ST. PETERSBURG — If a tax break worth more than $1 million works, then a financial services company will move to St. Petersburg and create 350 jobs by the end of 2015.
Even better, the company's annual payroll of $16 million would be a windfall for the city.
Council members voted unanimously Thursday with little discussion to approve the incentive for an unnamed firm that plans to pay an average salary of $46,428, with an additional $12,000 in average benefits. The company is expected to move into existing office space but spend $724,000 on renovations.
In exchange, the city and Pinellas County would each have to refund $105,000 in taxes. The state would cover the rest, translating into a $3,000 tax break for each job created.
If history is any guide, however, the tax breaks will do little to lure the company to St. Petersburg, and those jobs won't materialize.
Since 1996, St. Petersburg has offered the Qualitative Tax Incentive program, which refunds an assortment of taxes — corporate income, sales, ad valorem, intangible personal property, insurance premiums — for companies that create high-wage jobs in industries such as technology and finance.
Of the $1.8 million in city tax refunds that companies relocating to St. Petersburg have qualified for, only $685,600 has been paid — less than 38 percent. If one includes refunds the state later paid the city because companies often didn't meet their obligations, the city only paid 23 percent of the incentives.
Since the 2008 economic downturn, it's been even worse. The last four projects offered the incentives never materialized.
Last year, Florida, Pinellas and St. Petersburg approved $1 million in incentives to a "global conglomerate" that was to move its information technology department to the city. That company has since pulled the plug on the project, said Sophia Sorolis, city economic development manager.
In 2010, a green technology company that specialized in air conditioning and heating was approved for nearly $3 million in refunds to create 350 jobs. That project, too, is defunct, because the company, Cool Sound Industries Inc., couldn't get the funding to develop the technology.
"So it went south," said Mario Faras, who lobbied for Cool Sound. "They're regrouping. But if the incentives aren't there, they'll go somewhere else. We're competing against cities that are offering a lot."
Also in 2010, council members approved a refund of $1.8 million for human resources outsourcing company Ceridian Corp. That didn't go anywhere, either.
Neither did a management services company called Back of the House that was to create 100 jobs with incentives approved in 2009. "We're getting a lot of goose eggs," Sorolis said.
Sorolis said that in a bad economy, companies have greater leverage to play cities off one another. That has set off an arms race among cities to cut taxes in a process designed to favor corporations. For instance, under Florida law, the name of the company negotiating the tax breaks is confidential, allowing it to talk with other competing cities in secret.
Just last year, St. Petersburg voters approved a property tax break for companies that expand or relocate. The reason council members put it on the ballot? Other cities, like Sarasota and Tampa, offered it.
Council members say there's no harm in the incentives because companies don't get any breaks if they don't create jobs.
"So they have to create the jobs first," council member Karl Nurse said. "I'm pretty comfortable with that."