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FBI headquarters would be boon for Md., economists say

— An effort to lure the FBI to Maryland could have a profound payoff for the state's economy, but the benefits could take years to materialize and the eventual impact would hinge on the way local officials handle the project, several of the state's top economists say.

Maryland's congressional delegation has been pressing for months to make Prince George's County the new home of the Federal Bureau of Investigation, which is currently headquartered in the crumbling J. Edgar Hoover Building in downtown Washington. The lawmakers are competing with officials in Virginia, who want the FBI to move to Springfield.

State Democrats, including Gov. Martin O'Malley and Sens. Barbara A. Mikulski and Ben Cardin, are set to appear in Prince George's County Monday to reiterate their support for bringing the project to Maryland.

The FBI headquarters would house about 11,000 employees, which would rival the size of the largest federal agencies in Maryland, including the Social Security Administration in Woodlawn and the National Institutes of Health in Bethesda. The agency has requested a site that could accommodate 2.1 million square feet of office space.

County officials estimate the development would pump $180 million in annual tax revenue into the state.

"The impact would be enormous," said Anirban Basu of the Baltimore consulting firm Sage Policy Group. "All one needs to do is look at a map and see what kind of potential that development will have."

But that impact would be limited — at least initially — because many of the agency's employees already live in the region. An economic study commissioned by the District of Columbia last year predicted few employees would move closer to the new headquarters, meaning many who live in Virginia would commute to Maryland.

Basu and others said that as the agency made new hires over time a growing share of employees would likely settle in Maryland.

Others said the potential secondary economic benefits of such a project — employees taking lunch in a nearby restaurant or shopping after their shift, for instance — would depend on how the overall development is planned by local officials and the General Services Administration, the federal government's real estate agency.

Little private investment cropped up around the U.S. Census Bureau's headquarters in nearby Suitland, for instance, in part because the design of the complex makes it unlikely employees would walk out to take lunch or run an errand, economists said. To avoid similar office islands, they said, the county needs to follow through on plans to develop retail and residential space near the new building.

Federal workers, University of Maryland economist Peter Morici said, are less likely than employees at a law firm or private company to have expense accounts or need to take clients out to pricey restaurants.

"Bureaucrats don't 'do lunch,'" Morici said. "You're not going to get those kinds of benefits."

Still, Morici said, the project ultimately would be positive for the state.

Elected officials in Maryland, who have been working behind the scenes for months on the project, have all touted the potential economic effect.

"With thousands of employees, both stationed at the headquarters and visiting from field offices around the country, we anticipate significant economic growth directly outside the complex and in the surrounding region," Rep. Steny H. Hoyer, the Southern Maryland lawmaker, said in a statement.

Hoyer, the No. 2 Democrat in the House, represents a portion of Prince George's County, including Greenbelt.

Mikulski, also a Democrat, said the project would make "the country safer and Maryland's economy stronger."

With its proximity to Washington and its large federal workforce and contracting base, Maryland weathered the recession better than most other states. The state is home to more than 300,000 federal employees, and the government spent about $30 billion on contracts in the state in 2011, the fourth-largest share in the nation.

Social Security has more than 11,000 employees in Maryland, according to the Office of Personnel Management. The NIH has more than 18,000.

The military presence grew dramatically during the last base realignment process, or BRAC. Tens of thousands of new jobs were transferred to Fort Meade, Aberdeen Proving Ground and other installations.

But Prince George's County has missed out on much of that growth, even as Northern Virginia and Montgomery County won approval for new office leases. That is part of the reason O'Malley and other state leaders were early backers of the Prince George's proposal.

"I don't think suddenly you're going to have dollars dropping out of the sky in Prince George's County if they have the FBI headquarters," said Richard Clinch, a research economist at Battelle Technology Partnership Practice, who has consulted on economic development in the county.

"But Prince George's County needs to have a big win, and this would put them on the map for other types of economic development," he said.

Developers have proposed several sites in Maryland, but the state's top officials have united behind a site adjacent to the Metro station in Greenbelt. The GSA is expected to announce a short list of potential sites as soon as this month.

Prince George's County officials submitted a proposal along with Maryland-based Renard Development. The GSA is expected to choose only potential sites this spring — not developers — meaning other companies would likely have an opportunity to submit proposals.

Virginia officials, including Gov. Terry McAuliffe, are supporting a site near the Metro station in Springfield.

The GSA is exploring the idea of swapping the development rights of the Hoover building — located in a prime downtown neighborhood — in exchange for building the new FBI building in the suburbs. It's not yet clear if development of the downtown site would cover the entire cost of the new headquarters.

The FBI has been considering a move for years. A 2009 study by the GSA found the Hoover building needs $80.5 million in repairs and upgrades. The agency's workforce is scattered among 22 annex buildings throughout the Washington region, which presents challenges for the agency's mission.

Local economists praised Prince George's County officials for organizing a competitive bid, gathering support for it statewide and creating a business climate that quickly allowed the proposal to be taken seriously as a top contender.

"We've made significant strides," said Aubrey D. Thagard, the county's interim deputy chief administrative officer for economic development. "We ... have focused on making [the county] an attractive and affordable option for work and to live as well."

john.fritze@baltsun.com

Copyright © 2014, The Baltimore Sun
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