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Solari: Get Piper’s audited financials

STORY BY STEVEN M. THOMAS, (Week of December 22, 2011)

Piper Aircraft, Indian River County’s largest private employer, may have a tough time wiggling out of a half-million dollar payment it owes the county.

The debt was incurred when the company failed to meet employment targets set in a 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, if the company failed to meet certain targets, it was supposed to repay Indian River County one-sixth of the incentive amount annually for six years.

The agreement called for Piper to have 950 employees by the end of 2011, and according to county officials, it currently is approximately 220 employees short of the payroll target.

In November, in the wake of cancelling its jet development program and a change in ownership, Piper issued a white paper requesting relief from the repayment obligation, citing a poor economy and low demand for new airplanes as justification.

But Piper has a history of keeping the county in the dark about its operations, according to Commissioner Bob Solari, and he wants to see three years of audited financial statements before giving any consideration to the company’s request.

“My impression is Piper hasn’t been too forthcoming with what it has been doing and I haven’t seen any reasonable financial information about the company,” says Solari.

“They take the view that since they are a private company, their records are confidential, but once they come to a public source of funds, that changes,” said Solari.  “They can’t have it both ways – keeping their information to themselves while taking taxpayers’ money.”

Commissioners Wesley Davis and Peter O’Bryan take a somewhat softer stance toward the company’s request. They cite facts from Piper’s undocumented white paper about how much money the company has invested in its Vero Beach operations and the size of its payroll as mitigating factors the county should consider.

“I think the county’s money has been well invested,” says O’Bryan. “We have had four years of a payroll that I believe is about $40 million a year and they spend six to nine million a year with local companies. We’ve seen a return of nine dollars for every dollar invested.”

But Solari says the white paper doesn’t contain the type of information he is interested in. “There was nothing in there about their financial situation. It was an impact analysis similar to what the Chamber of Commerce does to show the benefits of a new business. I want the facts and figures.”

Despite their sympathy for Piper’s self-described plight in the wake of the jet program cancellation, Davis and O’Bryan say they are not in favor of forgiving company’s debt outright.

“In these economic times, a delay I could live with,” says Davis. “But I am not there yet with the idea of forgiving the debt.”

“I am not supportive of any blanket forgiveness,” says Commissioner Peter O’Bryan. “I would consider giving them another couple of year’s extension to see if times turn around and they can make their job numbers. Or I would consider a staged forgiveness, where they would be let off the hook for a certain amount each year they maintain current payroll numbers.

Davis and O’Bryan are not intent, as Solari is, on closely examining the company's financial situation before granting an extension.

“I don’t think we need to see to their books,” says Davis.

But Solari told County Administrator Joe Baird on Dec. 12 he wants the audited financial statements before responding to Piper’s request, and Baird said he planned to make the request to Piper at a meeting on Wednesday, Dec. 21.

“I have asked for financial information,” Solari says. “We will see if we get it.”

James Miller, a spokesman for the Florida Department of Economic Opportunity, which provided $6.66 million of the incentives to Piper, says the agency expects to have an amended agreement with the company executed by the beginning of 2012. “We are looking at what obligations they have met and which ones they might still meet to determine how much money they should pay back.”

Davis says he is not sure how long it will take to resolve whether Piper needs to pay back some of the $4 million it received from the county. “I don’t know what the timeframe for our response is, but soon I hope. We need to get some answers and get everybody on the same page.”

Piper Aircraft spokesperson Jackie Carlon says Piper most likely will provide audited financial statements, but is not interested in having the situation prolonged with extensions or staged debt forgiveness.

“We don’t want it to drag on,” Carlon says. “We want the state and county to acknowledge we fulfilled our obligations and met the spirit of the agreement.”