By: Elias Porras, SIOR Fla. President
Home rule-the right of Florida cities and counties to self-govern is under attack this legislative session. House Bill 3 and its companion, Senate Bill 1714, are good examples of how the legislature is attempting to wrest power from local governments. The bills impose onerous rules and restrictions on local tourism and economic development organizations and seek to undermine our state’s competitiveness and our ability to attract quality jobs and capital investment. In doing so, the Florida State Legislature oversteps its bounds and ultimately, will be micromanaging decisions that are better made at the local level.
“Economic development is most effective at the local level,” said Craig J. Richard, president and chief executive officer, Tampa Hillsborough Economic Development Corporation. “The attack on local economic development organizations is setting a bad tone and environment for economic development for the entire state of Florida. It is unfortunate, and we need to fight it.”
In broad strokes, should HB 3 and SB 1714 become law, it will weaken Florida’s competitiveness against other states, diminish local government’s authority to act on local issues and actively discourage private sector business leaders’ participation in economic development activities.
Michael Silver, Society of Industrial and Office Real Estate Florida Chapter (SIOR Fla.) board member and past president and first vice president, CBRE Miami said, “Taking our local rights away and adding another layer of government will not improve our communities. Many entities are not in favor of this legislation because it will add significant time and money to the process while weakening our ability overall to compete with other states.”
The following points detail how the Florida State Legislature overreaches with HB 3 and SB 1714, and how this legislation would restrict Florida’s economic growth if passed.
Micromanages local government
Local economic development organizations (EDOs) do not distribute any financial incentives or determine which companies receive them-state and local governments do. Most Florida EDOs don’t receive any funds from the State of Florida, either. The structures of local EDOs vary, but many operate as private organizations that manage the business recruitment, retention, and expansion needs for their communities. Such EDOs typically have fee-for-service contracts with the cities and counties that they serve. The cities and counties typically require them to submit detailed quarterly financial reports as well as annual audits to ensure proper accountability.
HB 3 and SB 1714 suggest that even privately run EDOs and tourism promotion organizations are insufficiently transparent, and that they should be forced to behave like government agencies. Hence, the bills are trying to prescribe limits on how EDOs pay their staff, require government approvals for vendor contracts of $5,000 or more, and dictate how much they can spend on things like hotel room nights and per diems.
For organizations that essentially operate as the business development arms for their communities, this makes no sense whatsoever. If private sector dollars are being used for legitimate business activities, why should the state dictate how these funds are being spent? And if public dollars from cities and counties are being used for such activities, shouldn’t they get to specify whatever limits and accountability measures they require? This constitutes a clear overreach.
Alienates the private sector
The private sector drives the local tax base from which valuable community services are funded-take that away, and Florida’s economy will suffer. HB 3 proposes that all board members serving on economic development organization boards file financial disclosures in order to serve. Should this legislation pass, business leaders will resign from economic development boards in droves, leaving the public sector without their much-needed input on the talent and infrastructure necessary for high wage employment in growth industries.
“The idea that we need transparency and accountability is fine and we have those measures currently in place, but if you add this level of restriction, it’s going to be extremely difficult to bring in businesses if there is no privatization of how our economic development organizations are run,” said Melanie Jackson, SIOR Fla. board member and director, office brokerage, Cushman & Wakefield, Tampa. “The unintended consequences of not having the private industry at the table and engaging our existing community in economic development is a pretty scary thought.”
Diminishes value of public-private partnerships
Discouraging the business community’s participation in economic development activities will stifle local economic growth and thwart the success of public-private partnerships like the Tampa Hillsborough Economic Development Corporation (EDC). Since its inception in 2009, the Tampa Hillsborough EDC has helped more than 210 companies create nearly 30,000 new jobs and invest close to $2.2 billion in Hillsborough County. It leverages three dollars in private sector funding for every one dollar of public funds it receives for its fee-for-service contracts with the City of Tampa and Hillsborough County. The EDC’s highly successful model relies on the input of the private sector, academia, and government leaders on its board, who have been instrumental in helping the organization recruit Bristol-Myers Squibb, Johnson & Johnson, Amgen, Ashley Furniture’s e-commerce headquarters, Bertram Yachts, and many other prominent companies to Tampa. They’ve also played key roles in helping local companies expand, and retaining those at risk of moving out of the market.
Why on Earth would our legislators want to undermine such an effective model, and force EDOs to have an even greater reliance on public sector funding?
Richard added, “We raise additional money so we can be more effective, do things on a larger scale and be one of the best-in-class economic development organizations around. If you take away private funding, there is no way we can continue at the same level. What organization or company will want to invest in Tampa if they have to go through that type of scrutiny?”
Erodes Florida’s ability to compete
The local level is where communities decide the most innovative ways to advance their business plans. It is where barriers to growth and employment are addressed, and solutions are created. Business leaders are free to have private meetings where conversations can openly take place. Another way that HB 3 and SB 1714 would hurt Florida’s competitiveness is by requiring even private EDOs to videotape board meetings and post them on the Internet for all to view.
“If we are competing with Texas to bring in business, and Texas knows that Tampa or St. Petersburg has to record every board meeting, where target industries are discussed and our strategic advantages disclosed, then we have just lost that competitive edge,” said Jackson. “If these bills pass, Texas can go in and see exactly what we are doing and adjust their strategy accordingly. They can match it. It won’t bode well for Florida.”
By exposing economic growth plans to competitors in other states including, Georgia, Texas, South Carolina and North Carolina, SB 1714 will easily eliminate any strategic advantages Florida has to capture new business. Competitors will use the knowledge to get out in front of Florida’s strategies and offer better options.
“Florida needs to be able to compete,” said Silver. “Other states offer huge incentives to bring in companies like Amazon. Florida is not making those offers, but we bring in these companies because of jobs and sunshine. Other economic incentives include properties near airports and seaports. For my colleagues down here in the South Florida market, particularly Miami-Dade, the transparency proposed in these bills is a huge concern. Posting strategic information so other entities can see it and sell against it is a disadvantage for our state.”
Jackson added, “It’s a trickle-down effect. It will impact us if we can’t attract new organizations that do business on a national or international level. High-paying jobs, people that spend money, buy homes, live, work and play in our area-If we don’t have that coming in, we could see a change in our local economy.”
If passed, HB 3 and SB 1714 would make it difficult, time-consuming, and expensive for Florida economic development organizations to operate and compete with other states for jobs and capital investment. It will give a big leg up to competitors in surrounding states who already outspend Florida on marketing and business recruiting activities.
For Florida to continue to grow, less government is more. Local communities have more interest in their towns and cities than legislators at the state level. Silver added, “The consensus we have in South Florida is to let us, the local level, determine what’s best when pursuing business investments, job creation, and marketing to our own communities. We want to continue to have the right to do what we feel is best as opposed to being governed out of Tallahassee.”
It is critical that legislators hear your opposition to HB 3 and SB 1714. Please reach out to them by phone or email to make your voice heard.
The SOCIETY OF INDUSTRIAL AND OFFICE REALTORS® (SIOR) is the leading professional commercial and industrial real estate association. With more than 3,200 members in more than 685 cities in 36 countries, SIOR represents today’s most knowledgeable, experienced, and successful commercial real estate brokerage specialists. SIOR has certified thousands of members with the prestigious SIOR designation, a professional symbol of the highest level of knowledge, production, and ethics in the real estate industry. Real estate professionals who have earned the SIOR designation are recognized by corporate real estate executives, commercial real estate brokers, agents, lenders, and other real estate professionals as the most capable and experienced brokerage practitioners in any market. SIOR designees can hold the following specialty designations: industrial, office, sales manager, executive manager, or advisory service. SIOR also consists of associate members who include corporate executives, developers, educators, and others involved in the commercial real estate industry. A professional affiliate of the NATIONAL ASSOCIATION OF REALTORS®, SIOR is dedicated to the practice and maintenance of the highest professional and ethical standards. SIOR maintains a commitment to business and industry by providing outstanding professional services, publications, and educational programs.