A check-processing operation that opened near downtown Baltimore with great expectations and an infusion of government incentives is shutting down after seven years, closing the books on a disappointing economic-development deal that produced fewer than half of the 500 jobs that officials had anticipated.
JPMorgan Chase & Co., which inherited the center when it bought Bank One Corp., said the Baltimore center fell victim to a shift in the way people pay their bills, increasingly online rather than by mailing checks. About 220 people work at the Fayette Street operation, across from the main post office.
JPMorgan spokesman Chris Spencer said the financial-services company expects to close the operation by the end of the summer. One of three JPMorgan check-processing centers, the Baltimore site is being closed because it is the smallest and newest, he said.
"There's a businesswide evolution from paper-based processing to image-based processing, and it's forced a lot of companies in the industry to make hard choices and how and where the work is processed," Spencer said. "We need less employees to handle declining volumes of paper payments. ... The decision did not have anything to do with productivity, quality or performance."
The closing, first reported in the most recent edition of the Baltimore Business Journal, comes at a time when the city's unemployment rate is averaging 6.7 percent. The jobs pay between $20,000 and $30,000.
Much effort was expended to land the operation. Local officials wooed Bank One for about two years, eager to bring jobs to a city bleeding employment.
The city, which acquired the land and sold it below cost, spent $1 million preparing it for development. The quasi-governmental Maryland Economic Development Corp. built the 40,200- square-foot facility and 162-space parking garage, selling it to Bank One for about $7.7 million in 2000, state records show.
Empower Baltimore Management Corp., a nonprofit formed to distribute federal money for economic development and similar improvements, contributed a $1.4 million grant for work-force training, according to a document The Sun obtained in 2000.
M.J. "Jay" Brodie, president of Baltimore Development Corp., the city's economic-development arm, is angry that after this effort, JPMorgan gave no warning that the closure was under consideration.
"Perhaps the end result was unavoidable, but not having been given the opportunity to at least try to weigh in on the process was, to put it mildly, frustrating," he said yesterday.
Alethia Reed, Empower Baltimore's deputy director, said it is unusual for a grant or loan recipient to fall short of expectations. No strings were attached to the grant, she said.
JPMorgan will owe money to BDC for failing to meet job goals - as much as half of the $1 million the city contributed in land-development costs. The company was to have hired 150 full-time-equivalent employees by December 2001, increase that to 400 jobs by 2004 and maintain those jobs through 2007. Bank One, which said Baltimore topped 84 other competitors for the facility, had rosier expectations of 500 jobs.
The company was 10 jobs short of its first target and never had more than about 220 positions. JPMorgan, which took over in 2004, would have owed the city money at the end of this year for missing targets even if operations continued, said Jeffrey Pillas, BDC's chief financial officer.
"It's disappointing," he said. "Usually, most companies - especially large companies - have a really good handle on how many people they'll need. But ... this happened back in, originally, 2000. And now we're seven years later, and technology is different."
Bob Brennan, executive director of Maryland Economic Development Corp., known as MEDCO, was not involved in the check-processing center deal because he joined the organization in 2004. But he noted that economic-development agencies cannot predict how business conditions will change in outlying years.
"It's really important for economic developers to have that perspective, that businesses have limited life spans," he said.
As the landowner, JPMorgan will have to decide what to do with the site. Brennan said the location near the post office, a key part of the site's attraction for Bank One, would be useful for businesses such as direct-mail that rely on postal services.