ST. LUCIE COUNTY — Some local officials are worried Digital Domain Media Group's demise will affect voters' decision in November whether to continue waiving property taxes to help lure new and expanding businesses to the county.
Larry Pelton, the county's Economic Development Council president, said he's concerned voters don't know the difference between a tax abatement and a cash incentive. He expects the latter to "go to the wayside" because of the economy.
"It (tax abatement) probably will be about the only incentive that will be offered for any company that would locate here," Pelton said.
Although it wasn't open long enough for the tax abatement to take effect, Digital Domain planned to defer paying property taxes to the county for the next five years before the company laid off 346 employees this month. It didn't receive any other county incentives, which include impact fee credits and job creation grants.
"Unfortunately, the debacle at Digital Domain will undoubtedly color all conversations regarding economic development for the next 10 or 20 years, regularly being trotted out as an example of what happens when the process goes horribly wrong," said Jon Ward, the Fort Pierce Urban Redevelopment Director.
Economic development incentives work when applied to make a good business better, Ward said, and they don't work when used to make a bad business good. He said incentives to support startup businesses has a high failure rate.
"I hope the voters recognize the value of having this tool available to the county and do not throw the baby out with the bathwater," Ward said. "It (tax abatement) is widely used in many locations, and its loss would place our county at a distinct disadvantage when competing against them for good firms."
County Commission Chairman Chris Dzadovsky agreed, saying St. Lucie would be at a "severe disadvantage" to Martin County, which has its own tax abatement program, and could not compete for companies without the same option.
"Not having the tools could severely impact the county's ability to attract jobs we so desperately need," Dzadovsky said.
Sen. Joe Negron, R-Stuart, said Digital Domain's closing "will and should be a significant consideration" for voters regarding tax exemptions, but an end to them would result in an increased reliance on state economic incentives.
Mayor Bob Benton isn't worried about the closing having an effect on voters' because tax deferments aren't the same thing as giving relocation money or using tax dollars.
"We have to have something to compete," Benton said.
20 YEARS OF TAX BREAKS
County commissioners rolled out the tax break plan 20 years ago for businesses moving into or expanding in the county. Voters approved the referendum by 56 percent in 1992 and again by 66 percent in 2002. Since the program sunsets every 10 years, it's on the ballot again Nov. 6.
Since the program began, at least 3,832 jobs were created through 24 approved applications for tax exemptions, said Michael Brillhart, the county's business and concurrency manager. The exemption given to Liberty Medical Supplies was based upon the company hiring 765 employees at its Port St. Lucie location, but as many as 1,300 employees have worked there during times of high market demand for its products, he said.
The exemptions apply only toward county taxes on improvements a business makes to its property and on equipment it buys as part of relocation or expansion. It doesn't apply to school, fire, city or voter-approved taxes. The discounts would be spread over time at a maximum of 10 years and with the amount of the discount decreasing each year. However, a business still would pay taxes on the full value of its land.
For example, if a company is granted a 50 percent tax exemption for a year, the county's general fund and fine and forfeiture accounts would collect 50 percent less on that property than it would have if no exemption had been granted.
In 2002, county officials organized a task force of government and business leaders to talk to residents and try to gain support for the Economic Development Ad Valorem Tax Exemption referendum.
The Economic Development Council, St. Lucie Chamber of Commerce and Realtors Association of St. Lucie plan to do the same this year, according to chamber Executive Director Linda Cox.
"There's just so much of this that people don't understand," she said. "And it's hard to understand."