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Southwest: The Two-Class Economy
Increasingly popular with wealthy empty-nesters, the Gulf Coast counties are experiencing rapid growth. And with the baby boom generation reaching middle-age, more and more people figure to buy second homes here.
"The folks who are coming into preretirement have more money and more pension money than ever before, so they can afford a lot," says real estate expert and Florida Trend Contributing Editor Lewis Goodkin of Price Waterhouse/Goodkin Research in Miami.
But for all its popularity with snowbirds and retirees, the region creates very few good-paying jobs. Increasingly, it's not much of an exaggeration to say Southwest Florida is populated by two classes of people: the idle rich and the folks who mow their lawns and wash their cars.
The University of Florida's Bureau of Economic and Business Research (BEBR) projects the ten-county Southwest region of the state will grow from 1.39 million people currently to 1.74 million by 2005, a 25% increase, compared to population growth of 18.6% statewide. Charlotte, Collier and Lee counties are expected to grow even faster than the regional average.
Economic development officials worry that as the region grows, infrastructure and social services needs may overwhelm local governments' ability to pay. "If we keep increasing that disparity of income, one group is going to have to subsidize the other," says Susan Pareigis, executive director of the Economic Development Council of Collier County.
Despite the influx of wealthy people into Southwest Florida, income growth is sluggish. While per capita personal income grew by 3.7% annually in Florida from 1990 through 1995, it grew by just 2.9% in the Southwest, according to BEBR. And while heavy concentrations of wealthy people give Collier and Sarasota counties two of the highest per capita income figures in the state -- each around $30,000 per year -- the other eight counties in the region have per capita personal income at or below the state average of $22,534 per year.
What's more, the region's biggest counties all posted weak five-year income growth rates: 2.2% in Collier, 2.5% in Sarasota, 2.7% in Charlotte, 3.0% in Lee and 3.4% in Manatee.
In the agricultural counties, meanwhile, incomes are growing faster but remain well below state averages. Hendry County, for example, enjoyed 5.9% growth in personal income last year, but per capita personal income remains at just $19,088 per year. Incomes in De Soto, Glades, Hardee and Highlands counties are even lower. This year's cold winter won't help, although farmers say several frosts caused surprisingly little damage to citrus and sugar cane crops.
Potentially more damaging is the Clinton administration's proposal to impose a one cent per pound tax on sugar to help fund the federal purchase of more than 100,000 acres of farmland for Everglades restoration.
Robert Buker, a vice president for U.S. Sugar, says the proposed government land purchases would result in the shutdown of two of the seven sugar mills in the Everglades Agricultural Area and would be "a huge blow to the property tax base" in Hendry and Glades counties. Although Buker doesn't believe the Clinton plan will receive congressional approval, he says it will have "a chilling effect on every business decision everybody makes" in 1996.
In the more developed counties, the lack of income growth is just now sparking serious economic development efforts. Historically, regional efforts to attract more industry consisted mainly of asking semi-retired executives to relocate their businesses. Sarasota County, for example, spends a good deal of time courting people who own waterfront property locally and run businesses elsewhere. "We try to market to people who like the lifestyle," says Bill Little, executive director of the Sarasota County Committee of 100.
That strategy appears only moderately successful. The Committee of 100 says the addition of 420 jobs last year through business relocations and expansions "exceeded expectations." The average annual wage for the new jobs was a healthy $32,900, but in a county with more than 225,000 workers, it's a drop in the bucket. Little concedes Sarasota's economy remains "very fragile."
"It's fragile because the manufacturing base is only about 5% or 6% of total employment, and 85% of those manufacturers employ five or fewer people," he says. Many of Sarasota's manufacturers make venetian blinds, cabinets and other products for sale locally. "There is a lack of jobs created by firms that export" out of the county, says Little.
Indeed, a recent Committee of 100 report designed to tout Sarasota as a business destination included this sobering assessment: "The gap between passive income -- Social Security, pensions and dividends -- and earned income continues to widen in Sarasota. County wealth per capita is declining. We have the highest percentage of service jobs in the state, coupled with a declining percentage of manufacturing jobs."
Sarasota, like much of Southwest Florida, also suffers from a reputation as anti-development, ironic considering the region's growth rates. "From talking to homebuilders, their sense is that Sarasota is an anti-growth county," says Frank Pallini, senior manager of KPMG Peat Marwick's real estate and hospitality consulting group.
Little insists those sentiments are fading. When he took his position three years ago, after spending ten years in economic development in Baton Rouge, La., Sarasota's economic development budget was $118,000. Today, Little has a development budget of $750,000, including a marketing budget of about $600,000. Sarasota also will waive impact fees for road building to prospective employers who promise to pay wages that exceed the average county wage and meet other stipulations.
Last year, Sarasota created 200 manufacturing jobs, well above its modest expectations. The biggest expansion was Vinyl Tech's move into a 420,000-squarefoot plant in the Laurel Road Interchange Business Center. The company makes vinyl doors, windows, porch enclosures and rang up sales of more than $45 million last year. Vinyl Tech added 75 employees during 1995.
Despite the bigger budget and some success in 1995, Little acknowledges that early returns on 1996 are mediocre. He says there are no major business expansions or relocations in the pipeline right now.
Other counties feel the same pressure as Sarasota. In Manatee, for example, economic development officials use a mix of federal and state programs to encourage local job growth. One of the most effective has been an employee training program administered by the Florida Department of Commerce; it helped marine manufacturer Aldon Industries to expand and Cysco Corp. to build a food distribution center, says Sydney Ivey, industry development representative for the Manatee Economic Development Council. "The only problem we've had with the training program is the Legislature hasn't allocated enough money to it," Ivey says.
Even in Collier County, which boasts the state's highest median income at $48,000 per year and the lowest real property tax rates, there is concern about income disparity.
"I think that is the impetus for putting together an economic development policy for Collier County," says Pareigis, of Collier's Economic Development Council. "If we keep growing the county the way it is growing now, you are going to see a dramatic increase," in social service costs and taxes, she says.
Nearly 4,400 residential units were built in Collier last year, including 1,721 detached single-family homes and 2,170 multi-family units. Naples' fourth high school is scheduled to open in 1998, concrete evidence that not everyone in town is an empty-nester. The construction of Florida Gulf Coast University in Lee County has pulled development in Collier further north, creating more infrastructure needs. Says Vincent Cautero, administrator for Collier's community development and environmental division: "We don't really have a sense that anything is going to slow up."
One project Collier officials hope will boost the economy is a $5.8 million construction effort at county airports in Immokalee, Everglades City and Marco Island. At Immokalee, the county is spending more than $3 million to build an industrial park with a foreign trade zone in hopes of attracting manufacturers, says John Drury, executive director of the Collier County Airport Authority. Drury says he's seen interest from executives who'd like to live in Naples and run their businesses in Immokalee.
A common concern of potential employers is that the Southwest work force lacks skills. Pareigis counters that many Collier residents formerly were skilled workers or executives elsewhere. "We have a lot of underemployed people here," she says. "Namely, people who moved here to semi-retire and create their own small business or take a lesser job while they wait for something appropriate. We do have highly skilled labor in the marketplace."
For the past three years, a top priority of the Lee County Commission has been to diversify the local economy and expand economic development efforts.
Last year, Lee established a $1.5 million fund to offer incentives to new businesses. The fund offers up to $2,000 per job created to employers paying wages in excess of 115% of the average county wage of about $21,815. It is the first time Lee County has used financial incentives to attract business, says Janet Watermeier, executive director of Lee's Office of Economic Development.
Watermeier also has a publicly funded budget of just under $900,000 to promote Lee. The Collier County government, by comparison, spends no public money on economic development. Recently, Lee has attracted several new employers. Sony Electronics opened its 68,000-square foot national customer information services center in March. The center will employ 450 people. Last October, Baader North America Corp., which manufactures poultry processing machinery, opened a 56,000 square-foot manufacturing facility. Sims-Intertech Resources, a medical devices manufacturer, also expanded its plant by 20,000 square feet and expects to add 25 employees a year for the next four years.
Going forward, Lee figures to benefit from the opening of Florida Gulf Coast University in 1997 and from expansion at Southwest Florida International Airport. Watermeier says the university will enable employers to take advantage of advanced degree programs for the first time. "It is going to make a major impact," Watermeier says.
In Charlotte, the county commission recently voted for the first time to provide matching funds to the local Economic Development Council, up to $125,000. Executive Director Peggy Willis says she never before had a budget bigger than $40,000.
Partly because the county has never marketed itself, Willis concedes she can't point to big successes, though there have been small victories. Tracker Marine, for example, opened a manufacturing plant that will produce Silver King fishing boats and employ about 50 people in Punta Gorda.
This year, Charlotte will conduct its first marketing campaign. "In the past, we depended on the old situation where the CEO comes in on vacation and likes it and decides to stay," Willis says.
Charlotte County Commission Chairman Matt DeBoer says developing some diversity to the local economy is paramount. Charlotte was built as a retirement destination and there is sentiment against business development. But DeBoer says many who came for jobs in restaurants and shops ten years ago have stayed to raise families and need better paying work.
Historically, the best paying jobs for young people were in construction, but development in Charlotte has slowed recently. There are now more than 200,000 vacant lots zoned for single-family homes. DeBoer would like to rezone some of those lots for commercial or industrial use.
Though he concedes an anti-growth attitude still exists in Charlotte, DeBoer believes residents are coming to realize that Social Security and pension checks alone can't fuel a healthy economy.
"I think we've just passed the turning point in this fight," he says, echoing sentiments expressed by others in the region. "There are a lot of people who want to see this county take off."
Hoffman's Big Play
Al Hoffman, the multi-millionaire Tampa Bay developer, bought 24,000 acres of Westinghouse Communities Inc. (WCI) real estate for $556 million last year and catapulted himself into a leading role in Southwest Florida's future development. Through WCI and his Florida Design Communities, Hoffman now controls properties that include Pelican Bay and Pelican Marsh in Naples; Pelican Landing in Bonita Springs; Gateway and the Gulf Harbour Yacht & Country Club in Fort Myers and Burnt Store Marina & Country Club in Punta Gorda on Charlotte Harbor. These developments encompass more than 13,000 acres.
Taking Off
Airport projects are taking off. Southwest Florida International Airport in Fort Myers expects to receive a foreign trade zone designation and plans to spend at least $157 million on a second runway and new terminal building. Collier County is spending $5.8 million to improve county airports in Marco Island, Everglades City and Immokalee.
