ST. PETERSBURG - Millions of dollars in tax breaks offered within the city's enterprise zone have helped spur towering Beach Drive condominiums and the expansion of local day care centers.
But after years of seeing the waterfront and downtown core thrive with new business and wealthier residents, city leaders say it's time to move these incentives to other parts of town that need them more.
A proposed change by the Enterprise Zone Development Agency would give businesses at the crossroads of Central Avenue and 34th Street and other depressed areas a chance to get state tax refunds for hiring nearby residents or building new hotels.
At the same time, more than 600 businesses in places like Beach Drive, parts of the Grand Central District and even less affluent areas like 22nd Avenue South would be dropped from the incentive program to make room for the new entrants.
Economic development officials say the changes reflect a shift in the city's demographics as the new boundaries are drawn around viable commercial districts with the highest concentration of low-income residents nearby.
But business owners in less wealthy areas who will be cut from the program say they're still in dire need of support to keep growing.
"The majority view is the areas coming out of the enterprise zone have overwhelmingly been rebuilt, so there is much less need than there used to be," said City Council chairman Karl Nurse, referring to the opinion of the enterprise zone agency. "We hope that by shifting the boundaries to the areas that need more development, we'll see redevelopment. It just gives us one more incentive to jump start them."
The City Council will vote on the proposed boundary changes in October, when a public hearing is also scheduled.
The incentives include refunds on state sales and use taxes for hiring workers, buying significant equipment or building materials for construction.
Municipalities nominate commercial districts to be placed within the zone, but they must meet statewide criteria that that surrounding neighborhoods have high unemployment and a poverty rate of 20 percent or higher.
The enterprise zone is just one of many programs the city uses to push redevelopment in high-need areas.
St. Petersburg's 10-square-mile zone drawn up in 2005 covers most of downtown and extends up to 22nd Avenue North, south past Lake Maggiore and west to 58th Street across many neighborhoods south of Central Avenue.
Since 2006, scores of developers and businesses have received refunds totaling more than $7.6 million, according to city records. They've created 601 certified jobs.
Small restaurants like Rollbotto Sushi on Second Avenue Northeast have enjoyed relatively modest refunds in the hundreds of dollars for hiring a couple workers from within the zone, according to city records.
A majority of applicants, though, have been big hotel, condo and restaurant developers, particularly in the city center.
Large residential developments like 1010 Central in the EDGE district received tens of thousands of dollars in refunds for building materials before condominium developments were disqualified from receiving the incentives in 2010, according to city records.
Success, particularly along the city's waterfront, led city staff to consider updating the enterprise zone, which is based on data from the 2000 U.S. Census.
"With all the new condos that have gone in there, the unemployment rate has dropped in downtown and the poverty rate has dropped," said city economic development analyst Brian Caper.
The new proposed boundaries are based on 2011 census data, which showed there were many fewer poor residents living in the shadow of Beach Drive's multimillion condos.
Restaurateur Steve Westphal's business got thousands of dollars in incentives for building 400 Beach and for hiring workers at Parkshore Grill. He says he doesn't mind being kicked out of the zone.
"It served its purpose and we're standing tall on our own two feet with or without those, I would call them, minor concessions," Westphal said.
While there is little disagreement that Beach Drive businesses shouldn't qualify for incentives, not everyone likes the way the new boundaries have been drawn.
Some areas in South St. Petersburg that are still struggling economically might have been blocked together with more affluent neighborhoods in the most recent census data, disqualifying some businesses that still need help, Caper said.
City council member Wengay Newton said he's puzzled by the exclusion of a large area around 22nd Avenue South, which he says still needs a development boost.
Carolyn Cloud, who runs Starling School and Day Care on 28th Street South, says she relies on the tax breaks to help her pay for equipment, extra employees and cleaning services. Being in the zone also qualifies many of her low-income children for additional financial assistance.
"We do plan to fight and at least go before the city and plead our case," she said.