Beech-Nut pays penalty for job level

FLORIDA – The Beech-Nut baby food plant’s failure to meet job projections has led to more than $1 million in penalties against the company, Montgomery County Economic Development Director Ken Rose said.

Rose said the company failed to hire enough full-time employees at the Florida Business Park plant in 2012 under a tax-break agreement with the county.

When the Hero-Beech-Nut plant opened in 2010, it had a payment-in-lieu-of-taxes agreement, or PILOT, with the county. Under the agreement, Beech-Nut does not have to pay property taxes for 13 years. Instead, the company gives the Industrial Development Agency $2.5 million a year. After the 13 years, the tax level gradually will increase until the company is taxed fully.

However, Rose said, the agreement states the company must have maintained 373 employees who qualify under the PILOT program in 2012. According to Rose, the plant’s employee numbers totaled 260 full-time employees who qualified. Rose said the plant had additional part-time employees, but they could not be counted.

“They had over 350 employees there, but they didn’t qualify under our PILOT standards,” Rose said.

Rose said Beech-Nut paid the $1 million in penalties to local municipalities in October.

The PILOT program does not include school taxes, Rose said.

Rose said he expects to have another set of employment numbers Dec. 31. Based on those numbers, Beech-Nut may have to pay another penalty if it fails to reach the job projections included in the PILOT program for 2014.

The $124 million Beech-Nut Nutrition Corp. manufacturing plant is 650,000 square feet.

New York state gave Beech-Nut $104.5 million toward the new facility, including $18 million for construction, machinery and equipment. Beech-Nut purchased the property under the PILOT agreement from the Montgomery County IDA.

The cost was factored into the overall incentive package offered to Beech-Nut, which included $38.5 million in tax incentives.

Hero AG is Beech-Nut’s Swiss parent company.

Beech-Nut representatives could not be reached for comment for this story.