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Hidden Beacon

Daily Business Review

April 22, 2002

 

By Frank Alvarado

  The Beacon Council says it has independent audits proving that from 1996 to 2000 it helped create 15,454 jobs in Miami-Dade County and helped keep another 4,838 jobs from leaving the county.

  The county’s official economic development agency, which received about $4.25 million in public money last year, claims that a pending audit will prove it helped create about 5,000 more jobs over the last year and a half.

  The problem is that the only people who will get to see the audits are Beacon’s board of directors.

  “That information is considered proprietary,” says Dana Fernety, the Beacon Council’s spokesman.

  But a review of the agency’s annual reports, interviews with companies assisted, and county records show:

  •  Beacon takes credit for helping create jobs when its involvement was no more than to provide companies with information or business referrals.

  •  Beacon spent $1.6 million last year in public and private money to promote Miami-Dade worldwide, but received only 25 leads. Only one of those leads panned out.

  • And some county leaders say the council does not encourage companies to come to distressed areas.

  Which is not to say the Beacon Council doesn’t do good work.

It’s done a very good job promoting the county as the gateway to Latin America - assisting international names like Porsche, Volkswagen, Caterpillar and Telefonica to make Miami-Dade their Western Hemisphere hubs.

  And companies like United Parcel Service and Precision Response Corp. praise Beacon for helping them expand their Miami-Dade operations.

  “This is not a game,” says Frank Nero, who became Beacon’s president in 1996 after serving in similar posts in Jacksonville and New Jersey.

  The question is whether Beacon’s assistance - whether it’s providing marketing information, helping a company cut through the county’s permitting process or recommending lucrative tax breaks — is the reason a company relocates to Miami-Dade or expands existing operations.

  Founded in 1986, the Beacon Council is a joint effort between county government and private business to build Miami-Dade’s economy and job base.

I  t is the 800-pound gorilla among South Florida’s three main economic development agencies, spending $5.7 million last year on salaries, advertising and marketing. That’s about $3.6 million more than the Broward Alliance and $3.8 million more than the Business Development Board of Palm Beach County.

  Nero, who earned $229,740 in 2000, $45,143 more than Miami-Dade Mayor Alex Penelas, says Beacon’s board of directors monitors the agency’s performance.

  The board includes business leaders such as Thomas Cornish, Beacon’s chairman and executive vice president of SunTrust Bank Miami, Herman Echevarria, a Miami advertising executive and Penelas ally, and Merrett Stierheim, Miami-Dade Public Schools superintendent.

The county also keeps tabs on the agency through audits every four years.

  The next one is due for release to the public within the next few weeks. Cathy Jackson, director of the county’s department of audit and management services, said her office found nothing that would “cause concern.”

  Cornish says the Beacon Council verifies its performance by asking companies it assists to sign forms detailing the agency’s involvement.

The information goes into an annual report, broken down by company, how many jobs it created, how much space it leased and how much capital it invested. An independent auditor Beacon hires reviews the numbers.

  “At the end of the year, we can show you our progress, company by company,” Cornish says. “What is harder to quantify are other activities, such as marketing Miami-Dade to the world.”

 

Not yet verified

 

The agency has not verified the reports, however, for the last two years, says Carlos Leonard, the agency’s senior vice president of business expansion, retention and recruitment.

  “We’ll start calling companies this month to verify projects completed for the last fiscal year,” he says.

  Beacon says the 51 companies that signed the form in the last two years brought or retained 4,760 jobs.

  But a review of the reports shows that the Beacon Council’s only involvement with 24 of the companies was to provide marketing information and business referrals. It’s hard to say whether that information had anything to do with those companies’ decisions to locate in Miami-Dade or add jobs.

  For example, Nien Made, U.S.A, a mini-blind manufacturer based in Los Angeles, picked Hialeah for a new manufacturing plant last year after speaking with its clients about the pros and cons of moving here, Atlanta or Memphis.

  “Our clients suggested we come here,” says Shawn Shih, national account manager for the company, “because transportation and the local labor force is better than the other cities we considered.”

  The only contact with the Beacon Council, Shih says, was to obtain marketing information about Miami-Dade during the two-year decision-making process.

  “They were eager to help, but we really didn’t need it,” he says.

The plant, according to Beacon, will produce 150 jobs and a capital investment of $1 million.

  Shih says Nien Made is still in the start-up phase and will open its the 80,000-square-foot facility in two months and will employ 60 people by the end of the year. Currently, the company employs 10 people locally.

  Dedienne Corp., a Paris-based manufacturer of aircraft parts that opened a Miami office in January 2001, decided to come here months before contacting the Beacon Council, says company president, Karel Volot.

  Volot says the company came to Miami because of its travel connections to Latin America. He doesn’t remember whether he contacted the Beacon Council or if the agency called on him.

  “I think they called me,” he said, adding that Beacon offered its assistance if he needed it.

  At the time, Volot says, he didn’t.

  Dedienne employs six people in its local office and Volot says he plans to fill four new positions by the end of the year. The Beacon Council says in its 2000-2001 report that Dedienne’s move to Miami would create 15 jobs.

 

‘Beacon helped us’

 

Some companies say they picked Miami-Dade County because of the Beacon Council’s efforts to promote the county.

Manuel Merellas, sales manager for L.D. Books, a Mexico-based distributor of Spanish-language books, says the Beacon Council helped him choose Miami over Los Angeles.

  “I was not sure about coming to Miami,” he says, “but Beacon helped us make that decision.”

  Beacon says L.D. Books was going to create 15 jobs. Merellas says his office employs three people.

  In other instances, the council has helped lobby on behalf of a company.

  Plantation-based Precision Response Corp., for example, built another call center in Miami-Dade for the most-often publicized reason: the lure of tax incentives.

  PRC, a division of USA Networks, has opened five call centers in Miami-Dade over the past five years; it received tax incentives with Beacon’s assistance each time, says Bob Tenzer, the company’s senior vice president of human resources.

  “Beacon is very aggressive about getting us better incentive packages than we may be able to find in other states,” Tenzer says.

 Its last expansion in 2000 netted the company about $3 million in incentives for creating 600 new jobs over three years. So far, the company has added about 400 employees.

  Tenzer says PRC would not have selected Miami-Dade for any of its call centers had it not been for the Beacon Council’s assistance on the tax incentives and its ability to blaze paths through the county bureaucracy.

  “We looked at other municipalities at the same time as Miami-Dade,” he says. “Because of the Beacon Council, Miami-Dade comes on top.”

United Parcel Service is another beneficiary of the Beacon Council’s ability to speed up building permits at the county.

  UPS announced plans to expand its Miami facility in 1999, when it acquired Challenge Air.

  The international delivery company would have expanded the facility without the agency. Nevertheless, Beacon’s help cutting the amount of time it took to get building permits was valuable, Acosta says.

  “They shaved months off the completion date of the new building and saved us a considerable amount of time and money,” he says.

  That’s why the agency can take credit for helping UPS create jobs in Miami-Dade, says the Beacon Council’s Leonard.

  “Is that the only reason they expanded?” he asks. “Maybe not. But they talked about expansion and reached out to us to help them.”

 

The inner city

 

  Some elected officials, however, question Beacon’s vision.

  “They need to put more time and money into inner city districts.  That’s not their focus,” says Miami-Dade County Commissioner Barbara Carey-Shuler, conceding that it’s not easy to attract companies into her district, which includes parts of Liberty City and Little Haiti. Leonard says the agency does everything it can to market inner-city areas to companies, holding regular meetings in depressed areas like Perrine, Opa-locka and Homestead to tell companies about government benefits available to them for training and hiring residents in the area.

  But the agency’s annual reports for the past two years indicate it assisted only 10 companies in Carey-Shuler’s district and in the predominantly black communities represented by three other commissioners.

  Two of those companies, Colonial Press International and DiversityPro Corp. were already expanding in a Northwest Miami enterprise zone. The Beacon Council takes credit for assisting the companies create 60 new jobs, but its own 2001 report states it didn’t do anything to help.

  “When I was elected two years ago the consensus was that Beacon didn’t have [the city of] Miami on their radar screen,” says Miami City Commissioner Johnny Winton.

  At the time, Winton says, Nero told him it was hard to promote Miami to companies because of the political and social turmoil that swirled around the city in recent years.

  “Frankly, I could agree with him,” he says. “But now I feel he has a hell of a product to sell because we have a great mayor, financial stability, political stability and administrative stability.

  “We have great opportunities for investors and businesses, the kind of folks the Beacon Council promotes to.”

  Another elected official, Coral Gables Mayor Donald Slesnick, says he hopes to improve communication with Beacon.

  For instance, he says, he was the last to know that the council was working to relocate Delta Air Lines to another part of Miami-Dade when the company announced it was moving out of its digs in Coral Gables. Delta ended up moving to Miramar.

  “I look forward to improving the relationship between Coral Gables and the Beacon Council in an effort to produce better results for my city,” Slesnick says.

  Fernety declined to comment about Slesnick’s concerns but says the agency keeps an open line of communication with all municipal leaders.

On the flip-side, Miami’s Winton says he’s never had a problem meeting with the agency.

  “Every single time I have called the Beacon Council they have been front and center,” he says.

 

Think Coke

 

Then there is the question of whether or not Beacon gets its money’s worth from the $1.6 million it spent last year to promote Miami-Dade as a good place to do business.

  The Miami-Dade marketing initiative launched in February 2001 intended to market Miami-Dade locally, nationally and internationally as the ideal place to relocate or expand a business.  The campaign touted the area’s diverse business community and its lifestyle.

  The campaign features the slogan “Miami-Dade. Give your business a life,” and the county matches every dollar a company contributes to the campaign with $2 in public money. Last year, the total advertising budget came to $1.6 million.

  The Beacon Council recruited only one company from the 25 leads generated by the marketing initiative. That company, Neoris U.S.A., an e-consulting firm formerly based in Mexico, will receive $400,000 in tax incentives for creating 150 jobs during the next three years. And that only one lead came of the initiative is perfectly OK, says Herman Echevarria, vice chair of Beacon’s marketing committee.

  “Marketing is not about one project,” he says. “It’s about creating an image. Coca-Cola is not Coca-Cola because they sold one can of Coke.”

 

 

 

 

 

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