Charlotte Observer: Chiquita Deal Includes $5 Million For Moving Expenses
Chiquita CEO Fernando Aguierre. Photo: Tanner Latham, WFAE Chiquita's decision to move its headquarters to Charlotte was almost undone by the banana company's insistence on receiving taxpayer cash to offset its moving costs, according to a transcript of a Charlotte City Council closed session meeting released Wednesday. City staff told council members at the September meeting that the request was unprecedented. Charlotte Chamber president Bob Morgan agreed, saying the negotiations to move Chiquita from Cincinnati were like a game of poker. But after prodding from Mayor Anthony Foxx, who asked council members - "Do we want the jobs or don't we?" - seven council members tentatively approved the deal, paving the way for Tuesday's announcement. The city and county are celebrating the move, but the short-term cash deal is another sign of how far governments are willing to go to land jobs. It could set a precedent, with companies looking for the same deal that Chiquita received. Chiquita Brands International, which had $3.2 billion in sales last year, said Tuesday it would move its global headquarters from Cincinnati to Charlotte. The move will bring about 400 jobs with an average salary of $106,000. The company is considering moving into the office tower adjoining the NASCAR Hall of Fame uptown. Easier international and domestic travel from Charlotte-Douglas International Airport was an important factor in Chiquita's decision. Another critical piece: Roughly $22 million in taxpayer incentives, most of which came from the state. The September closed session of the council on Chiquita was around the same time media reports said Charlotte-based Bank of America could cut up to 30,000 jobs - a devastating development. During the meeting, Morgan told council members that the bank "may not exist in its present form in the next 12 to 18 months" and that Chiquita would help the community when it needs "positive news more than ever before." He said the deal hinged on whether the city, Mecklenburg County and the state would OK paying $5 million to $6 million in short-term cash. That money would be used to defray the company's cost of packing up, estimated at $27 million. Morgan told council members: "This ask is unique." The city and Mecklenburg County were likely to give the company a grant of roughly $730,000 over five years, based on the amount of new property taxes the company would create. That program - known as a Business Investment Grant - is a common program that's been used for Electrolux, SPX and Siemens, which moved to Charlotte or expanded here. Chiquita wanted more. That put the city into murkier waters because there is no policy on how much the city should give up front, or whether it should give such funds at all. Morgan originally told the company he thought the city, county and state could give Chiquita a $3.5 million short-term incentive package. Included in that would be the roughly $730,000 in property tax grants. In September, Morgan told council members Chiquita wanted $5 million plus the property tax refunds. "The CEO ... has told me, has told the mayor, has told the governor...that if the total package is $3.5 million, which is what is currently on the table, that we will no longer be competitive," Morgan told council members. During the closed session, Foxx told council members the different deal "does require us to do some mental gymnastics." Council members - by a 7-3 vote - tentatively approved giving Chiquita more money in closed session. Voting no were Republicans Edwin Peacock and Warren Cooksey and Democrat Patsy Kinsey. Democrat Warren Turner was absent. The total short-term package approved was $5 million, including the $730,000 in property tax refunds. It was more than originally offered, though less than what the banana company was seeking. In addition to the property tax refunds, the city and county will each pay Chiquita $875,000 each over three years. The state will match that with a $2.5 million grant, in addition to the state's $16.1 million in larger income tax grants. In the end, the city put some "clawbacks" on the short-term incentives. The money is tied to job creation, and the headquarters must remain in Charlotte for 10 years. The average salary must be more than $100,000, and the company needs to keep 90 percent of its jobs in the city over 10 years. Morgan told council members Chiquita's relocation was a once-in-a-decade opportunity. But Charlotte almost didn't get that chance. Six years ago, Chiquita was looking to leave Cincinnati in a well-publicized hunt for a new home. Morgan said the company had actually signed a lease in Miami, but on the night before the press conference, the European Union increased its tariff on bananas, costing the company millions. Chiquita canceled the move and signed a short-term lease in Cincinnati. The debate over incentives was sidetracked during the closed session while council members discussed Chiquita's history in Colombia, where it once grew bananas. The company was fined $25 million by the U.S. government for paying paramilitary groups $1.7 million between 1997 and 2004. The company likened the payments to extortion to protect its workers. But the groups committed atrocities against Colombians. Morgan told council members that if the city's position was that corporations that have been sued weren't welcome in Charlotte, "we would see the exodus of eight Fortune 500 companies that we have currently." Cooksey said Chiquita's history was "unique." "The acquisition of hiring terrorist death squads that kill people is several orders of magnitude more serious than litigating over fraud in my opinion," Cooksey said. "That is why I raised the question and why I'm trying to identify just how different and how far outside of our usual boundaries we should be going." The council will vote on the incentives in open session Dec. 12. The council will have four new members following last month's elections. Mecklenburg County Commissioners must also vote on the package in open session. Copyright 2011 The Charlotte Observer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.