2016-4 Arthrex Job Creation-Final
Internal Audit Department
Audit Report 2016-4
Job Creation Investment Program:
Arthrex, Inc., and Arthrex
Manufacturing, Inc.
Dwight E. Brock
Clerk of the Circuit Court
and Comptroller
3299 Tamiami Trail East
Suite #402
Naples, FL 34112-5746
www.collierclerk.com
Issued: June 8, 2016
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Prepared by: Patrick Blaney, Senior Internal Auditor
Michael Harder, Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Nick Casalanguida, Deputy County Manager
Jeff Klatzkow, County Attorney
Mark Isackson, Corporate Financial & Management Services Director
Jace Kentner, Interim Business and Economic Development Director
Cc: Dwight E. Brock, Clerk of the Circuit Court and Comptroller
Crystal K. Kinzel, Director of Finance & Accounting
James D. Molenaar, Internal Audit Manager
TABLE OF CONTENTS
SUMMARY ..................................................................................................................................2
OBJECTIVES ...............................................................................................................................2
SCOPE ..........................................................................................................................................2
BACKGROUND ..........................................................................................................................2
OBSERVATIONS ........................................................................................................................3
MANAGEMENT RESPONSE .....................................................................................................3
The files and draft versions of audit reports are confidential and exempt from public records requests during
an active audit under Nicolai v. Baldwin (Aug. 28, 1998 DCA of FL, 5th District) and §119.0713, Florida
Statutes. Workpapers supporting the observations noted within this report become public record and will be
made available upon request once the final audit report has been issued.
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Internal Audit provided a draft of this report to the Office of Business and Economic Development for management
response on May 5, 2016. County management provided that response on May 13, 2016.
Summary
This examination generated the following observation regarding the Job Creation Investment Program:
Arthrex maintained the 400 eligible new jobs validated through June 30, 2014.
Arthrex created 100 more eligible new jobs during 2015.
Objectives
The objective of the audit engagement was to validate the number and eligibility of continuing and new jobs that
qualified for the Job Creation Investment Program incentive payment during the period from July 1, 2014, through
June 30, 2015.
Scope
The audit engagement consisted of, but was not limited to, the following tasks:
Reviewing applicable Florida Statutes;
Reviewing applicable Collier County Ordinances;
Reviewing applicable Board of County Commissioners (BCC) Agenda Items and related Meeting Minutes;
Reviewing the BCC’s Job Creation Investment Program Agreement with Arthrex;
Examining payroll and personnel records from Arthrex; and
Tracing payroll data, such as employee numbers, names, job titles, hire and/or promotion dates, wages, work
locations, and lawful United States residency, to the personnel records.
The Office of Business and Economic Development and the Clerk’s Internal Audit Department verified 100% of
applicable payroll and personnel records for Arthrex’ created positions.
Background
The Clerk’s Internal Audit Department assisted the Office of Business and Economic Development in validating jobs
created by Arthrex in accordance with the Job Creation Investment Program. This program was a performance-based
initiative authorized in Collier County Ordinance 2003-60, as amended. The program provided general revenue
funding to local businesses for the creation of jobs that met the criteria specified in the Ordinance. Those criteria,
which varied by geographic location within Collier County, included minimum numbers of new jobs at or exceeding
specific wage levels.
Collier County Ordinance 2003-60 stated that the program’s purpose was “to promote and foster economic
diversification through the retention and creation of high wage jobs in targeted industry clusters.” Ordinance 2006-
36 defined jobs as “limited to individual permanent legal residents of the United States who are employed in each
new created position of employment at a primary location in Collier County, and as applicable maintained, as a result
of the program.” Ordinance 2003-60 originally terminated this program on October 1, 2008, but on September 9,
2008, the BCC enacted Ordinance 2008-46, which extended the Job Creation Investment Program through October
1, 2013. The BCC approved a Job Creation Investment Program agreement with Arthrex on January 24, 2012, prior
to the program’s expiration.
To be eligible, businesses had to apply to the County Manager prior to making the decision to locate or expand within
Collier County. In keeping with the Job Creation Ordinance and the BCC’s Job Creation Investment Program
Agreement with Arthrex, the general fund would pay $2,000 over a three-year period for each job created.
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In its 2011 application to participate in Collier County’s economic incentives, Arthrex proposed creating new jobs
with annualized wages averaging $59,580. The average private sector wage in effect at that time was $38,719. Based
on its expansion locations, the Program required Arthrex to create at least 30 new, eligible jobs. Arthrex intended to
create 400 net new jobs by June 30, 2014 (Phase 1), 100 more new jobs by June 30, 2015 (Phase 2), and another 100
new jobs by June 30, 2016 (Phase 3), for a total of 600 net new jobs.
This review validated Arthrex’ creation of 500 new jobs in Collier County in the period ending June 30, 2015. By
meeting the terms of its Job Creation Investment Program Agreement, Arthrex has earned an economic incentive
payment of $333,334.34.
Observations
1) Arthrex maintained the 400 eligible new jobs validated through June 30, 2014.
The Office of Business and Economic Development and the Clerk’s Internal Audit Department reviewed Arthrex
personnel and payroll records. This process established that Arthrex had maintained the 400 new jobs validated for
2014. Those jobs paid an average wage of $70,128 during this review period, and continued to qualify for a Job
Creation incentive payment. According to Collier County’s Job Creation Investment Program Agreement with
Arthrex, this incentive payment for 400 Phase 1 jobs is $266,667.67.
2) Arthrex created 100 more eligible new jobs during 2015.
Business and Economic Development and Internal Audit also reviewed Arthrex personnel and payroll records for
employees filling positions created between July 1, 2014, and June 30, 2015 (Phase 2 in the Job Creation Agreement).
This process established that Arthrex had created 100 more new jobs during that period. Those jobs paid an average
wage of $74,840, and qualified for a Job Creation incentive payment. According to Collier County’s Job Creation
Investment Program Agreement with Arthrex, this incentive payment for 100 Phase 2 jobs is $66,666.67.
Management Response
“I have reviewed the submitted Audit Report #2016-4 Arthrex regarding Arthrex Manufacturing’s compliance with
incentive criteria established by Job Creation Investment Program Agreement with Collier County, approved January
24, 2012. I concur with the audit findings and consider the Arthrex Manufacturing currently in compliance with the
obligations within the Job Creation Agreement up to June 30, 2015, as specified for Phase Two.
Staff appreciates the professional and pragmatic approach exhibited by the Internal Audit Department for this
performance validation process.”
Internal Audit Comments:
Internal Audit acknowledges the cooperation of Arthrex management and County personnel for their support in the
audit process.