CLEARWATER - The city of Clearwater could forgo more than $1 million in tax revenue over the next decade on improvements to General Electric Co.'s nearly 40-year-old manufacturing site.
City officials, though, say they're getting a good deal - an overhauled manufacturing plant in the aging Hercules Avenue industrial zone, more than 200 new jobs and, most importantly, a commitment by the global company to build its Center of Excellence here rather than at a factory in upstate New York that's shutting down.
In Pinellas County, where undeveloped land is scarce and many commercial buildings worn, cities are taking extra steps to ensure their best employers stay put when they start growing.
It can be a tough sell where only about 5 percent of the peninsula's commercial land remains empty and redevelopment costs can be high.
In the past two years, St. Petersburg, Clearwater and Largo each have passed a referendum to allow city officials to negotiate a significant tax break on improvements to new or existing properties, provided the company delivers high-paying jobs.
Companies pursuing the incentive include information technology giant Tech Data, which is adding to its offices near the St. Petersburg-Clearwater International Airport, and a $42 million new corporate headquarters for American Strategic Insurance in St. Petersburg's Gateway area.
"We recognized that we needed to remain competitive," said Teresa Brydon, economic development manager for the city of Largo, which adopted the incentive last year.
"You've got to create opportunities to get these places redeveloped. There's a cost associated with older structures."
With an impressive array of defense contractors and Fortune 500 corporations like Jabil Circuit, Pinellas remains the No. 2 county in Florida for manufacturing jobs.
State incentives for companies that create positions in targeted industries such as IT or medical technology have long played a role in attracting and retaining major employers across Florida.
Indianapolis-based lending company Stonegate Mortgage Co. announced this past week it would expand offices in Clearwater and add 139 jobs. The state and county has offered a tax refund up to $695,000, provided he company follows through with the jobs, expected to pay at least 115 percent of Florida's average annual wage, or at least $47,500.
A hindrance to some expansions is that much of the county's industrial property is outdated, and there are only a handful of undeveloped tracts big enough to accommodate a large-scale build out, Pinellas County Economic Development Director Mike Meidel said.
The county is reviewing a series of tax breaks and fee waivers dubbed a "regeneration toolbox" to drum up more interest in restoring and retrofitting these old properties or tearing them down to build new.
Individual cities, though, have limited carrots at their disposal.
St. Petersburg was the first to adopt an ad valorem tax exemption in 2012 for businesses that promise to add a set number of jobs, depending on the industry sector.
The waiver applies only to increases in a property's taxable value for up to 10 years and strictly covers the city's portion of property taxes.
The county is considering adopting a similar incentive to eliminate the county's portion.
St. Petersburg economic development officials suggested the incentive following its adoption in Tampa and Hillsborough County.
National insurance firm ASI is applying for the tax incentive for a second building under way on its expansive campus near Gandy Boulevard and Dr. Martin Luther King Jr. Street, said Sophia Sorolis, St. Petersburg's economic development manager.
Clearwater also has seen quick results, with the city council approving two tax exemptions in recent months.
GE announced plans last fall to invest $49 million in its Instrument Transformers facility on Calumet Road, which manufactures industrial transformers.
Cost saving was a major part of their rationale for closing a plant in upstate New York and consolidating in Clearwater to "maximize efficiencies, simplify operations, and to become more cost competitive," company spokesman Daniel Nelson wrote in an email.
The company has said it will create more than 200 jobs at the site, which already employs 463 people.
"The city was able to compete for those jobs and bring them here," Clearwater economic development director Geri Lopez said.
In the second case, Heritage Property & Casualty Insurance Co. is moving out of the Carillon office park in St. Petersburg to a larger space at the corner of U.S. 19 and McCormick Drive. Part of their deal with the city of Clearwater includes building a parking deck to serve the needs of the complex.
The incentives can waive up to 100 percent of taxes on improvements for up to 10 years, but the city has discretion over the terms in each case.
Since the tax waiver applies only to added value at a property, companies are likely to use them for major, long-term capital investments, Meidel said.
The exemption doesn't kick in until the improvements are finished and the value appreciates.
"It doesn't take anything away from current budgets," Meidel said.
In the bigger picture, if companies invest in redeveloping old commercial buildings or erecting new ones today, cities will collect higher revenues down the road when the exemption expires and the property value has risen, Brydon said.
There will also be an updated commercial building where there might have been a fading and possibly empty space.
"Now we have new commercial space that's come online," said Brydon.
"If they ever left, we still have a viable office product that's been brought up to good standards."