Jeff Immelt chief executive of General Electric (GE) says the company will make a decision on a new location for their head office by the end of the year. They are fed up with the costs of operating in Fairfield CT on the eastern fringe of the New York metro area. The final straw was another increase in already high taxes proposed by Connecticut state governor Daniel Malloy.
The Wall Street Journal (2015-09-10) reports that GE employs 310,000 people worldwide and about 4,900 in Fairfield Connecticut. Many of those work for GE Capital, its finance arm which is being sold off. Back office operations have already been moved to Cincinnati OH. CEO Immelt is now looking to move an 800 person head office out of the NY City area to a more business friendly environment.
It is interesting to consider how well Frederick MD would suit a company presently headquartered in Fairfield CT.
Fairfield CT and Frederick MD have some things in common:
- population 61k, 68k
- college degrees 45%, 37%
- over 65yrs 14%, 11%
- foreign born 19%m 20%
- area square miles 30, 22
- distance to metro center 59 miles NYC vs 49 miles DC (46 miles Baltimore)
- mean travel time to work mins 28, 33
- 2 major international airports, one major national airport each
Plus both have classy restaurants and historic districts (Fairfield CT regulates more lightly over several smaller historic districts.) The climate is rather similar. (Pictures of some of Fairfield’s historic buildings nearby)
To that extent Frederick MD would offer much of what Fairfield CT offers.
Of course there are differences:
- NYNJCT CSA 23.5m, Wash/Balt CSA 9.4m
- median household income $82k, $66k
- median value owner-occ housing $432k, $241k
GE is presently located on the fringe of the biggest US metro area at 23m people while in Frederick MD is part of #4 metro area, less than half the size. And GE would be moving from the metro area #1 in finance to the metro area #1 in government. To the extent GE wants to play crony capitalist, where lobbying is key, the Washington metro area is the place to be. GE apparently wants to work the Export-Import Bank racket because government backed loans are very helpful to its competitiveness internationally. Coming here to work Big Government they’d be at the center of things, while Big Finance would come to them, and established NY area family and friends – a one hour hop by air, 5 hrs road and rail.
Overall the lifestyle break moving Fairfield CT to Frederick MD would be less than moves to the Carolinas, Georgia, Texas or Tennessee, other states being looked at by GE.
We have lots of empty office space 1.1msf empty out of 8.4msf and it is rentable at around $21/sf vs Germantown $24, Fairfax Co VA $23, $30 to $50 DC.(Frederick Magazine)
How about the comparison with Connecticut’s high taxes and high cost of living?
Fairfield’s median household income at $82k is 24% higher than Frederick’s at $66k, but housing values are almost double. Part of that no doubt is larger, fancier houses but part is undoubtedly price – less housing value for money.
Connecticut taxes are crippling – right up there with NJ, NY, CA, MN, VT, RI, OH, DC.
Trouble is Maryland is not far behind. Martin O’Malley’s eight years of governorship have left a disastrous legacy of debt and taxation. We’re now 40th in severity of taxation, ahead of all but ten states in the Tax Foundation’s measure of government rapacity. CT is only two rungs up from MD at 42. Moves to TX (#10) or NC (#16) or Florida (#5) would make a real difference to the after-tax incomes of both the company and its employees. By contrast a move here would not be a marked improvement.
We handicap ourselves paying taxes in Frederick to have local government:
- run TransIT buses around the town largely empty and fantasize about how a new/olde trolley downtown shuttle will attract the wealthy hordes
- lose two dollars for every dollar earned at a City ‘airport’ for corporate jets and hobbyist flyers
- chase after loan money for a conference center in a region glutted with half-empty conference facilities
- plan moves to turn a city monopoly of parking garages into a debt-ridden risk to taxpayers with yet more construction
- make development difficult with infinitely complex landuse zoning and plan review stuck in the an old-fashioned paper operation in a digital age
- indulge golfers – Ah such ‘needy’ people those golfers – with a city-run golf course
Local government serious about attracting companies like GE would focus government on:
- facilitating mixed use, repurposable, infill development with a wholesale simplification of landuse codes and zoning
- improving our integration with the greater Washington-Baltimore metro area by pushing for toll-financed enhancement of I-270, US15 to Leesburg VA, a new Potomac River crossing with a ICC-VA28 connection and ICC US1-US50 Annapolis
- improved traffic circulation with completion of the Monocacy Blvd perimeter arterial, the north-south eastside 15-reliever allowing lane diets and more trees downtown
- improved telecom with end-to-end fiber
- hardened electric supply (undergrounded and EMP resistant)
- a phase-out of historic wooden poles and overhead cable downtown with progressive undergrounding of telecom and electricity
- get serious about our history as a business draw
Reorient historic preservation – less regulation, more action
On the last point we’d reorient historic preservation away from blanket downtown regulation and annoying controls over peoples’ backyards to stressing landmark buildings and the streetfronts of special blocks where the owners want and can afford the expenses of historic restoration. Plus we’d have a program to memorialize and organize displays on the City’s founders – people like Benjamin Tasker, Daniel Dulany, Joseph Brunner, John Thomas Schley, Sampson Lazarus and Jacob Engelbrecht. The only present memorials are to the two prominent state politicians and revolutionary war patriots John Hanson and Thomas Johnson, and to the wretched slavery apologist Roger Brooke Taney.
History see Chris Heidenrich. Frederick: Local and National Crossroads. Arcadia Publishing. Kindle Edition 2003.
On empty office space see Vacancy Signs, Douglas Tailman, Frederick Magazine June 2015