A giant is lured by a bit of money

Morgan Stanley getting $8.1 million in incentives to open in Fells Point

January 15, 2003|By Meredith Cohn | Meredith Cohn,SUN STAFF

Maryland and Baltimore officials said yesterday that they would pay $8.1 million in public incentives to Morgan Stanley & Co. Inc., which plans to open a waterfront office.

The financial services giant, which posted a profit of nearly $3 billion in 2002, announced in October that it would begin moving 150 workers into Bond Street Wharf in Fells Point in June and planned to hire a total of 600 in the city by 2014.

The deal requires much of the incentive money to be repaid with little or no interest if hiring goals are not met.

The state approved its part of the package yesterday, and the lead economic developer defended the "aggressive" efforts in courting Morgan Stanley because, he said, the company was looking at 30 other sites around the country. David S. Iannucci, the departing secretary of the state Department of Business and Economic Development, said he counted Morgan Stanley as one of his last and biggest deals.

"Morgan Stanley is one of the most significant economic development wins in the Baltimore metropolitan area in decades," Iannucci said. He estimated that the company could pump $80 million into the area's economy once the operation is in full swing and workers are living in the city and spending money.

Most of the incentives will be paid from various city and state pots in the form of grants and loans, and do not have to be repaid unless Morgan Stanley misses three deadlines to hire workers and keep them until 2017.

The largest share from the state, $3.5 million, comes from the "sunny day" fund used to attract companies to high-unemployment areas. The state generally caps the payout from this fund to one-fifth of the capital investment made by companies. But officials waived the requirement for Morgan Stanley, which plans to invest $15.5 million.

The company also is to receive a $1 million low-interest loan to be used to open a day-care center. A $1 million grant is to go toward employee training.

About $900,000 will come from tax credits for locating in a state enterprise zone.

The new office is to support the company's institutional securities division that trades equities for large institutional clients.

Morgan Stanley also has individual investment branch offices throughout the Baltimore metropolitan area and Annapolis.

Optimism

"We appreciate the [state] approval and look forward to opening our new facility," said Bret Gallaway, a Morgan Stanley spokesman.

City leaders hope to use the Morgan Stanley name to bring other companies to town, said M. J. "Jay" Brodie, president of Baltimore Development Corp., the city's economic development agency.

"Morgan Stanley's selection of Baltimore is significant in itself," he said. "In addition, it has captured the attention of other companies that are contemplating relocation from other regions to take a second look at Baltimore's great location, affordability and excellent quality of life."

The city expects to consider approval of its $1.75 million portion of the incentive package within a month.

The $8.1 million total package does not reflect tax credits for which Morgan Stanley would be eligible for locating in a federal empowerment zone. The value could not be determined yesterday.

As for the state, Maryland officials estimated that its contribution could be paid back within 2 1/2 years from taxes.

The package is not the state's largest, Iannucci said. But the payout is big compared with the majority of offers. Most companies make less of an investment and hire fewer people, he said.

Other incentives

Other industry giants that open facilities in Maryland have enjoyed generous incentive packages.

Also yesterday, the state and Washington County announced a package of $5.7 million for Mack Trucks Inc. to retool its manufacturing facility in Hagerstown. The company agreed to retain 1,000 jobs in the state through 2009.

Companies that have received larger state and local incentive packages include Black & Decker, which received $9.5 million in October 2000 to expand its Baltimore County headquarters and hire another 340 people.

Marriott International Inc. got about $22.3 million in 1999 to remain in Bethesda, and Northrop Grumman Corp. received a package worth $14 million in 1997.

Other multimillion-dollar packages have gone to Bethlehem Steel Corp. and Lockheed Martin Corp.

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