In the intense, multimillion-dollar competition for economic development between Montgomery and Fairfax counties, the Dallas-based Electronic Data Systems Corp.'s decision to build a regional center in Fairfax instead of Rockville points up weak links in Montgomery's effort to attract major high-tech industries.
A shortage of large, industrially zoned vacant land in fast-growing Montgomery, coupled with limited public facilities such as roads and sewerage systems, played a part in the huge computer firm's decision this week to build its East Coast headquarters in Fairfax, officials with Montgomery's Department of Economic Development said.
Montgomery currently has about 1,700 acres of industrially zoned vacant land. Most of it is concentrated along the already burgeoning I-270 corridor and in upcounty areas north of Germantown, where public facilities are lacking, said Jeff Burt, manager of business and industrial development for Montgomery.
But Montgomery, which until recently had developed more rapidly than Fairfax, is now finding it difficult to accommodate large-scale development projects because its supply of large undeveloped parcels -- such as those totaling 200 acres or more -- is dwindling, Burt said.
By contrast, Fairfax has nearly 6,000 acres of industrially zoned vacant land, said officials with Fairfax's Economic Development Authority.
EDS's relocation will mean a net loss of about 4,000 jobs in Montgomery -- where half of the 2,000 EDS employes who are now in the Washington area work -- over a 10-year expansion period planned by EDS, county officials said.
About $7 million in anticipated tax revenue to Rockville, Montgomery and the state also will be lost during that period.
While Montgomery views EDS's relocation as a setback to its economic development efforts, officials said that the county's overall economic health is still strong.
"We're very disappointed, but we recognize EDS had a business decision to make in order to accommodate its own corporate needs," said Ioanna T. Morfessis, Montgomery's Economic Development director. "But we don't view this as a trend-setter. We're growing by leaps and bounds . . . . We're confident we will absorb any loss" resulting from the EDS move.
News of EDS's relocation shocked Rockville officials who, over the objections of many nearby residents, approved a rezoning of a 200-acre tract two months ago that officials believed would meet the firm's growing needs.
"I am extremely disappointed, not only for the city but for Montgomery County," city council member Stephen N. Abrams said. The firm's decision to relocate, Abrams said, "is not in accordance with the representations that were made to us during the planning process."
EDS had considered the Rockville site, located along I-270 near Montrose Road, as its top choice from among several other possible locations in Maryland and Virginia ever since it announced plans to establish a regional headquarters three years ago.
However, Penny Pasquesi, director of EDS public relations in Dallas, said that the so-called Westmont property in Rockville, which allows construction of up to 2.1 million square feet of office space, "wasn't large enough."
She said that EDS originally had requested about 500,000 square feet of office space. But she said that after EDS was purchased by General Motors Corp. late last year for $2.5 billion -- one of the largest acquisitions in the country's history -- it was determined that EDS would require up to 2.5 million square feet during its expansion period.
Pasquesi said the company chose to build its headquarters in Fairfax County largely because of the proximity to Washington and to Washington Dulles International Airport. Neither Fairfax nor the state offered any special incentives to lure the company to Virginia, she said.
During the past five years Montgomery has lost a handful of major industrial firms to Fairfax. Most recently, the Germantown-based Fairchild Industries Inc. decided two years ago to shift its corporate headquarters to Dulles International Airport, despite intense lobbying by Montgomery and Maryland officials to retain the company.
When asked if Maryland considered the loss of EDS a setback to its economic development efforts, Bill Grovermann, an industrial representative with the state's Department of Economic and Community Development, replied, "Naturally it is.
"There was no question we wanted to retain EDS," Grovermann said. "It was unfortunate we could not produce a site of the size that they demanded."
EDS had warned Rockville officials during the planning process last summer that it had become frustrated by repeated delays, due largely to citizen protests that the project was incompatible with surrounding residential areas.
When the firm warned that it would look for another site in Northern Virginia, Montgomery County Executive Charles W. Gilchrist urged Rockville officials in writing to expedite the planning process.
"It would be tragic to lose a high-technology firm of the caliber of EDS, when the company already has a sizable presence here," Gilchrist wrote. Most of the 1,000 EDS employes in Montgomery are based at a small regional headquarters in Bethesda.
In April, the city council adopted a land-use plan allowing construction of up to 2.1 million square feet of office space on the previously residentially zoned Westmont property, the last major tract of vacant land in Rockville along the burgeon.ing I-270 corridor
The McLean-based Westmont Associates, developers of the property, said after the vote that EDS still intended to move there.
But several weeks later a coalition of Rockville civic groups filed three lawsuits in Montgomery County Circuit Court against the city, contending that officials had violated the planning process in granting the rezoning.
Some Rockville and Montgomery officials said they believed that the suits, which threaten to hold up development, played a part in the firm's decision to relocate. However, Pasquesi maintained that the suits had little bearing on the firm's decision.
EDS plans to build its center on a 202-acre tract on Route 28, about two miles south of the Dulles Access Road. The firm said its 2,000 employes in the metropolitan area, plus about 1,000 new employes, will be located at that site.
Phil Meany, suburban sales manager for Leggat, McCall and Werner -- the brokers that negotiated the acquisition of the privately owned land for EDS -- said the land sale was finalized earlier this week at a $35 million cost. The land, zoned industrial, is one of the largest undeveloped sites in Fairfax.
Construction is expected to start in September, company officials said, and should be completed by June 1988. Plans for the center include 40,000 square feet of office space and a 75,000-square-foot data processing center, officials said.
EDS, founded in Texas in 1962 by entrepreneur H. Ross Perot, specializes in "soup to nuts" computer services for large firms and government agencies. It holds major contracts with such agencies as the Defense Department, Navy, Social Security Administration and the Postal Service, Pasquesi said.