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Still not clear if Piper will repay debt to county

STORY BY STEVEN M. THOMAS, (Week of September 27, 2012)

Nearly a year after Piper Aircraft cancelled its Altaire jet program, causing major layoffs at the company’s Vero Beach headquarters, it remains unclear if the county will recoup $500,000 in economic incentive money it is due under a 2008 agreement.

Multiple sources say a much-delayed settlement between the Piper and the Florida Department of Economic Opportunity over a companion debt to the state is near, but the county is an independent actor in the matter, free to piggyback on the state agreement or take a separate course.

“Piper is negotiating with state to get an extension on its employment goals,” says County Administrator Joe Baird.  “When that is settled, we can continue to be part of the joint agreement or we can make them pay back the money they owe us.”

The debt was incurred when Piper failed to meet employment targets set in the 2008 agreement in which the county and the state gave Piper $10.7 million in incentives to remain in its location near the airport and increase its payroll.

Under the terms of the agreement, the company was supposed to spend a certain amount on capital investment in its Vero Beach facility, invest an agreed amount in product research and development and have 950 employees by the end of 2011. It met the first two requirements, according to county officials, but came up approximately 220 employees short of the payroll target after the jet program was scuttled.

That failure put on hold payment of another $21 million the company would have received if it continued to grow and invest in Vero Beach and triggered the agreement’s “claw-back” provisions, entitling the state and county to reclaim part of the $10.7 million already paid.

Piper issued a white paper in November requesting relief from its repayment obligation, citing a poor economy and low demand for new airplanes as justification.

The state entered into negotiations with the company and said in December an agreement was likely by January.

That expectation turned out to be wildly optimistic and negotiations are still ongoing, but County Commissioners Joe Flescher and Peter O’Bryan say they think a deal is close.

Baird, Piper and the state say the same thing.

“We expect it to be resolved within this calendar year,” says Piper spokeswoman Jackie Carlon.

“The renegotiation process is nearly complete,” says DEO spokesman Ben Wolf. “We have reclaimed $13.4 million that was being held in escrow for the company and the money has since been returned to the state.  Any new discussions with the company will require Piper to maintain a certain number of jobs.  Additionally, the potential for future claw backs and sanctions remains, should the company not meet specified requirements.”

The county commission mirrored state action last week, moving $8 million from a restricted account created in 2008 back into the general fund.

Piper will not get any more money from the county or state, and judging by Wolf’s statement it sounds like the state agreement will forgive or put off repayment of what Piper owes the DEO, dependent on maintaining or possibly increasing current employment numbers. 

But what the commission will do about the $500,000 in taxpayer money due to the county remains to be seen.

Flescher is adamant Piper abide by the agreement and repay the money, regardless of what the state decides.

"I believe the claw-back provisions should be imposed,” he says. “As commissioners, we represent the taxpayers and we made a commitment to the taxpayers that Piper would create a certain number of jobs or pay back the money, and we need to live up that obligation and Piper needs to live up to it."

Commissioner Wesley Davis says the same thing, though less emphatically: “I would like for them to pay it back.”

Commissioners say they have waited for the state to settle with Piper before acting because the DEO was the lead economic development agency in the incentive deal, and they are still in that mode.

“Our contract with Piper was piggy backed on the state contract so it would be prudent to wait and see what the state does,” says O’Bryan. “Meanwhile, Piper is still building and selling planes and pumping over $40 million a year into the economy.”

The commission has generally been fiscally conservative and expressed determination to protect taxpayer money.

But Commissioners Bob Solari and Gary Wheeler did not respond to inquiries about whether they will insist on Piper paying back the $500,000 it owes the county, even if the state lets the company off the hook, so it is not clear whether there is majority support for that course.

If the state settles with Piper and the commission votes on the matter after Nov. 6, Wheeler will be gone and one of the two candidates running for his seat, Tim Zorc or Tony Donadio, will have a voice in the decision.