Charlotte Observer: United Technologies Sought
Fri August 24, 2012
Charlotte Observer: United Technologies Sought Up-Front Cash Incentives From City, County
United Technologies wanted to move a division headquarters to Charlotte from Connecticut for "political diversification," as it seeks more leverage in Washington, D.C., according to the Charlotte Chamber.
"They have all of their eggs in one basket politically, by having multiple divisions - all of which are in Connecticut," Chamber president Bob Morgan told City Council members during a May 14 closed session meeting. "They would like to diversify."
The decision to bring its newly created aerospace headquarters to Charlotte could give United Technologies more influence among the state's Congressional delegation, helpful to a company that relies on federal government contracts.
In a controversial June 25 vote, the City Council voted 6-5 to give United Technologies $2.5 million in city and county incentives for the move. The decision broke with city policy because much of the money will be given up-front to help defray the company's moving expenses.
The state also gave the company $2.5 million.
United Technologies will bring its newly created aerospace division headquarters to Charlotte, along with 325 jobs with an average pay of $200,000.
During the May 14 meeting, Morgan told council members the company's 10-year total payroll in Charlotte would be $650 million.
"This is the biggest project we've seen related to projects like this," Morgan told council members, according to a transcript released Monday.
In 2011, Hartford, Conn.-based United Technologies announced it was buying Charlotte-based Goodrich, a manufacturer of parts and systems for commercial and military aircraft. The deal was a blow to Charlotte, as Goodrich is a Fortune 500 company.
UTC announced it would create a new aerospace division headquarters, combining Goodrich with its Hamilton Sundstrand business. It considered northern Virginia, West Palm Beach, Fla., and York County, S.C. for the new office.
When asked by the Observer Monday whether the decision to move a division out of Hartford was made for political reasons, the company referred to a statement released a week earlier about its move: "The Charlotte area was on our short list of attractive locations mainly because of the access to aerospace talent at Goodrich. The location selection process was highly competitive, and the incentives provided by North Carolina were vital to our selection of the state for the headquarters. The state's favorable business climate was also a consideration."
The city has said the company will likely stay in Goodrich's current office space on West Tyvola Road, though it will likely expand as it adds more employees. Goodrich employs about 200 people, and the new UTC division will have 325.
The city of Charlotte's typical policy for business incentives is to offer a rebate for a portion of property taxes created from a company's new investment. For instance, if a company builds a new factory, it could receive most of the money back that it paid in property taxes.
In the case of UTC, the company was only planning to spend about $4 million on new improvements to the Goodrich facility, which would result in a city/county property tax rebate of about $731,000.
After Charlotte made that offer to United Technologies, the company asked the city for more money.
"The company saw that number, saw the policy (and said) that's not a lot of money compared to what I'm getting in Florida, South Carolina and Louden County, Virginia," said the city's economic development director, Brad Richardson during the May 14 meeting.
The city and Mecklenburg County then offered more money, including up-front cash to seal the deal.
The deal was similar to up-front incentives given to Chiquita Brands International, which moved to Charlotte from Cincinnati earlier this year.
During the closed session meeting, council members said they need to revisit their policy for corporate incentives. The problem, Richardson said, is that a corporate move may bring many high-paying jobs - but little direct investment.
He said the city is "challenged" because of its incentives being investment-based.
The city's economic development committee is scheduled to discuss changing the policy July 19.
Mayor Anthony Foxx, a Democrat, lobbied for the deal, just as he did in helping convince council members to support Chiquita.
But some council members were skeptical. Warren Cooksey, a Republican, asked during the closed session meeting why a company with more than $6 billion on its balance sheet needed money from the city.
On June 25, six council members voted for the deal: Democrats David Howard, James Mitchell, Claire Fallon, Beth Pickering, Patrick Cannon and Republican Andy Dulin.
Voting against were Cooksey, along with Democrats John Autry, Michael Barnes, Patsy Kinsey and LaWana Mayfield.
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