax incentive programs haven't yet seen success. A similar program in Tampa has not fielded any applications, and St. Petersburg's program has yet to get off the ground.

Florida offers a statewide tax refund program with similar terms, but Clearwater hasn't gained much from it in recent years. A company that stood to earn nearly half a million dollars in state tax refunds for pledging 50 new jobs in downtown Clearwater took its business elsewhere last month, ending the first such attempt that downtown had seen in six years.

In July, Tampa and Hillsborough leaders agreed to a $1.1 million tax incentive for an unidentified financial services firm, believing it would save 1,633 jobs. Days later, a partner with PricewaterhouseCoopers said the firm's jobs had never been in danger, surprising officials and leading to calls for more oversight.

Even so, Clearwater Mayor George Cretekos supported development of the Clearwater incentive program during Monday's council work session, saying it could help diversify the local economy. Voters in Tampa and St. Petersburg passed similar referendums with about two-thirds of the vote.

But not everyone supports the idea. Bob Graham, former Florida governor and U.S. senator, wrote an opinion for the Tampa Bay Times last year decrying tax incentives, pointing out that business tax cuts had soaked up $4 billion in state funds while delivering worse job growth than before the cuts began.

"After 12 years of tax cuts, there is no evidence in these numbers that the cuts have achieved their purpose," Graham said. "If that is the case, what have we done?"

Contact Drew Harwell at (727) 445-4170 or dharwell@tampabay.com. To write a letter to the editor, go to tampabay.com/letters.

Clearwater wants to offer tax breaks for job-creating businesses 05/15/12 [Last modified: Tuesday, May 15, 2012 7:49pm]
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