D.C. area jurisdictions vie to become new home of Northrop Grumman headquarters

By V. Dion Haynes
Washington Post Staff Writer
Monday, January 11, 2010

Economic development officials in the District are pitching the city's urban hipness and proximity to Capitol Hill power brokers. Maryland is touting its abundance of federal facilities and highly educated workforce. And Virginia is marketing itself as a place whose relatively low taxes have helped draw such corporate titans as Hilton, Volkswagen and CSC.

The battle for Northrop Grumman is on.

The District, Maryland and Virginia -- as well as numerous counties -- are vying to host the new headquarters of the defense contractor, which last week announced plans to relocate from Los Angeles to the Washington region. Though only 300 employees are expected to take up offices here, such a relocation would bring to the winner some extra payroll tax revenue from high-income executive jobs, another tenant for vacant office space, a boost to local philanthropies and prestige.

The process for most corporations contemplating such relocations is typically veiled in secrecy. Most hire firms that scout sites on behalf of unnamed clients. Real estate agents and economic development officials usually are kept in the dark about the identity of the corporation with which they are working until the selection is announced.

But Northrop Grumman has raised the stakes through its public process, pressing the jurisdictions to make their best offer.

The company -- which already has 30,000 employees in Virginia, 10,000 in Maryland and 600 in the District -- said it is looking not only for the most suitable site with an abundance of amenities, but also the best financial incentive.

"We did reach out and notify the economic development organizations. They are working on incentive packages," said Randy Belote, a spokesman for Northrop Grumman, adding that the company wanted its relocation process to be transparent. Executives plan to reach a decision by March, Belote said, based in part on which jurisdiction can offer "the best deal."

Matt Erskine, executive director of the Greater Washington Initiative, a nonprofit organization that promotes the region as a top-class business destination, said his group and economic development officials in 26 jurisdictions in the region are finalizing guidelines devised about a year ago on how the communities can compete fairly, keeping the process from getting ugly.

Rule No. 1: The officials are encouraged to play up their assets -- but never trash their neighbors.

Economic development officials "need to refrain from disparaging other localities," Erskine said. "Compete on your strengths."

Some business and commercial real estate experts say they think Virginia -- particularly Fairfax County -- has an advantage over its neighbors. The state has a 6 percent corporate tax rate, compared with 8.25 percent in Maryland and 9.97 percent in the District.

Liz Povar, director of business development for the Virginia Economic Development Partnership, said the state's corporate tax rate is among its top selling points. The rate has been "unchanged for nearly 30 years, and that indicates a stable business climate and shows a commitment to business," she said.

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