Montgomery County’s Economic Development Corp. Board Gets Insight Into Regional Competition

New board member Carmen Larsen says Arlington and Fairfax counties tried to woo her business


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Aquas CEO Carmen Larsen at a Montgomery County Council meeting Tuesday

Screenshot via Montgomery County Council video

Local officials will be watching the Montgomery County Economic Development Corp. over the next few years to see if its independent nonprofit model—hailed by elected officials—is effective in keeping businesses in the county and attracting new ones.

On Tuesday, members of the nonprofit’s board found out firsthand what they’ll be up against when new member Carmen Larsen told them and the County Council about how Fairfax and Arlington counties tried to convince her  to move her business inside their borders.

Larsen, founder and president of Bethesda-based technology and business consulting firm Aquas Inc., was the lone new member appointed this month to the 11-member board that was formed in 2015 to guide economic development in the county. The corporation overseen by the board was created by County Executive Ike Leggett and the council to provide a more business-like approach to attracting companies and growing the local workforce.

Over the past year and a half, the corporation has hired staff, including CEO David Petr, and set up a website—thinkmoco.com. However, other than playing a role in keeping Marriott International’s headquarters in Bethesda, the corporation has not announced that any major new employers are moving to the county. In fiscal 2017, the corporation received $4.1 million in county funding, which rose to $5.3 million in the fiscal 2018 budget.

Petr, who has been on the job for about nine months, said Wednesday in an interview with Bethesda Beat that the corporation has hired about 11 staff members and moved into permanent office space two weeks ago. During his tenure, the nonprofit launched a marketing campaign that highlights the county’s connectivity to Metro, airports and proximity to the federal government. Ads have run on NPR and The Washington Business Journal and there’s a backlit display advertising the county as a business destination at Reagan National Airport.

Soon staff members will begin “Outreach Montgomery”, an effort to have 1,000 face-to-face meetings with county business over the next year to learn their concerns and find ways to assist them. He said county leaders and residents will have to be patient about major corporations relocating here.

“We haven’t had what I’m calling the ‘grand slam’ or household name yet—[a company] that people say, ‘wow, that’s something that’s really moved the needle,’ “ Petr said. “But it’s more important to convey that the project pipeline takes years.”

He said, however, that there are five businesses close to making an announcement about future plans and that “some are high visibility Fortune 500 companies.”

Petr said one of the biggest challenges in the county is attracting and retaining skilled workers to fill open private sector jobs.

During Tuesday’s session with the council, several of the economic development corporation’s board members discussed their strategy and vision to help the county attract and retain workers and businesses. Larsen shared her story as officials talked about how or whether the corporation should cater to small businesses.

 “I just wanted to say that over the last six months I’ve received phone calls from Fairfax and Arlington counties reaching out and saying, ‘You know, we will help you set your business here and move out of Montgomery County. We’ll be more friendly to you.’ And I said, ‘I don’t think you understand, we’re a small business, I don’t think you’ll be interested in us.’ And they said, ‘No, we’re precisely interested in you. We want you to come over, we’ll help you set up your business here and get your operation going.’ ”

Larsen said she wanted to share her experience because “those are counties that are actively reaching out to small businesses and I don’t think we should forget about that because it will make a difference in the long run for our county.” Aquas has less than 100 employees, according to its website.

Council President Roger Berliner, a former chairman of the Metropolitan Washington Council of Governments, said it made his “blood boil” to hear that Fairfax and Arlington were trying to attract Larsen’s business to their counties. In 2016, the council of governments issued a report asking that governments in the Washington, D.C., region find ways to work together to build the regional economy, rather than compete against one another.

“We cannot keep doing this and cannibalizing our own,” Berliner said.

Despite the report’s recommendation, local jurisdictions continue to compete for federal agencies such as the new FBI headquarters and projects such as a new stadium for the Washington Redskins. Even craft breweries haven’t been shielded from the competition—after the Maryland General Assembly passed a law this year adding new restrictions to the operation of large breweries, Virginia officials openly courted Maryland’s breweries to move south.

Petr said he hopes his regional counterparts can work collaboratively to market the region.

“Our current strategy doesn’t include direct outreach to businesses in neighboring counties,” Petr said.

Bob Buchanan, the board’s chair and also president of the regional economic research association The 2030 Group, said the economic development corporation’s strategy is focused on “talent.”

“Attract talent, retain talent and retrain talent—then your community will be fine,” Buchanan said. “It’s all about talent development and talent attraction. Hopefully other parts of the community are doing their part to make livability what it needs to be.”

Buchanan said recent research has found the county is no longer a destination for skilled workers, but rather an origin—meaning that people who grew up in the county are leaving to work elsewhere resulting in a worker shortage. He said the county has about 29,000 unfilled private sector positions.

When pressed by council member George Leventhal about how the corporation plans to attract and retain workers, Buchanan said it would do so by providing “across-the-board” services.

James Brady, a board member and vice president of the Gaithersburg biotech firm MedImmune, said the corporation is examining the challenges faced by small businesses, but that its major mission will be to attract and retain new businesses. He said the corporation needs to develop metrics that will provide details about why a company chose to leave the county or why it moved here.

“The organization now has bones,” Brady said. “We want to see how it functions.”

Terry Forde, the board’s vice chair and CEO of Adventist Healthcare, said the county needs to do a better job sharing its story.

“We realize it’s a great place to do business, we’re examples of it,” Forde said. “We need to be able to tell that story and connect the dots for people. Let’s get good at telling our story.”

Despite acknowledging that the organization was still in its early stages of development, some council members said it needs to do more. Council member Craig Rice said the corporation needs to provide specific recommendations to the council on how it can help make the county more attractive to businesses. And council member Marc Elrich said the nonprofit should find ways to develop programs in the county’s public schools to train local students so they can fill the thousands of job openings in the county.

Board treasurer Sanjay Rai, vice president for academic affairs at Montgomery College, said the college is already investing in cybersecurity programs to meet demand for workers in that booming local industry. 

But he also said the county faces stiff competition from nearby jurisdictions because the cost of doing business here is generally “much higher.” In a 2013 Washington Post report, developers assailed high permitting fees that they said resulted in higher construction costs in the county. Businesses have also complained about high energy costs due to the county’s energy tax, while jurisdictions such as Fairfax County have long spent more than Montgomery on its economic development budget.

On Tuesday, council member Hans Riemer said it’s difficult to attract young skilled workers, “if they think the entry price of a home is $700,000 and they’re stuck in traffic for half a day trying to get to and from their job.”

Riemer said improving transportation infrastructure and providing more affordable housing will make the county a better place to live and better for business.

Buchanan said two ways to better attract companies in the county would be to improve connectivity to airports and fix problems associated with Metro.

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