State to seek repayment of Bechtel loan

Government contractor Bechtel Corp. announced that 1,000 employees now based in Frederick will be moving to offices in Virginia.
Government contractor Bechtel Corp. announced that 1,000 employees now based in Frederick will be moving to offices in Virginia. (Andre F. Chung, Baltimore Sun)

Maryland officials plan to seek repayment of a $9.5 million loan they gave the global engineering and construction giant Bechtel Corp. as an incentive to keep jobs in the state, after the firm said this week that it would relocate a "substantial" part of its Frederick office in Virginia as part of a global restructuring.

It would be one of the largest clawbacks in state history.


Bechtel established offices in Reston, Va., in 2011, shortly after Maryland announced the seven-year loan to the company, offered in an effort to retain the firm's jobs in the state. At the time, the firm employed about 2,000 people in Frederick; it employs about 1,100 there today.

So far the state has disbursed about $4 million of the loan, which is contingent on the firm's Maryland employee count at the end of each calendar year, according to a spokeswoman for the state Department of Business and Economic Development.


Now the DBED expects Bechtel to repay about $3 million plus interest, spokeswoman Karen Glenn Hood said. That includes $2 million issued the first year on the condition the firm maintain 1,250 positions in the state through the end of 2018.

It's also expecting $1 million back from an installment the company received last year, which required the firm to retain the positions through the end of 2015.

The San Francisco-based company may keep $1 million issued in 2012.

The total amount due under the clawback, which Hood said will become effective as soon as the state asks for it, would be based on how many employees the firm keeps in the state.

If the firm had met the employment conditions, the loan would have been forgiven.

Keeping Bechtel in Maryland for an extra few years generated about $35 million in tax revenue, Hood said.

Bechtel employs about 800 people in Reston, where the majority of Frederick's relocated jobs will go after the power division is merged into different units, according to a company spokeswoman.

Right now, Bechtel doesn't know how many employees it will keep in Frederick or how many people it expects to move with the firm to Reston once the restructuring goes into effect Jan 1, or how long the relocation will take, spokeswoman Michelle Michael said.

"Whatever's in the agreement, we will abide by," she said.

The DBED has made 466 loans, grants and other deals worth $200.6 million since 2000 to promote business in the state. About $10.8 million has been repaid by firms that did not meet conditions.

Between 2010 and 2013, 16 firms were required to repay the state for not meeting the employment requirements of conditional grants or loans totaling about $2.2 million, the agency said.

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