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Marriott gets incentives to build $600M facility, stay in Maryland

(File photo)

(File photo)

Marriott International Inc., one of Maryland’s four Fortune 500 companies, will receive nearly $70 million in state and county tax breaks, grants and conditional loans as part of an incentive package to remain in the state.

The company will build a $600 million facility in downtown Bethesda, maintaining the company’s presence in Montgomery County, where it has been for the last six decades, according to an announcement from Gov. Larry Hogan.

The new complex will include office space for more than 3,500 employees as well as 700,000 square feet of leased space and a 200-room hotel. The deal with the state will retain the company’s current level of jobs at its headquarters and does not require the company to create new positions.

A final site in downtown Bethesda is expected to be selected in early 2017. Company officials said they considered Washington and Arlington and Fairfax counties in Northern Virginia and North Bethesda before focusing on downtown Bethesda.

“Marriott has been headquartered in Montgomery County, Maryland, for more than 60 years and we intend to remain close to our roots. Our goal is to provide a cutting-edge workspace for our associates that offers state-of-the-art technology, modern amenities, and access to a range of transportation options,” Marriott President and CEO Arne Sorenson said in a statement.

Sorenson said the new hotel on the site “will be a significant economic driver for the community.”

The company will remain in its current location until late 2022.

Montgomery County will contribute $22 million from its own economic development funds over four years beginning in fiscal 2019, according to Patrick Lacefield, a spokesman for Montgomery County.

Additionally, the county will see a reduction of as much as $15 million over a six-year period as the result of the new construction under a 1999 state jobs tax credit that will be triggered by the construction of the new headquarters, Lacefield said.

The county will also lease 1,200 parking spaces to Marriott either at existing sites or a new garage, based on where the company ultimately locates. Marriott will pay the county $2 million annually for the spaces over 20 years, Lacefield said.

“We estimate this agreement will result in $1.8 billion in net economic benefit to the state and county over 20 years,” Lacefield said.

That benefit, about $90 million annually, is after the cost of state and county incentives is factored in, Lacefield said.

As part of the negotiated agreement between Marriott and the state Department of Commerce and the Montgomery County government that was announced Tuesday, the state will contribute $20 million, disbursed equally over four years, from the state’s so-called Sunny Day economic development fund.

The loan would be forgiven after 10 years so long as Marriott retains its current staffing level of roughly 3,250 full-time employees and 250 part-time workers at its current corporate headquarters and spends the $600 million on its new facility as agreed, according to Allison Mayer, a spokeswoman for the state Department of Commerce.

Mayer said the company would repay the state $4,000 per head for each position under 3,250 and the full amount should employment levels drop below 2,475.

“Marriott is a brand recognized and respected around the world, and the fact that they call Maryland home does a lot to advance our economic development efforts,” Commerce Secretary Mike Gill said in a statement. “With more than 90 hotel properties across Maryland that had more than $600 million in sales last year, Marriott is also a valued part of our state’s tourism industry, which contributes some $16.4 billion in economic impact within our borders each year.”

The amount provided to Marriott is equal to an agreement Hogan made with Northrup Grumman last year from the same fund. That loan was approved by the General Assembly when it passed the budget earlier this year, but lawmakers have delayed action on a final approval needed to disburse the funds.

Mayer said the new money for Marriott will be part of Hogan’s proposed fiscal 2018 budget that will be introduced in January.

Additionally, the state will provide a lump sum $2 million loan from the Maryland Economic Development Assistance Fund. That amount would also be forgiven after 10 years so long as Marriott meets the same targets.

The company will also receive $6 million in corporate tax breaks over six years.

Mayer said both conditional loans contain clawback provisions allowing the state to take money back should the targets not be met.

In addition to state assistance, the company will receive incentives from Montgomery County, Mayer said.

Terms of those arrangements was not immediately available.