Palm Coast government to grant 75% property tax relief to business moving here, with conditions
Last month, the Palm Coast government announced that Ground Up, the Connecticut-based muscle car parts company, is finally closing its store there and moving operations to the 70,000 square foot building on Commerce Boulevard which once served as town hall and later as headquarters in the Palm Coast. Data. Ground Up is committed to creating 30 to 40 jobs. The city had been in talks with the company since January.
Today, Palm Coast City Council passed an unusual incentive for the company: a 75% five-year reduction in property taxes Ground Up owes the city. In return, the company will have to spend the money that would have gone to the city for certain initiatives related to the city. The package is the first of its kind in Palm Coast, although this is not a particularly unusual approach in aid packages: US foreign aid is generally structured the same way. The federal government requires recipient countries to spend their aid dollars on American goods, recycling the money back into their coffers.
Palm Coast calls its approach a âsalvage and enhanced value grant,â a method used by a few cities, namely Jacksonville and Lakeland, though structured differently than Palm Coast. Jacksonville and Lakeland offer a rebate of up to 50 percent on the gradual increase in property taxes, starting in a baseline year, and extend the grant over 10 years.
The goals of the Palm Coast government include a directive to “create a business recruiting program and develop incentives from internal resources.” In previous years, the city has offered incentives by reducing impact fees (the one-time levies on new construction) or, in the case of Palm Coast Data, sold it that same building at 2 Commerce Boulevard for this. which at the time was a very low price. A few years ago, the county government offered property tax rebates to potential new businesses, but the approach fizzled out.
As the Palm Coast Development Manager presented the tax refund approach to council at a workshop this morning, council members were quick to applaud him and hope for more.
âFor the amount of money, it’s a no-brainer. I hope they will pay decent wages, which I am sure they will. And I hope we open a good box of worms, âCouncil member Eddie Branquinho said.
“How can we take this success to broadcast to other companies, maybe, maybe competitors, maybe in a similar industry or just a similar size, how do we advertise the fact that we have those people who come and want more? Alfin said.
There is a cost to the city. But since it’s only one business at the moment, the cost is almost insignificant. In 2020, the tax bill for 2 Commerce was $ 55,855. The Palm Coast portion was $ 12,884. Based on these figures, DeLorenzo said that a 75 percent tax refund would be $ 9,684, “and over a five-year period depending on the growth in assessed value and mileage, this can be approximately $ 50 to $ 60,000 for the duration of the grant, maximum “.
The company will always pay all of its property taxes. Ground Up will then submit an annual report indicating whether it complies with the terms of the grant. It is necessary to stay in town, have a minimum of 25 jobs at the Palm Coast site, and provide a list of grant related activities. Unlike the grant structures in Jacksonville and Lakeland, Palm Coast does not require Ground Up to have a minimum average wage (in Lakeland, for example, wages must be 115% of the county’s average wage, or at least $ 22. per hour. Call center employees usually don’t command such a high salary.)
Once the grant compliance document is reviewed and matched against the requirements, the city will then reimburse the 75 percent. âThey can only extend grant funds over spending allowed in this deal,â DeLorenzo said. For example, the company can reinvest its rebate on improvements to its facility. He could organize an auto show that would attract visitors to the city. It could work with school curricula that focus on science and engineering, or even foster such a program. âThese are all intended to collect the grant from the community. ”
This is “far superior to the money up front for them to move,” said Council member Nick Klufas.
No analysis was presented of the cumulative effect of such a program if, for example, five or ten companies were to benefit from similar incentives. If the same benefit were extended to 10 businesses, the city would run out of $ 100,000 per year (the equivalent of just under the cost of a sheriff’s deputy for a year). The assumption is that the rebate functions as an investment which, by bringing in so much business activity, so many jobs, and the resulting reinvestment required by the subsidy, the subsidy would be repaid in other ways and ensure a more employment base. solid beyond the five-year grant term. But in the absence of hard data, it remains hypotheses, not observed evidence that the incentive works.
The company bought 2 Commerce Boulevard for $ 4 million in April. It plans to open by December. The company is hiring from 30 employees with plans for future expansion. Its call center will remain in Connecticut for a period of time, until the Palm Coast operation is fully operational.
DeLorenzo traced the origin of the relationship with Ground Up. It all started in January, when the company’s financial representative contacted the city, showing interest in 2 Commerce. City and company officials quickly met there. Ken Santoro, co-owner of Ground Up, said he’s looking to move his business to northeast Florida, with a few locations in mind. âWe continued to have a high level of engagement with them, it was obviously something that we were interested in continuing with their move here, it is a low impact business for us and it would create significant jobs. Ground Up officials asked what kind of economic incentives the city had. The city offered the tax cut, which Ground Up appreciated.
DeLorenzo also explained how the city has been silent on the deal for months: âWe had known for several months that it was going to happen that they were going to come here,â he said, âbut they had a business. fully operational in Connecticut and they needed us to work carefully with them on the timing of the announcement because they didn’t want to lose all of their employees in Connecticut and hurt their business.
On the flip side, it also prevented Connecticut employees from knowing what was to come and preparing for it with enough time so that they didn’t end up without a job when the time came. Florida law allows local governments to exempt their business prospects from open registration provisions, at least for a period of time. But Palm Coast and Ground Up have not found it necessary to invoke these confidentiality provisions.
âSo we worked very closely with them to draft the post and post a post early on, at some point we posted the post a few weeks ago because they had to start hiring,â DeLorenzo said.
The council was particularly interested in posting business listings for job searches on the city’s website.
The deal has yet to be ratified by the board at an upcoming business meeting. It may take a few weeks as Ground Up is still tidying up its documents.
The basic grant proposal: