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Orange County expects busy year for economic incentives

While having issued just one economic incentive award so far this year, Orange County administrators are confident they will reach at least 13 before 2015 ends, the same number as 2014.

This year's first award went to to Funky Eyes, a maker of colored contact lenses, which will receive $420,000 from the state and the county if the company reaches its goal of creating 70 jobs over three years. Orange County would pay 20%, or $84,000, of that amount.

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The county is currently looking at some larger businesses that would help bring incentive award numbers up but declines to name them for reasons that include confidentiality agreements.

Ten to 13 awards "is a pretty busy year for us," said Eric Ushkowitz, overseer of the county's Economic Development Department, which administers the incentive awards.

The figures compare with eight in 2010 and five in 2011, when Florida was experiencing some of the hardest hits of the recession.

Incentives range from tax breaks to outright grants and the amount depends on what the applicant can and will do for the area. Mostly, they are meant to create jobs and ultimately add to the tax base.

This year's incentive pool for Orange County is budgeted for $953,000 in tax breaks and grant awards. The tax refunds are roughly $483,000 and grant awards are $470,000. Recipients usually receive a combination of both.

The average company receiving incentive awards is adding about 200 jobs with an average salary of $58,000. This compares to the county's average salary of $42,000. Enterprises in the sweet spot are established and expansion minded.

There are also business types that Orange County likes and has seen gravitating here. The enterprises include life sciences, corporate headquarters, aviation and back offices for financial services concerns. The county will not give incentives to retailers or theme parks because these businesses do not meet its criteria that recipients pay employees at least 115 percent of the area's average wage.

While incentives can be a linchpin for drawing companies and allowing others to expand, there is a flip side. The county, its residents and businesses--at least initially--pay for the growth.

"There is always a cost," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "When you take tax revenue and use it for incentives you are not using it for things like parks, infrastructure and social services."

"Incentives are almost a necessary evil because they are offered by virtually every region," Ushokowitz said.

Still, "We don't have to offer the highest dollar package because we have other attributes, like our (lower) cost of living and a skilled workforce," he said.

Awards issued by Orange County can piggyback on other incentives provided by the state and private backers. The teaming can make the package even more appealing, while the county reaps the most benefit by having the enterprise within its confines.

For instance, the U.S. Tennis Association is getting about $1.7 million from Orange County in the form of $215,600 in tax rebates and roughly $1.5 million in tax exemptions for the USTA National Campus that broke ground last month in Lake Nona. Orange County is part of a roughly $40 million package that includes incentives from the state, the city of Orlando, the University of Central Florida, developer The Tavistock Group, Visit Orlando and Visit Florida.

For its part, Orange County is requiring the USTA to create 154 jobs, pay employees above market rate salaries and invest $62 million in the facility.

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Incentives can also come into play for companies that are already here and want to expand. For instance, Lockheed Martin will be adding 120 jobs and undergoing an $80 million expansion. The company will receive from the county a bit over $1 million and a 75 percent exemption for seven years from the taxes it will pay on the new equipment and renovations.

Making sure companies live up to their promises generally falls to the state, which each year verifies job numbers and wages.

If a company has not adhered to the agreement the county can shave the amount of the incentives or remove them completely.

This happens about 50 percent of the time, Ushkowitz said.

For one thing, it can be hard to exactly gauge employment because of how economic conditions change. But the county is generally shielded from any loss on an arrangement because it does not pay incentives until jobs are actually created or verified.

"For instance, if they say they will create 100 jobs and they create 50, they don't get anything,"  Ushkowitz said.

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