By Ashley Lopez
Florida Center for Investigative Reporting
A mortgage software firm that has received millions in state incentive dollars has announced it will lay off 744 workers in Florida by April.
Digital Risk, which engineers mortgage risk, compliance and transaction management software, “disclosed in a regulatory filing Tuesday that it is laying off up to 251 workers in two locations in its Maitland headquarters, along with 30 workers in Boca Raton, 148 in Jacksonville, and 315 in Lake Mary, The Tampa Bay Times reported.
A spokeswoman, however, said the firm anticipates shifting an unspecified number of affected workers back to full-time or on contract, part-time or temporary status after analyzing business conditions over the next 60 days.
“It’s not a straight layoff,” Digital spokeswoman Brandie Young said, calling it a “hybrid” workforce model. “What we’re doing is restructuring a portion of the workforce … to support (our clients’) fluctuating demand.”
Young said she couldn’t predict how many employees may be called back, even part time, if market conditions improve.
In its letter to the state, Digital Risk blamed the layoffs on “substantial, abrupt and unforeseen residential mortgage events,” including a large decline in mortgage refinancings. With credit quality improving, “demand for Digital Risk services has materially decreased,” the company said.
Currently, Digital Risk has 1,765 employees statewide, state officials said.
Digital Risk is among a long list of companies that the state has given money to in the past several years in an effort to promote job creation.
Gov. Rick Scott—more than any governor before him—has relied on these incentive programs to boost the state’s economy, but these incentives have had mixed results.
In the case of this company, it’s not clear whether the state incentive program will eventually pay off.
According to The Orlando Business Journal:
Enterprise Florida released a statement looking at the Digital Risk’s tax incentive programs. Digital Risk has been awarded three incentive packages since 2009; so far, the state has paid the mortgage company $2.1 million and could, at maximum, pay Digital Risk a total of $3.8 million.
The most pressing was a quick action closing fund agreement signed in 2012, where the state gave Digital Risk $1 million and a commitment for another $1 million payout. Digital Risk committed to create 1,000 jobs.
Half of those jobs, 500, have to be created by the end of 2014, and up until recently, the company was on track, having created 261 jobs so far. However, with the layoffs, it may not be possible for the company to continue creating those jobs by the end of 2014.
“Sanctions would be applied if the company is unable to meet performance requirements by the end of 2014 according to their contract with the Department of Economic Opportunity,” Enterprise Florida CEO Gray Swoope wrote in a statement.
Sean Helton, a spokesman for Enterprise Florida, confirmed that if Digital Risk doesn’t create and retain the remaining 239 jobs by the end of 2014, they would have to pay money back to the state.
In 2012, a movie company that state taxpayers had given $20 million to went under, putting the effectiveness of state’s incentive program into question.
However, it took a while for any changes to the program to come to fruition. For several years, there was no public record of whether the state’s incentives were actually creating the jobs they were supposed to.
However, last year a law was passed that created more transparency in the state’s economic incentives program. But even though there is now some record of how the program has been working in the past three years, experts have said some other changes still need to be made.
Integrity Florida and the state’s Office of Inspector General have offered many other ideas on how to improve Enterprise Florida and the state’s economic incentives program, but they have not become law.