Selected Florida business incentive outcomes, FY1996 Q1 FY2013 Q2. February 11, 2013

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1 Selected Florida business incentive outcomes, FY1996 Q1 FY2013 Q2 February 11, 2013

2 Executive Summary Enterprise Florida, Inc. (EFI) promotes state incentive and economic development programs throughout the State of Florida and serves as the primary contact for businesses looking to relocate, expand, or retain current operations in the state. This report summarizes Ernst & Young s analysis of the outcomes of projects assisted by EFI, based on data and project information verified by the Florida Department of Economic Opportunity s Division of Strategic Business Development (DEO), and provided to Ernst & Young by EFI for the period from July 1, 1995 to December 31, Note that the data and information provided by EFI has not been independently verified by Ernst & Young. While most incentive applications approved by DEO (89%) ultimately result in incentive contracts with the State of Florida, 11% of approved incentive applications are classified as withdrawn or vacated before executing a contract because the associated projects decide to locate in another state or because the project does not occur. 1 Projects with which the State of Florida has executed an incentives contract have a variety of outcomes and levels of success in achieving milestones (e.g., employment or investment) required by incentive programs. Some contracts are completed after the associated projects meet all of the requirements of the incentive program under which they were granted an incentive award; others remain in active status, meaning that they have achieved all program requirements to-date, but have additional milestones that must be achieved in the future. Contracts that have not met some or all project milestones are classified as inactive or terminated. Table ES-1 below summarizes key contract outcomes by status of the incentives contract. The following key findings are summarized in the table below and in the full report. Of the 1,474 incentive applications that were approved by DEO over the July 1, 1995 through December 31, 2012 study period, 1,307 applications resulted in executed incentive contracts with the State of Florida. From FY1996 through the second quarter of FY2013, the state paid out $291 million in net incentives and confirmed 87,470 new Florida full-time equivalent jobs for an average of approximately $3,320 in incentive payments per net new job. The Florida DEO confirms jobs through company payroll records and unemployment insurance filings. The net incentives number excludes incentive awards that were not paid to a business or were returned through a clawback or other mechanism resulting in repayment of incentives to the state. Of the total $291 million of net incentive payments, $161 million was related to programs that require projects to make specific levels of capital investment. Projects receiving these incentive payments invested $3.2 billion confirmed by DEO, or approximately $20 million of capital investment for every $1 million of state incentive payments. 1 Incentive programs included in this analysis are: Brownfield Redevelopment Bonus (Standalone and QTI add-on), High Impact Performance Incentive grants (HIPI), Local Government Distressed Area Matching Grant program (LGDAMG), Manufacturing and Spaceport Investment Incentive program (MSII), Qualified Defense and Space Contractor tax refund program (QDSC), Qualified Target Industry tax refund program (QTI), and the Quick Action Closing Fund (QACF).

3 The average annual wage for new jobs created by projects with contracts for the programs included in this analysis was $53,169, which is nearly 28% greater than the $41,633 average annual wage that was required for these jobs. As of the last job verification for each project, projects with completed contracts created 50% more jobs than were required by the state. Completed contracts required an average of five years to move from contract execution to completion. Over the life of the contract, the associated project, on average, was required to verify the number of jobs created in Florida 4.9 times and received 4.8 payments from the state. Currently active contracts are on track to create more jobs than required by the state. The majority (61%) of the 547 contracts that were active as of December 31, 2012 are recent projects, with contract dates in FY2011, FY2012, or FY2013. Currently active contracts have reached, on average, 0.8 of 4.7 (18%) of their project milestones (or checkpoints). These contracts have, however, already created 24,443 (46%) of the total net new jobs required by their contracts with the state. Of the 1,307 executed contracts from FY1996 to FY2013 Q2, 83% were Qualified Target Industry (QTI) incentives, including contracts for Brownfield Redevelopment Bonus add-on awards. 2 With 81,209 net new jobs attributed to projects receiving QTI & Brownfield Redevelopment Bonus add-on awards, jobs associated with these programs account for nearly 93% of total confirmed net new jobs and 43% of net state incentive payments for included incentives. Over the July 1, 1995 to December 31, 2012 period, there were 38 contracts that required retained jobs in addition to net new job creation. Because the employment amounts presented in this report only include net new jobs required and created, the results understate the total job impact for the projects also requiring and confirming job retention. Contracts that are classified as inactive may have completed one or more planned checkpoints and received net incentive payments from the state before being classified as inactive. While projects with inactive contracts have generally underperformed relative to required outcomes, they have been somewhat more successful in meeting job creation targets than investment targets. Overall, inactive projects have achieved 59% of their job creation targets and 42% of their required capital investments. There were 441 terminated contracts over the study period. These projects failed to meet contract requirements or withdrew from the incentive program and never received a state payment. Although $15.4 million of state payments were authorized and made to an EFImanaged escrow account, the funds were returned from the escrow account when the project was terminated and before they were actually paid to the recipient businesses. Therefore, there is no net state cost associated with terminated contracts. 2 Of the 1,090 executed QTI and Brownfield add-on contracts, 1,001 (92%) were QTI contracts and 89 (8%) were Brownfield add-on contracts. ii

4 Table ES-1. Summary of Florida outcomes for projects receiving financial incentives through selected Florida incentive programs, FY1996-FY2013 Q2 Dollars in millions Completed contracts Active contracts Inactive contracts Terminated contracts All executed contracts Contracts ,307 Jobs Total net new jobs contractually required 21,137 52,725 41,712 62, ,752 Net new jobs confirmed 31,619 24,443 24,567 6,814 87,470 Ratio of confirmed/required net new jobs Avg. number of checkpoints passed Avg. percentage of checkpoints passed 100% 18% 40% 4% 26% Capital investment Capital investment contractually required $803 $2,882 $1,530 $358 $5,573 Capital investment confirmed $1,625 $899 $ $3,162 Ratio of confirmed/required investment Incentive awards Total incentive award (including local match) $100.5 $373.0 $235.1 $268.4 $977.1 Net state payments to-date $76.2 $141.9 $ * $290.5 Number of net state payments ,322 Average number of net state payments received per project *Note: $15.4 million of state incentives were authorized as payments to projects that were later classified as Terminated. The entirety of this amount was returned to the state from the escrow account managed by EFI, resulting in no net cost to the state. Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. iii

5 Selected Florida business incentive outcomes, FY1996 Q1 FY2013 Q2 I. Introduction Enterprise Florida, Inc. (EFI) promotes state incentive and economic development programs throughout Florida and serves as the primary contact for businesses looking to relocate, expand, or retain current operations in the state. Ernst and Young (EY) was commissioned by EFI to analyze the status and performance indicators related to selected state business incentive programs from fiscal year (FY) 1996 through the second quarter of FY2013 (December 31, 2012). The report summarizes projects in terms of achieving specific milestones, by project status, industry, and location. Specifically, the report tracks projects through various stages of approval, compliance with incentive program requirements, and completion. The results presented in this report provide information on the outcomes of specific projects rather than the economic impact of these projects, which has been analyzed separately in another Ernst & Young report. 3 For example, the analysis presents the number of net new jobs created by a project but does not attempt to quantify the number of years these jobs remained in place after the final performance was verified or the ultimate direct and indirect economic contribution of these jobs. The key findings below summarize Ernst & Young s analysis of data and project information verified by the Florida Department of Economic Opportunity (DEO), provided to Ernst & Young by EFI. Note that the data and information provided by EFI has not been audited or independently verified by Ernst & Young. II. Methodology and data This report relies on data collected and verified by the Florida DEO on each project approved by the state for incentives. A description of the incentives and outcome metrics included in this analysis are detailed in the following section. Identification of projects included in analysis The analysis considers the Florida state incentive programs provided to EFI-assisted projects that are shown in Table 1. These incentive programs were selected by EFI to be included in the analysis because of their similar objectives, scopes, and structures. Incentive awards are specified in contracts between the State of Florida and the business undertaking the project. A single project may have more than one incentive contract. The most significant incentive program in terms of the number of contracts executed, the number of net new jobs confirmed and the amount of state payments is the Qualified Target Industry (QTI) Tax Refund, frequently offered in conjunction with the Brownfield Redevelopment 3 Ernst & Young LLP, Florida s public return on investment in Enterprise Florida, Inc. and business incentives; fiscal years , January 2013.

6 Bonus add-on award (BFR add-on). Under QTI, tax refunds are made to qualifying businesses creating jobs within target industries. These projects are conducted under performance-based contracts with the state which spell out specific milestones for triggering incentive payments. The BFR add-on is a tax refund intended to encourage redevelopment and job creation in designated brownfield areas that previously hosted industrial or commercial facilities but have since been abandoned or become underused. Such blighted areas are of particular concern to surrounding communities due to the risk or presence of environmental contamination. Like QTI, BFR add-on contracts include incentive milestones. Projects receiving payments under the QTI & BFR add-on incentives are presented together. Incentive programs that are not listed in Table 1 are not included in the analysis. These include business incentive programs that are not marketed by EFI, programs that are primarily tax credits, and programs that have substantially different economic development or policy goals than the included programs. For example, the contracts, outcomes, and costs associated with the Semiconductor, Defense and Space Technologies Sales Tax Exemption (SDST); Economic Development Transportation Fund (EDTF); Enterprise Zone Tax Credits; Innovation Incentive Fund (IIF); and Capital Investment Tax Credit (CITC) are not included in the results presented in this analysis. The IIF, for instance, has a repayment mechanism that requires recipients to remit a portion of profits from successful spin-off companies related to the projects receiving state funding and is primarily used to fund research projects rather than job creation projects. Code Table 1. Overview of incentive programs included in the analysis Incentive name Requires investment Requires job creation BFR Brownfield Redevelopment Bonus Standalone Yes Yes BFR add-on Brownfield Redevelopment Bonus QTI add-on No Yes HIPI High Impact Performance Incentive Grants Yes Yes LGDAMG Local Government Distressed Area Matching Grant Program No Yes MSII Manufacturing and Spaceport Investment Incentive Program No Yes QDSC Qualified Defense & Space Contractor Tax Refund Program No Yes QTI Qualified Target Industry Tax Refund Program No Yes QACF Quick Action Closing Fund Yes Yes Source: EFI, Throughout this report, projects are classified into various status categories to describe the outcomes of individual project contracts as of December 31, An individual project may have more than one status classification during its life as it moves through various stages of approval, contract execution, and performance against goals specified in the contract. A single project that has executed more than one incentives contract with the state may have contracts that fall into more than one status as of December 31, 2012 if the contracts have different terms 2

7 and requirements. 4 The analysis presented in this report reflects a contract s status on December 31, 2012 and therefore presents a current snapshot of the portfolio of EFI-assisted projects receiving assistance from the programs listed in Table 1, many of which are still active. Projects may have been classified differently in the past and may change classification in the future. Approved contracts. Approved projects are those that have been approved by the state to execute an incentives contract agreement. Approved contracts have anticipated job creation or investment targets and have been offered to a particular business. Executed contracts. Once approved for an incentive package, a project will then typically execute an incentive agreement with the state. Of the 1,474 approved incentive applications, 89% (1,307) resulted in executed contracts. The remaining 167 applications did not execute a contract with the state and are referred to as withdrawn or vacated. Over the period, 23,538 anticipated net new jobs were associated with withdrawn or vacated contracts. Current contract status. Projects with an executed contract fall into several categories based on their progression toward required contract goals. Contracts that have met all program requirements to-date are included in one of two categories: (1) complete contracts are those that have successfully completed all requirements and received incentives and (2) active contracts are contracts that are currently open and ongoing, meaning they are in good standing and are currently meeting requirements and receiving incentive payments. The analysis also considers two categories of contracts that have not met all project requirements as specified in their contract: (1) inactive contracts that have met some, but not all requirements, and (2) terminated contracts that did not meet contract requirements and did not result in state incentive payments to the businesses. 5 Inactive and terminated contracts are ineligible to receive future incentive payments and are considered closed. Project investments and outcomes Using project and incentive data provided by EFI and collected by DEO, the analysis shows project outcomes in terms of four primary indicators: (1) net new jobs, (2) average annual wages, (3) capital investment, and (4) actual incentive payments made by the state. Employment. DEO monitors and verifies job creation for each contract multiple times over the project lifecycle. First, DEO confirms a base jobs number, equivalent to the number of existing jobs at the start of the incentives contract. 6 Most incentives contracts require additional jobs to be created over the project lifecycle, reported as net new jobs in this analysis. The number of net new jobs is equal to the change in employee headcount from the base year. Net new employees are the number of full-time equivalent employees verified 4 In these instances, the associated jobs and investment have been allocated between contracts within a project, as appropriate, to remove instances of double-counting of jobs and capital investment. 5 Terminated contracts are those that never received a payment from the state. Although a payment may have been authorized and made to an EFI-managed escrow account, the funds were returned from the escrow account before they were actually paid to the recipient businesses. Therefore, there is no net state cost associated with terminated contracts. 6 The State of Florida verifies submitted job claims against the business s unemployment insurance records and payroll report. Source: Florida DEO,

8 by DEO. The number of net new jobs for each project is equal to the total number of net new positions created by the project in Florida, as of the most recent job verification date, which may vary by contract. For completed contracts, the most recent DEO verification of jobs may have occurred several years prior to contract completion. For all projects, the employment amounts reported are the verified amounts in DEO s performance monitoring system as of December 31, For projects with multiple contracts, the total net new jobs associated with a project have been allocated to contracts based on the size of the total incentive award. Throughout the analysis, each year of jobs confirmed or expected to be confirmed by DEO is referred to as a project checkpoint, reflecting the fact that project checkpoints generally occur only once during a year. Incentive contracts are often structured over three to seven years, with an average number of approximately five planned checkpoints. Average wages. Certain incentives require new jobs to achieve the average annual wage specified in the project s incentive contract. The analysis reports average wages of net new jobs confirmed by the state and total confirmed wages of new employees. Capital investment. Certain incentives included in the analysis, including the Quick Action Closing Fund (QACF), Standalone Brownfield redevelopment incentives (BFR), and the High Impact Performance Incentive (HIPI) grant program include investment requirements in the incentive contract terms. 7 The State of Florida (through DEO) confirms that the required capital investment has occurred before paying an incentive award or authorizing the company to claim an incentive for these projects. While other projects receiving incentives may have also made new capital investments in Florida, the analysis only includes the investments required and confirmed by the state. 8 DEO verifies the total amount of investment for each project with investment requirements at the end of the contract term. 9 State incentive payments. Incentive payments in each year include only payments made by the state. The analysis presents state payments net of repayments by businesses and returned funds that were held in an escrow account managed by EFI. Therefore, the net state payments shown reflect the actual cash cost incurred by the state. Over the period, of the $334.5 million of total (gross) payments made by the state, more than $44 million was recovered. The analysis reports the distribution and nature of the net $290.5 million of incentive costs incurred by the state. Matching payments by local governments and payments directly to communities (as in the case of Economic Development Transportation Fund awards) are excluded from the analysis. 10 Projects are approved by DEO to receive an incentive payment once all of the performance metrics for a specific contract checkpoint are met. If all conditions are met, a project will receive a full incentive payment. If conditions are only partially complete, a project may 7 Brownfield QTI add-on awards do not include investment requirements. 8 Since only a few of EFI s incentive programs require investment amounts to be confirmed by the state as a condition of their incentive contract, it is possible that the analysis is missing a significant amount of capital spending each year. 9 Businesses document activity by submitting invoices and proof of expenditures related to capital investment. Source: Florida DEO, According to EFI, local match payments are an average of 20% of the total incentive awards for the Qualified Target Industry (QTI), Brownfield, and Qualified Defense and Space Contractor (QDSC) incentives. 4

9 qualify for a partial payment, no payment, or be considered for termination. 11 Projects with multiple incentive contracts may meet the terms of one contract and receive an incentive payment while failing to meet the terms of another contract. Approach limitations Several important limitations should be noted with respect to the analysis: Information reporting and analysis only. This report provides analysis and reporting of project data collected by DEO and provided to Ernst & Young by EFI, but does not provide independent validation, verification, or assurance that the project outcomes achieve statutorily required outcomes. That is, the Ernst & Young analysis analyzes and summarizes the information provided by EFI, but does not provide assurances on the quality, completeness, or accuracy of the data provided by EFI. No analysis of causation. This analysis does not attempt to determine if the EFI-assisted projects located in Florida due to incentives or due to other factors. Although the project outcomes are evaluated and associated with EFI-marketed incentive programs, determining the cause of individual project location decisions, job creation, and investment is beyond the scope of this analysis. Projects receiving multiple incentives required jobs to be allocated to each incentive. In the instances where one project executed multiple incentive contracts, it was necessary to allocate project requirements and outcomes to the contracts separately. In the cases where this information was not available from DEO, project requirements and outcomes (jobs and investment) were allocated to contracts based on total contract award. The analysis does not measure the economic impact of the overall benefit of the programs. The jobs and investment associated with the projects analyzed in this report may create economic impacts that are not analyzed in this report. The results presented only include jobs and investment monitored by the state. Not all economic development incentives are included. Table 1 of this report lists the programs that are included in this analysis. There are additional business incentives, tax exemptions, and other programs that provide financial benefits to businesses in Florida that are not included in this analysis. Neither the benefits (jobs and investment) nor the costs of these programs are included in this analysis. No benefit-cost analysis is included. This analysis does not include a comparison of the monetary benefits and costs of the incentive programs nor does it include estimates of the benefits of alternate uses of the public funds that are used to provide incentive awards. EFI and state project administration costs are not included. In addition to the cost of providing incentive awards to the projects analyzed in this report, the state incurs costs associated with EFI operations, DEO verification activities, and activities of other state agencies that may have increased costs as a result of the projects. 11 Florida DEO,

10 III. Approved incentive applications Each year, the state approves incentive applications and enters into performance-based agreements with the businesses receiving incentives. Businesses may not ultimately contract with the state for a number of reasons. Analyzing the reasons why projects do not occur is outside the scope of this report. However, based on the project data provided by DEO, these withdrawn or vacated contracts account for only 11% of approved awards. As shown in Table 2, of the 1,474 incentive applications that were approved over the study period, 167 applications did not result in an executed incentives contract. There were 23,538 anticipated jobs and $681 million of capital investment associated with these withdrawn applications, accounting for 12% of total anticipated new jobs and 11% of total anticipated investment. Likewise, the $132 million in awards to applications that were withdrawn or vacated make up 12% of total incentive awards. Table 2. For the incentive applications approved between FY1996 through FY2013 Q2, comparison of required/anticipated metrics, as of December 31, 2012 Dollars in millions Executed contracts Vacated or withdrawn applications Total approved applications Approved applications 1, ,474 Net new jobs anticipated 177,752 23, ,290 Net new jobs confirmed 87, ,470 Capital investment required $5,572 $681 $6,253 Capital investment confirmed $3,162 $0 $3,162 Total approved incentive award (including state and local portions) $977 $132 $1,109 Note: The table shows the total cumulative jobs and investment confirmed by DEO. These projects may still be considered Active and are in the process of adding employees or facility construction. Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. IV. Confirmed jobs, investments & net state payments Table 3 shows contract performance in terms of outcomes as of December 31, 2012, based on the most recently verified information for each project receiving an incentive payment. Of the $977 million of total state and local incentives contracted over the July 1, 1995 to December 31, 2012 period, the state paid out approximately 30% ($291 million) of the total contract awards. Projects receiving incentive payments have created a total of 87,470 net new jobs, with an average annual wage of nearly $53,170. The average annual wage exceeds the average required wage by nearly 28%. Total confirmed capital investment over the study period was $3.2 billion, 57% of the total required investment of $5.6 billion. This difference is due to newer contracts that have not yet started construction or to contracts that are now classified as inactive or terminated. Additional detail on contract outcomes, by contract status, is outlined in the next section. 6

11 Table 3. For the projects that executed contracts between FY1996 through FY2013 Q2, comparison of required versus confirmed metrics, as of December 31, 2012 Dollars in millions Required/contracted Total confirmed by DEO as of 12/31/2012 Ratio of confirmed to required Net new jobs 177,752 87, Average wage $41,633 $53, Capital investment $5,573 million $3,162 million 0.57 Incentives $977 million $291 million 0.29 Note: Confirmed incentive payments include only state incentive payments and are net of funds returned to the state. Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. Over the period, there were 38 contracts that required retained jobs in addition to net new job creation. Because the results presented in this report only show net new jobs required and created, the tables understate the total job impact for each incentive since these projects were not required to create or report new employment. Outcomes by incentive As shown in Table 4, of the 1,307 contracts executed between FY1996 and FY2013 Q2, 83% were QTI incentives (including projects receiving BFR add-on awards). With 81,209 net new jobs confirmed by projects with QTI & BFR add-on contracts, these programs account for nearly 93% of total Florida job creation verified by DEO for these contracts. Contracts that received QACF incentives increased from 2% of total contracts executed between FY1996 and FY2004 to 12% of total contracts executed from July 1, 2004 through December 31, Standalone Brownfield incentives increased from less than 1% of total contracts executed between FY1996 and FY2004 to 5% of total contracts executed from July 1, 2004 through December 31, Additionally, the number of executed contracts has grown over the period, including executed contracts associated with new programs. Between July 1, 2010 and December 31, 2012, there were 33 executed MSII contracts and three executed LGDAMG contracts. As incentive programs have expanded and been added, QTI and BFR addon contracts have lost share, relative to other incentives. While QTI & BFR add-on contracts comprised 96% of all contracts executed from FY1996 through FY2004, these incentives comprised 78% of total contract executed from July 1, 2004 through December 31,

12 Table 4. For contracts executed between FY1996 through FY2013 Q2, summary of outcomes in Florida as of December 31, 2012, by incentive type Dollars in millions HIPI QACF QTI & BFR add-on Other incentives Total Number of contracts executed , ,307 Total net new jobs confirmed 1,475 2,442 81,209 2,344 87,470 Total capital investment confirmed $2,153.7 $914.7 n/a $93.8 $3,162.2 Net state incentive payments $20.5 $138.3 $125.9 $5.9 $290.5 Note: Other incentives includes BFR, LGDAMG, MSII, and QDSC. QTI & BFR add-on incentives do not contain a capital investment requirement. Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. Outcomes by industry sector Projects were classified into industries based on EFI industry designations, project NAICS or SIC codes provided by EFI, and the identities of incentive recipients, shown in Table Table 5 shows that their outcomes varied by industry. Net new jobs confirmed in the information technologies sector one of the several industries targeted by EFI saw average annual wages in excess of $80,000. The lowest average wage was in the emerging technologies sector, which includes global logistics and nanotechnology, at just over $33,500. Capital investment was concentrated in the aviation/aerospace industry, which accounted for nearly 44% of the total projected-related capital investment confirmed by DEO for the programs included in this analysis. Table 5. For contracts executed between FY1996 through FY2013 Q2, summary of outcomes in Florida as of December 31, 2012, by industry sector Total net new jobs confirmed Average wage confirmed Total capital investment confirmed ($millions) Net state incentive payments ($millions) Number of Industry contracts Aviation / aerospace 73 4,405 $53,307 $1,390.7 $31.8 Clean technologies , Corporate headquarters ,481 68, Emerging technologies 55 6,764 33, Financial / professional services ,560 45, Homeland security / defense 20 1,065 66, Information technologies 126 8,424 80, Life sciences 42 1,747 50, Other manufacturing ,327 44, Other industries 72 1,557 56, Total 1,307 87,470 $53,169 $3,162.2 $290.5 Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. 12 A detailed list of industries included in each EFI industry sector is included in Appendix A. 8

13 Outcomes by Florida region Table 6 presents project outcomes by Florida economic development region. 13 For example, over the period, more than 26,500 net new jobs were created in Northern Florida, comprising approximately 30% of net new Florida jobs created by projects included in this analysis. Table 6. For contracts executed between FY1996 through FY2013 Q2, summary of outcomes in Florida as of December 31, 2012, by Florida region Number of contracts Total net new jobs confirmed Average wage confirmed Total capital investment confirmed ($millions) Net state incentive payments ($millions) Central East ,871 $48,797 $2,163.8 $88.5 Central West ,846 49, North ,503 58, Southeast ,494 53, Southwest 63 3,756 57, Total 1,307 87,470 $53,169 $3,162.2 $290.5 Source: Ernst & Young LLP analysis based on EFI-assisted project data provided by the State of Florida DEO. V. Projects by contract status Figure 1 shows the distribution of contracts, confirmed net new jobs, investments, and state incentive payments for each of the four contract statuses. Over half of the contracts executed between FY1996 through FY2013 Q2 have either been completed or are still active and ongoing. Together, projects with completed and active contracts have confirmed nearly 80% of the total capital investment and created approximately 65% of the total net new jobs confirmed by the state. Net new jobs associated with completed contracts make up the largest share of new job creation, with 36% of total net new jobs. Active contracts have received nearly 50% of net state payments, while no net payments were made to terminated contracts. 13 A map of Florida regions, by county, is included in Appendix B. 9

14 Figure 1. Distribution of contracts, confirmed net new jobs, capital investments, and state incentive payments by project status, FY1996 FY2013 Q2 Number of contracts executed 9% 42% 15% 34% Amount of capital investments 51% 28% 20% Number of net new jobs confirmed 36% 28% 28% 8% Net state payments 26% 49% 25% Note: Amounts shown may not sum due to rounding. Source: Ernst & Young LLP analysis based on data provided by Florida DEO. Complete Active Inactive Terminated Table 7 shows the total and average outcomes by contract status over the period. For contracts completed over the period, 181 net new jobs, on average, were required per contract. Once completed, DEO confirmed an average of 270 jobs per completed contract, 50% more than the average job creation requirement. For completed contracts, net new jobs were reported by projects and confirmed by DEO at an average of 4.9 checkpoints over the life of the project. Currently, active contracts have reached an average of 0.8 (18%) of 4.7 planned checkpoints. This average is based on the number of checkpoints in which a project has reported jobs, as a percentage of total number of planned checkpoints for the contract. This assumes that the project will create jobs in equal increments over the project life cycle. In reality, the contract terms may include a ramp-up period that differs by project; these project-to-project variations in annual employment requirements have not been considered in this analysis. For terminated contracts, net state payments are zero, indicating that the state is identifying underperformance or non-performance early in the incentive contract and/or structuring incentive agreements to effectively recover state funds. In contrast, inactive contracts have achieved some, but not all, of their project milestones and have received a total of $72.4 million in net state incentive payments. However, inactive contracts are not eligible for future payments. The net state incentive payment per job for inactive contracts is $2,948 per verified job, compared to $5,804 per job for active contracts and $2,411 per job for completed contracts. Note that the total award includes local match payments so the net state payment, as a percentage of the total incentive award, may be less than 100% for completed contracts. On average, local match payments are roughly 20% of the total contract award amount. As shown in Table 7, net state payments to businesses with completed contracts totaled $76.2 million out of $100.5 million (76%) of total incentive awards including the local match Programs with local matching include: BFR, LGDAMG, QACF, QDSC, and QTI & BFR add-on. 10

15 Table 7. For contracts executed between FY1996 through FY2013 Q2, summary of outcomes in Florida as of December 31, 2012, by contract status Dollars in millions Complete Active Inactive Terminated Total Number of contracts ,307 Jobs Total base jobs confirmed 20,145 80,255 38,310 21, ,557 Total net new jobs required 21,137 52,725 41,712 62, ,752 Net new jobs confirmed 31,619 24,443 24,567 6,841 87,470 Avg. net new jobs required Avg. net new jobs confirmed Ratio of confirmed / required jobs Avg. checkpoints with net new jobs Avg. checkpoint completion 100% 18% 40% 4% 26% Capital investment Capital investment required $802.8 $2,881.9 $1,530.2 $357.7 $5,572.6 Capital investment confirmed $1,624.6 $899.4 $ $3,162.2 Avg. investment required $6.9 $5.3 $7.6 $0.8 $4.3 Avg. investment confirmed $13.9 $1.6 $ $2.4 Ratio of confirmed/required investment Incentive awards Award total (including local match) $100.5 $373.0 $235.1 $268.4 $977.1 Net state payments $76.2 $141.9 $ $290.5 Number of state payments ,322 Source: Ernst & Young LLP analysis based on data provided by Florida DEO. VII. Conclusion Projects receiving financial assistance through the incentive programs included in this analysis have created over 87,470 Florida jobs and nearly $3.2 billion of investment that has been confirmed by the Florida DEO. Of the 1,307 contracts executed for the analyzed incentive programs from FY1996 through FY2013 Q2, 117 contracts have been completed while 547 remain active. New jobs associated with completed contracts are 50% higher than the jobs required by the contract terms. Based on the performance of projects with completed and active contracts, the majority of contracts included in this analysis have met or are expected to meet incentive contract requirements. 11

16 Appendix A. EFI targeted industry list Aviation / aerospace Aircraft and aircraft parts manufacturing Maintenance repair and overhaul of aircrafts Navigation instrument manufacturing Flight simulator training Space vehicles and guided missile manufacturing Satellite communications Space technologies Launch operations Cleantech Biomass & biofuels processing Energy equipment manufacturing Energy storage technologies Photovoltaic Environmental consulting Emerging technologies Global logistics Marine sciences Materials science Nanotechnology Financial / professional services Banking Insurance Securities and investments Corporate headquarters Engineering Legal Accounting Consulting Information technologies Modeling, simulation and training Optics and photonics Digital media Software Electronics Telecommunications Life sciences Biotechnology Pharmaceuticals Laboratory and surgical instruments Diagnostic testing Other manufacturing Food and beverage Automotive and marine Plastics and rubber Machine tooling Other industries not elsewhere classified (NEC) Accommodations and food service Direct mail Research and development, NEC Retail Other industries NEC Homeland security / defense Optical instruments Navigation aids Ammunition Electronics Military vehicles Shipbuilding and repair Computer systems design Simulation and training * Other industries NEC sector added by Ernst & Young to classify projects where industry data was missing, unavailable, or was added by Ernst & Young. Source: Enterprise Florida, 2012 Incentives Report. Released 2012, pg

17 Appendix B. Florida economic development regions Source: Florida Department of Economic Opportunity,