A state legislative committee yesterday approved spending $1.25 million in state funds to help Giant Food Inc. build a distribution facility in Howard County and transfer 550 jobs from Prince George's County.
The committee also was notified that Ciena Corp. and Corvis Corp., two of the largest makers of fiber-optics network, had declined the $2.2 million in Sunny Day Fund grants previously offered by the state. The decision was driven by rising losses the companies have endured during the telecommunications slump, officials said.
Ameritrade Holding Corp. turned down a $1 million state grant that was approved in 1999.
The decision on Giant's grant, designed to keep the facility in the state, was made after members of the Legislative Policy Committee twice voted down a motion for a 30-day delay while the committee gathered information on why Giant did not select Prince George's or Anne Arundel counties. Both were on Giant's initial list of sites under consideration.
Senate President Thomas V. Mike Miller, who represents Prince George's County, was concerned that the state was spending funds to help the grocery chain move from an economically disadvantaged area in Prince George's to the state's most affluent county.
Having the jobs in Landover "is a very significant economic benefit for Prince George's County," he said. "They're going from a poor county to the wealthiest in the state, and we're paying them. To pay them these funds makes no sense whatsoever."
Barry F. Scher, vice president for public affairs for Giant, said the company will keep its headquarters in Landover with about 800 jobs.
Scher said that if the committee had delayed its decision, there was "no doubt" the company would have reconsidered a parcel in Spotsylvania, Va., one the company was considering before deciding on a 72-acre site along Dorsey Run Road in Jessup.
"We would've taken another look at the project," he said. "We would've had a lot of questions to answer, like are we going to get the votes" to approve the incentive package.
Giant Food, a subsidiary of Dutch company Royal Ahold NV, announced in January its intention to build a 370,000-square-foot distribution facility for its perishable goods and began a site search in Virginia, Delaware and Maryland.
Company officials testified yesterday that the company had considered a site in Forestville in Prince George's but ruled it out because its costs over 30 years would have been $14 million more than those for the Virginia site.
The difference between the Howard site, near Interstate 95 in Jessup, and the Spotsylvania site was about $1.5 million. The state's incentives of $1.2 million, along with $500,000 in grants and state tax credits and an estimated $250,000 in tax credits and grants from Howard County, closed that gap, Scher said.
He told the committee that the company has aggressive expansion plans and intends to build a significant number of stores in coming years, including some in Baltimore.
The company has not promised to create jobs, but during negotiations it said the new facility would be able to handle up to 700 workers. Officials also said Giant could build as much as 200,000 square feet in additions to the facility.
"The bottom line is this is a significant economic development retention win for the state, and the committee clearly went on record when it's Maryland vs. Virginia, the legislature is going to make sure the jobs stay in Maryland," said David S. Iannucci, secretary of the state Department of Business and Economic Development.
In other action, the committee announced the return of $2.2 million in Sunny Day Fund grants from Corvis and Ciena and $1 million from Ameritrade.
Corvis' $1.2 million grant was approved by the committee in December 2000 on a promise from the company to create 1,500 jobs by December 2003 and to spend $44 million in expanding its executive offices and manufacturing facilities.
Ciena's $1 million grant, approved last June, was contingent on the company's retaining 1,400 jobs, creating 1,000 jobs and expanding in a $62 million facility.
As the economy began to slow, the telecommunications sector has been among the hardest-hit, and Columbia-based Corvis and Linthicum-based Ciena have cut back.
Corvis laid off about 300 workers in November, then quietly cut about 120 more in March, according to filings with the U.S. Securities and Exchange Commission.
Ciena had three major rounds of layoffs, cutting 380 in November, 400 in February and 650 in March.
"Everything in this business is a cost-benefit analysis," said Glenn Jasper, a Ciena spokesman. "In exchange for a million, we would've needed to hire a certain number of people and build out facilities. You just weigh the cost and benefits. It's a nice offer but we're not going to accept."
The Ameritrade grant originally required the discount stock brokerage to create 340 jobs by next year. After market conditions slowed in 2000, the company renegotiated the deal, promising to create 315 jobs by next year. The company has created 122 jobs.
In a letter to the committee, Iannucci wrote that the company had notified the department that it was "unable to complete the level of expansion originally anticipated."
Sun staff writer Stacey Hirsh contributed to this article.