By BEN GRAFTON
On Feb. 3, the Freeport City Council held a special meeting to hear presentations relating to an incentive package to be offered to a company presently identified under a confidentiality agreement as Project Target to establish a manufacturing plant in Freeport. Steve Jaeger, executive director of the Walton County Economic Development Alliance (WCEDA) addressed the Council and made these points:
The WCEDA Board has agreed to gift an eight-acre parcel in Walton County’s Freeport Industrial Park to Project Target. Land in the Industrial Park has been sold for $17,500 per acre.
Jaeger said, “… a Dun & Bradstreet analysis of the company, which is based in [the Asian country of] India… was a very, very positive report in terms of their financial stability, revenues and the activities in which they engage… They manufacture precision metal parts for industry. They service the firearms industry,…. auto parts, and they are looking into aviation and aerospace. They have never had an American plant before. This is a big project….roughly by year five, we’re talking 300 plus jobs. It would involve the construction of a manufacturing building and occupancy of eight acres of land.”
Jaeger also said, “There is competition…. Two of them are located in Texas. One of them is in San Antonio, Texas…. they have an offer of free land…no property taxes in perpetuity, and … San Antonio will build their building for them and retire that debt over the first 10 years of occupancy. In McAllen, Texas, near the Mexican border, there is another candidate site for this project.
Jaeger said, “One thing that is very important … for the precision parts they manufacture, they need machine shops and heat treatment facilities in the area to service their needs.” Project Target representatives have been taken to eight or nine machine shops and heat treatment facilities between Milton and Marianna to illustrate what is here.
Jaeger introduced Leno Maldonado, vice President of operations for Wyndham Vacation Rentals and one of Gov. Scott’s appointees to the Gulf Consortium which is working for economic development; Jay Odom, developer; and Larry Sassano, Executive Director of Florida’s Great Northwest, the Florida agency for development within the Panhandle region.
Maldonado said, “The owners and general counsel for this company have been a client of mine for many years.”… Recently following a real estate transaction in Fort Walton Beach….”they mentioned they were looking for a U.S. facility…. and named four states [Georgia, South Carolina, Texas and one other] that did not include Florida.” They agreed to put off their decision pending presentations about available sites in northwest Florida. Maldonado then contacted Odom to see what could be done. He also said, “Their issue, more than anything else, is their supply chain, because they’ve got so many U.S. based customers. …we’re in the game – we’re behind the eight-ball – and we are short of money. I have no interest in this company whatsoever, they are just clients and friends of mine.”
Sassano followed by saying, “This is a unique situation because we are looking at only one county and one city and that’s to your advantage…. Manufacturing jobs are some of the highest impact jobs created in the country. They have skilled labor and they pay higher wages…. With the 330 jobs you’re going to see probably a 1 to 4 ratio in job creation. That’s more jobs, more investments into Walton County. …The state of Florida … is not going to give a company anything unless they see that the local community has some skin in the game. The state will increase their investment when they see there is skin in the game by the city and the county. …A company like this which has been in existence a long time and is growing will probably create more than those 330 jobs…Anything we can do to help them make that decision to come here is upon you to do that.”
In response to a question from Councilwoman Kasey Cuchens, Sassano said, “…Project Target wants to focus on one thing – injection molding. …What companies look for is companies like this company which makes the first move. Other companies will look at it and say, ‘If a manufacturing company of that size is looking to one county, maybe there is something there for us to look at as well.’ So, it is a marketing tool in our favor to have a company like this make a decision to come here.”
Odom then went to the rostrum and said, “When I had the opportunity to get involved in this, I was extremely excited about it. I, as Leno, have no financial involvement in this company. …so my involvement is because of my huge investment in Freeport with Hammock Bay and …my future rides with the success of that project. If we can get these kinds of businesses into Freeport, into Walton County, and create those kinds of jobs and the payroll that kind of business will have, … in the vicinity of $17 to $18 million a year, that core money from manufacturing jobs folds into this community, the impact will be massive. Those people will have to live somewhere so I will try to get them to live in Hammock Bay. I just want you to know that this is not a company that I knew anything about or had any financial interest other than that. I am trying to help get them here and get the state of Florida to come to the table and write a big check. The county has been extremely gracious through the EDA with this gift of the land. The county also has an ordinance on the books so that a company like this can apply to the county for property tax abatement if they meet certain criteria. Abatements do not apply to the School District portion of the tax.”
Odom continued, “Their company has been incredibly rapidly growing. I got the opportunity in December to go with the CEO of Project Target to New Hampshire. He set up a meeting for me because his largest client is Sig-Sauer guns…. They don’t like New Hampshire. They have been looking in Texas for places to expand. I said, well they could come to Freeport too. We were in New Hampshire at the headquarters of Sig. They employ a thousand people. …In 10 years they have grown from just over $40 million in revenue to $500 million in revenue and the CEO of Sig was highly complementary of the Project Target folks. Sigs plans are to go from $500 million in the last five years to a billion dollar business. And that’s why this company [Project Target] has to be in the United States because they are concerned with their supply line being interrupted. Sig has several goals to not interrupt their supply chain but also to put a stamp on their parts, ‘Made in America.’… I spent a half a day with the CEO, the CFO, the chief of staff of Sig, giving them the rundown on Freeport and Walton County and why they would be a good fit here. They are looking for 300 acres of property to come and open a training academy, an ammunition factory, and eventually, …they don’t want to put any more money in New Hampshire. …if Project Target came here, because of their experience and synergy, that could be a follow-along for Sig to look on this favorably as a potential spot for them to come to in the future.
“Upon start up the new [Project Target] facility is projected to employ more than 100 people of whom only about 10 management staff would be Indian nationals and the balance would be from the United States. When the facility becomes fully operational the number of employees is expected to be about 330 persons.”
Jaeger said, “The county has adopted a set of standards for granting property tax exemptions. It would appear that this would be a slam-dunk for this company because of its size it would qualify for a 100-percent tax exemption.”
Jaeger continued, “The time table that I’m on to basically compiles the offers from the county, the EDA, the city of Freeport, and also from CHELCO…. they are going to be a huge, huge user of electrical power …(and I’m waiting to get an offer of what their electric rate will be) to bundle all that up and send it to Enterprise Florida… the economic development agency that goes out and tries to recruit industry for the state…. The State is putting together its own plan. The governor, by the way, has spoken to the company… and has this on his own radar screen. Enterprise Florida is putting together a package of probably three components. One of which will be a refund of corporate income taxes paid. Secondly it could involve a direct cash grant. And thirdly a financing of training for their workers. The value of the state’s package would be somewhere in the range of $1.4 million …The deadline that I’m looking at is to get this out the door by the end of this week.”
In response to questions from Councilwoman Elizabeth Brannon, Jaeger said, “The county cannot extend its [ad valorem tax exemptions] beyond 2022.” And Odom said, “This is a very clean process. They use electricity and they use water. All of the water that they use can be put down a normal sanitary sewer. …So environmental waste like smoke stacks or something – there are none of those.”
Engineer Cliff Knauer addressed the issue of sewer capacity. He said, “I don’t think we have anything to worry about. I don’t know exactly what type of demand for sewer there will be. I don’t know much about their process yet. If we can get a better grip on their process – how they get rid of their used water – but I’m sure there is something we can figure out. Right now your plant is only at 50-percent capacity – it’s been at 50-percent capacity for a very long time – so right now you do have capacity and so, I think we could get it there from the industrial park without a problem. Probably we need to study exactly what their process is so I could get a real idea of what type of demand we could expect for their sewer.”
In response to a question from Councilwoman Janice McLean, Knauer said, “Yes ma’am, we sure do have enough time to make any changes in [an active sewer] project that might be required.”
Attorney Clay Adkinson said, “We are not legally able to waive impact fees…. What we have to do is make a decision about whether certain impact fees or certain areas could be exempted from impact fees. There are a couple of options. One,… impose a moratorium on impact fees. The disadvantage of that route … is it cannot be used indefinitely. Even though it can be extended year to year it is not by any means a guaranteed commitment…. The alternative would be to take any step to evade impact fees as allowable by law. One step I have researched in other cities is revised impact fees that cover an entire area. …You might have an area that you know you are not going to need additional system improvements. For that reason the impact fee for future growth there may be less because it does not have as much impact on the system. That is a technical issue that Mr. Knauer and his team would have to provide because I can’t tell you that.”
Adkinson also said, “The city would not be committing any capital up front because the incentive package we would be sending would have a reverter clause that will be tied to the land , however a similar term could be written into an agreement with the city. Once they [Project Target] commit capital to the development of the land then the city could make the commitments of these steps.”
The city can pledge to waive administrative fees ($750), water ($600) and sewer ($1,000) tap fees, water ($100) and sewer ($100) deposits, impact fees (estimated total $39,500 as determined by the rate study), certain engineering fees ($1,000), and city ad valorem taxes but an accurate estimate [of these taxes] cannot be made. This does not contemplate the waiver of ongoing water and sewer fees. So, the city’s incentive package would come to $43,050 not including ad valorem taxes or fire impact fees.
Board of County Commission Chair Bill Imfeld said, “We in the county think this is a very important project and we want to do everything we can to help support it coming to Freeport. From what we have had available to us on the table I know that the Board has been briefed on it. Of course the procedure is that when we get the numbers they would do it and the key thing is that of the ad valorem question. But we wanted the city to know and the developers to know and the Economic Development people to know that the county is wholeheartedly behind it. And what’s happened is that Mayor Barley has been part of the economic team that has brought economic development to Mossy Head and other parts of the county. So with these partnerships we want to continue to be a strong supporter of Freeport, of the county and other places too for economic development. From the broad brush numbers we have seen, again they seem to knock dead the threshold levels established by the county and we think that if we could bring in those jobs, some coming from India and some to be developed locally and the development of the school system I think the county is ready to come to the plate when they get here.”
A motion to approve the Freeport incentive offer was made and unanimously approved by the Council.
