Aid keeps Sylvan Ventures close to home

Education incubator will join parent firm beside Inner Harbor

Economic development

July 27, 2000|By Rona Kobell | Rona Kobell,SUN STAFF

Sylvan Learning Systems Inc. said yesterday that its $500 million Internet education incubator will be located in Baltimore, thanks to commitments from the city and state to improve parking and fiber-optic networks.

The space for Sylvan Ventures will include four buildings near the company's headquarters at the corner of Fleet and Central streets. The entire venture will occupy 300,000 square feet, plus a 1,000-car parking garage.

The state will provide $5 million in loans over five years. Sylvan will pay no interest for the first two years, and then pay 3 percent. The city also committed to $1 million in low-interest loans to Sylvan.

City and state economic development officials flanked Sylvan Chief Executive Officer Douglas L. Becker as he announced his intention to keep Sylvan Ventures next to its parent. Baltimore Mayor Martin O'Malley called Becker a "great corporate citizen" and praised him for having "the insight, the courage, and the smarts" to remain in the city.

Becker's personal commitment to Baltimore was not in question. Born and raised here, he moved Sylvan from Columbia to the Inner Harbor in 1996. Sylvan at the time had 200 employees and occupied only one floor of one building.

Sylvan now has more than 5,000 employees. Its spinoff, Caliber Learning Network Inc., has about 200 employees.

In March, Sylvan sold its Prometric testing business to Thomson Corp. for $775 million so it could continue incubating education companies such as Caliber. It announced plans to invest $500 million in Sylvan Ventures: $300 million from its own coffers; $100 million from New York-based Apollo Management, led by Leon Black; and another $100 million from smaller investors.

But some of Sylvan's board members had to be sold on the city as home to the incubator, Becker said. And despite his loyalty, Becker said he wondered whether Baltimore could improve its fiber-optic access, provide adequate parking and become a safe and attractive place for workers.

"It was a tough fight," Becker said. "I can't say all the issues were solved, but enough of them were solved."

At his board's urging, Becker looked at San Francisco, New York and Northern Virginia. In the end, Baltimore had several advantages: Sylvan was already a big fish here, and the state was committed to keeping it that way.

Officials trumpeted the incubator's plan to create up to 2,000 jobs in the next five years, most of them paying $50,000 or more.

While Becker said the figure is not speculative - it was based on Caliber's investment and growth ratios - it is not exact either, because not all the companies the incubator funds will be in Baltimore.

Ellen Wiggins, executive director of the University of Maryland, Baltimore County's Research Park and Technology Center, said Sylvan's job growth projections are realistic. UMBC's incubator program has created or retained 500 jobs since 1989, with far less capital than Sylvan.

Wiggins views Sylvan's commitment to Baltimore as reaffirmation that the city is attractive for technology companies, and said she would have been surprised if Sylvan Ventures went elsewhere.

But other cities' overtures to Sylvan did not go unnoticed.

Doug Schmidt, chairman of the Greater Baltimore Technology Council and managing director of research at Legg Mason Wood Walker, said it would have been a "major blow" if the incubator moved.

The state, Schmidt said, was wise to make sure it didn't. "I don't begrudge a company like Sylvan, which has hundreds of millions of dollars at risk, for demanding that the state put its best foot forward," he said.

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