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Arlington County Lands Nestle Hdqtrs. Cost to Taxpayers?

An online story in today's Arlington Sun Gazette reports that local and state officials are "upbeat" because of Nestle's decision to move to Rosslyn.

The Arlington County weekly writes:

"It came with a cost to taxpayers, but county, state and business officials reacted favorably to the news that Nestlé USA would be moving its headquarters from the West Coast to Rosslyn, bringing 750 jobs and filling up about one-third of a largely vacant 30-story building at 1812 North Moore St.

"After considering a wide variety of options, the food giant concluded that “Arlington hits all the marks,” said Paul Grimwood, Nestlé USA’s chairman and CEO.

"The firm’s U.S. operations employ more than 50,000, with domestic sales of $26 billion in 2015.

"To make the move happen, the Virginia Economic Development Partnership, Virginia Economic Development Incentive Grant program and Arlington County government agreed to a package of incentives worth $10 million, which drew the ire of some but which others said will prove their worth in the long run."

Last Wednesday, the Washington Post's Abha Bhattarai posted a story, which included:

"The world’s largest packaged-food company — which bills itself as a nutrition, health and wellness company — will move in at 1812 N. Moore St., the region’s tallest building, which has remained vacant since it was completed in late 2013. Nestlé was lured to the area, executives say, by its proximity to lawmakers, regulators and lobbyists — and more than $16 million in state and county subsidies."

He also reported:

"The commonwealth is offering $10 million in cash grants to Nestlé: $6 million as a Commonwealth Opportunity Fund incentive and $4 million from a Virginia Economic Development Incentive Grant. Arlington County is offering an additional $6 million in incentives — $4 million from performance grants and $2 million in infrastructure updates — as well as additional money for “extensive relocation assistance” to help cover expenses related to the company’s move and training of new hires.

"Nestlé will spend an estimated $39.8 million building out its share of the 35-story high-rise. The company will take over 40 percent of the building, or about 206,000 square feet, on the top nine floors. The move will begin this summer and is expected to be complete by late 2018.

"Of the 750 positions in Rosslyn, about half will be new hires, Grimwood said. In addition to Nestlé’s corporate operations, the Arlington office will house the company’s confections and beverage businesses, as well as its online division. Nationally, Nestlé has 51,000 employees.

"Monday Properties, a New York-based developer, began building 1812 N. Moore St. in 2010 as the country was slowly recovering from the global financial crisis. By the time the high-rise was completed three years later, Northern Virginia was reeling from widespread government budget cuts and consolidation among defense contractors. Boeing and Northrop Grumman had both moved out of Rosslyn, leaving behind empty buildings. One-quarter of the suburb’s office buildings remain vacant, according to real estate services firm CBRE.

Daniel Sernovitz of the Washington Business Journal also reported on the relocation of Nestle last Wednesday, writing:

"The company will initially lease 206,000 square feet in the building, or about 40 percent, with plans to expand to more than 250,000 square feet over time. The move of Nestle's U.S. headquarters from Glendale, California, will shift nearly 750 jobs to 1812 N. Moore St., where Nestle plans to invest almost $40 million to build out its new space.

"Virginia and Arlington offered more than $16 million in incentives to entice the company to relocate from the West Coast, an economic development tool the county and commonwealth have turned to increasingly to help bring down Northern Virginia's bloated office vacancy rate.

"As I first reported exclusively in November, Nestlé has been in the market for between 150,000 square feet and 200,000 square feet as an alternative to the Switzerland-based company's current space in California. It had narrowed down its search to 1812 N. Moore St. and 1900 Reston Metro Plaza in Fairfax County, sources told me."

Arlington County' press release last Wednesday contained three bullets:

  • Relocation from California to Arlington’s Rosslyn neighborhood
  • Nestlé USA to invest almost $40 million in move, which will create some 750 jobs
  • Company to occupy 206,000 square feet in region’s tallest building beginning in September 2017

The county spinmeisters buried the damage to Arlington County taxpayers into a long paragraph at the bottom of the press release:

"As part of the deal, Nestlé USA will receive a total of $6 million from the Commonwealth of Virginia in a Commonwealth Opportunity Fund grant, which will be matched by Arlington County in the form of $4 million in Industrial Development Authority Performance Incentives grants and $2 million in Arlington County infrastructure mainly focused on Metro, transportation and the area surrounding the new headquarters. Arlington County is also providing extensive relocation assistance to the company to help ensure a seamless transition and maintain a high level of employee retention, including workforce assistance, familiarization tours, a staffed onsite resource center and technology tools to help transferring employees learn more about relocating to Arlington and the entire D.C. region."

In their Business Pulse, the Washington Business Journal asked, "Is luring Nestle to Rosslyn worth more than $16 million in incentives?" As of midnight, there were 74 responses: 69% "believe Nestle is worth the incentives," 19% say "time will tell," and 12% "don't believe Nestle is worth the incentives."

The incentives package cannot be described as anything but generous. Unfortunately, it seems to be the way of the world. After all, how is it any different than the "deal" offered to United Technologies' Carrier Corporation by the incoming Trump-Pence administration to stay in Indiana? In fact, the deal to bring Nestle to Arlington County looks to be twice as generous as the deal worked out by Trump-Pence. That deal, according to the Wall Street Journal, on December 2, 2016, said "Carrier will receive $7 million in tax breaks to keep jobs in Indiana" -- 1,000 jobs in the state, or $7,000 per job. On the other hand, the package for Nestle will bring 750 jobs to Arlington at a cost of $16 million, or just about $21,000 per job.

Unfortunately for Arlington and Virginia taxpayers, the incentive package is sufficiently complex, and split between Arlington County and the Commonwealth. that it cannot be easily untangled.

If you have a question or comment about the Arlington County Board's decision to become involved in the crony capital deal to bring the Nestle Corporation to Arlington, take a few minutes to ask your question or make your opinion known to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

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