Company that Shunned Michigan for Florida’s Tax Giveaways Now Being Sued By Florida County

bluewhereIn May of 2012, a company called BlueWare, or anyone of a number of “affiliate” names, announced it was relocating its company from Cadillac to Melbourne, Florida.  Melbourne, located in Brevard County, is in an area of Florida known as the “space coast” because it is home to the Kennedy Space Center.  The space coast has been hit hard by the cut backs at NASA, and even some highly skilled workers have found themselves on the unemployment rolls for more than a year.  According to an article in Crain’s Detroit Business, BlueWare’s CEO Rose Harr moved her company, which digitizes records, in part to take advantage of the space coast’s available talent.  She said “there’s just no more talent” in Northern Michigan.  Workers in Cadillac criticized the statement suggesting that BlueWare’s poor management under Harr was why she was having difficulty recruiting and retaining talent.  Regardless, BlueWare committed itself to hiring 190 high skilled workers, to be paid $69,000 a year, over four years in Florida.

It wasn’t just the available talent that lured Harr to Florida.  It was also because Florida seemed to offer every kind of tax giveaway available.  It is hard to identify all the ways Florida incentivized Harr’s company for relocating because Harr has a “nondisclosure agreement with Florida.”  Reports are that BlueWare received at least 1.31 million dollars, and probably a lot more.  It wasn’t just the biggest deal Harr was after, but also how the money was paid out.  While Michigan was willing to give BlueWare 2-3 million in incentives, Florida was giving incentives and tax credits.  Michigan’s Governor Rick Snyder called such credits “ridiculous” because it forces a state to ” buy people . . . so they’ll do business here.”  Buying jobs didn’t seem to bother Florida Governor Rick Scott who helped recruit BlueWare by personally calling Harr.  Harr seemed awfully smitten with Governor Scott calling him “amazing” in an article by the Cadillac News.

Fast forward a year.  It seems that BlueWare’s first big contract in its new Florida diggs was an 8.6 million dollar deal with the county of Brevard, where BlueWare is now located.  Shortly after BlueWare announced their move, the county all of a sudden had a need for digitization of its records and put out an “invitation to negotiate” for the service.  Another BlueWare affiliate, RoseWare LLC, appears to actually have helped draft the invitation to negotiate.  Despite the obvious conflict of interest, BlueWare “affiliate” BlueGem submitted a bid as did two other companies.  Not surprisingly, BlueGem won the job even though their bid was the highest by a whopping 3 million dollars!

So far BlueGem has received around 5.6 million dollars from the county for the job of digitizing its old records, a job they appear to be very behind on.  The fact that BlueGem received that much money up front is unusual.  In fact, the county actually had to borrow money from Hewlett-Packard Financial Services to make the payment.  The borrowing of money is the basis of a new lawsuit against BlueWare/BlueGem.  Clerk of Court Scott Ellis filed the lawsuit on behalf of Brevard County.  The deal with BlueGem, and the loan, was facilitated under Ellis’ predecessor and political opponent Mitch Needleman.  Oh by the way, Needleman’s former business partner is a manager at BlueWare.  Ellis claims “The entire bidding, selection and negotiation process . . . was fundamentally flawed.”  He called it a “sham bid.”  Additionally, Harr is being sued by BlueWare’s former managing director who claims that he was “improperly terminated” when he threatened to take steps towards reporting Harr for “improper conduct . . . in attempt to procure a business contract/relationship with the county” of Brevard.  The whole thing is such a mess that The Eye on Brevard, a local blog, has dedicated a page to keeping up with the ongoing events and the “cast of characters.”

So one wonders if the choice of Brevard County as Blueware’s new headquarters was also incentivized by a contract from the county to perform a service they had not yet put up for bid, that they didn’t have a pressing need for, and that they certainly couldn’t afford.  No one knows how many people BlueWare has actually hired and retained.  So far, the company has only tapped local training funds to train one employee, though they said they had hired 25 as of last November.  This raises serious questions about the ethicalness and efficacy of the way units of government are incentivizing business to move to their locale.

Despite the apparent mishap in bringing in BlueWare, Florida Governor Rick Scott has continued to use his influence to lure companies to Florida.  He recently sent letters to hundreds of companies in five states that have Democratic Governors inviting them to relocate to Florida.  Scott is getting a bit desperate as he is only creating half of the amount of jobs he promised in his election campaign.

Back in Michigan, we were left feeling slighted that BlueWare wasn’t adding 190 new jobs here.  If BlueWare actually had the workload to offer 190 jobs, the talent could be recruited from one of our many prestigious universities.  However, it doesn’t make sense to incentivize the creation of new jobs if you also have to create the work for those new jobs by spending loads of tax money on non-essential projects.  In this case, Michigan won by losing.  It’s just a matter of time before BlueWare collapses under the weight of its own ineptitude and Florida is only left with some digital records and a lot less cash.

Note: Coverage by the Brevard Times, especially by their conservative columnist Charles Parker, was crucial in research for this blog post.

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One Response to Company that Shunned Michigan for Florida’s Tax Giveaways Now Being Sued By Florida County

  1. Pingback: Breaking: Warrant Issued for CEO of Company that Fled Michigan for Florida Tax Breaks | Michigan Populist Blog

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