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Marriott, close to reaping $62 million in subsidies, chooses Bethesda site for HQ

Arne Sorenson, chief executive of Marriott International. (Simon Dawson/Bloomberg News)

Marriott International is still pressing to secure up to $62 million in state and county incentives for a new headquarters, and now the firm knows where it would like to spend it.

The $33.1 billion company announced Friday that it had signed a letter of intent to lease space in a planned development by Boston Properties and Bernstein Cos. at 7750 Wisconsin Ave., on the corner of Norfolk Avenue in Bethesda. The project beat out about a half-dozen other developments vying for the lease. The project will also include a 230-room Marriott hotel.

In the meantime, Marriott, now the largest hotel firm in the world, continues to seek taxpayer-funded subsidies. The company received good news this week when Maryland Gov. Larry Hogan (R) included $20 million in his latest budget to go toward a retention package for the company.

The proposed funding follows an agreement with Hogan and Montgomery County Executive Isiah Leggett (D), reached in October, that would mark the second publicly funded incentive package Marriott has received from the state and county in less than 20 years, reigniting a debate over how far elected leaders ought to go to chase corporate employers.

Hogan and Leggett have touted the subsidies to preserve jobs and a top corporate nameplate. But the package, which effectively provides Marriott up to $17,700 per employee to move about five miles, comes as Hogan, according to the Associated Press, also proposed cutting $22.5 million for a planned hospital in Prince George’s County, $8.4 million from care for the developmentally disabled, 92 percent of the budget of the state’s Department of Housing and Community Development and millions in funding for after-school and scholarship programs, parks and adult education.

In discussing his budget plans, Hogan said fiscal discipline had kept Maryland on sound footing.

“Because of the fiscal restraint that we’ve instituted over the past two years, while many other states are facing crippling budget shortfalls, we are in much better shape today than we would have been,” he said Tuesday.

[The trap that causes states to give millions to corporations such as Marriott]

In an interview, Patrick Moran, president of the American Federation of State, County and Municipal Employees’ Maryland Council 3, the largest union representing state employees, said there wasn’t a need to “give money to big businesses that are running massive surpluses — they’re doing fine. It’s Maryland’s working families that are not doing fine.”

The company’s plan to move 3,500 employees to the complex near the Bethesda Metro station by 2022 follows the lead of companies moving out of sprawling office parks to more-urban locations, but it could put new strains on public infrastructure, such as Metro’s troubled Red Line.

Should the General Assembly and Montgomery County Council back the deal — as many expect — Marriott has committed to maintaining 3,500 headquarters employees and moving into a new $600 million complex.

Boston Properties attempted to land the Marriott headquarters deal last time around, when the company instead opted to remain in its current Rock Spring office-park headquarters with the help of about $43 million in taxpayer-funded incentives. That deal, however, also had contingencies, and when Marriott didn’t add all the 700 new jobs it planned, the company ended up forgoing $5.8 million in grant money.

Marriott posted the news on it website one hour and 15 minutes before Donald Trump took the oath of office. The news was reported earlier by the Washington Business Journal.

Josh Hicks contributed to this report. 

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz