Wednesday, November 18, 2009

Economic development? Simply absurd

Lauren Ritchie


November 18, 2009

Second of two parts.

Sunday's column looked at a report by the Metro Orlando Economic Development Commission that claimed the agency had worked with Lake County's economic-development employees to bring 157 jobs to the community in the past year.

The real number, according to the companies themselves, is roughly a third of that when layoffs at the same companies cited by the EDC are tallied into the final total.

Today, we'll take a look at what the EDC says it did for those 10 firms for the nearly $300,000 in tax dollars that the county pays the group.

Recruiting companies and helping those already here to expand is a major part of the EDC's job but not the only part. The agency also is to help firms find buildings that work for them, help the county work toward meeting economic-development goals, represent Lake in trade missions, act as a conduit for grant money and help the county sell itself as a desirable place to live and work.

Nine of the 10 companies the EDC helped responded to requests to detail their relationship with the economic-development folks. The 10th, Niagara Bottling Co., did not answer inquiries asking for the exact number of people it employs now.

Two other companies were eliminated from the EDC's count. The agency claimed to have brought 42 jobs to Lake last year through Dunkin Donuts Distribution and six through QuietFlex, which makes flexible ductwork. Both of those firms, located in the Christopher C. Ford Commerce Park in Groveland, came to Lake in 2006 and did not add jobs in the past year.

Maureen Brockman, vice president for marketing and communications for the EDC, said the agency relied on figures from Lake County's economic-development folks for Dunkin and on a 2006 letter from QuietFlex to estimate the number of new jobs.

Calls to the companies show that none of the 10 was sought out and recruited by the EDC. Rather, it helped firms that already decided either to come to Lake or to expand operations here.

Only three companies said that the EDC or the county did anything other than provide information and paperwork about job grants. Two said the EDC didn't even do that much — the companies applied on their own for incentive money.

Here are the results:

Surgery Center of Mount Dora: A group of local doctors joined with Regent Surgery Health, an Illinois developer of surgical centers, to build a facility in Mount Dora. Regent chief of operations Joyce Deno described her company's relationship with the EDC as excellent. The agency, she said, didn't recruit her company, but "once we were grabbed, they were wonderful."

The EDC guided the surgery center through the process of getting incentive money for hiring workers making at least 115 percent of Lake's average annual wage, and the agency helped the center get through snags in the building-permit process. The EDC said the firm has 16 people, but Deno said that 22 are employed now, and she hopes to hire another eight in the next few months as the company opens and begins doing surgeries. The center expects to do about 300 surgeries a month. Deno said company made it a point to hire local janitorial, landscaping and extermination businesses.

Restor Telecom: President and Chief Operating Officer Lisa Somerville said her company came to Lake from Orlando in 2000 with the help of the EDC. Somerville said the EDC notified Restor last year that it may be eligible for job-incentive money. The EDC said Restor had hired 10 new employees, but Somerville said the number was 13, with the company getting grants for 10 of them.

G&T Conveyor: The company that designs, manufactures and installs large baggage-handling systems, mostly for airports, got grant money for 15 jobs but had to return the cash for four of them when it could not keep the positions for two years as the contract for the incentive money requires.

No one from the EDC or the county told G&T about the funds, HR director Chuck Matthews said. He said he was familiar with the program and he submitted the application without help from the agency.

At the time, he said, "G&T was experiencing good economic growth." Like many companies since then, the downturn hit G&T, which had to lay off 96 people.

Blue Earth Solutions: The EDC estimated that the recycler would hire up to 200 people, but the company is in a zoning pickle with Clermont and plans to expand are at a standstill.

The county's economic-development director is trying to help, but Blue Earth has "dropped" plans to increase the size of its Lake County location, Vice President of Business Development James Cohen Jr. said.

Instead, the startup company, which recycles durable foam and other products, is moving its headquarters to Winter Garden this week and looking to expand elsewhere.

Brockman said, "Our hope is that the full job creation potential originally anticipated in 2008 may one day happen."

It probably will — just somewhere else. After all, recycling is one of those business that is expected to grow under the Obama administration's push to expand "green" companies.

Cohen said he doesn't know where the EDC came up with the figure of 200 jobs. The agency, however, said it has a 2008 letter from the company president saying that Blue Earth hoped to employ that total.

Cohen said the company would hire 75 people at most if it were able to expand and operate around the clock. It has about 15 jobs now, which tallies with the EDC's claim.

Niagara Bottling Co.: The EDC didn't claim the jobs that the water bottler brought to Lake County this year, but it should. It is the EDC's biggest job creation of the year.

Brockman, however, said the EDC reports jobs from only those firms with which it has an official relationship, and Niagara is not one.

The EDC worked hard to get Niagara to come to Lake County. The firm doesn't have a "letter of establishment" with the agency because the county refused to give Niagara job-incentive money. Together, Lake and Groveland spent about $1.2 million trying to prevent the bottler from winning approval to take about 176 million gallons a year from wells into the underground water supply at a time when drinkable water is dwindling and residents can water their lawns only in dribbles.

A spokesman for Niagara said a month ago that about 50 people were working for Niagara and more were expected to be hired.

Lakeside Electrical: The electrical contractor, which was created in 2007, brought 14 jobs to Lake, according to the EDC. Owner Ron Hunt said the company currently employs 18 people. He said neither the EDC nor the county's economic-development department helped his firm get incentive money for high-paying jobs.

"Our office manager knew about the grant, and she pursued it and chased the paperwork," Hunt said. "Nobody informed us. We happened to hire a smart office manager."

Brockman said the agency provides a "seamless resource delivery system" that sometimes is invisible.

"Many companies don't realize that the EDC works closely with the county and the state to move incentive requests from application to approval," she said. "Again, that's OK because it is not about who gets the credit but that it happens."

Smart Fuels: The Boston-based biodiesel company that plans to produce fuel from waste vegetable oil at a plant in Fruitland Park already was building in Lake County when its owners contacted the EDC. That's how the company learned that incentive money for creating new jobs was available, said vice president Michael Carlton, who grew up in Lake and graduated from Eustis High in 1995.

The EDC said it is reviewing Smart Fuels for grant money, but Carlton said the firm employs 12 full-time people so far and plans to have 20 to 25 when production begins, perhaps by the beginning of 2010.

Buildtelligence Web Solutions: The Internet marketing and search-engine optimization firm in Mount Dora could be reimbursed up to $62,000 for hiring 31 employees over a period of three years as the company ramps up.

However, the firm has applied for reimbursement for only one position so far.

President and Chief Executive Officer Ken Knorr said he hasn't been able to find employees with experience in managing pay-per-click accounts and in search optimization. The latter is the ability to write copy that search engines latch onto so that a particular business appears at the top of any list that a search engine like Google returns to a user.

So, Knorr said, he's had to hire people at a lower wage and then train them.

However, he said, the company is growing fast. It is out of space in Mount Dora and is planning to move to the old Pringle Development building near the Leesburg International Airport. Knorr said he expects to double the size of the company quickly after the move.

He said the EDC not only walked him through the process of getting incentive grants but also helped him find a new location and pointed him toward other money available for training employees.

Brockman said, "This growing Mount Dora company has great potential; we are optimistic that the full job creation will occur."

So, there you have it.

The EDC is fudging its "success" numbers and needs to stop immediately.

Here are some numbers that are hard to tamper with, however: The EDC's IRS tax return for 2008 shows that it paid president and chief operating officer Ray Gilley $326,759. Gilley and the vice president combined took home $537,827, or 10 percent of the agency's revenue for the year. Talk about absurd.

If Lake County government paid its top two managers 10 percent of the budget, approximately $40 million would be walking away.

Here's an economic-development agency that doesn't have the first clue about economics. Somebody please tell me why Lake County deals with these people.

Lauren Ritchie can be reached at Lritchie@orlandosentinel

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