Recession Recovery Study Findings Draft 3.11.2011 by JCCI

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Jacksonville Community Council Recession Recovery and Beyond Study Findings Draft Date: March 11, 2011

PLEASE DO NOT DISTRIBUTE

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Recession Recovery and Beyond â&#x20AC;&#x201C; Study Report 3.11.2011

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Table of Contents

EXECUTIVE SUMMARY ...................................................................................................................................................3

FINDINGS .......................................................................................................................................................................4

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Introduction.....................................................................................................................................................4

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Regional Overview...........................................................................................................................................4

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Northeast Florida’s Job Creation Strategy .......................................................................................................8

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Attracting Businesses And Jobs .......................................................................................................................9

Educational attainment and building a qualified workforce .............................................................9

Visioning and branding: Choosing “who we are” and “what we want to become” .......................10

Regionalism: Working cooperatively and speaking with one voice ................................................11

Quality of life: Living, playing, working, and doing business in Northeast Florida ..........................12

Many sectors and communities working together to encourage business development ..............14

Job creation priorities and opportunities: Bringing new businesses to Northeast Florida .............15

Quality public education systems and higher education offerings .................................................16

How we do business regulation, taxes and incentives....................................................................20

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Creating New Businesses And Jobs Locally ...................................................................................................22

Small business and entrepreneurship development and support at all levels ...............................22

A thriving community of fast growing firms ...................................................................................23

Growing existing businesses and industries ...................................................................................24

Access to capital ..............................................................................................................................25

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Retaining Businesses And Jobs ......................................................................................................................25

Recognition and utilization of local businesses ..............................................................................26

Training people for the jobs that are available ...............................................................................27

Identification of and support for second stage, growth companies ...............................................27

CONCLUSIONS .............................................................................................................................................................29

RECOMMENDATIONS ..................................................................................................................................................29

APPENDIX.....................................................................................................................................................................30

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EXECUTIVE SUMMARY Key elements  Major themes  Recurring negatives/positives  Bullet point summaries of findings, conclusion, and recommendations

Recession Recovery and Beyond – Study Report 3.11.2011

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FINDINGS Introduction In December 2007, the United States entered into a recession. While the economists state that the official end of the recession was June 2009, the country (and Northeast Florida) continued to struggle economically. At the end on 2010, Northeast Florida was down over 80,000 (need to verify) jobs from the pre-recession peak. Unemployment rates in the region at the end of 2010 ranged from 9.9 percent in St. Johns County to 15.5 percent in Flagler County. Both a JCCI community survey and a statewide Leadership Florida Sunshine State Survey conducted in 2010 showed that jobs and job creation were the top concern among respondents. The study committee set out to discover how Northeast Florida might: 1. Retain existing jobs; 2. Rapidly create new jobs; and 3. Position the region for long-term economic growth. In the process of exploring Northeast Florida’s strengths and challenges in retaining and expanding existing local businesses, attracting business relocations, and encouraging business start-ups, study committee members visited the seven counties identified as part of the Northeast Florida Region (Baker, Clay, Duval, Flagler, Nassau, Putnam, and St. Johns.) Committee members examined existing job development plans and economic development strategies for the region, and met with economic development organizations, business support organizations, and other key public and private players in job creation, retention, and marketing. Like Florida’s other 60 counties, Northeast Florida’s seven partner counties are suffering economically as a result of the national recession, which exposed Florida’s dependence on steadily increasing population as a driver for economic growth. Many of the issues that the study committee found were hindering the region’s ability to bounce back from the jobless recovery pre-date the recession, and have only been exacerbated by the economic downturn and corresponding fiscal crises in local and state government. At the same time, the study committee found working regional partnerships and strong community assets in each of the partner counties, which provide a platform from which the region can grow.

Regional Overview Northeast Florida is a region of 1.1 million people, living in 27 municipalities covering 4,428 square miles. The seven counties of Northeast Florida are home to a diverse collection of communities, including rural, urban, and suburban areas. This diversity is one of the characteristics of the region that makes it an attractive place to live; any number of lifestyles is possible. Arguably, the best known cities in the region are Jacksonville, the region’s major urban center and St. Augustine, the country’s oldest city and a major tourist destination. The region has highly valued quality of life assets like beaches, the St. Johns River, good climate, low housing Recession Recovery and Beyond – Study Report 3.11.2011

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costs, and abundant healthcare facilities. The region also has many factors appreciated by business concerns, including the availability of land, low taxes, low labor costs, excellent highway accessibility, two deepwater ports, and local and state incentives. According to the Northeast Florida Regional Council the region is 43 percent dedicated to agriculture, 2 percent to industry and commercial use, and 13 percent urbanized. The counties surrounding the urban center are mostly rural, relying on agriculture and service sectors, with a limited industrial base. These communities however are becoming increasingly urbanized and becoming more economically diverse. Duval County is the most populous county with 900,000 residents, while Baker County is the least populous with 26,000 residents. The racial makeup of the counties varies, with some counties being more homogenous than others. Overall the region’s minority population is 25 percent, which is closely aligned with the state of Florida and the United States. Northeast Florida is also a relatively youthful region with the average age being 39 years old. Both the minority population and the population of young people are disproportionately unemployed in Northeast Florida. Educational attainment and education outcomes are factors that influence both a community’s intellectual infrastructure and its workforce capacity. These factors vary from county to county in Northeast Florida. The Florida Department of Education rates public education districts using results from the Florida Comprehensive Assessment Test (FCAT). As of the 2009-10 school year, the region had four “A” rated districts, two “B” rated districts, and one “C” rated district. High school graduation rates ranged from 66 to 92 percent in the region. Measures of adult educational attainment show that 89 percent of all people in the region over the age of 25 have earned a high school diploma, and 21 percent have obtained a bachelor’s degree or a higher educational credential. The rate varies across counties, with 37.6 percent of St. Johns County residents having earned a bachelor’s degree or higher, compared to 6.7 percent of Putnam County residents. Industries like tourism and construction with low skill, low wage entry points thrived in prerecession Northeast Florida. Many of those industries have shed thousands of jobs regionally. The workers who benefited most from those jobs are at a particular disadvantage when it comes to finding work. The unemployment rate among college graduates in the region has averaged 3.9 percent from 2005 to 2009 as compared to 12 percent for those with no high school education and 6.7 percent for those who have a high school diploma. The regional economy is as diverse as the people who live in Northeast Florida. The major industries in the region, are Trade, Transportation, and Utilities; Education and Health Services; Professional and Business Services; Government, and Leisure and Hospitality; and Financial Activities. These industries employ 78 percent of the region’s population. However, the largest employers in five of the seven counties are the county public school systems. Small business also figures prominently in the region’s mix of businesses with firms employing less than onehundred employees, making up 96 to 98 percent of all Northeast Florida companies. Throughout the study, three industries – health and biosciences, logistics, and the military – Recession Recovery and Beyond – Study Report 3.11.2011

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were discussed as industry sectors that the region should focus upon to create and retain jobs. Assets in those areas are as follows. Northeast Florida has…

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21 hospitals and over 1,500 medical facilities. 2 deepwater ports, 3 major interstates, and an international airport and several regional and commercial airports. 3 military installations - Navy (2), Marines (1) - and is home to the Florida Air National Guard and Coast Guard Sector Jacksonville.

The cohesiveness of the region as an economic entity is driven by the Cornerstone Regional Development Partnership, a private, nonprofit division of the Jacksonville Regional Chamber of Commerce. Cornerstone is Jacksonville and Northeast Florida's regional economic development marketing initiative. Many of the region’s seven counties also have other geoeconomically important relationships:    

Residents in Nassau County Florida (5 percent) work in several South Georgia communities and vice versa. Baker and Putnam Counties are members of the 14 county North Central Florida Rural Area of Critical Economic Concern (RACEC) that extends westward to Jefferson County. Flagler and Putnam Counties belong to the Florida High Tech Corridor Council that encompasses Central Florida. Flagler County shares economic ties with Volusia County.

With these extra-regional partnerships, the Cornerstone counties connect to economic regions beyond Northeast Florida - north to Georgia, south to Orlando, and west to Tallahassee. The national recession has taken a toll on the economic viability of Northeast Florida. At the close of 2010, the region’s unemployment rate was 11.7 percent. Flagler County had the highest unemployment rate in the region, where 15.5 percent of the labor force was without work. The number of unemployed persons in the region stands at 80,000 (need to verify) as of December 2010. These unemployment figures do not include people who are underemployed or those who have simply given up the search for work. To reach full employment (3-4 percent regionally) approximately 60,000 (need to verify) people will need to find jobs in Northeast Florida. Northeast Florida like many regions in countries around the world has entered a new era of austerity. Market and public policy uncertainty have fueled the reluctance of big businesses to hire workers and make capital expenditures, while capital for existing and start-up small businesses is extremely limited. Both of these realities limit private investment. Likewise local governments are faced with falling tax revenues due to depreciated property values, which limits public investment. The result is stalled economic growth, which threatens the region’s quality of life and future, long-term economic competitiveness.

Recession Recovery and Beyond – Study Report 3.11.2011

1 BAKER COUNTY Population 25,899 Labor Force 12,178 Unemployment Rate 10.9% Top 3 Private Employers  Northeast Florida Hospital  Wal-Mart Food Distribution Center  Macclenny Nursing & Rehabilitation Center

CLAY COUNTY Population 185,208 Labor Force 95,766 Unemployment Rate 10.5% Top 3 Private Employers  Orange Park Medical Center  Jacksonville Kennel Club  HCA Patient Account Service Center

Top 3 Public Employers  Baker County School Board  Baker Correctional Institute  Baker County Medical Services

Top 3 Public Employers  Clay County School Board  Clay County Sheriff's Office Average Wage $31,843

DUVAL COUNTY Population 900,518 Labor Force 446,118 Unemployment Rate 11.7% Top 3 Private Employers  Baptist Health  Blue Cross & Blue Shield of Florida  Mayo Clinic Top 3 Public Employers  Naval Air Station  Duval County Public Schools  Naval Station Mayport Average Wage $44,034

Average Wage $29,503 NASSAU COUNTY Population 72,588 Labor Force 36,317 Unemployment Rate 10.9% Top 3 Private Employers  Amelia Island Plantation  The Ritz-Carlton Amelia Island  Smurfit-Stone Top 3 Public Employers  Nassau County School Board  Federal Aviation Administration  Nassau County Average Wage $34,981

FLAGLER COUNTY Population 94,901 Labor Force 33,498 Unemployment Rate 15.5% Top 3 Private Employers  Palm Coast Data Ltd.  Florida Hospital Flagler  Hammock Beach Resort Top 3 Public Employers  Flagler County School System  Flagler County Sheriff's Office  Flagler County Clerk of Courts/Justice Center Average Wage $30,486

PUTNAM COUNTY Population 74,608 Labor Force 33,226 Unemployment Rate 12.6% Top 3 Private Employers  Georgia Pacific Corporation, Palatka  PRC  Seminole Generating Plant, a Division of Seminole Electric Cooperative Top 3 Public Employers  Putnam County School Board  St. Johns River Management  Putnam County Government Average Wage $33,908

ST. JOHNS COUNTY Population 183,572 Labor Force 97,450 Unemployment Rate 9.5% Top 3 Private Employers  Northrop Grumman  Flagler Hospital  Florida School for the Deaf & Blind

Sources Population - Bureau of Economic and Business Research (BEBR) 2009

Top 3 Public Employers  St. Johns County School District  St. Johns County  U.S. Air National Guard

Employer information – Cornerstone Regional Partnership as of April 2009

Average Wage $35,758

Labor Force 2010 and Unemployment Rate 2010 – Florida Research and Economic Database, Labor Market Statistics, Local Area Unemployment Statistics Program

Average Wages - Florida Agency for Workforce Innovation Quarterly Census of Employment & Wages, 2009 – County Summary Totals

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Northeast Florida’s Job Creation Strategy Job creation is a complex enterprise that involves multiple groups and various strategic efforts. Private enterprise, governments, and the individuals who need jobs each have a role to play. Businesses create new jobs when it makes economic sense to do so. The projected economic benefits need to be greater than the initial investment, ongoing costs, and perceived risks. Businesses also need access to capital to invest in growth, a market for their products and services, and a regulatory environment that is responsive and predictable. While governments do not directly create jobs within the private sector, all business is licensed by government, and the various levels of government can create conditions that make it easier and more efficient for the private sector to create or expand existing businesses. Governments also have access to incentive programs and tax credits meant to encourage business development, expansion, or relocation. Still, one resource speaker made the point that government tax credits to incent hiring mean nothing if consumers are not making purchases. Individuals also have a role to play in job creation. Workers, through education and training, can prepare themselves for the jobs that are available. According to the Bureau of Labor Statistics one-third of the fastest growing jobs will require workers to have postsecondary credentials; therefore those individuals who are undereducated and those communities with large populations of non-degreed/non-credentialed residents will continue to fare poorly even as the employment situation improves. In 2010, at the same time that the nation was experiencing record numbers of long-term unemployed, over two million jobs remained unfilled because worker skills did not match job Site Selection Factors requirements. 

Job creation strategies include bringing new businesses into a community; growing jobs through the support and development of small businesses and entrepreneurial enterprises; and encouraging existing businesses to stay local. Research indicates that up to 80 percent of new jobs are created by existing businesses, while 70 to 80 percent of a community’s jobs are created by small businesses. At the same time 50 percent of such businesses fail within the first five years, according to the Small Business Administration. Focusing job creation efforts on just one approach - attracting, developing, or retaining businesses can limit a community’s economic development efforts. The regional issues identified over the course of the study as having a great impact on attracting, developing, and/or retaining jobs are workforce development; visioning and branding; small business and entrepreneurship; regulation, incentives, and taxes; regional leadership; quality of life; Recession Recovery and Beyond – Study Report 3.11.2011

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Availability of advanced information technology services Availability of Land Availability of Skilled Labor Corporate Tax Rate Energy Availability and Costs Highway Accessibility Inbound/outbound shipping cost Labor Costs Occupancy or Construction Costs Proximity to Major Markets State and Local Incentives Tax Exemptions

Quality of Life Factors  Climate  Colleges and Universities in the Area  Cultural Opportunities  Healthcare Facilities  Housing Availability  Housing Costs  Low Crime Rate  Ratings of Public Schools  Recreational Opportunities Area Development Magazine 2009 List is not ordered by importance

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partnerships; job creation priorities and opportunities; and education. Attracting Businesses And Jobs Attracting new businesses to the regional community provides an opportunity to diversify the economy by seeking new businesses, drawing specific types of industries into the market place (i.e. high tech, high wage companies), and increasing the wealth of the community. Companies interested in relocating or expanding their operations will seek communities with comparatively low costs (i.e. labor, energy, utilities, and taxes) and a high quality of life to encourage employee relocation and satisfy hiring needs. Area Development Magazine provided a list of both the site selection criteria and the quality of life considerations that businesses weigh when making location choices. Many of the factors on the lists, like land availability, geographic location, and climate, are beyond the control of the community and outside the dictates of public policy or community advocates. Educational attainment and building a qualified workforce Educational attainment, like the quality of public schools, informs employers about the quality of the local workforce. The percentage of persons who have earned a college degree is indicative of the region’s economic competitiveness. For a community to compete successfully in the knowledge-based economy 30 to 40 percent of the residents should hold a bachelors degree. Educational Attainment in Northeast Florida by County Population 25 and older POPULATION 25 YEARS AND OVER BAKER CLAY DUVAL FLAGLER PUTNAM NASSAU Less than high school graduate 21.4% 10.2% 12.7% 10.5% 22.4% 14.6%

ST. JOHNS

NORTHEAST FLORIDA

8.4%

14.3%

High school graduate

78.6%

89.8%

87.5%

89.4%

77.7%

85.2%

91.6%

85.7%

Some college, no degree

15.0%

25.3%

22.9%

26.3%

17.1%

20.5%

22.4%

21.4%

Associate's degree 8.0% 10.2% 8.7% 9.0% 6.2% 6.7% 8.2% Bachelor's degree or higher 6.7% 22.9% 25.2% 20.8% 12.9% 20.3% 37.6% Source: Survey: American Community Survey S1501-Educational Attainment. Data Set: 2005-2009 American Community Survey 5-Year Estimates.

8.14% 20.9%

Educational attainment at the postsecondary level in Northeast Florida varies across counties. If a highly qualified workforce is a primary consideration, then business prospect would be drawn to the counties in the region with the most degreed (associates and bachelors) residents – St. Johns (46%), Duval (34%), Clay (33%), and Flagler Counties (30%). Associates degrees are included here because the credential indicates that the possessor has at least basic competency in writing, math and computer skills and/or has specialized technical or industry training. <Include chart here that details the percent of college graduates in other communities and in other countries>

The region is also home to 50,000 active duty, reserve and Department of Defense civilian men and women. Of the personnel who exit the military each year, more than 3,000 choose to Recession Recovery and Beyond – Study Report 3.11.2011

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remain in the region, providing a steady stream of skilled workers for area businesses. Similarly, 80 percent of military personnel who get out of the service in Jacksonville stay local. In most cases, degreed individuals have also been less likely to face unemployment than their counterparts who have earned only a high school diploma. Percentage of unemployed persons by education level in Northeast Florida ages 16 - 64 Less than High school Some college or Bachelor's County high school graduate associate's degree or graduate (includes degree higher equivalency) Baker 16.8% 2.6% 6.6% 3.1% Clay

8.8%

6.6%

5.0%

3.2%

Duval

13.5%

7.3%

5.5%

3.3%

Flagler

12.2%

6.8%

5.9%

6.6%

Nassau

15.2%

7.5%

6.6%

3.3%

Putnam

9.9%

10.5%

6.2%

3.5%

St. Johns

7.6%

5.3%

5.0%

4.3%

Northeast 12.0% 6.7% 5.8% 3.9% Florida Source: U.S. Census Bureau, 2005-2009 American Community Survey

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The perception of the region being undereducated persists. Various examples were provided by resource speakers where business prospects were concerned about the quality and capacity of the workers in the region. At present only one county in the region has close to the percentage of bachelors-degreed residents needed to signal to the world that Northeast Florida is able to compete in a knowledge-based economy. Visioning and branding: Choosing “who we are” and “what we want to become” Cornerstone and each county’s economic development organization have an extensive catalogue of characteristics that make the region an appealing destination for business - the starting point for defining the region’s capacity. Whether the region is referred to as Northeast Florida, the Jacksonville Region, Florida’s First Coast, or America’s Logistics Center, the region’s assets have not been grouped or disaggregated in a way to make it clear to internal or external audiences why the region is a great place to do business or a great place to live. The region does not have a clear or consistent brand. The lack of regional and local-county identity was pointed out at every partner county site visit. Northeast Florida has many stories to tell using its assets to solidify a unique place among its competitors - quality of life, logistics capabilities, health/medical resources, military facilities and personnel and more. The future of the region depends on being able to leverage those positive stories (assets) in a way that is appealing to those who have a negative impression of the region and others who are unfamiliar with Northeast Florida. When CEO’s are considering relocating or expanding their firms, the regions that get the most favorable look are those who have values and branding reflective of their organizations.

Recession Recovery and Beyond – Study Report 3.11.2011

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Visioning, the precursor to branding, has gone wanting in Northeast Florida. Communities must have both a long-term vision and an implementable plan for getting to the future. Having leaders with the will to carry out that plan over a period of many years, without regard fro changes in political climate, is also critical. Recent efforts by the Northeast Florida Regional Council have provided an opportunity for regional leaders and residents to consider what is important economically and in other key areas. In 2009, The Northeast Florida Regional Council sponsored Reality Check First Coast to inform the update to the Strategic Regional Policy Plan (SRPP) which is required by Florida statute. This exercise engaged about 500 people in the seven-county region to discuss future job, housing, transportation, infrastructure, and recreation needs. The Regional Community Institute (RCI), a non-profit spinoff of the NEFRC, is in the process of convening regional residents to develop a vision for the region. The regional vision will be tied to the implementation of Reality Check First Coast, which is being directed by Region First 2060 an ongoing partnership of the Reality Check First Coast entities. Asset development, visioning, branding, funding, and implementation A sustained vision for Indianapolis for almost four decades: Indianapolis is the “only” major city in Indiana and is very comparable to Jacksonville in terms of population and size, though Indianapolis has far fewer obvious natural amenities than Jacksonville. Despite not having the great natural assets or strategic geographic advantages of some other cities Indianapolis has experienced success due to a focused agenda and consistent leadership. Indianapolis is driven by strong leadership in both its public and private sectors. Over the past 36 years there have been four strong mayors – Democrats and Republicans – who each picked up where the last mayor left off in building downtown – and with it, the region. Each mayor remained focused by sustaining the vision. One difference between Jacksonville and Indianapolis is Indianapolis has benefited from strong philanthropic support in developing its long-range plan. Eli Lilly and Company, a Fortune 500 pharmaceutical company headquartered in Indianapolis, has a charitable foundation that lists enhancing quality of life as one of its missions. Lake Nona Medical City, Orlando’s efforts to brand its medical and life sciences industry: In an effort to compete for the Scripps Research Institute in 2003, the Tavistock Group agreed to aside 650 acres for a planned medical city complete with retail stores and housing at Lake Nona. Orlando lost the Scripps deal to Jupiter, Fla., a decision made due in part to its lack of a medical school. Three years later, when Burnham Institute for Medical Research in exchange for a $310 million incentive package and an opportunity to be collocated with the University of Central Florida new College of medicine. Construction is underway on Nemours Children's Hospital and the Orlando VA Medical Center. Both facilities are scheduled to open in 2012. In addition, the University of Florida recently broke ground on a Lake Nona academic and research center, which will house a Comprehensive Drug Development Center, the UF College of Pharmacy doctoral program and biomedical research laboratories.

Regionalism: Working cooperatively and speaking with one voice The Northeast Florida region has worked successfully and collaboratively as an economic unit. During the partner county site visits the message was consistent regarding Cornerstone’s effectiveness marketing the region to attract business. As of 2010, the region was also designated as an Economic Development District. However, other collaborative efforts are rare even though there are intersecting concerns where a regional effort might be appropriate for the purpose of greater economic competitiveness, including education, branding, transportation, and tourism. During the study, an educator suggested that the time has come to have a regional discussion about the role of k-12 education in making Northeast Florida more competitive. A regional Recession Recovery and Beyond – Study Report 3.11.2011

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visioning process is underway; however determining the region’s brand essence is work that remains to be done. The region has several vital areas for tourism – St. Augustine, Amelia Island, and Palm Coast, but those areas are not promoted as a regional unit. Northeast Florida also has two deepwater ports, which operate independently. Regional transportation may become a reality now that the Jacksonville Transportation Authority (JTA) has been directed by the Florida legislature to develop a plan for a regional transportation authority. Northeast Florida is the only region in the state without a Regional Transportation Commission. According to a 2009 Regional Transportation Agency Study, this is a limitation that prohibits the region from taking full advantage of its multi-modal transportation capacity. The seven counties being discussed in this study are tied together economically via Cornerstone and the Regional Council. The counties are different and have different assets associated with being primarily rural, suburban, or urban. There is a sense of place that undergirds those communities along with a sense of community pride. In the rural counties, meeting participants spoke of wanting to keep the character of their communities intact. This type of community identification can be leveraged in the quest to define the region. On the other hand, community identity can create tension among the counties especially as it relates to quality of life. Those counties watching their more urban neighbors struggle with crime, education, traffic congestion do not want to have those issues invade their communities. At the same time, the region’s urban center is the business and cultural center of Northeast Florida and the relative short time that it takes to travel from urban to rural communities in the region is an asset. The subtext that results from identifying the region’s winners and losers can devalue the region as a whole. A resource speaker offered insight on why this is problematic, sharing a story about area realtors steering newly relocated executives to St. Johns County by drawing the conclusion that children cannot receive a quality education in Duval County. One of the messages this sends to an executive is that his/her workforce, the majority of which live in Duval County will be subpar. Quality of life: Living, playing, working, and doing business in Northeast Florida During each partner county site visit, residents in every community said their communities had a high quality of life, often citing the county’s natural beauty, rural charm, outdoor recreation, abundant waterways, high quality healthy care, the Jacksonville Jaguars, educational opportunities, plus arts, culture, and entertainment amenities. Other quality of life factors can be added to that list as well, including falling crime rates, decreases in housing prices, and the availability of healthcare facilities. From 2008 to 2009 the rate of index crimes has decreased in all but two Northeast Florida Counties.

Recession Recovery and Beyond – Study Report 3.11.2011

Northeast Florida Index Crime Rates

Percent Change in Crime Rate 2008 - 2009 Index Crime Rate - Crimes Per 100,000 Population 2009 Index Crime Rate - Crimes Per 100,000 Population 2008

Baker

Clay

Duval

Flagler

Nassau

Putnam

St. Johns

25.9%

6.6

9.7

6.0

19.2

12.5

7.0

Northeast Florida 3.3%

1,706.6

3,057.6

5,814.0

2,724.9

2,928.9

5,679.0

3,114.3

3575.0

1,355.7

3,275.4

6,435.7

2,571.5

3,623.7

6,491.6

3,346.9

3871.5

Source: Florida Department of Law Enforcement

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Housing prices have also fallen, and while this is good news for those seeking to buy homes, it does not bode well for property tax collections. Northeast Florida Median Home Sales

Median Sales Price Single Family Homes 2009 Median Sales Price Single Family Homes 2008

Baker

Clay

Duval

Flagler

Nassau

Putnam

St. Johns

$146,500

$168,350

$170,000

$165,000

$215,000

$111,000

$249,450

Northeast Florida $175,042

$160,000

$190,000

$174,000

$185,450

$316,500

$128,750

$260,450

$202,164

Source: Florida Housing Data Clearing House

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Healthcare facilities including hospitals, nursing homes, clinics and other licensed facilities are abundant in the region. Northeast Florida Hospitals and Medical Facilities Baker

Clay

Duval

Flagler

Nassau

Putnam 1

St. Johns 1

Northeast Florida 21

Hospitals

Other Medical Facilities Licensed by AHCA

168

1,008

100

151

1,583

Source: Agency for Health Care Administration (AHCA)

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The Cornerstone Regional Partnership, which markets Northeast Florida nationally and internationally, focuses on the region’s quality of life as a key selling point highlighting many of those same areas that were touted during the partner county site visits. The study committee also heard that a community’s quality of life, while important, is not the make or break factor for business prospects and site selectors. In some cases this is true because the company’s owners will not live in the local community and in other instances the business case for relocation or expansion outweighs the quality of the community. Though site selection factors may take primacy over a community’s quality of life factors, it is not likely that companies are willing to invest in undesirable communities with poor education, health, and public safety outcomes among others. When communities are not willing to invest Recession Recovery and Beyond – Study Report 3.11.2011

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in a quality future, there is a risk that private enterprise (new and existing businesses) will forgo investment as well. Funding an improved quality of life In the early 1990s, the leaders of Oklahoma City were faced with a decision: to compete or retreat. The city was in the wake of the oil bust and had lost a bid for a United Airlines maintenance facility. The decision was made to compete, and a visionary project was launched, which would forever change the face of Oklahoma City. That plan is Metropolitan Area Projects (MAPS), an ambitious program that is one of the most aggressive and successful public-private partnerships ever undertaken in the United States. The amount spent in this public/private partnership exceeds $3 billion. MAPS was funded by a temporary one-cent sales tax approved by city voters in December 1993. The tax expired on July 1, 1999. During the 66 months it was in effect, more than $309 million was collected. In addition, the deposited tax revenue earned about $54 million in interest. All of the public projects were funded by a self-imposed, five-year, one-cent sales tax. The tax was extended by a vote of the people for six months to cover cost increases during construction. The tax is complete and the projects are all debt-free. In December 2009, a record number of Oklahoma City voters went to the polls and voted YES to continue Oklahoma City's future through the $777 million MAPS 3 initiative. MAPS 3 includes eight projects that will work to increase the quality of life for all Oklahoma City citizens, as well as create economic growth through private investment and the creation of jobs. The eight projects include improvements to the Oklahoma River, 57 miles of new walking and biking trails, improvements to State Fair Park, sidewalks, senior health and wellness aquatic centers, a new convention center, a world-class destination park, and a modern downtown streetcar. The temporary one-cent sales tax for MAPS 3 began April 1, 2010 and will be in effect for 93 months.

Many sectors and communities working together to encourage business development A regionâ&#x20AC;&#x2122;s economic competitiveness is enhanced by the partnerships between the entities that control the various component pieces of economic development including those who have an interest in the workforce, innovation, regulation, taxes, business development, and the buying and selling of products or knowledge. Those entities might include economic development agencies, higher education, government, and private enterprise. In Northeast Florida the relationship among these groups is said to be strong; often cultivated via board memberships, interagency participation, Cornerstone, the Northeast Florida Regional Council, WorkSource among others. The relationships that do exist are used for maximum advantage when promoting the assets of the region. At present, however, these alliances are relatively informal. Furthermore, a formal partnership arrangement between government, private enterprise, and higher education for the purposes of attracting or and creating businesses in Northeast Florida does not yet exist. As a result, leveraging the research power of the University of Florida has been a casualty. While the university provides services to Northeast Florida, the institution became a leading partner in Central Floridaâ&#x20AC;&#x2122;s economic development efforts along with the Universities of Central and South Florida. The question arises: Should the University of Florida look north, how would that institution, or any other, bring its resources to bear for the economic development future of Northeast Florida? Growth results from business, government, and education partnerships The Research Triangle Park was founded in January 1959 by a committee of government, university, and business leaders as a model for research, innovation, and economic development. By establishing a place where educators, researchers, and businesses come together as collaborative partners, the founders of the Park hoped to change the economic composition of the region and state, thereby increasing the opportunities for the citizens of North Carolina. The vision was to provide a ready physical infrastructure that would attract research oriented companies. The

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advantage of locating in RTP would be that companies could employ the highly-educated local work force and be proximate to the research being conducted by the state’s research universities. CONNECT was formed in 1985 by the City of San Diego, UC San Diego and the private sector to stimulate the commercialization of science and technology discoveries from local research institutions. CONNECT has assisted in the formation and development of more than 2,000 companies and is widely regarded as the world's most successful regional program linking investors and entrepreneurs with the resources they need for commercialization. Key to our success has been the unique "culture of collaboration" between industry, capital sources, professional service providers, and research organizations. The Florida High Tech Corridor Council (FHTCC), founded in 1993, is a regional economic development initiative of the University of Central Florida (UCF), the University of South Florida (USF) and the University of Florida (UF) whose mission is to grow high tech industry in the region through research, workforce development and marketing programs. The partnership involves more than 25 local and regional economic development organizations (EDOs) and 14 community colleges. The Council is co-chaired by the presidents of UCF, USF and UF. The unique partnership has resulted in a strategic approach to high tech economic development that involves matching funds research, workforce development and a marketing program leveraging governmental, EDO and corporate budgets on a regional rather than local basis.

Job creation priorities and opportunities: Bringing new businesses to Northeast Florida Northeast Florida has significant opportunities to strategically focus its business development efforts. Cornerstone, following the lead of Enterprise Florida, but taking into consideration Northeast Florida’s unique assets, targets the following industries for business relocation and new business development - advanced manufacturing, aviation and aerospace, finance and insurance services, headquarters, information technology, life sciences, and logistics and distribution. Determining which targets are right for Northeast Florida includes a review of the businesses that are already concentrated in the region as well research based analysis. Each county also tweaks those targets based on the unique capacity of their communities. The target industries are re-assessed every three years and provide a framework for business development. Limited resources require this targeted approach to attracting business because taking a “shotgun approach” is inefficient. The State of Florida also provides incentives (Qualified Target Industry Tax Refund) for companies that create high wage jobs in targeted high value-added industries. This incentive includes refunds on corporate income, sales, ad valorem, intangible personal property, insurance premiums, and certain other taxes. Both new and expanding businesses in selected targeted industries or corporate headquarters are eligible. Other incentives for target industries include the Qualified Defense and Space Contractor Tax Refund, Capital Investment Tax Credit, and High Impact Performance Incentive Grant. In addition to creating jobs, attracting headquarters to the region has the added benefit of creating wealth in the community. When headquarters are located in the region, it means that Northeast Florida is always of mind when decisions are being made with regard to expansion, investment, and philanthropic giving. Jobs within headquarters also have a tendency to pay higher salaries. High level executives also add to the region’s civic, social, and political capacity as well. The region could benefit from efforts to attract small fast growing companies with annual revenues of $50 to $100 million as well as Fortune list companies.

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Quality public education systems and higher education offerings One of the most oft discussed quality of life issues during this study was k-12 public education as it relates to both the quality of the workforce and the quality of the region’s communities. Quality public education can be measured in a variety of ways, including high school graduation rates and postsecondary education continuation rates. In the past three years, graduation rates have steadily climbed in most districts and the average for region has improved significantly. At the same time, graduation requirements have become more rigorous. Northeast Florida’s High School Graduation Rates 2009-10

2008-09

2007-08

Baker

75.9%

85.3%

74.9%

Clay

78.4%

75.3%

70.5%

Duval

66.6%

64.5%

61.3%

Flagler

83.5%

81.3%

80.9%

Nassau

89.5%

76.3%

70.9%

Putnam

74.6%

70.4%

71.1%

St. Johns

92.1%

89.3%

87.1%

Counties

10 11 12 13

Northeast 80.1% 77.5% 73.8% Florida Source: Jacksonville Community Council Inc., Community Snapshot uses the National Governor’s Association Graduation Rate. Note: The NGA rate accounts for students who transfer into a cohort and students who transfer out; it is not based specifically on dropouts. Thus, the NGA rate acknowledges that students transfer out of state, to private schools, to home schools, and other educational settings. It does not imply that all students are either graduates or dropouts.

Northeast Florida’s Postsecondary Continuation Rates Follow-up of prior year graduates attending a postsecondary education program District 2008-09 2007-08 2006-07 Baker

45.8%

50.5%

67.1%

Clay

57.6%

57.9%

64.2%

Duval

61.5%

61.0%

62.1%

Flagler

56.4%

61.9%

55.2%

Nassau

56.2%

58.9%

63.7%

Putnam

55.9%

52.8%

62.2%

St. Johns

70.2%

69.7%

57.9%

Northeast 57.7% 58.9% 61.8% Florida Source: Florida Department of Education, Florida Schools Indicator Report (FSIR)

14 15 16 17 18 19 20

The percentage of high school students attending college declined in Northeast Florida from 2006 through 2008 according to the latest data provide by Florida Education and Training Placement Information Program (FETPIP). The exceptions were in Flagler and St. Johns Counties. Over 50 percent of the region’s graduates consistently opt to go directly to work after high school from year to year. Of those who pursue a college or postsecondary degree, over one-half of those students work as well. This may be due in part to the cost of higher education Recession Recovery and Beyond – Study Report 3.11.2011

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and the recession. High school graduates who forgo college or postsecondary training may do so because earning a living takes precedence. On average less than 5 percent of the region’s graduates enter the military. The State of Florida also rates public school systems by student performance on the Florida Comprehensive Assessment Test (FCAT). In the seven-county region the majority of the county’s districts received a rating of “B” or better. Putnam County was the only “C” rated district during the last testing cycle. During the partner county site visits, the success of the school districts in some counties - based on the state’s grades - were readily mentioned. In other counties participants were concerned that their poorly perceived school districts negatively affect business recruitment efforts. Participants in Putnam County suggested that progress is being made, and a recent grant from the U.S. Department of Education for $7.3 million will provide additional support to support high performing teachers. Duval County also received $9.5 million to implement a similar program. District Ratings Based on Florida Comprehensive Assessment Test Scores COUNTY  # of Schools

BAKER 11

CLAY 46

DUVAL 188

FLAGLER 20

NASSAU 23

PUTNAM 26

ST. JOHNS 50

2009-2010

2008-2009

2007-2008

Source: Florida Department of Education – School Grades District: ST JOHNS, BAKER, CLAY, NASSAU, FLAGLER, PUTNAM, DUVAL, Years: 20092010, 2008-2009, 2007-2008

17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

To prepare students for the challenges of tomorrow’s world work, the school systems in Northeast Florida have not tracked for vocational education or college preparatory work in decades. All students participate in curriculums that prepare them for work or postsecondary success. The prevailing idea is that colleges and employers are looking for the same set of skills. Once a student graduates from high school he or she should be worthy of investment by either academia or the business world according to an education speaker. To make high school education relevant to young people and prepare, the region’s career academies provide job relevant education that may provide students with an industry relevant certification so that they can go to work after high school as well as an academic direction should those students continue their education in the field of study. The academies have been credited with supporting high academic outcomes in St. Johns County where the career academies have ties to both postsecondary institutions and local industries, including Stellar, Northrop Grumman, Flagler Hospital, and Embry–Riddle Aeronautical University. The intermingling of work and college preparation addresses several regional realities. At least one-half of the region’s high school graduates will go directly to work. Average college attainment regionally is low compared to other communities at 21 percent. Most people in the United States do not attend college; the national average is 30 percent. Secondary education that exposes students to work and the educational path needed to move along in a career can be beneficial. Recession Recovery and Beyond – Study Report 3.11.2011

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Career academies…provide training in high school. Some students must work…Opportunity cost of attending college vs. work. For some attending college immediately after high school is not the right choice, but still need skills to get a job. Only 30 percent of the U.S. public has a college degree, everyone will not attend college, but everyone needs skills. Future jobs will require postsecondary training. While graduation rates are improving and grades based on the FCAT indicate that the school districts in the region are doing well, there is a disconnect when it comes to the college readiness of students in the region. This disconnect is indicative of workforce readiness as well, since high school curricula no longer prepares students for work or college, but both simultaneously. Common placement tests results vary widely depending on the district and the high school from which students graduate.  In 2009, 21 percent of the 1,002 St. Johns County graduates taking the common placement tests in math, reading, and writing required remediation, 78.9 percent did not.  During the same year 74 percent of the 90 William Raines High School graduates who took the common placement tests required remediation – the highest in the region, while 1.3 percent of the Staton College Preparatory School’s 228 graduate required the same – the lowest in the region. There is also a correlation between the higher education institution graduates attend and the likelihood of needing remediation. Graduates attending a state university are less likely to need remediation than their peers attending a community or state college. This may be a reflection of the fact that Florida’s state colleges are open enrollment institutions, while the state universities have more stringent entrance requirements. I n 2009, 49 percent of the students graduating from a high school in Northeast Florida and attending Florida State College at Jacksonville (FSCJ) required remediation as did 50 percent of the region's students attending St. Johns River Community College (SJRSC). Those numbers have not varied much since 2007. Over the same period, less than 5 percent of the region's graduates attending the University of North Florida required remediation. Duval County graduates made-up the greatest proportion of FSCJ and UNF students, while Clay County graduates made up the greatest proportion of SJRSC students. From 2007 to 2009, on average, 35 percent of high school graduates in Northeast Florida attending a state college or university required remediation in math, reading, or writing. Northeast Florida High School Graduates Performance on Common Placement Tests Students scoring at or above the cutoff do not require remediation 2009

Counties 

Baker

Clay

Duval

Flagler

Nassau

Putnam

# Tested in math, reading, and writing

102

1,112

3,094

392

337

129

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St. Johns 1,002

Northeast Florida 6,168

% Scoring at or 62.7% 68.1% 60.1% 70.4% 57.9% 55% 78.9% 64.7% above cutoff score in all three subjects 2008 # Tested in math, 102 1,148 3,072 335 320 146 990 6,113 reading, and writing % Scoring at or 67.6% 65.9% 61.1% 66.9% 63.4% 54.8% 77.6% 65.3% above cutoff score in all three subjects 2007 # Tested in math, 105 1,139 3,122 335 334 220 979 6,234 reading, and writing % Scoring at or 62.9% 67.4% 61.9% 64.8% 57.8% 53.6% 76% 63.5% above cutoff score in all three subjects Source: Florida Department of Education, Performance on Common Placement Tests Note: These reports include performance information for students who graduated from a public high school in Florida and attended a public college or university in Florida during the academic year immediately following high school graduation. Students who did not go to college or who attended private or out-of-state colleges are not included in these reports. The CPT, SAT-I, and ACT are the assessments used to place students in English and Math courses at colleges and universities in Florida.

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In addition to the two state colleges and public university mentioned previously, Northeast Florida also has two private colleges, one private law school, several public and private college/university satellite campuses, a wide range of technical schools, and various private proprietary institutions. The graduates from these institutions, when they remain local, contribute to building a stronger regional workforce by increasing the number of degreed residents. Retaining this talented workforce is often a function of the community’s quality of life as well as the availability of high paying jobs. According to Next Generation Consulting, ‘the key is to identify and capitalize on the community’s unique strengths in efforts to attract and retain the next generation workforce.’ In its 2009-10 list of Next Cities with more than 500,000 people, Jacksonville ranked 14 out of 20 cities. Other Florida cities making the list were Gainesville (#10 of 20 among cities with a population between 100,000 - 200,000) and Orlando (#20 of 20 among cities with a population of 200,000 to 500,000). Higher Education Academic Degrees Awarded Duval County Institutions Only Year

Associates

Bachelors

Graduate

Total

2009-10

4,070

4,106

1,062

9,238

2008-09

3,211

3,847

1,001

8,059

2007-08

3,239

3,674

934

7,847

2006-07

3,031

3,548

1,088

7,667

2005-06

2,860

3,102

943

6,905

Source: Quality of Life Progress Report for Jacksonville and Northeast Florida Note: Includes data from Edward Waters College, Florida State College at Jacksonville, Jacksonville University, University of North Florida, and the Florida Coastal School of Law

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Higher Education Institutions in Northeast Florida by Student Enrollment Jacksonville Business Journal 2009-2010 Book of Lists Recession Recovery and Beyond – Study Report 3.11.2011

1. 2. 3. 4. 5. 6. 7.

Florida State College at Jacksonville 13. Keiser University University of North Florida 14. ITT Technical Institute St. Johns River State College 15. University of St. Augustine for Health University of Phoenix Sciences Jacksonville University 16. Jones College Flagler College 17. Trinity Baptist College Webster University Graduate School North 18. University of Florida College of Pharmacy – Florida Jacksonville Campus 8. Florida Coastal School of Law 19. Troy University 9. Nova Southeastern University 20. Logos Christian College and Graduate School 10. First Coast Technical College 21. Southern Illinois University Carbondale 11. Columbia College 22. DeVry University 12. St. Leo University Note: Though not listed on the JBJ list, Florida Gateway College in Columbia County and Daytona State College in Volusia County also serve Northeast Florida residents.

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How we do business regulation, taxes and incentives On more than one occasion, the study committee heard resource speakers state that it is difficult to do business in the State of Florida and the Northeast Florida region. “Rather than specific regulations being at fault the committee was told that failed processes and/or the absence of processes for decision making are at fault.” Too often, businesses are not able to get their doors opened quickly due to an anti-business regulatory attitude. These statements, made with regard to what happens in Tallahassee, is important at the regional level because the difficulty of doing business in Florida has a “trickle down effect” that negatively impacts local economic development efforts. At the same time, the regulatory environment in the state, as measured by outside interests, produce mixed results. In several recent studies, Florida fares poorly or in the middle of the pack with regard to business climate, which includes regulation.  U.S. Economic Freedom Index (2008), Pacific Research Institute: All 50 states are ranked in five areas: fiscal policy, regulatory policy, judicial climate toward business, the size of government, and welfare spending. Florida ranks #45 in regulatory category and #28 overall.  Freedom in the 50 States: An Index of Personal and Economic Freedom (2009), Mercatus Center at George Mason University: The categories measured were fiscal policy, regulatory policy, personal freedom and economic freedom. In the regulatory category, Florida ranked #19 and #22 overall.  The Best States for Business (2010), Forbes magazine: The study examined business costs, labor policy, regulatory environment, economic climate, growth prospects and quality of life. In the regulatory ranking, Florida ranked #22 and #26 overall. Top 10 States for Business Forbes Magazine 2010

Overall rank

State

1 2 3

Utah Virginia North Carolina Colorado Washington

4 5

2 Labor supply rank

3 Regulatory environment rank

8 24 3

5 3 15

6 2 3

1 4 18

33 28

1 2

15 5

6 11

Business costs rank

Recession Recovery and Beyond – Study Report 3.11.2011

Economic climate rank

5 Growth prospects rank

Quality of life rank

Population

Gross state product

20 14 9

18 6 32

2,811,600 7,927,400 9,460,300

$87B $329B $322B

6 4

9 29

5,059,500 6,705,100

$201B $265B

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

6 Oregon 18 4 34 14 12 21 3,857,500 $144B 7 Texas 26 21 17 2 1 38 250,107,00 $912B 8 Georgia 31 7 1 30 7 35 9,919,300 $324B 9 Nebraska 6 23 28 12 40 14 1,800,900 $66B 10 Kansas 23 18 11 13 30 27 2,829,800 $97B 26 Florida 37 14 22 36 3 39 18,589,000 $588B Source: Forbes Magazine, 2010 Best States for Business - Notes: 1) Index based on cost of labor, energy and taxes. 2) Measures educational attainment, net migration and projected population growth. 3) Measures regulatory and tort climate, incentives, government integrity, transportation and bond ratings. 4) Reflects job, income and gross state product growth as well as unemployment and presence of big companies. 5) Reflects projected job, income and gross state product growth as well as business openings/closings and venture capital investments. 6) Index of schools, health, crime, cost of living and poverty rates

The State of Florida is known for its low taxes, which is a benefit when businesses consider the Region. There is no personal income tax and the corporate tax rate (5.5 percent) is among the lowest in the nation. Nevada, Washington, and Wyoming are the only states in the nation without a corporate income tax. Florida may soon join those states as Governor Rick Scott campaigned on a promise to eliminate this tax altogether as an enticement for businesses to come to Florida. In some states, corporate income taxes are paid on a sliding scale relative to income. Depending on the business structure, types of goods or services sold, and the purpose for doing business, Florida’s businesses in addition to corporate taxes, may also have to pay sales and use taxes and unemployment taxes among others listed by the Florida Department of Revenue. List of Taxes Paid by Florida Businesses  Communications services tax  Corporate income tax  Discretionary sales surtax  Documentary stamp tax  Fuels tax  Gross receipts tax on utility services  Insurance premium taxes and fees  Motor vehicle warranty fee  Pollutants tax  Solid Waste taxes and fees  Unemployment taxes Source: The Florida Department of Revenue

Incentives are an investment that communities make to attract businesses. While these tax incentives, refunds, grants, and credits are not primary businesses attractors, they are a differentiating factor when the business case is relatively equal among communities. Consequently, incentives come into play at the end of the site selection process, rather than the beginning. In Northeast Florida the incentives offered to businesses are local, based on the funds available within county and/or municipal economic development budgets. The State of Florida also offers incentives to businesses that meet certain criteria, especially with regard to targeted industries, workforce training, and hiring specific classifications of workers (i.e. high wage, low wage in distressed communities). Generally speaking, Florida communities often fall short when it comes to offering incentives when compared to Texas, North Carolina, and other states able to offer generous cash grants and financial support for capital improvements. INCENTIVE PROGRAMS MANAGED AT THE STATE LEVEL  Economic Development Transportation Fund

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

Qualified Target Industry Tax Refund (QTI), Florida Statutes

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 36

       

Qualified Defense Contractor Tax Refund (QDC) Brownfield Bonus Program Quick Response Training (QRT) Sales Tax Exemptions (as-of-right) Tax Exemptions on Inventories and Personal Property (as-of-right) No State Corporate Franchise Fee/Tax (asof-right No State or Local Personal Income Tax / No State Property Tax (as-of-right Enterprise Zone Program (Applicable to certain portions of Duval and Putnam Counties only)

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

SPECIAL STATE INCENTIVE PROGRAMS AVAILABLE ONLY FOR HIGH ECONOMIC IMPACT PROJECTS  High Impact Performance Incentive (HIPI Source: Cornerstone Regional Development Partnership

  

Capital Investment Tax Credit CITC) Florida Quick Action Closing Fund (QACF) Florida Clean & Renewable Energy Technology Sector Programs

INCENTIVE PROGRAMS MANAGED AT THE LOCAL LEVEL  Tax Increment Economic Development Grant  Targeted Economic Development Area Special Funds (Duval County only)  Development Site Land Cost Write Down  Free Trade Zone (FTZ)  Industrial Development Revenue Bonds (IDB’s)  Recovery Zone Facility Bonds  Recruiting, Screening, Placement Assistance (as-of-right)

37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Creating New Businesses And Jobs Locally Local job creation requires the recognition and support of businesses at every level from startup (Stage 0-1) to mature businesses (Stage 4). Start-up companies may stay forever small or become the next great international business. Growing both strong and entrepreneurial businesses also serve as a way to attract new business into the regional community. Businesses want to be domiciled in communities with successful peer companies. A community of successful entrepreneurs attracts those with the same goals and financiers as well. Fast growing entrepreneurial firms are well positioned to hire new workers by virtue of being in an expansion mode. On the other hand, the single person consultancies, small service agencies, “mom and pop” stores, and local restaurants also have a role in reducing unemployment, creating jobs, and hiring workers. The power of small businesses was illustrated by a resource speaker example – “if every small business in the region hired one employee the unemployment rate would be zero.” Northeast Florida also has multiple options to leverage existing business assets for future job creation. Many of those opportunities come with a price, specifically, an investment in visioning, planning, and money is required for these projects to come to fruition. However, the return on investment may yield thousands of jobs. Small business and entrepreneurship development and support at all levels Northeast Florida is home to nearly 38,000 employers according to data provided by the University of North Florida’s Small Business Development Center1. Of those businesses, 98 percent employ fewer than 100 people and 59 percent employ less than 5 people. The largest group of workers in the region is employed in Stage 1 businesses that employ 2-9 employees. 1

The number of businesses listed here is based on U. S. Census information that excludes data on self-employed individuals, employees of private households, railroad employees, agricultural production employees, and most government employees. Recession Recovery and Beyond – Study Report 3.11.2011

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Because of the higher proportion of small businesses to large ones (>100 employees) it is likely that a significant number of the new jobs created in the region will come from these smaller firms. With jobs in short supply, many people have elected to start businesses. Many of these small businesses owners will be "lifestyle entrepreneurs" or self-employed people who have found a way to replace their income. These start-up businesses and Stage 1 firms require a broad support platform, including technical assistance, financing, training, and networking. Some of these firms will remain small businesses and others may grow to employ hundreds of people. No matter the case, preventing these businesses from failing is a prime consideration. Such firms are as important to a community’s economic diversity as fast growing, innovative gazelle firms that will become tomorrow’s big tech firm or dynamic new food service chain. There are at least 39 organizations in Northeast Florida that support the success of small businesses throughout Northeast Florida. These include chambers of commerce, state colleges, technical assistance programs, and networking groups that help business owners operate more effectively. Some of the organizations listed in the appendix have come together to form the Small Business Assistance Providers group, which exists to share information, exchange ideas regarding small business issues, coordinate assistance activities, and advocate on behalf of their small business members and clients. Small business development is not the primary focus of any economic development organization in the region. The degree of focus on small business development as a job creator also varies from county to county. The Jacksonville Economic Development Commission had the most extensive list of resources and programs followed by Enterprise Flagler and the Nassau County Economic Development Board. The region’s extensive chambers of commerce network provides extensive support to their small business members through networking, education programs, and other member perks. A thriving community of fast growing firms Entrepreneurial firms are defined as those small Definition: Venture capital is a of private equity provided to businesses that are fast growing and innovative. These type early-stage, high-potential, growth second stage or gazelle firms create jobs because they companies in the interest of generating a return through an IPO are in a growth mode. The Kauffman Foundation (initial public offering) or the study, High-Growth Firms and the Future of the sale of the company. American Economy, states that fast-growing gazelles (3 to 5 years old) make up less than 1 percent of all businesses, yet account for approximately 10 percent of net new jobs in any given year. Of the 157,000 firms in the seven-county region, 4.7 percent are at this growth stage according to the Edward Lowe Foundation. Attracting and growing more of these businesses in Northeast Florida requires at least two considerations, more venture capital firms and an environment that encourages entrepreneurship. Creating this environment starts with building partnerships between the region’s universities, venture capital, and private enterprise. At present there is one venture Recession Recovery and Beyond – Study Report 3.11.2011

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capital firm in Northeast Florida – Springboard Capital, however the region has several higher education institutions and due to existing geo-economic relationships the region has expanded reach beyond the seven counties. Universities in this extended region include the University of Florida, Florida State University, Florida A&M University, and the University of Central Florida. Like-attracts-like, creating a strong entrepreneurial culture will attract entrepreneurs and capital. As discussed earlier, formal partnerships between business, government, and education are a key component for creating a more competitive region. With this theme in mind, along with the reality of Northeast Florida’s de facto super-region, which extends “north to Georgia, south to Orlando, and west to Tallahassee”, a precedent exists for formalizing partnerships with other urban economic centers, including but not limited to Tallahassee, Gainesville, and Orlando, tapping into their higher education systems and venture capital networks. Growing existing businesses and industries At least three job growth focus areas were presented over the course of this study – improved logistics capabilities enhanced by the expansion of JAXPORT, a health and biosciences cluster anchored by a medical school, and continued support of the military in Northeast Florida. Maximizing the potential in two of these areas requires significant investment. To some degree regional leaders have limited direct influence over what happens next regarding the region’s military presence and the expansion of JAXPORT. Decisions about military spending for expansion projects depend on operational needs within the United States Department of Defense. Though the region has enviable medical/health resources and institutions, the consolidation of the various component pieces anchored by a medical school or university research facility are improbable in the short term. The expansion of JAXPORT is dependent on state and federal agency approvals to dredge the Jacksonville channel, plus funding in excess of $1 billion. The port’s expansion is considered the most critical of these options due to the number of jobs that could be created. At every partner county site visit the expansion of JAXPORT was said to be integral to future economic development. Without dredging to become Post-Panamax ready and other port improvements, JAXPORT will remain a second tier port. INDUSTRY/PROJECT

INVESTMENT NEEDED

EXISTING ASSETS

PROJECTED JOBS CREATED

ECONOMIC IMPACT

HEALTH AND BIOSCIENCES** MILITARY

$50 million

21 hospitals

30,000

Maintain and cultivate relationships with military leadership locally and nationally. $1.1 billion (JAXPORT Expansion)

3 military bases in Northeast Florida and 1 in Kings Bay

$7.6 billion annually ~$4.5 billion annually

LOGISTICS

34 35

~2,000* (This growth in jobs will occur over approximately 14 years. Jobs at Mayport are expected to decrease from 2012-2022)

2 deepwater ports, 75,000 $3 - $6 billion 3 interstates, plus annually international and regional airports Sources: Speaker presentations. *Military personnel only. **College of Medicine combined with a life sciences cluster.

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Job creation opportunities are inherent in other existing Northeast Florida’s industries as well, namely tourism, financial services, and manufacturing. To date less discussion has taken place on how to best develop these industries. In a diverse seven-county region, where the target industries are adjusted to fit the community, it follows that the three focus areas above may need to be expanded. A salient point brought up by the study committee was the need for balance in job creation. A focus on one industry over another, could lead to a community of logistics workers and very little else, for example. Access to capital Small and large business access to capital is limited due to the fallout from the national recession. Financial institutions are necessarily focused on their institutional survival in a time when bank failures are not unheard of in communities across the nation. Regulatory changes and greater prudence in lending practices mean that businesses will be able to qualify for loans unless they have strong have a strong cash position and are highly credit worthy. Traditionally, small businesses start-ups have also relied on the owner’s personal financial reserves and the generosity of family and friends to invest in new ventures, but with the high unemployment and depletion of personal savings, this is less likely today. Very small firms, which often rely on the credit worthiness of their owners, have few avenues. When Jacksonville was a banking and financial center in the 1980’s and 1990’s and community banks where better situated before 2007, small business owners were more likely to work with a local banker who had the leeway to consider factors beyond the balance sheet. Today, small business owners options are somewhat limited if bank financing is the goal. However, the Small Business Administration 7 (a) loan program is an option and many of the region’s banks are actively engaged in lending through this vehicle. Borrowing against assets and collateral is another option for businesses as well. In addition to the SBA, the region’s small business organizations also include agencies that can assist business owners who are seeking financial assistance. The financial crisis has provided business owners with an opportunity to become more effective and efficient by examining their processes and capacities, according to one speaker. The resulting savings could very well improve the business’ access to cash, which can be used for investment or collateral purposes. Retaining Businesses And Jobs Approximately 100,000 firms in Northeast Florida employ more than two persons according to the Edward Lowe Foundation. Efforts to keep these firms local and support to help them thrive are beneficial to the region. As noted earlier, there are many organizations that support business development in the region. Many of these organizations also work to retain local businesses as well, including Cornerstone’s Business Development Committee. Retention efforts are intrinsic to some of the state’s incentive programs, particularly those geared toward target industries and workforce training. The region’s economic development organizations have limited capacity – funding and staff – to engage in wide ranging retention efforts.

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Per the University of Minnesota, retention efforts employ both short and long term tactics to retain businesses. There are some indications that Northeast Florida’s regional communities are embracing the tactics mentioned, including consideration for buying local and creating stronger, more competitive, businesses. Short Term…  Demonstrate community support for local firms  Help resolve immediate business concerns

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Long Term…  Build community capacity to sustain business growth and development through creation of broad-based coalitions  Increase the competitiveness of local firms  Establish and implement a strategic plan for economic development

Recognition and utilization of local businesses Campaigns to support local businesses have been discussed in Baker, St. Johns, and Duval Counties via the chambers of commerce. The only regional effort to date is being undertaken by the Jacksonville Regional Chamber of Commerce that encourages chamber members to buy from on another. Such efforts are thought to bring attention to and help those businesses succeed. According to the Baker County Chamber, “When you support local businesses, you are also supporting your local government, and the money you spend will most likely be used by that business again in our local economy and it just might find its way back to you and your business.” The Amelia Island-Fernandina Beach-Yulee Chambers of Commerce also has a local buying initiative, the Buy Nassau campaign has been in effect since 2009. In 2009, the State of Florida launched its Backyard Economics initiative to encourage spending within the state. The effort was spawned by a Florida Tax Watch report, which asserted that every $100,000 spent via the internet with companies outside the state costs a Floridian his or her job. The program was rolled out through various economic development organizations throughout the state, but is now defunct. Buy Local Jacksonville (www.buylocaljacksonville.com), operating independently of any business or government group lists the benefits of buying from local locally owned and operated companies.  Buying from locally owned and operated businesses keeps local money in the local economy.  Buying local helps to create and sustain a more vibrant local economy.  Locally owned businesses are more likely to utilize local banks.  Locally owned businesses are more likely to utilize locally owned services.  Locally owned businesses help foster uniqueness and economic diversity in neighborhoods where they are located.  Locally owned businesses are more likely to actively participate in local issues involving schools, taxes, development, roads, zoning, and a myriad of other local issues.

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

A thriving, locally owned and operated business environment prevents blight and brings character to the City of Jacksonville and its surrounding areas.

Training people for the jobs that are available Though the unemployment rate is high in Northeast Florida and many people have been out of work for an extended period of time, there are job openings in the region. However, the jobs available do not always match the skills of those seeking employment. Jobs in high demand fields often require technical expertise, a postsecondary credential or a college degree. Addressing the skills gap in Northeast Florida is important for attracting businesses, but equally so for retaining business where losing an employer because workers do not have the needed skills can be damaging for the economy and the perception of the region. WorkSource, the region’s publically funded workforce development agency, offers job seekers several tools to improve their skills and find work. The region’s community colleges and various non-profit organizations and forprofit institutions also offer job training and workforce readiness skills training to people who are unemployed and underemployed. WorkSource received federal stimulus funds and has provided training scholarships for over 2,200 displace workers in the region. The training resulted in degrees or certifications in high demand occupations. Identification of and support for second stage, growth companies Support for the region’s second stage and gazelle firms is important for creating and retaining jobs and, because they have a history in the community, they are more likely to remain local given the necessary support. Indentifying these companies and providing needed technical assistance and resources is important to the region’s economic viability. Economic Gardening, which began in Littleton Colorado, is the phrase used to describe the process of focusing resources on growing and retaining local high-growth firms. The program helped entrepreneurs double the job base in Littleton from 15,000 to 30,000 and triple the retail sales tax from $6 million to $21 million over a period of 20 years. At the same time, the population only grew 23 percent over those two decades. Littleton’s project began with the idea that "economic gardening" was a better approach than "economic hunting." This means growing jobs locally through entrepreneurial activity, rather than recruiting those jobs. Recruiting typically represents less than 5 percent of the jobs created in most local economies The three basic elements of Economic Gardening are: 1. Providing critical information needed by businesses to survive and thrive. Recession Recovery and Beyond – Study Report 3.11.2011

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2. Developing and cultivating an infrastructure that goes beyond basic physical infrastructure to include quality of life, a culture that embraces growth and change, and access to intellectual resources, including qualified and talented employees. 3. Developing connections between businesses and the people and organizations that can help take them to the next level — business associations, universities, roundtable groups, service providers and more. Nationally, it is estimated that 40 to 80 percent of all new jobs are created by small businesses, particularly second stage companies that are defined as firms having revenues between $1 million and $50 million. These are firms that have grown past the startup stage but have not grown to maturity. These growing, but relatively small businesses are considered entrepreneurial because of their high growth potential. In 2008, according to the Edward Lowe Foundation’s online database (youreconomy.org) 4.73 percent of businesses (7,463 firms) in Northeast Florida were second stage businesses, which employed 28 percent of the region’s workers. According to IMPACT the Jacksonville Regional Chamber of Commerce’s second stage, economic gardening initiative, the investment required to create a new jobs at existing companies is less than the investment required to recruit companies from other areas. The list of organizations that provide assistance to small businesses listed in the appendix also serve the needs of second stage companies. Jobs and Businesses in Northeast Florida Based on DUNS Reporting - 2008 Counties 

BAKER

CLAY

DUVAL

FLAGLER

NASSAU

PUTNAM

ST JOHNS

TOTALS

ESTABLISHMENTS 2008 NONCOMMERCIAL

1,775

16,405

94,628

10,272

7,219

6,221

21,266

157,786

8.7%

4.7%

5.3%

3.5%

6.6%

8.0%

4.7%

5.93%

NONRESIDENT

2.0%

3.0%

3.9%

1.4%

2.3%

2.6%

2.2%

2.49%

RESIDENT

89.3%

92.3%

90.8%

95.0%

91.0%

89.5%

93.1%

91.57%

SELF EMPLOYED (1) STAGE 1 (2-9)

37.9%

36.1%

29.6%

35.9%

35.8%

35.4%

35.0%

35.1%

58.1%

58.9%

63.5%

60.3%

59.6%

59.1%

60.1%

59.94%

STAGE 2 (10-99)

3.7%

4.8%

6.5%

3.7%

4.4%

5.3%

4.7%

4.73%

STAGE 3 (100499) STAGE 4 (500+)

0.3%

0.2%

0.4%

0.1%

0.2%

0.23%

0.0%

0.01%

0.04%

0.0%

0.03%

0.0%

0.03%

0.02%

Counties 

BAKER

CLAY

DUVAL

FLAGLER

NASSAU

PUTNAM

ST JOHNS

TOTALS

JOBS

7,611

74,917

38,063

34,016

27,723

94,211

888,851

NONCOMMERCIAL

23.8%

11.8%

612,31 0 12.3%

10.8%

11.0%

18.8%

13.9%

14.63%

NONRESIDENT

8.9%

19.6%

19.9%

11.7%

20.8%

12.8%

9.1%

14.69%

RESIDENT

67.4%

68.5%

67.8%

77.6%

68.2%

68.4%

77.0%

70.7%

SELF EMPLOYED (1) STAGE 1 (2-9)

11.7%

10.6%

6.1%

11.9%

10.1%

10.4%

9.5%

10.04%

49.5%

47.9%

37.8%

53.3%

46.9%

49.2%

45.7%

47.19%

STAGE 2 (10-99)

23.7%

31.3%

30.9%

26.2%

26.5%

32.7%

27.9%

28.46%

2008

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STAGE 3 (100499) STAGE 4 (500+)

15.1%

8.5%

13.6%

8.7%

7.0%

7.7%

11.8%

10.34%

0.0%

1.8%

11.6%

0.0%

9.5%

0.0%

5.0%

3.99%

1 2 3

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Source: The Edward Lowe Foundation. www.youreconomy.org

Key terms for the chart above Noncommercial



Nonresident



Resident



Self (1 employee) Stage 1 (2-9 employees)



Stage 2 (10-99 employees)



Stage 3 (100-499 employees)



Stage 4 (500+ employees)



Educational institutions, post offices, government agencies and other nonprofit organizations. Businesses that are located in the area but headquartered in a different state. The reason for this distinction: residents have more influence on job creation than establishments headquartered outside of the state. Either stand-alone businesses in the area or businesses with headquarters in the same state. This includes small-scale business activity that can be conducted in homes (cottage establishments) as well as sole proprietorships. This includes partnerships, lifestyle businesses and startups. This stage is focused on defining a market, developing a product or service, obtaining capital and finding customers. At this phase, a company typically has a proven product, and survival is no longer a daily concern. Companies begin to develop infrastructure and standardize operational systems. Leaders delegate more and wear fewer hats. Expansion is a hallmark at this stage as a company broadens its geographic reach, adds new products and pursues new markets. Stage 3 companies introduce formal processes and procedures, and the founder is less involved in daily operations and more concerned with managing culture and change. At this level of maturity, an organization dominates its industry and is focused on maintaining and defending its market position. Key objectives are controlling expenses, productivity, global penetration, and managing market niches.

CONCLUSIONS Develop value judgments (conclusions) based on the agreed upon findings. Meeting dates: 4.6.2011 and 4.13.2011

RECOMMENDATIONS Develop a set of recommendations, guided by the findings and conclusions that will create community change once implemented. Meeting dates: 4.20.2011, 4.27.2011, and 5.4.2011

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APPENDIX Small Business Assistance Organizations in Northeast Florida Baker County Chamber of Commerce 29  National Association of Minority Contractors, 30 North Florida Chapter Beaver Street Enterprise Center 31  Procurement Technical Assistance Center (PTAC BETA-1, Business & Emerging Technology Accelerator 32  Puerto Rico Chamber of Commerce of Northeast 33 Florida  Better Business Bureau of Northeast Florida 34  SBDC at Daytona State College  Center for Business Excellence 35  SCORE  Essential Capital (Formerly JEDCO) 36  Small Business Resource Network  European American Business Club 37  Small Business Workshops at the Small Business  First Coast African-American Chamber of 38 Development Center at UNF Commerce 39  Small Business Development Center (SBDC) at  First Coast Hispanic Chamber of Commerce 40 University of North Florida (UNF)  Flagler Small Business Incubator Program 41  U.S. Small Business Administration  Florida Business Development Corporation 42  UNF Small Business Blog  Florida Export Directory 43  Women Business Owners of North Florida  Florida First Capital Finance Corporation (FFCFC) 44  WorkSource  Florida State College Small and Emerging 45  Clay County Chamber of Commerce Business Training & Development Program Small Business Workshops at the Chamber's Small 46  St. Johns County Chamber of Commerce Business Center 47  Flagler County Chamber of Commerce  Jacksonville Asian American Alliance 48  Enterprise Flagler  Jacksonville Entrepreneurship Center 49  Flagler County Chamber of Commerce  Jacksonville Regional Chamber of Commerce 50  Greater Nassau County Chamber of Commerce Small Business Center 51  Amelia - Fernandina Beach - Yulee Chamber of  Jacksonville Women's Business Center 52 Commerce  Indo-US Chamber 53  Nassau County Economic Development Board Note: This list is not all inclusive. Other small business resources may be available in the community in addition to those listed above.   

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