The perils of up-front incentive money for job creation

May 21, 2014 

Ken Sanborn came roaring onto the cultural scene in 2010 with lofty promises of creating a major studio for film and television productions in Lakewood Ranch, coaxing Sarasota County into dishing out $650,000 in incentives in exchange for a [SoftReturn]promised bonanza of 117 new jobs.

But Sanborn Studios LLC failed. Other than a glitzy, short trailer touting an action-packed drama about television news helicopters called "Miami 24/7," Sanborn Studios had little to support claims to big ideas and big success. In fact, Sanborn was a veteran of bankruptcy court.

Now Sarasota County officials are looking at filing a lawsuit to recover the generous package of incentive money. And the question must be asked of throwing good money after bad -- recovering nothing while paying for court proceedings.

This episode reflects the gamble that government incentives place in new companies with no track record of success. In stark contrast, both PGT Industries and Tervis, established and highly regarded companies, received less than Sanborn Studios from Sarasota County but far exceeded hiring projections.

Sanborn lasted all of 15 months before abandoning its Lakewood Ranch lease and deserting another space near Sarasota-Bradenton International Airport. The studio failed to deliver one single job paying an average of $72,000 by the September 2013 deadline, per the company's agreement with Sarasota, the county acknowledged in Herald reporter Sabrina Rocco's Sunday exposé.

After the Legislature approved $242 million in tax credits in 2010 as incentives to attract the entertainment industry to Florida, [SoftReturn]Sanborn Studios sprouted up here.

Then Sanborn switched "Miami 24/7" into a movie to qualify for $700,000 from the state, the Herald reported in July 2011. That same article noted the studio got rid of four employees.

(That state program has already exhausted its funding well before the expected 2016 expiration date. Legislators failed to extend the tax credit this year, but leaders are planning to restore the program next year.)

Other warning signs about Sanborn Studio's perilous financial position existed for months.

In one 10-day period in February 2011, Sanborn backed out of a deal to purchase land in Lakewood Ranch and requested another $500,000 from Sarasota County for studio equipment before abruptly withdrawing that request.

"Miami 24/7" never flew and other production promises never got off the ground.

Due diligence should have sparked caution over the multiple bankruptcy filings and Hollywood flops of the principal players in Sanborn Studios.

This is a cautionary tale about exposing taxpayers to Hollywood glitz and glamour in the rush to boost a region's image via the entertainment industry and stimulate job growth.

Sarasota Country struck gold with an incentive package to PGT Industries, a manufacturer and supplier of residential windows and doors. The company received $600,000 on the promise of creating 400 jobs. PGT added 719 positions.

Tervis also proved valuable. The insulated cups and mugs maker collected $450,000 on a pledge of increasing hiring by 214. Tervis almost doubled that, creating 413 jobs.

All in all, Rocco reported that eight out of 32 companies granted incentives since 2010 surpassed job projections. Those were especially wise investments in tax money.

Incentives should be performance-based, not up-front money that could simply disappear in a shaky enterprise.

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