VERO BEACH — Piper Aircraft Inc. and the state remain in a holding pattern on the possible repayment of some incentive money the aircraft manufacturer received in 2008, but some county officials indicated they will not be taking a hard line regarding the return of the money.
Both state and Piper officials said a meeting Friday concerning the incentive package went well.
"We discussed the current status of the agreement and Piper is going to do research on their business performance and what they can realistically achieve in terms of reaching performance measurements by the end of their contract," said James Miller, a spokesman for the state Department of Economic Opportunity.
The state and Indian River County in 2008 developed a $32 million incentive package to keep Piper in Vero Beach, with a key selling point being the construction of the PiperJet, which was later redesigned as the Piper Altaire. The company announced Oct. 24 it was indefinitely suspending the Altaire program and would be laying off 150 employees and immediately releasing 55 contract workers.
The incentive package crafted by the state and county contained employment and investment benchmarks that the company had to meet to receive the incentive money. The company received its first $4 million from the county and almost $6.7 million from the state, but never met the benchmarks needed to collect additional money as the recession sent general aviation sales across the country into a tailspin.
Employment at Piper plummeted from about 1,100 in 2008 to about 580 in the summer of 2009. Employee numbers had climbed back to about 850 before the recent Piper Altaire announcement.
The drop in staffing puts Piper at risk of having to pay back one-seventh of the money it received from the county and state unless there is some significant increase in jobs by the end of the year.
Miller said no decision on potential paybacks, also known as clawbacks, can be made until Piper responds with updated figures on what job creation and economic development goals it can meet.
Piper had earlier received a two-year extension allowed under the contract and Piper spokeswoman Jackie Carlon said the company has not decided whether it will seek additional time.
Indian River County Administrator Joe Baird said Monday that based on the economy, he would be willing to recommend to the County Commission that Piper be given an extension of three or four more years to meet the employment benchmarks.
A day after Piper announced the suspension of its Altaire program, Baird sent a letter to Michelle Dennard, deputy director of the state Office of Tourism, Trade, and Economic Development, expressing the county's support for Piper Aircraft.
"Despite recent layoffs, Piper Aircraft, Inc. is still our largest manufacturing operation." wrote Baird, and noted the company has a payroll in excess of $40 million and employs 700 people.
"This business is extremely important to our area businesses, area utilities, and our tax base. Our community would be devastated if, for any reason, the entire operation was forced to shut down," wrote Baird.
Baird said he has no knowledge of any possible shutdown, but was just trying to emphasize the company's importance to the community.
Indian River County Commissioner Peter O'Bryan said previously he would be open to an extension. He said he doesn't think anybody could have predicted the global economic meltdown and noted Piper had invested $100 million of its own money in the jet program before calling it off.
"It wasn't like they were trying to take the money and run," said O'Bryan.
As to whether other companies who received government incentives might expect similar extensions after failing to meet their benchmarks, O'Bryan indicated that it should only be allowed in extraordinary conditions, such as those that can't be predicted.
For instance, O'Bryan said, a company merely saying that it failed to meet its sales projections after one year in a state would not be enough to warrant reconsideration.
Professor Robert Lynch, of Washington College in Chestertown, Md., has evaluated the effectiveness of such programs over the past two decades. He said in the past couple of years, it has not been unusual to see companies wanting to renegotiate incentives deals they received from the government.
While not familiar with the local situation, Lynch said in general, the impacts of incentive programs have been small and somewhat negative.
In determining the impact of incentives, Lynch said, one has to look at other ways the money could have been used, such as to reduce taxes. State and county officials deserve credit in this case, however, for putting a package together that tied payouts to certain performance measures. Often, the money is given out by government without having such protections in place, he said.
O'Bryan said Piper invested more than the money it was given by the county back into the community.
The Indian River County Chamber of Commerce also issued a newsletter noting that the company's payroll since 2008 has been more than $40 million per year. It said this $120 million impact over a three-year period represents a 3,000 percent return on investment of the $4 million the county gave to the company. In addition, the chamber cited a 2007 economic impact analysis it commissioned that showed Piper had a $518 million annual economic impact on the county.
