In 1999, then-Maryland Gov. Parris Glendening was under pressure from J.W. “Bill” Marriott Jr. for millions of dollars to keep the hotel giant Marriott International in the state.
“He said, ‘Listen, you don’t want to be the governor who lost Marriott to Virginia,’ ” Glendening recalled recently.
Glendening heeded those words, providing Marriott with about $43 million in incentives to update its Rock Spring office park headquarters.
Last week, 17 years later, nearly the exact same thing happened when Gov. Larry Hogan (R) and Montgomery County Executive Isiah Leggett (D) agreed to offer Marriott’s company up to $62 million in grants and tax benefits to move about five miles, from Rock Spring to downtown Bethesda, where the company will decide between a handful of development projects.
Should the General Assembly and Montgomery County Council back the deal — as many expect — Marriott would commit to maintaining 3,500 headquarters employees and moving into a new $600 million complex.
Glendening’s deal failed to produce the job growth he had hoped as Marriott didn’t add the 700 new jobs it planned and ended up forgoing $5.8 million in grant money. He also subsidized an office park only easily accessible by driving, the type of traffic-inducing development he condemned both as governor and now, as an advocate for Smart Growth America, the anti-sprawl group.
Glendening did, however, succeed in the stated goal of not being tagged as an anti-business governor, which can be a career killer in a state that historically has taken a back seat to the corporate raiders in Virginia, North Carolina and further south.
But with the new Marriott deal on the table, Maryland officials have a chance to ask themselves whether they really want to do this again, given research showing that jurisdictions are more likely to create economic growth spending their money on workforce training, transportation and quality of life.
Glendening, a former Prince George’s executive who arrived in Annapolis focused on education and the environment, knows how difficult a choice it is.
“At the time, we were struggling to build more schools,” he said. “Should we put the money there? On the other side of the coin were we prepared to lose 3,500 good jobs and were we prepared for the message that would be sent, that one of the most recognized corporations would be leaving Maryland, and particularly to our economic competitor of Virginia?”
David Iannucci, who helped negotiate the deal for Glendening (and now works for Democratic Prince George’s County Executive Rushern L. Baker III) said the negative publicity of losing Marriott would have amounted to economic suicide.
“It was something that we had to do. The state of Maryland couldn’t lose an international name like Marriott,” he said. “There would have been a fallout of the state’s business climate, reputation had they left.”
If Glendening and Iannucci are correct, that Marriott moving to Northern Virginia would have precipitated an economic slide, where does this end? Marriott is the largest hospitality company in the world, a $17.3 billion firm with 5,700 properties in at least 110 countries. Should Maryland taxpayers write the company a check every 20 years to keep it from bolting?
Many have suggested Marriott might have moved to downtown Bethesda had it not received a cent from taxpayers. After all, the state is home to 68 percent of Marriott headquarters employees and chief executive Arne M. Sorenson has long lived in the suburb of Chevy Chase.
Virginia Gov. Terry McAuliffe (D), for instance, said he called Sorenson and Bill Marriott but ultimately decided it didn’t make sense to pursue a company that wasn’t planning on leaving. “That did not make sense for us. Nor did they want to move, they have so many people affected,” McAuliffe said.
A move to Bethesda was also an obvious choice because the hotel giant had expressed its interest in locations where millennial talent was willing to work anyway, typically urban-oriented neighborhoods close to Metro stops. Glendening knows this all to well. Smart Growth America published a report last year in which executives from across the country said locating in urban, walkable locations was essential to their business.
“Regardless of incentives or anything else Marriott would be making the same decision they are making in moving to downtown Bethesda,” Glendening said.
Maybe. But the need to protect oneself from the departure of a name-brand company — no matter how unlikely — crosses party lines. “We can never take for granted that a Fortune 500 company, like Marriott, would remain in Maryland. Businesses have options, and economic development is highly competitive,” said Allison Mayer, spokeswoman for Hogan’s Department of Commerce.
Glendening said the only way he could see governors eschewing corporate pirating for real economic growth would be new federal rules. “Without it, there is no jurisdiction that can withstand that pressure,” he said.
Before Hogan was inaugurated Glendening said he offered the governor-elect some familiar advice.
“I told him ‘Listen, you ran on jobs and economic development. You don’t want to be the governor who loses Marriott.’ ”
Gregory S. Schneider in Richmond contributed to this report.
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz
