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Bids to lure Piper Aircraft run as high as $90 million

By Erik Siemers
Wednesday, May 23, 2007

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Copyright © 2007, The Albuquerque Tribune

Albuquerque's competition to lure Piper Aircraft Co. and its estimated 1,500 jobs is not only fierce.

It's likely to be expensive.

Two Florida cities have unveiled details of incentive-laden proposals aimed at keeping the Vero Beach company in the Sunshine State, with at least one plan reaching about $90 million.

And for the first time, New Mexico officials are confirming the state's place as a bidder for the aircraft company.

"I will tell you that we are clearly very, very interested in Piper and we would be delighted if they were to choose New Mexico as a site for their facility," said Kelly O'Donnell, the state's acting secretary of economic development. "We feel we present a very competitive package, and clearly New Mexico is becoming increasingly desirable as a place to do business."

Piper is in the hunt for place to locate a manufacturing facility for its new PiperJet aircraft, and possibly its corporate headquarters.

Company spokesman Mark Miller on Wednesday confirmed for the first time that Albuquerque is one of the five cities that are finalists for the site.

Asked whether Piper officials would come to Albuquerque for an assessment and when, Miller said a visit is scheduled Friday.

"We are continuing to explore our options," Miller said. "Albuquerque is part of our serious consideration for site selection."

The company confirmed last month it has narrowed the list of possible locations down to five, but would only identify its hometown of Vero Beach as one. Besides Vero Beach and Albuquerque, the other sites are Oklahoma City; Tallahassee, Fla.; and Columbia, S.C., according to various published reports.

Florida's more rigorous public records laws have led to officials in Tallahassee and Indian River County, which includes Vero Beach, to disclose details of their proposed incentive packages.

The Vero Beach area has put forward a $50 million proposal to keep Piper along Florida's Treasure Coast.

The proposal includes purchasing Piper's existing facilities and leasing it back to the company and building a new facility for building the PiperJet, along with the impact fees associated with the construction and possibly a reduced utility rate, said Helene Caseltine, economic development director for the Indian River County Chamber of Commerce.

Both the Indian River County Board of Commissioners and the Vero Beach City Council have approved the plan in concept, Caseltine said. A final approval vote would come only if the city is chosen by Piper, she said.

"That's a ballpark figure," Caseltine said of the $50 million amount. "We're not going to release our entire package to the media. That would be silly. I don't want our competitors to know the details."

Meanwhile, the Tallahassee City Commission on Wednesday was scheduled to consider an estimated $90 million proposal conceived by city economic development officials.

The plan, according to documents on the city of Tallahassee's Web site, includes building a 593,000-square-foot manufacturing space and about 122,000 square feet of corporate office space.

The construction would cost about $65 million, with an additional $15-20 million to cover capitalized interest through 2013. Another $5 million would be used for airport improvements. Piper would provide lease payments over 30 years to cover the debt, according to the proposal.

Published reports in Florida also indicate the state would kick in an additional $20 million to keep Piper in the state. Officials with Enterprise Florida, the state's economic development arm, declined to confirm those reports.

Economic development officials in Oklahoma and South Carolina declined to comment.

New Mexico officials have also declined to discuss details of the state's recruitment efforts.

Vero Beach City Manager Jim Gabbard was quoted Wednesday in the The (Vero Beach) Press Journal on Wednesday saying, "We know there are other proposals out there like the $70 million from Albuquerque."

O'Donnell, New Mexico's acting secretary for economic development, wouldn't provide an exact value of what the state might offer.

"However, the total value of the package, including tax abatements, could total $70 million over a number of years," O'Donnell said. "I'm not confirming nor denying, however I could see that our package, with everything included, could total that amount over a certain number of years."

The state has an arsenal of incentives it is authorized to offer, O'Donnell said. They include: industrial revenue bonds, a program to provide reimbursement for some job training costs, and tax credits for providing high wage jobs and on the value of equipment brought into the state by manufacturers.

Richard Aboulafia, an aviation analyst with Teal Group Corp. in Fairfax, Va., is critical of New Mexico's history of investing directly in aviation ventures like Eclipse Aviation and the planned spaceport.

"There's a fine line between infrastructure and tax breaks and outright subsidies," Aboulafia said. "You have to watch that you're not giving away the store."

He called New Mexico's chances of outbidding its competitors, "very good."

"The New Mexican taxpayer is a remarkably generous creature," he said.

Information on the city of Tallahassee's Web site says a final proposal must be submitted to a site selection consultant by May 30 and will be sent to the company the following week. The company then would narrow its list to two or three cities, the Web site states.

Miller, the Piper spokesman, said the company has not disclosed a timeline for making a decision.

The city with the most to lose in the Piper bidding war is Vero Beach.

Piper employs 1,029 people and remains Indian River County's largest private employer, Caseltine said. It has been in Vero Beach since 1957, she said.

An economic impact study released last month concluded that the company has a $518 million impact on the local community, Caseltine said.

"If Albuquerque or whoever loses out, they just move on to the next project. No big deal," Caseltine said.

"If we lose out, it's devastating."