It was billed as a once in a decade opportunity, the chance to lure an international brand to relocate their worldwide headquarters to Charlotte. The pursuit was costly and controversial.
And now, after only three years, Chiquita is already on the way out. The company announced Wednesday it will close its Charlotte headquarters, a few months after it was bought by a Brazilian conglomerate in a hostile takeover.
Was it worth it?
The setting
To understand how this particular deal went down, go back to September 12, 2011.
The unemployment rate is 8.8 percent. The front page of the Charlotte Observer reads “Bank of America to cut 30,000 jobs.”
“Our leading corporate citizen is on the ropes,” Bob Morgan of the Charlotte Chamber of Commerce tells the city council. “Bank of America may not exist in its present form in the next 12 to 18 months.”
The council was meeting in a closed door session to approve a package of economic incentives to bring Chiquita’s headquarters to Charlotte, along with 400 jobs at an average salary of $100,000, plus benefits.
The state estimated a net economic impact for North Carolina as a whole of more than $800 million over the next decade.
Chiquita has other suitors, so the council is asked to put together their side of an unprecedented incentive package right away.
The deal
The company received a package that, if they met all benchmarks, could total more than $21 million in state and local money over 11 years.
Chiquita’s incentives were largely tied to the number of employees at what would become its Uptown headquarters.
The company needed to create 170 jobs in 2012, add 92 to that total the next year, and so on.
Chiquita delivered on the promise those first two years. The company, and those people, pay taxes—the second promise of the plan.
These incentive deals only work if the company and its employees pay more money in taxes than the company receives in incentives.
To date, Chiquita has received roughly $500,000 each from both Charlotte and Mecklenburg County in incentives. The state ponied up another $1.5 million, meaning Chiquita’s three years in Charlotte cost $2.5 million in incentive cash.
There are so called “clawback” provisions in the incentives, which allow the city, state and county to get their money back if Chiquita breaks the deal. One provision stated Chiquita would stay in Charlotte at least 10 years.
City and county leaders say Chiquita has agreed to repay the $2.5 million it has received. The company has yet to comment.
A question of payoff
The deal was a steal, says Bob Morgan of the Charlotte Chamber of Commerce.
“My back of the envelope calculation is that you’re talking about a payroll over the last two, two-and-a-half years, in the tens of millions of dollars,” Morgan says. “You’re talking about, I don’t know the number of families, but probably approximately 100 families that have moved here from elsewhere—they are now part of our community.”
And Morgan says, despite its short stay, landing Chiquita has been good for Charlotte.
“They help us tell the story. They’ve helped us sell Charlotte, to Sealed Air and MetLife and to other companies that are going to bring jobs to the community,” Morgan says.
That view may be why Mayor Dan Clodfelter issued a statement saying, “We thank Chiquita for contributions to the community during their time in Charlotte.”
And why Mecklenburg County Manager Dena Diorio issued talking points to county staff and commissioners. Here’s one: “We are appreciative of the Chiquita’s corporate philanthropy and investment in the community.”
But not every civic leader shared those warm feelings. Mayor Pro Tem Michael Barnes voted for the incentive package then. Today, he’d vote no because it failed to live up to its billing. And that, Barnes says, has consequences.
“What you’ll see is I’m trying to be as cautious about all the projects we’re considering,” Barnes says.
He mentions the former Eastland Mall, where the city is looking to lure a developer, as well as the deal the city is working on with a private company to turn Bojangles Coliseum into an amateur sports complex. The city would be responsible for half of the $70 million project.
He says the Chiquita experience means “we need to be more cautious about how we do those projects.”
There’s another potential cost, too, to Charlotte’s reputation. All these incentive deals may lure companies, but, Mecklenburg County Commissioner Bill James questions if it’s worth it.
“I mean honestly, what kind of loyalty do you get?” James says. “I don’t want to sound crass, but, no one falls in love with a hooker. And in essence Mecklenburg County and the City of Charlotte, they’ve been hooking themselves out to these companies.”
As for Chiquita, the company was taken private earlier this month. There is no word on where the new headquarters will be. As for their roughly 300 Charlotte employees, a memo Wednesday stated that, as a private company, there will be certain corporate services that are no longer necessary.
