#Orlando dry cleaners, day cares, and real estate offices are among businesses that would have benefited from a $4.8 million economic boost if Sanford Burnham had met job goals, according to a new analysis.
Lured to Orlando a decade ago with more than $350 million in incentives, the California-based medical-research institute fell short of its goal to create 303 relatively high-paying jobs. The institute’s shortfall of 64 relatively high-paying jobs takes a multi-million-dollar toll on the local economy annually, according to regional economic analysis by economist Sean Snaith, of the University of Central Florida.
Much of that is money that would have flowed through businesses in the burgeoning #Lake Nona area.
“The impact here is on the household sector,” said Snaith, who sees incentives as worthwhile in some cases. “The employees who weren’t hired don’t spend on consumer goods, retail, restaurants, day care, doctors, transportation and mortgages.”
The state has demanded $77 million — half of its $150 million contribution to the incentives package — back from Sanford Burnham. But institute officials have said they owe nothing because their agreement only required attempting to create 303 jobs.
Orlando businesses aren’t alone in missing out on new customers, orders and commerce lost when incentivized companies fail to deliver on promised jobs. Eight research companies won $444 million in state innovation incentives from 2006-2008 — three times more than incentives awarded to 440 companies with Florida operations. The eight heavyweights of incentives are in Palm Beach, St. Lucie, Miami-Dade, Pinellas and Hillsborough counties. Only one met or exceeded job goals, according to data from the state Department of Economic Opportunity.
“They all fail and it’s at a cost to the taxpayers,” said new House Speaker Richard Corcoran, who has vowed his chamber will fund no incentives. “It’s the taxpayers’ money and it could easily be going to something that would have a terrific effect on our state, such as world-class education.”
State officials say Gov. Rick Scott has reformed the incentive process by requiring companies to meet job goals and other measures before they get any payments.
Even without Sanford Burnham hitting full stride, Lake Nona is among Orlando’s fastest-selling developments. Where cow pastures had been just a decade ago, Lake Nona now claims a VA Hospital, the University of Central Florida Medical Center, the University of Florida Research Center and Nemours Children’s Hospital. Most had been discussed for various Central Florida locations before Sanford Burnham located in Lake Nona.
In the corner offices of a stone-trimmed shopping center near the entrance to Lake Nona, Keller Williams broker Allyn Maycumber speaks with a walk-in customer about Lake Nona’s vibrance and strong schools. But the broker is so busy he cuts the conversation short to leave for a client meeting.
Maycumber said the unfilled jobs at Sanford Burnham are still important because Lake Nona home prices, combined with Orlando taxes, community development fees and homeowner association fees put purchases out of reach for many buyers. Higher-paying jobs from Sanford Burnham would have brought in more buyers who could afford to purchase there, she added.
“I think it’s important to have that anchor [Sanford Burnham] because the houses are so expensive,” said Maycumber. “Prices are steadily going up to where it’s almost out-priced the first-time buyers. You have young people who have been priced out of the market here.”
In June, Sanford Burnham reported that salaries for its Orlando operations averaged about $64,000. Even though that surpassed Metro Orlando’s most recent median of salary of $51,077, the institute’s average paycheck is still not enough to afford a typical house in the Lake Nona postal zone, mortgage calculators show. Average October sale prices there averaged $375,000, far exceeding the Orange County average of $264,000 for that month, according to the Orlando Regional Realtor Association.
Housing would have been one of the biggest local beneficiaries if Sanford Burnham had succeeded with its jobs mission, said Owen Beitsch, senior director of economic and real estate advisory services for Community Solutions Group. But many types of #business also would have benefited, he said.
“When money has been misallocated, it leads to benefits not realized,” said Beitsch, who also teaches economics at UCF. The “opportunity cost” of jobs not realized “begs the question of how closely we make these evaluations initially, he said.
Situated on a Lake Nona street named for Nobel Laureate Frederick Sanger, Sanford Burnham is credited with forming the Translational Research Institute with Florida Hospital. It also helped cultivate a spin-off company, micro-gRx, which develops a “lab on a chip” for scientists to study live human cells in space.
In response to the state’s demands, the institute’s attorney wrote last week that Sanford Burnham had worked “very, very hard over the years” to live up to its agreement with Florida. And even though the institute worked for months to transfer its Orlando operations to the University of Florida, the letter stated it does not intend to cease operations in Florida in the coming months.
Snaith used modeling used by other universities and government agencies, with Sanford Burnham salaries and job numbers. He said incentives sometimes get compared to the parable of a farmer scattering seed and only some of it germinating while the rest goes to waste.
“I don’t think this is a seed that got trampled,” he said. “I just don’t think it bore as much harvest as expected.’