Fairfax opens economic development office in Los Angeles

May 1, 2011

The Fairfax County Economic Development Authority has opened an office in Los Angeles to lure companies to the Washington region, in an effort to build on its recent success wooing several prominent West Coast corporate nameplates to move east.

Fairfax County is among a number of jurisdictions vying for California-based companies with promises of a friendlier business environment. The Golden State’s precarious financial position, onerous regulatory environment and corporate tax policies have made it a prime target, county officials said.

“California has a lot to offer, but there’s a myriad of taxes there,” said Gerald L. Gordon, the authority’s president and chief executive. “Here, you pay relatively few taxes. We don’t tax companies for things like water treatment.”

Fairfax is hardly alone in homing in on such rhetoric. Nevada, for instance, launched an ad campaign last June deriding California’s policies and touting its own lack of corporate income taxes.

There is no current comprehensive data on how many companies have left the state, but Gary L. Toebben, president and chief executive of the Los Angeles Area Chamber of Commerce, argues that the number is negligible.

“In any given year there are actually few companies that relocate; many add new locations in other states or countries,” he said. “We have a large number of technology firms who see California as a huge market. They also see the human capital that we have here as a real advantage for creative and growing companies.”

Ernst & Young and the Council on State Taxation issued a recent study showing Virginia has the nation’s sixth lowest tax rate for companies making new investments; California ranked 29th.

The Fairfax County development authority hired Market Diligence Group, a business development outfit out of Newport Beach, Calif., to extol the county’s virtues to businesses in the Silicon Valley, San Francisco and Southern California areas.

“There are companies in California that are very active with the defense department, but are looking to shift because of concerns about defense expenditures,” Gordon said. “At the same time, there are a whole range of services and goods that are purchased by other federal agencies.”

About 30 California-based companies currently have offices in Fairfax.

This is not the authority’s first satellite office in California. Back in 2006, it set up shop in Silicon Valley to encourage technology firms to establish a presence in the federal government’s backyard. Twelve companies eventually launched locations in Fairfax, with names like GovPlace and Technical Communities.

The county fared better in Southern California, where corporate giants such as Hilton Worldwide, CSC and SAIC chose to pack their bags. Winning those relocation deals persuaded the authority to broaden its marketing efforts and move its California digs to a more central location.

Gordon would most like to see personalized medicine, medical devices and green technology industries gain ground in Fairfax County. He said the authority is in discussions with several Golden State firms trying to establish a presence in Fairfax, but he said he was not at liberty to name names.

With offices in London, Munich, Seoul, Tel Aviv and Bangalore, India, the authority has been one of the most aggressive in the Washington region about prospecting for new business. Last year alone, it worked with 154 companies that are adding 6,459 jobs to the county. The most high-profile deal involved defense giant Northrop Grumman agreeing to relocate its headquarters from Los Angeles to the Falls Church area.

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