THE YEAR IN BUSINESS
Hertz Corp. will likely be etched in the annals of history as the hero of Southwest Florida’s business environment in 2013. The Fortune 500 company’s door-opening decision to relocate its New Jersey headquarters to Estero overshadowed any other business transaction in the threecounty region, resonating louder than even the sound of home construction to stagnant gated communities and longempty lots.
Ironically, it was the uptick in the housing market, an increase in new-home starts and a just-received text alert about a possible Federal Reserve move to increase mortgage rates that excited Florida Gulf Coast University’s Gary Jackson, the most last week.
“It’s been a tough year with slow and gradual improvement,” says the assistant economics professor in the school’s Lutgert College of Business and the director of the Regional Economic Research Institute. “But at least there’s improvement and we’re finally seeing economic recovery. Housing construction is picking up and our business climate survey tells us businesses are starting to hire again. The fact the Federal Reserve, which has kept interest rates extremely low and long-term mortgages down, may pull back is a big sign the economy is now strong enough.”
Dr. Jackson and the majority of local executives responding to the institute’s quarterly business outlook survey are not only encouraged by the existing economic picture, 77 percent of them also predict improving conditions in 2014. Headlinegrabbing news like Hertz, expansions by existing businesses — even Major League Baseball — no doubt have fuel this increased enthusiasm.
Hertz’s new hometown headquarters
Lee County Commissioner Frank Mann called the Hertz Corp.’s move to Southwest Florida the “largest economic event in Lee County’s history” shortly after the commission approved a $4 million incentive package in May that sealed the deal. Hertz, which is operating at a temporary location until its Estero facility is completed in 2015, will bring as many as 700 jobs to Lee County during the next two years.
The estimated economic impact of the Fortune 500 company’s decision is staggering: the relocation is expected to generate $300 million annually to the Southwest Florida economy while the influx of New Jersey newcomers, their families and newly minted local Hertz employees will create another 1,000 jobs spanning retail to construction. Simply put, executives will create demand for new home construction and patronize local businesses. Hertz alone is spending about $62 million for its new building at U.S. 41 and Williams Road.
“Hertz is a great example of regional impact,” says Dr. Jackson. “Many employees will work in Lee County but live in Collier County. It impacts the overall labor pool in the whole region. A really important element here for us and our competitive advantage is the quality of life in Lee, Charlotte and Collier counties.” Hertz decision-makers agreed. CEO Mark Frissora has noted Florida had to be a good fit for the company and its employees.
Hertz started considering relocation after is acquisition in November 2012 of Oklahoma-based Dollar Thrifty and the need to streamline efficiency and costs. Tourism, big business in Florida with a record 89.3 million visitors in 2012 and an economic impact of more than $67 billion, also factored into the decision, meaning plenty of opportunity for long-term sustained growth for Hertz and the region.
A break from Obamacare
Local large employers rejoiced after implementation of a provision in the Affordable Care Act was delayed a year. The mandate requires companies with 50 or more employees to provide government approved health insurance or pay a new $2,000 federal penalty per fulltime employee who acquires federallysubsidized insurance, in essence a tax for failure to offer “acceptable insurance.”
Opponents claimed the Obamacare mandate, now delayed until 2015, would discourage business growth by creating disincentives for companies to expand beyond 50 employees and forcing them to use contractors or outsource work. Locally, the provision would affect more than 1,000 businesses, including 617 in Lee County and 375 in Collier. Figures were not readily available for Charlotte County.
The threat of the impending edict, however, has already caused some local downsizing. Several companies have replaced full-time employees with two part-timers to offset their future liability.
Upgrades for the Twins
Not to be outdone by their World Series co-spring breakers, the Minnesota Twins followed the Boston Red Sox’s lead in demanding better Grapefruit League accommodations in Fort Myers. Although not quite as steep as the $78 million price tag for JetBlue Park, the Twins’ spring training facilities at Hammond Stadium and the Lee County Sports Complex are undergoing a twophase $48.5 million project funded by bed taxes paid by hotel guests. Work began in October.
The Twins — and their fans — have made the annual spring pilgrimage to Fort Myers since 1991, injecting more than $47 million into Lee County’s economy each year. With the approval of the upgrades, the team has signed a 30-year lease to remain at the stadium, which also serves as the team’s center for year-round player development operations and is home to the club’s Florida State League franchise affiliate Fort Myers Miracle.
The project, planned for completion by the 2015 session, includes renovations to the minor league clubhouse, expanded seating capacity from 8,000 to 9,300, new parking facilities, playing and agility fields, a new retail store and improvements to concession areas, restrooms and premium seating options and a clubhouse expansion.
A new residential player development academy will create a year-round, multidiscipline training center for players and staff.
Naples-based Arthrex created 300 jobs this year, most of them at its new $25 million state-of-the-art manufacturing facility in eastern Collier County, where production lines started to hum in late summer. The company, which specializes in medical and surgical implements for orthopaedic surgery, makes more than 7,500 types of devices.
With an average salary of $60,000 and jobs ranging from entry level to senior engineers plus a four-year training program for first-class machinists, Arthrex is changing the demographic and economic profile of eastern Collier. The 190,000-square-foot includes 160,000 square feet of high-tech manufacturing equipment, two 8,000-square-foot clean rooms and second-floor offices.
Company officials have already hinted at plans for another 120,000-sqaurefoot building in Ave Maria but have declined releasing additional details as construction is still a year away.
The impact of impact fees
Reduce impact fees and they will come seems to be the mantra of local counties looking to grow development by slashing the one-time charge accessed to construction projects that create a strain on public infrastructure and services. During the height of Southwest Florida’s building boom, counties doubled and tripled their impact fees to offset the impact a growing population and commercial projects placed on local roadways, parks, libraries, police and fire departments.
Charlotte County commissioners have waived all non-transportation fees since 2010 and voted in June to decrease road fees 6.45 percent. A high-turnover sit-down restaurant built in 2009 would have paid $10,005 in across-the-board fees. Today, a similar project is assessed $5,446 for its impact on local roads. Single family home fees range from $1,726 in the county’s urban areas and Englewood fire district to $8,896 in more rural areas.
In March, Lee County voted to reduce fees 80 percent for two years in hopes of stimulating development. The new fees, effective until March 15, 2015, range from about $2,400 to $2,900 for a singlefamily home depending on fire district — down from $12,000.
Collier County, which assessed up to $25,000 in fees covering a dozen services, has also reduced impact fees.
Don’t bank on it
The Royal Palm Bank of Naples and First Community Bank of Southwest Florida, which collectively operated 10 branches, joined the region’s list of local bank failures. Royal Palm’s three locations were closed Saturday, July 20 by the Florida Office of Financial Regulation and reopened the following Monday as branches of First National Bank of the Gulf Coast.
The following month, the FDIC ordered the closure of First Community and is affiliated Community Bank of Cape Coral. St. Petersburg-based C1 Bank acquired and reopened First Community’s seven locations. ¦