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The Year Ahead For Local Industries

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The Tampa Tribune

Published: January 6, 2008

Will this year be great, or will we see recurring economic themes from 2007? Predictions by industry experts point to an easing of the morass in the housing market but say insuring your home will still be a hairy proposition. On a positive note, Hillsborough County's cancer research center, the county's biggest economic development project, may start paying dividends. Meantime, the cost of energy will go higher, the state is reviewing sales tax exemptions and the local workforce should stay resilient despite ongoing economic crises.

Real Estate

In review: The downturn in the real estate market was a personal and economic problem in 2007. People couldn't sell homes, homebuilders struggled to unload inventory and some mortgage companies collapsed. Many homeowners who took out risky loans saw interest rates rise, adjusting their mortgage payments beyond what they could afford. As a result, Florida's foreclosure rate led the nation. Sellers dropped prices, and the Tampa metro area saw its median home sales price drop more than any other in the country.

What to expect: Experts say that the market should turn around in Florida by fall of 2008, but loans won't be as readily available. Look for more price reductions until the market reaches parity and sales pick up. Some economists predict prices could drop another 10 percent in the Tampa Bay area before the market gets better. When prices do start rising again, it's expected to happen slowly.

Shannon Behnken

Insurance

In review: In 2007, Gov. Charlie Crist and the Florida Legislature passed legislation that helped lower home insurance rates about 13 percent on average, but the decrease was short of the 24 percent decline promised by lawmakers. Citizens, the state-run property insurer of last resort, grew to become the state's largest home insurer as private companies stopped writing new policies and continued to drop customers.

What to expect: Proposals to further reform Florida's insurance market are sure to be considered during this year's regular legislative session, which begins in March. Chief Financial Officer Alex Sink will pitch to lawmakers a plan that would reduce homeowners' exposure to assessments. Her plan would give the state the authority to set reinsurance levels and pricing options, a measure designed to reduce the state's risk and encourage competition among private insurers.

Russell Ray

Economic Development

In review: After a few years of big achievements, the Bay area was a bit less successful in attracting corporations and expanding local ones. The Committee of One Hundred, the Greater Tampa Chamber of Commerce's economic development arm, reported closing on 11 projects through Oct. 31. Those projects created 1,387 jobs and capital investment of about $45.7 million. That is a slower pace than in 2006, when the Committee of One Hundred closed on 16 projects, creating 1,545 jobs and capital investment of $166.1 million.

Some successes in 2007 include the addition of 200 jobs in Brandon by Coca-Cola Enterprises, which added 200 people to its Brandon workforce. Premier Beverage, a liquor distributor, announced it will add up to 550 jobs to its south Hillsborough distribution center.

What to expect: By late this year, Hillsborough County's biggest economic development project, the M2Gen cancer research center, may start trying to sell some of the research from its cancer database to drug and medical companies. Research from the center, which is a collaboration between Merck & Co. and the H. Lee Moffitt Cancer Center & Research Institute, should help find the most effective cancer treatment for individual patients. In Pinellas County, a major project includes redeveloping the old Toytown landfill at Roosevelt Boulevard and Interstate 275 into a massive retail, office and park project.

Michael Sasso

Energy

In review: Gasoline prices surged to record levels late in 2007, surpassing $3 a gallon in many parts of the country, including the Bay area. The historic spike came in the fall, a time of year when pump prices should be falling amid decreased demand. But demand for crude oil, the feedstock for nearly all transportation fuels, remained strong amid record consumption in Asian markets. As a result, the price of oil neared $100 a barrel. Oil prices peaked at $99.69 a barrel on Thursday.

What to expect: Experts foresee oil prices hanging at about $100 a barrel or higher. If at that level in the spring, when demand for gasoline begins to surge, prices at the pump could exceed $4 a gallon in the Bay area and elsewhere, experts say. Also, St. Petersburg-based Progress Energy, the state's second largest electric utility, is expected to officially file plans with the state to build two nuclear reactors in Levy County.

Russell Ray

Sales Tax

In review: In February, state Sen. Bill Posey, R-Rockledge, filed his annual bill seeking to remove the sales tax exemption for ostrich feed. It's become a symbolic effort by Posey to call attention to the state's mishmash of sales tax exemptions. And, as usual, the bill died in committee. The 245 exemptions to the sales tax still stand, diverting some $12 billion from state coffers.

What to expect: An influential group of business, political and legal veterans serving as the Florida Taxation and Budget Reform Commission is holding its once-every-20-years session. The panel can bypass the Legislature and place constitutional amendments directly on the ballot, and its work will likely be concluded sometime this spring. Members are considering several proposals to require a review of sales tax exemptions. What's more, the group is also pushing for Florida to join a consortium of states trying to make it easier to collect sales taxes on Internet purchases. Looking the other way on e-commerce costs the state an estimated $2 billion a year.

Jerome R. Stockfisch

Workforce

In review: After years of hovering near historical lows, the unemployment rate for Florida and the Bay area began ticking upward - but still remained well below the national average - as the housing market, consumer confidence and other economic issues took their toll on the labor market. Homebuilders struggled, and some lenders, such as Homebanc, closed their doors for good.

What to expect: Overall, economists believe Florida and the Bay area will continue to be a resilient labor market. However, if the mortgage and credit industries provide more choppy waters for the economy, more financial services could jettison jobs.

Dave Simanoff

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