Sarasota County may sue Sanborn Studios for incentive money

Lakewood Ranch-based movie studio took $650K in incentives, fizzled out

srocco@bradenton.comMay 18, 2014 

LAKEWOOD RANCH -- When Sarasota County officials handed $650,000 over to Sanborn Studios in 2010, they expected quite a bang for their buck.

County commissioners envisioned powder keg productions that would put Lakewood Ranch and the rest of the Manatee-Sarasota region on the map as a national destination for film and television productions.

They looked forward to the creation of more than 100 jobs with a projected $164 million added to the local economy.

Officials trusted that a hefty investment in Sanborn Studios would pay dividends for years to come.

But the reality has been disastrous.

The studio's first planned production, "Miami 24/7," was poised to be an action-packed drama about competing television news helicopters. There was promise of explosions, guns, expensive cars, handsome men and beautiful women. That project never progressed past a 2-minute, 39-second trailer.

Sanborn Studios lasted 15 months in its 30,000-square-foot Lakewood Ranch studio before terminating its lease there and vacating a second space near Sarasota-Bradenton International Airport.

Now, Sarasota County officials are considering filing a lawsuit to recover its lost money.

According to a financial incentive agreement signed in 2010 between Sarasota County and Sanborn Studios, the company was required to add 117 jobs with an average wage of $72,000 by Sept. 2, 2013 in return for the incentive money. If Sanborn Studios could not create all the jobs, it was obligated to reimburse the county $2,992 for each unfulfilled job.

If Sanborn Studios ceases operations in Sarasota County within five years of the agreement, the company will be responsible for reimbursing the county a prorated amount of the incentive, the agreement states.

County officials say no positions have been created since the agreement was inked, and, in turn, Sanborn could owe more than $350,000.

County attorney Stephen DeMarsh plans to discuss the commission's options during its regular meeting June 10.

"If the Commission authorizes the filing of a lawsuit, one would be filed," DeMarsh stated in an email to the Bradenton Herald.

Deputy county attorney Rick Elbrecht said he would not comment on the lawsuit potential or other options for getting the money back until after the meeting.

"I really don't want to discuss it because we haven't even presented it to the county commission," he said.

Sarasota County Commissioner Nora Patterson is upset that Sanborn Studios did not keep its promises, but she's wary of filing a lawsuit.

"The question in my mind is whether they have the resources to pay anything. I don't want to use lawyer time on a fruitless initiative," Patterson said.

Calls and emails to Ken Sanborn, CEO of Sanborn Studios, and Karinne Behr, the company's president, were not returned.

According to Florida Division of Corporations filings, Sanborn Studios remains an "active" business, but no projects have been made since Sanborn and Behr abandoned their facilities here.

Empty promises

Shortly after the Florida Legislature in 2010 approved $242 million in transferable tax credits to be used as incentives in wooing the entertainment industry to the Sunshine State, Sanborn and Behr swooped in with Sanborn Studios LLC, making golden promises of job creation and a significant stimulus to the region's economy.

But Sanborn Studios began to crumble within the next year, the Herald has reported:

• The company's first major pilot, "Miami 24/7," was expected to go into production in November 2010. Two reality TV series and two independent films were also lined up. After many stalled production dates, none of the projects ever came to fruition.

• Several key employees -- a chief financial officer, senior vice president of program development and director of media relations -- fled the company. Ken Sanborn confirmed in July 2010 that 21 jobs had been created, but four of those employees were given unpaid vacations because business was slow.

• Sanborn Studios requested $500,000 from Sarasota County in February 2011 after already receiving the $650,000 grant in 2010. The company withdrew its request a day later.

• Sanborn Studios rescinded a deal with developer Schroeder-Manatee Ranch to buy land in Lakewood Ranch.

• Cinepro Studios Pictures International dropped distribution for "Miami 24/7."

• Sanborn and Behr terminated the lease for their Lakewood Ranch facility at 7321 Trade Court in December 2011. They then left another space at 8100 15th St. E, located on SRQ airport grounds, in December 2012, said John Schussler, director of properties for the airport.

It's unclear if Sanborn Studios had enough capital to get the business off the ground. According to a 59-page Florida Uniform Commercial Code filing made a little more than a month after the incentives were approved, Sanborn Studios claimed over 1,000 items that were bought with credit -- everything from trucks, vans and trailers to high-tech camera and studio equipment.

Louise Levison, a film industry business consultant in Sherman Oaks, Calif., said the filing should have been a red flag early on.

"A company that's buying all of that equipment should have had investors," Levison said. "To go all out like that and not raise money from investors, to me, is very strange."

Since 2011, Ken Sanborn has opened another business, according to Florida Division of Corporations filings. Sanborn and his son, Harrison Sanborn, are listed as owners for a limited liability company called Telmed Systems, which was incorporated in May 2013.

Less than a month ago, Ken Sanborn and his wife, Patricia, sold their Longboat Key home for $2.9 million on April 28.

Behr owns a single-family home on Roebling Road South in Bellair, property records show. Business filings list her as owner of Finance in Motion, LLC, an entertainment finance company. The website financeinmotion.net touts Behr as a film executive with 23 years' experience.

"Through foreign sales and tax incentives, she was instrumental in securing film production loans in excess of 150 Millions," the site says.

The registered agent for Finance in Motion is Warren LaFray, a Clearwater attorney who was disbarred in 2008 for bad communication practices and failure to follow through on basic protocol with his clients.

Sanborn and Behr may still be in business together. Filings show they both own Sanborn Media Group. A company website includes a trailer for "Miami 24/7" and another for a production called "Paradise Lost." The phone number listed on the website forwards to an answering machine after one ring.

Iffy incentives

For as chaotic as the Sanborn Studios dilemma has been, Sarasota County's business incentive program has worked well for some local businesses.

Since 2010, eight out of 32 companies have created more jobs than the county projected, according to records obtained by the Herald. The biggest player is PGT Industries, which received $600,000 in 2010. The company, a manufacturer and supplier of residential windows and doors, has created 719 jobs after it promised 400.

Tervis, another major player, has nearly doubled their projection. After collecting $450,000 in 2010, the company, which produces insulated cups and mugs, created 413 jobs when it was only expected to create 214.

Still, some companies have dropped the ball.

Lakewood Ranch-based Evolucia, formerly named Sunovia Energy Technologies, an LED lighting company, received $50,000 in 2010 and was expected to provide 68 jobs.

It hasn't created any to date, and its stock is nearly worthless after the firm tried to grow its business internationally.

After collecting $100,000 in 2011, 5D Composite, a company devoted to the development and manufacturing of composite material for green energy products, has created only six out of 120 projected jobs.

Jeff Maultsby, director of Sarasota County's Office of Business and Economic Development, said he believes the incentive program has been successful. But he would not comment on the Sanborn case, saying it is being handled by the county attorney.

Jeanne Corcoran, director of the Sarasota County Film and Entertainment Office, which aims to attract film and TV projects like Sanborn's, declined to comment on specifics for this story.

"There's really nothing I can add to what Mr. Maultsby said, as he is the most appropriate person you could have reached," she said in an email.

In 2012, Sarasota County shifted to a pay-for-performance method for doling out incentive money. Instead of granting all the funds up front, the county now gives out money after jobs are created, said county spokeswoman Jamie Carson.

"It's not simply 'Here's the money, go forth,' " she said. "The county is continuously improving our processes to better our departments."

Carson wouldn't say whether the new model was implemented as a result of the Sanborn crisis.

In addition to the money it received from Sarasota County, Sanborn Studios was approved for state incentives in 2010. The Qualified Target Industry tax incentive from the state had a maximum potential award of $585,000, of which $117,000 in local support was required.

But the Florida Department of Economic Opportunity operates on a performance-based system when awarding incentive money.

As a result, the state incentive was terminated and no award funds were paid to the company after it was unable to meet the performance conditions of the state agreement, said Jessica Sims, spokeswoman for the Florida Department of Economic Opportunity.

In backgrounding candidates, the state now conducts a rigorous investigation of annual and quarterly financial statements, federal litigation searches, lien searches, Standard and Poor's rating, Moody's rating, Fitch rating and A.M. Best rating and more.

Sarasota County Commissioner Nora Patterson said the county might have been able to prevent at least some of the Sanborn Studios trouble.

"I do think that we should have probably done some more investigation on them. We should have done more due diligence," Patterson said. "We trusted that our staff and the EDC checked them out, but maybe it's our fault for not making sure."

Sabrina Rocco, Herald reporter, can be reached at (941) 745-7024. Follow her on Twitter @sabrinarocco.

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