Boondoggle sinks $20M in Florida funds

Former state Rep. Ambler helped Digital Domain.
Former state Rep. Ambler helped Digital Domain.
Published Feb. 1, 2013

The animation company behind Titanic, Digital Domain Media Group, has gone belly-up. This wouldn't be much more than a footnote to business news had the state not sunk $20 million in incentives into the enterprise to lure it to Port St. Lucie. The boondoggle was arranged by then-state Rep. Kevin Ambler of Tampa who — surprise — found himself invited to join the company's board and his son in the company's employ. Taxpayers lose, Ambler wins. The governor is launching an investigation into how it came about. But just looking backward is not enough. Safeguards are needed to keep something similar from happening again.

The state has a procedure for evaluating whether a tax incentive package for private business job creation is worth the investment. But it results in too many incentives awarded to companies that probably would have moved here or expanded anyway. There is not enough monitoring, but at least there is some oversight. In the case of Digital Domain, a company founded by director James Cameron, that process was ignored. Enterprise Florida, the state's public-private economic development group that conducts the reviews, failed to recommend the deal sought by the studio. Still, Ambler was able to tuck the funding into the 2009 state budget, resulting in Digital Domain being given up-front cash to come to Florida and build a state-of-the-art film and animation studio. It soon had 300 Florida-based employees.

In September, the company filed for bankruptcy, closed its offices and laid off its workers.

Where were the legislative leaders who should have been looking out for taxpayer interests? And why were there no eyebrows raised or investigations launched when Ambler was later given a seat on Digital Domain's board for an annual $20,000 retainer plus $2,000 per meeting attended, or when his son, Jason Ambler, was reportedly given a job there? It doesn't take a hunting dog to sniff out a smell this bad.

Now Florida is on the hook to pay high-priced bankruptcy attorneys as it tries to recoup some of its initial $20 million investment. The Department of Economic Opportunity under Scott has asked the Legislature for $500,000 to fund the effort. Florida will be lucky if it walks away with pennies on the dollar.

As the investigation unfolds it should also look into whether any private business should receive $20 million in up-front incentives from the state — since bankruptcy is always a danger. Scott has been pushing the Legislature to give him more freedom to entice businesses to the state with cash incentives. But that seems an unnecessary gambit, and from an ideological perspective contrary to those who say that government should stay out of private enterprise.

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Here, the state is picking marketplace winners and losers by underwriting one business in a competitive field. Might other movie studios have done even better at job creation with a $20 million taxpayer investment? Of course. But they didn't have a lawmaker awarding them special favors.