Tue May 21, 2013
Were Chiquita's Bananas Good For Charlotte?
Chiquita will hold its annual shareholders meeting in Charlotte for the first time Thursday. It's a sign the company's relocation from Cincinnati is complete – and it's an opportunity to take a look at what Charlotte taxpayers got for the generous tax incentives they gave Chiquita.
Charlotte went bananas a year and a half ago. It wasn't just the peppy yellow bowties and frenzied Twitter campaign to lure Chiquita to town. It was also the city council's decision to go beyond its standard property tax rebate and cough up nearly a million dollars from its capital reserve fund to bag Chiquita. It was a first for the city, and it worked.
Former North Carolina Governor Bev Perdue – sporting a yellow bowtie, of course – got big applause when she announced Chiquita would bring "400 jobs with $14 million of investment right here in Charlotte, North Carolina! These are great jobs, y'all! High wages. That's great for the people of this community."
But some Charlotte City Council members soon began to wonder if they'd been burned.
"When I cast a vote I clearly told citizens, 'Get your resume ready, you about to get employed. The city's done something great,'" says Councilman James Mitchell who chairs the city's economic development committee.
The minutes of a closed city council meeting in September 2011 show council members nervous about the precedent their unusually-generous incentives package would set, but eager for the 400 jobs Chiquita promised. Once the deal was made public, the council voted for it 9 to 2.
In another first, Councilman Mitchell added a stipulation that Chiquita hold a local job fair. But it didn't go as he hoped. Chiquita collected some 2,000 resumes online and then summoned about 250 to an "invitation-only" job fair.
"That's just misleading to the council members and it's misleading to the citizens," says Mitchell. He wanted an open job fair at city hall where his constituents could line up and hand their resume directly to a Chiquita hiring manager.
That kind of job fair is arguably an out-dated notion in today's digital hiring world – particularly when filling high-paying, executive positions. But it underscores a growing pressure some council members feel to justify economic incentives deals to their constituents.
"What I want to know is, 'How is this going to impact our unemployment rate?' because we still have a very high unemployment rate here in Mecklenburg County,'" says Councilwoman Lawana Mayfield.
Mecklenburg County's unemployment rate in March was 8.8 percent, compared to the national rate of 7.6 percent.
In the case of Chiquita, the company initially told the city it would transfer about 90 employees from Cincinnati. After the deal was announced, CEO Fernando Aguirre speculated the number would be closer to 200. In reality, transfers account for nearly half of the 303 positions Chiquita has so far filled in Charlotte. That's 141 transfers compared to 134 people Chiquita says it hired locally. Another 28 were recruited from elsewhere.
But the total jobs number is the only one number that matters for Chiquita to collect its tax incentives (which will start in the next month or two).
The numbers of transfers is just "a point of information we like to know," says Charlotte City economic development manager Brad Richardson.
So long as Chiquita employs 400 or so people in Charlotte and keeps its headquarters here for 10 years, it will get the full $22 million state and local incentive package.
Now, Charlotte could start demanding that companies fill a certain percentage of new jobs locally in order to get tax incentives, but Richardson says that would be "short-sighted" because it would make Charlotte's offer less competitive against other cities.
"I'd argue for a bigger picture, longer view," says Richardson. "We're trying to bring growth. Particularly a corporate-headquarter growth, spins off other jobs in our community that wouldn't be there."
Chiquita employees who transferred from Cincinnati are buying homes here now, and paying sales and income taxes, adds Richardson.
Chiquita didn't provide someone to be interviewed for this story, but did send a three-page document outlining what it's done for Charlotte in the last 18 months.
For example, the company says $11 million worth of construction on its new office in NASCAR Plaza was done by local companies. The Chiquita Classic golf tournament has moved to Charlotte and will benefit the local United Way.
"I think we've gotten more than we were promised with Chiquita," says Richardson.
And Chiquita changed Charlotte's approach to luring new companies.
All of the city's economic incentive agreements now include a section strongly encouraging the company to hire locally, use local companies for services and give to local charities. The city also now follows up with companies that get incentives to find out exactly how many of the new jobs went to locals.
Chiquita Chooses Charlotte
Charlotte Council To Approve Chiquita Incentives
A Conversation With Chiquita CEO Fernando Aguirre