St. Petersburg Loses Taxpayer Money on Risky Port Gamble.
January 3, 2007
Recently, the City of St. Petersburg, the county and state brought a local company (SRI)
to the city with $30 Million direct and over $30 Million indirect tax incentives for
“economic development”.
The City likes to promote “economic development” through targeted
use of taxpayer dollars. This is
not unlike speculating on the success of a business
investment. The only difference is that the speculator doesn’t
risk the loss of their
own money – they risk the loss of taxpayer money. Cut Taxes Now has evaluated a
recently publicized taxpayer subsidized venture that failed to examine some of the
risks of this approach.
The current example in the news illustrates this
point – the loss of well over a two million in taxpayer dollars
on the Ocean Jewel “investment”.
The City entered into a deal with Titan Cruise Lines to operate a Port in exchange for
the cruise lines to operate a gambling ship starting in October 2004. The City claimed
the deal would promote
“economic development” for St. Petersburg. Unfortunately, it cost
the tax payers $1.33 Million in operating
losses since 2003 with $748,000 projected to be
lost in 2007 (according to 2007 city budget -1). The Ocean Jewel
experienced a number of
mishaps (see story at St. Pete Times - 2), lost $30 million as a company and declared
bankruptcy
(3). This left the Taxpayers of St. Petersburg holding the bag for the
expense of building, maintaining and operating
the port near USF Bayboro campus. In
addition, the city had to expend just over $20,000 in outside legal fees
(4) in January
2007 to recover $152,000 (of 161K claimed) owed by Titan. This is in addition to time
spent by
city’s own legal department. The City’s own economic development website points
out that the demise
of Titan resulted in a loss of 400 jobs in St. Petersburg in 2005(5).
One wonders if the city should step back and let the whole port/waterfront location pay
for itself with commercial ventures that are proven to work in our economy – such as
commercial fishing or other
non-port businesses. Local fisherman claim they can dock
100 boats there tomorrow (6). In any case,
it is time for the city to stop throwing
good money after bad and look for a way to turn all these risks over to the
free market.
Any CEO who had speculated on a business venture in this way and lost so much so quickly
would
be severely scrutinized by their board. Instead of learning from such misfortunes,
the city is now participating
with the County and State in a venture with SRI to risk
more taxpayer money (over $60 million total) on more “economic
development”. They are
hoping it will spin off some sort of business activity next door at the vacant port
(7)
and generate other economic development – all from a company that has 95% of its income
($297 Million
in 2005) from government only sources (8). In the mean time, the port -
without a single passenger - requires
8.4 full time equivalent security jobs (24/7) to
man the port to comply with regulations (1) (the bleeding continues).
Our elected
officials should stop speculating with our money and stick to the more mundane chores
of running a
city: Public Safety, Transportation and Utilities.
1. 2007 City of St. Petersburg Budget, page 158 – available through City of
St.
Petersburg budget office, not yet on City website.
2. Titan Cruise Lines & Ocean Jewel Casino,
Bankruptcy Case
NO: 8:05-bk-15154-ALP.
www.oceanjewel.com