Morgan Stanley unit gets city loans

Board of Estimates votes $1.75 million in incentives

October 30, 2003|By Doug Donovan | Doug Donovan,SUN STAFF

The city's Board of Estimates gave final approval yesterday to taxpayer-backed incentives that helped persuade a New York investment bank to open a major operations center in Fells Point, an economic development coup for Baltimore that could lead to the creation of more than 600 jobs.

The five-member board, which sets the city's fiscal policy, voted unanimously for $1.75 million in loans to Morgan Stanley after Mayor Martin O'Malley defended the incentives from detractors who protested a package that also includes $5.5 million in state assistance.

"Our city is becoming a more attractive city to businesses who thought they had to be in downtown Washington or in New York near Wall Street," O'Malley said. "We stand to gain a great deal by attracting a company like Morgan Stanley."

Two years ago Baltimore competed with dozens of other cities trying to land Morgan Stanley's new processing facility, which will handle large-volume institutional stock transactions. The company has two similar centers in Scotland and Australia.

In October last year, the choice came down to Baltimore and Pittsburgh.

Baltimore's proximity to New York City by train and its financial-services work force were major advantages. The combined resources of the city and state offered the best incentives, officials said.

Last spring Morgan Stanley officially opened the 30,000-square-foot facility at the Bond Street Wharf. Although the center initially employs 60 people, officials expect the deal to create more than 600 jobs and $19 million in investment from the company.

City Comptroller Joan M. Pratt raised concerns that the city could lose money if another company bought Morgan Stanley. Jeffrey P. Pillas, chief financial officer for the Baltimore Development Corp., the city's quasi-public development agency, placated her fears by saying any firm that bought Morgan Stanley would be liable for the loans.

He said the city would provide $1.75 million to Morgan Stanley in three 10-year loans at 2 percent interest. The company will not have to pay back $875,000 if it meets employment targets.

The first $450,000 loan requires the company to create 150 jobs by June 30, 2005; a second, identical loan gives the company until Dec. 31, 2007, to create another 150 jobs; and a third loan, for $850,000, requires the creation of 300 more jobs by Dec. 31, 2010.

The state will provide $4.5 million in grants on the same three-phase timetable and with the same employment commitments. In addition, the state will lend $1 million to assist with developing a day-care center.

Roberto L. Marsili, a Republican candidate for City Council in next year's election, protested the city's plan for spending taxpayers' money. "This is an embarrassment and an insult to taxpayers," Marsili said. "We can't afford it."

O'Malley said Morgan Stanley's presence is likely to attract other companies to Baltimore's low cost of living and doing business.

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