Universal seeks $350M tax break
Company planning for design division’s new HQ
Universal Orlando is in line for nearly $350 million worth of state tax breaks to build a new headquarters for the division that designs its theme parks, rides and hotels, according to records obtained by the Orlando Sentinel.
Universal plans to build its Universal Creative headquarters on the same 750-acre property upon which it is also building “Epic Universe,” which will become the giant resort’s third Central Florida theme park when it opens in 2023.
The $348 million in state income tax breaks, which would be spread over as many as 30 years, is in addition to $125 million in local money that Orange County plans to give Universal to help pay for a new road through Universal’s property. It is also on top of a $16 million state economic development grant that Orange County obtained on Universal’s behalf to help pay for the same road.
Altogether, that adds up to nearly half a billion dollars from state and local taxpayers. Universal would not say whether it is pursuing additional public incentives.
In a written statement, John Sprouls, the CEO of Universal Orlando and the chief administrative officer for Universal Parks & Re
sorts, suggested that the state incentives helped persuade the company to base the Universal Creative headquarters in Central Florida and said the entire community would benefit from the project.
“Currently, our Universal Creative operation is spread around the world, as are the major ride and show vendors in our industry,” Sprouls said. “Our proposed new facility would allow us to unite the creative team and the many vendors who bring our award-winning experiences to life in one creative campus, which will include significant R&D [research and development] operations. One can easily understand why we would seriously consider where such a campus should be located, considering travel, business support, availability of talent, etc.”
Universal is owned by Comcast Corp., the cable and media giant that turned a profit of more than $11.7 billion last year. The company’s theme-park division has been a big growth engine; Comcast’s theme-park profits have more than doubled in the past six years, from about $1 billion to nearly $2.5 billion.
In a written statement, Orange County Mayor Jerry Demings — whose administration has worked closely with Universal on the Epic Universe development — praised the plans for the new Universal Creative campus.
“Adding a worldwide headquarters for Universal Creative with hundreds of highwage jobs is a wonderful problem to have,” Demings said. “We are honored that Epic Universe is choosing to locate in Orange County over other communities.”
But not everyone is happy that the company is seeking assistance from taxpayers.
“We should be encouraging businesses to expand that need the help,” said Orange County Commissioner Emily Bonilla. “Universal Studios doesn’t need the help.”
Cutting Universal’s tax bill
Universal is pursuing the state tax breaks through an incentive program that the Florida Legislature created 20 years ago to attract big-ticket capital-investment projects in desirable industries; the program was originally conceived as a way to attract a Lockheed Martin launch operation to the Space Coast. Universal qualified, according to the Florida Department of Economic Opportunity, as a business in software-publishing, which the state considers a “targeted” industry.
Under the program, a company can recover all of its capital investment in a new facility through state tax credits that can be used to reduce or eliminate its annual corporate income tax payments. The company gets tax credits equal to 5 percent of its total capital spending each year for 20 years.
Universal has told state officials that it plans to spend $348 million on the Universal Creative headquarters. That would put the company in line to cut its tax bill by $17.4 million a year.
That’s enough money to pay more than 350 new teachers.
Some other companies that have qualified for the same incentive program — including Orlando-based Darden Restaurants, which was approved in 2007 for corporate tax breaks worth more than $7 million annually — have sometimes found that they don’t actually pay enough in corporate income taxes each year to take full advantage. That’s partly because Florida’s corporate income tax is so low and easy for companies to avoid.
So a few years ago, in response to lobbying from Darden, the Florida Legislature changed the program to let companies extend their tax credits over 30 years, instead of 20.
Sprouls said Universal’s tax breaks would likely be spread out over 30 years, too.
“The tax incentives we have applied for may nominally equate to $348 million, but those incentives will likely not be realized for up to 30 years — if ever,” Sprouls said.
According to a summary of the project prepared by the Orlando Economic Partnership, Universal has pledged to create 150 new jobs at an annual average salary of $95,000 as part of the Universal Creative project. The economic development agency said Universal would also retain another 300 existing jobs — which the economic partnership suggested were at risk of being relocated without the incentives.
It’s not clear why the agency might think Universal would move existing jobs away from Central Florida. Representatives for the economic partnership did not respond to requests for comment.
“We have not threatened anything,” Sprouls said. “We’ve had serious conversations, both internally and externally, about the concept of the world headquarters, the specific requirements, and where it makes the most sense to locate it. With the help of the state, we believe that location is here in Central Florida.”
Sprouls also said Universal expects to add “significantly more” new “high-wage, creative” jobs than the amount detailed in its incentive application.
Revealed by records request
No public vote is required before Universal can start receiving the state tax breaks. The agency in charge of administering Florida’s incentive programs has already approved Universal’s application, according to an agency spokeswoman. Universal must also agree to a contract with the state’s revenue department; that agency said it could not say whether that contract has been signed.
The Sentinel learned of the incentive deal because it was mentioned in one of more than 3,000 emails between Universal and Orange County that the newspaper obtained through a public-records request.
Specifically, the Sentinel on Sept. 19 requested emails and other correspondence between four lawyers and lobbyists for Universal Orlando and 13 current and former Orange County officials. Orange County provided the records for 10 of those county officials — roughly 3,300 emails and text messages — 11 weeks later, on Dec. 5.
The county provided the remaining records — for Demings, his chief of staff and the chief of staff to former Orange County Mayor Teresa Jacobs — on Thursday morning, one day after this story was published online.
Demings and Orange County commissioners are expected to vote on the county’s separate incentive deal with Universal — in which the county would provide $125 million for the extension of a road through Universal’s property — on Dec. 17.