A Sound Investment for our Community and our Economy 

The definition of a sound investment is one that yields a positive return with minimal risk. This describes the Ad Valorem Tax Abatement program.

Among the best, most proactive economic development policies our community has enacted, the AVT program has proven its value over the last 20 years. After all, if you could secure a company’s commitment to create jobs that pay above-average wages and make a capital investment by providing this regulated tax reduction, wouldn’t that be considered a sound investment?

Let’s look more closely at how it works.

When Professional Aircraft Accessories was looking to expand its Titusville operations in 2011, the company was approved for a 10-year ad valorem tax abatement from Brevard County. It planned to create 50 jobs, paying more than $45,000 annually, and invest $1.5 million in its expansion.

Over the 10-year life of the program, the company was to receive an estimated $71,000 in abatements. Yet, because the abatement does not involve school taxes, water district taxes, beach renourishment funds and other areas, the company’s investment in its expansion will generate far more in new taxes for the county over that period – more than $115,000 – than are being abated.

And that does not include the economic impact of those new jobs, which if the company hired the 50 it needed to receive the abatement, would have a $2.2 million direct wage impact. In fact, the company ended up hiring more than 60 new workers.

It Pays to Invest

That illustrates the multiple positive impacts of the AVT program. It leads to new taxes, while encouraging companies to invest in our community with new spending and job creation. Furthermore, it ensures the Space Coast is competitive in the hard-fought field of economic development, while also allowing the community to leverage other state incentives in a fiscally responsible way.

Had we not had this key tool in place – we are one of just 28 Florida counties to have a local option AVT abatement – many of the three dozen companies that were approved for AVT abatements and remain active in the program may not have looked at Brevard County for their expansion or might have been lured away as they grew.

As our numbers illustrate (and you can find more success stories over the last 10 years in our annual reports posted at SpaceCoastEDC.org), the AVT abatement program has been an undeniable success. But to ensure it remains a part of our arsenal, the time has come for action.

When Florida legislators created this program more than two decades ago, they did so with a built-in expiration date – every 10 years, voters have the opportunity to ensure the Space Coast remains competitive in the increasingly heated battle over the recruitment and expansion of companies. It has been 10 years since Brevard voters approved the AVT abatement program in 2004, and a vote whether to renew it for the next 10 years will be on the November 4, 2014, countywide ballot (the City of Titusville is also seeking to renew its AVT program).

Answering the Why?

Keeping this program in place is critical for several reasons.

One is that tax exemptions are a MUST for our community to be successful in the recruitment and expansion of manufacturing and high-tech companies. As noted, competition for companies is extremely tough, even more so now as communities continue to recover and rebuild from the Great Recession.

Also, while no company expects or wants a free lunch, they do expect sensible, fair and logical treatment from the government. When a business chooses to locate or expand, they bring jobs, additional monies to the tax base, and attraction of other businesses.

And importantly, this is not an unregulated program without a safety net. In fact, dozens of companies that were approved for AVT abatements since it was implemented in 1994 have had those abatements rescinded because they did not meet the job creation, wage and capital investment obligations that must be achieved to receive the abatements.

As our community moves on from the Space Shuttle program and looks to build the next-generation space program while keeping our economy diverse and impervious to shifts in the global economy, we need the AVT Abatement program to continue to position Brevard County as one of the world’s premier business locations. Renewing the program for the next 10 years is a key step in achieving these goals.

 

Lynda Weatherman is president and CEO of the Economic Development Commission of Florida’s Space Coast.