Enterprise Florida ReviewObservations and Findings

May 11, 2016

DTW Strategies

Enterprise Florida Review

Approach to Review

Overall Findings

Rationalizing Organization

Opportunities for Savings

Summary

Recommendations for Board

2

Approach to Review

Interviews

Enterprise Florida

Board Members

DEO

Florida Economic

Development Council

Consultants

Accountants

Business Leaders

Citizens

Documentation

Enterprise Florida

DEO

Third Party Reports

Site Visits

Tallahassee

Orlando

3

Overall Findings

Enterprise Florida Continues to be a National Leader

Florida Job Growth is Significant and a National Envy

The Governor’s Leadership is the Number One Success Factor

Stakeholders Value Enterprise Florida and Recognize the Unique Contributions

Made to Local and Statewide Organizations

Third Party Reviews Echo the Above Points

Enterprise Florida is a Good Investment of State Dollars

New Enterprise Florida Branding is Well-Received

Public-Private Partnership Has Worked

4

Overall Findings

Public-Private Entities Have Their Unique Complexities

Appearance Matters

Transparency and Accountability is a Must

Public Trust Must be Earned and Re-earned

Evolution of the Organization Has Occurred Over Twenty Years

Are We Maximizing the Benefits of a Public-Private Partnership?

Community Leadership

Community Funding

Private Sector Management and Efficiency

5

Overall Findings

Statutory Community Funding of a 50/50 Model Has Never Been Achieved

Very Active Community Leadership Board Has Been Crucial

Business Development is Seen as Critical But Often Frustrating

Financial and Operational Concerns Exist in Accounting and Contract Management

Numerous Opportunities Exist to Reduce Cost and Improve Efficiencies

6

Rationalizing Organization

VISIT FLORIDA

Sports Foundation

Military and Defense Programs

Minority Business Support

Federal Loan and Capital Programs

7

Enterprise Florida Mission

Business Development International Trade

Rationalizing Organization

Marketing Florida

Corporate Relocation/Expansion

Local Government Economic

Development Assistance

Foreign Company Export and Import

Assistance

Florida Company Import and Export

Assistance

Foreign Direct Investment

8

Business Development International Trade

Core Area of Focus

Rationalizing Organization: EFI Funding by Year

9

FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16

EFI State Appropriation Operating

Budget*

$11.1 M $11.1 M $13.5 M $14.55 M $15.4 M $15 M

EFI Payroll and Related Costs $6.63 M $6.69 M $7.2 M $7.84 M $8.2 M $8.86 M

Marketing Appropriation $1.01 M $.5 M $.71 M $1.68 M $1.29 M 11.29 M

Closing Fund Appropriation $16 M $42 M $92.4 M $73.93 M $55.38 M $18 M

*Excludes Marketing

Rationalizing Organization

10

Business Development Performance

*Approximately 50% of these investments come from companies utilizing closing funds

FY12/13 FY13/14 FY14/15 FY15/16

(Projected)

Corporate Decisions Made to Move to Florida 171 161 211 154

Corporate Decisions Which Used Closing

Fund

25 22 13 14

Capital Investment from these Companies* 1.991 B 2.775 B 2.740 B 2.331 B

Total Jobs Committed/Retained 25,193 36,207 33,548 25,272

Referrals to Local EDO’s 100 115 196 145

ROI on Business Development with QACF 73.92 109.94 103.35 163.13

ROI on Business Development on QACF Deals 39.77 50.86 27.56 59.37

Options For Business Development Organization

Create Private Sector Like Sales Organization

Align and Allocate Dollars to Business Development as Core of Mission

Invest Money to Empower Results

Reinvent Go to Market Approach

Reduce Costs in Line with

Performance

Continue Current Operating

Model

Drive Step-Level

Improvements

11

Right Size Model Reinvent ModelOr

Expectations of Reinvention of Business

Development Organization

Seek vs Serve

International Expansion

Asset Exploitation

Marketing Integration

Community Intelligence Creation

12

Professional Selling

Regional Expertise Expansion

More Employee and Board Member Empowerment

Higher Compensation Potential

Industry Expertise Focus

Improved Results

Job Creation

Efficiency

International Office Performance Scorecard

13

Offices

Number of

Years with

Contracts

FY16/17

Operating

Budget

Avg Yearly

Jobs in FL*

Avg Yearly

Export Sales*

Avg Yearly

Corporate

Assists

Avg Yearly

CAP EX

Investment

4 Year

ROI

United Kingdom 20 $200,000 634 $20.4 M 148 $18.4 M 353

France 6 $234,900 205 $46.1 M 182 $8.9 M 262

Germany 20 $200,000 250 $137.1 M 168 $16.8 M 788

Spain 18 $210,000 221 - 8 $22.0 M 155

South Africa 15 $94,000 - $1.28 M 142 - 13

Brazil 17 $180,000 20 $23.4 M 158 $2.9 M 150

Canada 20 $178,750 77 $1.1 M 135 $2.0 M 40

* Does not address sales or job continuance in ongoing years.

Realign to Department of Economic Opportunity

VISIT FLORIDA

Florida Sports Foundation

Minority Business Development

Federal Small Business Credit Initiative

Legislative Intent

Savings in Administration

Leadership Focus (both ways)

14

Opportunities for Savings

Redesign Organization Around Business Development and International Focus

Implement Private Sector Best Practices

Accountability and Metrics

Skill Integration

Talent Acquisition

Simplify Cost Centers from Six to Three

Reduce Office Space Costs

Tighten Travel and Expense Policy

Lower Professional Fees and Contractual Services

15

Opportunities For Savings

Hotels

Mileage

Meals and Entertainment

Align With State Policy on Researching Low Cost Options

Align Mileage With State Policy

Align Per Diem with State Policy

16

Simple Travel Policy Modifications Can Save Approximately $150,000/Year

Opportunities For Savings

Current Cost Structure

Payroll & Related Costs $8.9 M

Operating Expenses $2.5 M

Program Expenses & Events $3.4 M

Florida Sports Foundation $4.6 M

International Offices $2.2 M

Advertising and Marketing $10.3 M

Professional Fees $1.3 M

Travel $1.0 M

Total $34.2 M

Operating Cash $6.0 M

Potential Cost Savings

Payroll & Related Costs $2.725 M

Operating Expenses $400 K

Program Expenses & Events $300 K

International Offices $775 K

Advertising and Marketing $200 K

Professional Fees $450 K

Travel $150 K

Total $5.0 M

Operating Cash $1.0 M

17

Summary

$6 Million in Savings Can Be Achieved Through Effective Cost Management

Reinvestment of Savings Should Feed Job Creation Agenda

Business Development Direction is Critical to Future

International Trade and Foreign Direct Investment Needs More Focus

Marketing 2.0 Must be Measured for Success

Financial Management Improvements Needed Immediately

Private Financing of Incentives Should be Explored and Pursued Locally

Legislature and Stakeholder Engagement and Sponsorship is New Norm

18

Summary

International Business Development/Foreign Direct Investment

Business Development Reinvention

Community Intelligence

Financial and Organization Management

19

Areas For Investment

Summary

20

|----Q1----||----Q2----||----Q3----||----Q4----|

Implementation Plan

Right Size EFI

Reinvent Business Development

Realign International

Integrate Marketing

Work with Legislature

Improve Operations

1. Consolidate and Redesign EFI Organization

2. Reduce Operating Expenses by Approximately $400,000

3. Reduce Program Expenses and Events by $500,000

4. Reduce Professional Fees by $450,000

5. Reduce Travel Expenses by $150,000 Per Year

6. Free up Available Cash on Hand for Reuse in Future Years

7. Hire an Independent Accounting Firm to Conduct an Internal Controls Review and

Recommend a Corrective Action Plan

8. Transition the Management of the State Small Business Credit Initiative to DEO

9. Prepare Legislative Proposal to Move VISIT FLORIDA, Florida Sports, and Minority Business to

DEO

Recommendations For Board

21

Immediate Action Items

Recommendations For Board

10. Eliminate 27 FTE Positions Throughout the Organization (June Meeting)

11. Conduct an Evaluation of International Office Expenditures (June Meeting)

12. Redesign the Business Development Organization (September Meeting)

13. Redesign the Business Performance Bonus System (September Meeting)

14. Redesign the Business Flow And Review/Approval Processes between EFI and

DEO (September Meeting)

15. Prepare an Investment Strategy for the $6M in Identified Savings (June Meeting)

22

Actions For Future Board Meetings