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Finance companies fleeing northeast for lower taxes in Florida

Posted at 10:55 PM, Aug 07, 2019
and last updated 2019-08-07 22:55:13-04

JUPITER, Fla. — Look out Wall Street. Huge financial firms from the northeast are moving en masse to Palm Beach County in search of lower taxes and better weather.

And the moves are spelling out big dollars for the local economy.

“The harder it snows in the higher the taxes the more phone calls we get here,” said Kelly Smallridge, president and CEO of Palm Beach County’s Business Development Board.

Smallridge has said over the years, she’s observed financial services companies fleeing to Florida by the droves, due to increasing taxes up north.

“It started in 2013 when New York raised their taxes and begin to tax the wealthy,” she said. “The wealthy turned around and already had second homes here in Palm Beach County and decided that this would be a good place for their operations.”

As taxes continue to go up in the Northeast, the more companies Smallridge said she works within relocating to Palm Beach County.

“There’s nothing else like this surge of CEO’s that are interested in escaping Manhattan, Boston, and Connecticut to come here and enjoy a much better quality of life at a fraction of the cost,” she said.

Smallridge said more than 70 companies have moved here in the last three years. She even started a full-time department in the BDB to sort through requests.

“There are about 20 to 30 more in the pipeline,” she said. “They’re inquiring about this area, sometimes they’ll come and set up a regional operation and then they turn around and move their corporate headquarters here.”

Why move to PBC?

The county's corporate tax rate is 5.5 percent. There’s no corporate income tax on limited partnerships and no state income taxes for individuals.

That’s very competitive when you compare that to the costs in New York and other states around it.

“You’re talking about $140,000 in savings alone in just taxes that you pay in the northeast that you don’t pay here,” said Smallridge.

She added that a domino effect is another explanation for the influx in financial services companies.

“Many companies are watching their peers make the bold move to come to Palm Beach County after being on Wall Street for decades,” she said.

Todd Lazenby, the founding partner of Royal Ascot Partners, offers an interesting perspective on the appeal to Florida. They started the private equity firm 12 years ago in Dallas, Texas — another competitive state with low taxes.

But Lazenby, a Florida native, said he felt drawn to bringing the company to the Sunshine State.

“We settled on Palm Beach County due to the lifestyle it offered, beautiful beaches and waterways, great access to healthcare, pro-business climate, number of wealthy families in close proximity, and most importantly, highly underserved market for private equity and investment banking,” he said.

He said Palm Beach County in particular, has an inviting business climate.

“The school system is very good and steadily improving, the people are warm, friendly, and very open to newcomers, and the financial and tech sectors are just starting to rev-up to serve the continuing growth we see for the foreseeable future,” he said. “The proximity to Dade and Broward Counties allows companies to attract good talent, customers, and clients while eliminating some of the hassles associated with large cities.” 

Impact on real estate, local business

Realtor Holly Meyer Lucas of Meyer Lucas Real Estate is seeing this trend play out in north county areas of Jupiter, Tequesta, and Palm Beach Gardens.

“We’ve seen the most insane influx of people moving to this area, particularly northern Palm Beach County,” she said. “A lot of homebuyers are trying to get in before the start of school so we’ve seen a real pop this summer.”

She says those business leaders are looking to north county for more space and ease of travel.

“We’re uniquely positioned to where 95 and the turnpike meet,” she said. “It’s not overdeveloped. It’s not your parents’ Palm Beach or Boca. People love that we have space.”

Across the county, Brightline and access to three national and international airports is another big appeal to access business needs in Fort Lauderdale/Miami and the rest of the country.

“When we’re working with a relocation situation, it’s not just the person. Now it’s the bigger picture of their business, their employees. So we’re finding them office space, we’re finding them a home, helping them navigate the schools,” said Meyer Lucas.

Marie Antoinette furniture in Tequesta is feeling the benefit as well with a busy of orders to decorate entire new homes this summer.

“New people coming down from the north, which is always good for business,” said Katrina Harden, who helps her family manage the shop. “We’ve felt a lot more people coming into this area.”

Smallridge says the county’s economic benefits go beyond buying homes. The companies are making donations to local charities, sending their children to local private schools and renting out office space.

“They’re leasing our office space so we have a very low vacancy rate,” she said. “There are two or three class a office buildings that are now under construction and soon we will have close to 600,000 square feet of office space.”

Data from the U.S. Census Bureau showed that Florida saw more people move here than any other state last year. Outflows from New York to Florida were the highest in the country at more than 63,000 people.

The BDB expects this trend to continue as taxes continue to go up in the northeast.

“CEOs are saying why not palm beach county and why not Florida?” said Smallridge. “The more and more companies that we’re able to amass here in Palm Beach County, the more the companies will realize that this is a solid business competitive environment.”