Friday, December 30, 2011

Require Piper to eventually repay incentive funds for failure to meet its obligations -Editorial

By Editorial Board
Posted December 30, 2011 at 4 a.m.

Piper Aircraft should repay some of the incentive money it received from local and state governments to stay in Vero Beach because the company failed to reach employment levels required.

Under agreements with the state of Florida and Indian River County, Piper was paid nearly $10.7 million in 2008, and was required to reach certain benchmarks over specific periods of time, including employment levels. While other benchmarks have been achieved, the company was to employ 948 by the end of this year. Instead, employment is about 730 to 740.

That means the company should repay about $950,000 to the state and about $571,000 to the county, plus interest.

Had Piper reached all of its benchmarks during the term of the incentive packages, it could have received up to $32 million — $20 million from the state and $12 million from the county. Piper officials have said they don't intend to request additional incentive funds beyond the $10.7 million, but want the state and county to forgive the $1.5 million it might have to repay.

Florida officials seem overly willing to let Piper out of its agreement and not have it repay what it owes the state. Officials said last week that the state intends to renegotiate its agreement with Piper and base employment goals on current employment figures rather than earlier — much higher — employment goals.

Certainly, one can sympathize with the company, hit hard by the recession. Market conditions did not allow for the company to achieve the employment levels desired. And, the company lived up to much of its obligations, including remaining in Vero Beach.

In a report released by the company, it said it "has already, by far exceeded total expenditures for product development and capital improvements originally contemplated by the incentive agreements. Direct spending nearly $100 million in additional long-term investments in the community. Piper has made more than $18 million in capital expenditures and spent more than $79 million in total product development for all its product lines since 2007. Piper's investment in the community, through product development costs and capital expenditures, has directly returned more than $9 for every $1 invested by the state and local governments in economic development incentives."

The amount the company might have to repay is comparatively minor compared to what the company has invested. But, that money rightfully should be returned to taxpayers who put up the incentive money. And the company on its own canceled production of a jet that had been on the drawing board for years.

Indian River County Administrator Joe Baird said recently that the county might be willing to extend Piper repayments by two or three years, but, "We would not recommend forgiveness" of those financial sanctions for not meeting employment goals.

That's the most prudent position. It indicates support for Piper and a willingness to cooperate with the company in difficult times while also representing the interest of county taxpayers.

Having Piper as a massive employer and community supporter has been important to Indian River County. It has been a great neighbor, particularly over the past few years.

Nevertheless, the company signed agreements with the state and county. It did not meet all of its obligations under those agreements. A penalty for not doing so is part of those agreements.

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