Is Pinellas County’s tax exemption program enough?

A week after St. Petersburg City Councilmembers announced their desire to reinstate tax exemptions for companies to remain regionally competitive, Pinellas County Commissioners discussed the effectiveness of their program.

During Thursday’s work session, Cynthia Johnson, economic development manager, relayed that since its adoption in December 2014, 13 projects and 11 companies have utilized the ad valorem tax exemption (AVTE) program. Six have active projects, one has entered the tax abatement phase and seven businesses failed to make it through the application stage.

Johnson called the program an investment tool for the county only offered to expanding or relocating companies that meet specific criteria and undergo an extensive review process.

“We find out what their need is,” said Johnson. “And if they have a gap in their need where this investment tool could help them relocate or expand here, we introduce them to this program.”

Like its largest municipality, Pinellas is competing for job and business growth with other cities and counties throughout the region and state that provide economic development tax exemptions.

Just north of Pinellas, Pasco County utilizes a job creation incentive fund, impact fee waivers and an AVTE program to entice companies. Matt Lowell, director of site selection and business incentives for Ryan Consulting Group, described a recent project with Touchpoint Medical committing to creating 116 jobs at 150% of Pasco’s average wage and providing a $24 million capital investment.

Those efforts earned Touchpoint $100,000 in training grants, a $150,000 permitting fee waiver, $464,00 in job creation grants and a 10-year tax abatement worth $980,000.

“Yes, we don’t have a job creation tool, but here is what some of you neighboring communities are doing,” said Lowell. “But they also have the tax exemption as well.”

“And swaths of land,” added Chair Charlie Justice.

In Pinellas, county officials score the applicants based on established metrics through a seven-step process. Johnson said each application goes before commissioners three times before a company receives the abatement.

Johnson said two of the seven applicants not advancing through the application phase chose to relocate elsewhere. The remaining five companies, already established in Pinellas, withdrew “for business reasons.”

Johnson said those businesses still operate out of the county but chose not to participate in the program.

“Sometimes it’s a business choice,” said Johnson. “And then, sometimes it’s a competitive issue, and we lose out to someone else.

“And we got to remember – we had two years of Covid, so a lot of plans changed.”

She added that the businesses that withdrew from the program remain engaged with the county’s economic development department

Cynthia Johnson (right), economic development manager, and Matt Lowell, director of site selection and business incentives at Ryan Consulting Group, provided commissioners with an update on the county’s ad valorem tax exemption program. Screengrab.

Commissioner Dave Eggers asked if companies believe the process is too long and cumbersome, and Johnson replied that an application’s success depends on the business meeting its stated goals. She said “five or six” applicants must still complete construction on facilities as part of a promised expansion.

Johnson said she compared the county’s numbers with St. Petersburg’s program, which it offered until the 2011 referendum granting its use expired in November 2021. Reauthorization failed by 87 votes during last year’s election, but city councilmembers hope to close that gap on this year’s ballots.

Johnson noted the city had a similar application success rate of about 50%, with just four companies asking for tax exemptions and two receiving approval.

“It wasn’t designed to have hundreds of companies,” said Eggers. “But the ones that are looking into it, obviously, we want to make it as painless as possible as we go through.”

To increase the program’s efficiency, Johnson said her department recently enlisted the help of Ryan Consulting Group.

Lowell told commissioners he reviewed the AVTE ordinance, application process and county scoring metrics and came up with recommendations to improve the program.

“We wanted to make sure it was fair, transparent and equitable,” said Lowell. “And that any company – or the board – is able to determine how the program works.”

The ADVTE scoring system focuses on a company’s capital investment, qualifying wage and headcount. Each category is broken into five tiers on a 10 to 35-point basis. The highest maximum allotment is 100 points, and program officials set the tax abatement structure accordingly.

Eligibility requires creating a minimum of 10 new jobs, and one of Ryan’s recommendations was to include bonus points for a business increasing its workforce by 25%.

Lowell said that initiative would aid smaller and existing businesses in Pinellas County. He also explained that companies with under $2 million in capital investments would earn 10 points, while those offering $50-100 million receive 30. That system extends similarly to the other two categories.

“It’s a spectrum,” said Lowell. “You could have a smaller investment, maybe a smaller headcount for a smaller business, qualifying in that Tier 1 level. But maybe you have a larger business that is bringing a manufacturing plant or opening a new headquarters or something like that – they would probably qualify for more on that higher tier.”

Companies earning 30-49 points would receive a 50% exemption over five years, while a score between 76 to 99 receives 85% over 10 years. A perfect 100 would earn the full ADVTE over a decade.

Lowell said the tiered system would provide eligibility for more companies and called it a performance-based tool, with recipients losing the benefit for failing to meet expectations. Johnson noted that businesses must submit annual reports to the county to remain eligible.

County Administrator Barry Burton said Pinellas must better align all its resources and speak with one voice when discussing relocation or expansion with business leaders, if it hopes to remain competitive.

“We have to get CareerSource at the table to be part of the incentive package that will drive a company’s decision,” said Burton. “You’ll see where they are investing in job training – and those types of things are far more valuable to companies in terms of those decisions.”