Downtown Investment Authority staff withdrew a resolution Dec. 18 that would have redrafted the terms of a 2016 incentives agreement between the city and Kraft Heinz Food Co. for its Jacksonville Maxwell House coffee plant.
The company requested an amendment to the deal after failing to hit the agreement’s stated job target for the facility.
DIA CEO Lori Boyer said after the meeting that DIA staff and Kraft Heinz representatives are not negotiating. “You may or may not see it back. I don’t know,” she said.
If the deal doesn’t return to the board for approval, Kraft Heinz would not receive the remaining $904,000 of a $1 million taxpayer-backed Recaptured Enhanced Value grant for the Downtown site.
The economic development agreement approved in January 2016 specified that Kraft Heinz would add 40 jobs.
DIA documents state that despite not adding those jobs, Kraft Heinz is reporting a more than $50 million investment in machinery and equipment at the plant. That is $20 million more than called for in the agreement.
Boyer said some DIA board members were not comfortable changing the agreement.
“I had more than one board member in my discussions with them who wasn’t looking favorably on it,” she said.
Boyer said recent issues involving JEA, Jacksonville’s city-owned utility, caused DIA board members to take a harder look at changing incentive deals.
“I think that all of the headlines about JEA board members’ responsibility and the heightened concern about the responsibility to the public, your fiduciary obligations, has given some of the board members pause about an incentive that doesn’t have new capital investment,” she said. “So they’re doing their job.”
DIA staff used the higher level of reported investment to justify amending the terms of the agreement.
The century-old facility at 735 E. Bay St. is Maxwell House’s last remaining U.S. coffee plant. Kraft Heinz is the fifth-largest consumer food and beverage company in the world.
In February, the company reported a loss of $12.6 billion in the fourth quarter of 2018 because of a noncash charge related to valuations of certain assets, including its Kraft and Oscar Meyer brands.
At the time, CNBC reported Kraft Heinz could sell its Maxwell House coffee business. As of Nov. 21, the company had not commented on that report.
Boyer confirmed Nov. 7 that she had a teleconference with Kraft Heinz representatives in October, but she declined to comment about the subject of the meeting.
Kraft Heinz withdrew from the state’s Qualified Target Industry Tax Refund program, a second incentive approved in Ordinance 2016-0059, after the company missed the Dec. 31, 2018, job creation target. With QTI, a company is refunded after jobs are created and wages are verified.
The company would have received $160,000 from the state, or $4,000 per job. The city’s portion was $40,000, or $1,000 per job. Kraft Heinz did not receive any QTI incentive payments from the state or city.
The seven-year REV grant in the agreement is capped at $1 million. The city has paid out $95,657 to date. It was a reimbursement of 50% of the increase on the property’s ad valorem taxes.
The requested changes would provide the company with five more REV grant payments from fiscal year 2020-21 through 2014-25.
Kraft Heinz employs 200 people at the Jacksonville plant, according to the DIA. The resolution included some new safeguards, including a proportionate reduction in the REV grant award for any year that employment levels at the Maxwell House factory drops below 200.
The grant would be forfeited if the plant’s staff level falls below 175 at any time before the end of fiscal 2024-25.