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Northrop Grumman narrows choices for its Washington area headquarters

By Derek Kravitz and V. Dion Haynes
Washington Post Staff Writers
Friday, April 2, 2010; A14

Northrop Grumman, whose plan to relocate its West Coast headquarters to the Washington area has spurred a high-stakes competition among local governments, has narrowed its choices to Arlington, Fairfax and Montgomery counties, according to several sources in government and real estate.

The Los Angeles-based defense contractor has apparently eliminated the District, where small-business owners complained about the $25 million in tax breaks and grants that the company was being offered, as well as Loudoun County.

The company, which had said it would announce its selection by April, is apparently benefiting from the glut of office space and the depressed rents in the region. It is focusing on three sites, one of which is close to its competitors, the sources said. All offer new buildings.

The sites under consideration are a planned office building on North Glebe Road, in Arlington's Ballston corridor; the Fairview Park office complex in the redeveloped Merrifield section of Falls Church; and a location on Gaither Road in Rockville, according to three sources who spoke on the condition of anonymity because the selection process is supposed to be confidential.

"Maryland [and] Montgomery County have put a very aggressive package on the table, and so has the building owner" on Gaither Road, Steve Silverman, director of the Montgomery County Department of Economic Development, said Thursday. "We're very competitive."

Randy Belote, a spokesman for Northrop, declined to comment on the specifics of the selection process, saying only that it is ongoing.

"We continue to work with the municipalities to understand the incentive packages that we've received, and we're on schedule to make a decision by the end of the month," Belote said.

D.C. Council member Kwame R. Brown (D-At Large), who chairs the council's economic development committee, said he was unaware of whether the city was still in the running. He said he thought city officials were still negotiating with the company.

"It's unfortunate if D.C.'s not selected," Brown said. "We knew it would be a long shot."

Northrop's Jan. 4 announcement about its relocation to the Washington area set off a frenzied contest among Virginia, Maryland and the District.

In Virginia, Gov. Robert F. McDonnell (R) sent late legislation to both houses of the General Assembly aimed at luring the firm. The bills would allow the Governor's Opportunity Fund, an economic development grant program that can be spent only on public infrastructure, to be used to renovate private buildings, as well. The bills also would renew the Virginia Economic Development Incentive Grant program, which is available to companies that create 400 jobs that pay better than 150 percent of the state's average wage, or 300 jobs that pay better than 200 percent. The state could begin spending $30 million over the next six years, starting July 1.

Under the legislation in the District, Northrop Grumman would receive $5.5 million in grants to help cover relocation expenses and a 10-year property tax abatement worth $19.5 million. The company looked at lots at Fourth and E streets SW and Sixth and E streets SW, near Nationals Park. The company would have to agree to employ a minimum of 250 workers in the District to get the incentives.

Legislation crafted by the administration of Mayor Adrian M. Fenty (D), dubbed the Global Security and Aerospace Industry Tax Abatement Act, initially had seven co-sponsors, enough to lock in a simple majority vote. But council members, under pressure from constituents and struggling with the city's budget deficit, began peeling off.

Maryland officials have kept their incentives close to the vest.

On its Web site, Fairview Park in Falls Church describes itself as "the finest suburban office park in Northern Virginia" in a "serene park-like setting." It has several new office buildings surrounded by waterfalls and wooded areas. Tenants include two other defense contractors, General Dynamics and CSC.

A 390,000-square-foot office building being built at the site on North Glebe Road in Arlington should be completed by mid-2011, a source said, Northrop's timetable for making the move to the region. Another advantage of the site is that it is close to Interstates 66 and 50.

Northrop officials have also looked at a vacant two-year-old office building at the Gaither Road site in Rockville, Silverman said. The building is a few hundred thousand square feet, enough to accommodate the company, in a campus-like setting.

Staff writer Dana Hedgpeth contributed to this report.

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