Week of January 28, 2002
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database
4,900 More Jobs Saved
St. Louis
More than meets the arch: More was at stake in CitiMortgage and Magellan's site selection decisions that the companies' 2,000 new jobs. Also hanging in the balance were the two firms' combined 4,900 existing St. Louis area jobs. (Pictured above: Downtown St. Louis)
CitiMortgage, Magellan Expansions Adding 2,000 Jobs in St. Louis Metro
By JACK LYNE, Site Selection Executive Editor of Interactive Publishing

MARYLAND HEIGHTS and O'FALLON, Mo. -- "Because of the current economic downturn," said Missouri Dept. of Economic Development (www.ecodev.state.mo.us) Director Joseph Driskill, "we must work harder in collaboration with our local partners to bring new jobs and investment into our communities." Working harder certainly seems to be paying off in St. Louis. In a slam-bang two-week spate that resembled the Rams' high-octane NFL offense, the St. Louis area this month secured major expansion commitments from two of its biggest employees, CitiMortgage (www.citimortgage.com) and Magellan Health Services (www.magellanhealth.com). Together, the two projects will add 2,000 local-area jobs.
"We must continue to aggressively work with companies to expand or locate operations here . . . instead of allowing those jobs to go elsewhere," said Missouri Dept. of Economic Development Director Joseph Driskill (pictured above).

        CitiMortgage, which already employed 3,500 workers in the St. Louis area, will create 1,500 of those jobs over the next three years. The mortgage banking subsidiary of financial giant Citigroup announced that it will add those positions at a new US$85 million, 515,000-sq.-ft. (46,350-sq.-m.) facility in the city of O'Fallon, 20 miles (32 km.) west of St. Louis. Magellan Health Services is adding 500 more jobs over the next five years at its national service center, which provides contracted employee-assistance programs, counseling, and substance-abuse and mental-health referrals. The company, which has 1,400 local-area employees, will expand in a three-building complex in the city of Maryland Heights, 20 miles (32 km.) northwest of St. Louis.
        Despite CitiMortgage and Magellan's substantial existing operations, the St. Louis metro wasn't a lock for either project. Both companies gave strong consideration to expanding in other states.
        And more was at stake than the substantial prize of 2,000 new jobs. Also hanging in the site selection balance were CitiMortgage and Magellan's combined 4,900 existing jobs in the St. Louis area. Both companies were intent on finding one location for new and existing employees alike.
        The city with the Gateway Arch was able to land both projects using a combination of private- and public-sector teamwork, inventive real estate strategies and financial incentives. Here's a look at the two projects.

Business Park Developer Buys
Existing CitiMortgage Facility

The new CitiMortgage facility will be located in Progress Point, a new 168-acre (67.2-hectare) park in St. Charles County that Tristar Business Communities (www.tristarbc.com) is developing.
        "We Make Deals Happen" is Tristar's slogan. The St. Louis-based company certainly went the extra mile to make the CitiMortgage deal a reality: Tristar is buying one of company's two existing buildings in the St. Louis area. The buy was essential in making the project happen. CitiMortgage's move into Progress Point was contingent on the company's selling its two area existing facilities, which had been languishing on the market since February of 2001.
        CitiMortgage's new campus in O'Fallon will be completed by mid- to late 2003, according to company officials. After the company moves in, Tristar will redevelop for residential and retail use the 138,000-sq.-ft. (12,420-sq.-m.) CitiMortgage facility that it's buying.

CitiMortgage Considered Michigan Site

A number of other players teamed together to land the CitiMortgage deal, including the Missouri DED, the city of O'Fallon (www.ofallon.mo.us), St. Charles County (www.stcc-edc.com), and the St. Louis Regional Chamber and Growth Association (RCGA at www.stlrcga.org). In the final shortlist stages, that team was competing with a site in Farmington Hills, Mich., according to company officials.
        Missouri's incentive package certainly didn't hurt the O'Fallon location's case. The final details of that incentive package are still being nailed down, according to state officials. The St. Louis Business Journal has reported that CitiMortgage will receive $8.71 million in state tax credits, plus $13.35 million in incentives and abatements from the city of O'Fallon, St. Charles County and Francis Howell School District. CitiMortgage is also eligible to apply for training funds through the Community College New Jobs Training Program, according to state officials.
        The CitiMortgage project's net benefit to the state will exceed $63 million, according to Missouri DED calculations.
Gov. Bob Holden
Magellan's expansion decision was "a result of the strong public/private partnerships that exist in Missouri," said Gov. Bob Holden (pictured).

        "But in reality, Missouri's high quality of life and its excellent work force far outweigh any financial incentives that we could ever offer," maintained Gov. Bob Holden. "Through its pledged commitment to growth, CitiMortgage has truly demonstrated confidence in the business climate of Missouri, and particularly the St. Louis region."
        Added Driskill, "We must continue to aggressively work with companies to expand or locate operations here, particularly those that are a part of our target industry clusters, instead of allowing those jobs to go elsewhere."

Maryland, Utah Main
Competitors for Magellan Project

Public/private coordination also kept Magellan Health Services from going elsewhere. The No. 1 U.S. player in behavioral health industry was looking for more space after "significant growth over the past year," explained Workplace Division Executive Vice President William Barr. Magellan's workplace division has landed several significant new contracts, including an expansion of its contract with the U.S. Postal Service. With the increased business volume, the company needed larger, more consolidated space to better serve business needs, Barr said.
        Maryland and Utah were St. Louis's two main competitors in meeting that need, according to officials with Columbia, Md.-based Magellan.
        Local officials' resourcefulness in providing expansion space helped Missouri land the project. St. Louis County is funding construction of Magellan's new facilities through the issuance of $31 million in taxable revenue bonds. The 230,000-sq. ft. (20,700-sq. m.) complex will house two wings linked by a central, three-story circular structure, plus a 25,000-sq.-ft. (2,250-sq.-m.) technical data center that will be built in conjunction with the three-building complex.
        Magellan will begin relocating existing employees from five leased facilities late this year. Magellan, however, won't own its new quarters. The Chapter 100 revenue bonds provide for the county to own the property. Magellan also won't pay taxes on its new site. In lieu of taxes, it will make $711,000 in payments to St. Louis County over a 10-year period, the DED reported. As part of its agreement with St. Louis County, Magellan will also "contribute financially to establish and support local community development projects," according to the DED. The company has offered the Pattonville School District $177,000 of in-kind services.

State, Utility Add Incentives

State-level incentives also helped facilitate the deal. The Missouri Development Finance Board approved more than $6 million in Build Missouri bonds to help support the project. The Build Missouri program awards borrowing companies state tax credits for debt service.
        Magellan is also eligible for other incentives, state officials said, including work-force development programs and business facility tax credits. As of this writing, state officials had not released those incentives' total value.
        St. Louis-based utility company AmerenUE (www.ameren.com) added to the state and local assistance, providing Magellan with a five-year, 15 percent rate reduction. A subsidiary of St. Louis- based Ameren Corp., AmerenUE also provided site location services and technical engineering assistance.
        The public- and private-sector coordination that facilitated the expansion drew praise from many of the project's principal players.
        "We're delighted that the state of Missouri has provided us with this opportunity to expand our operations while remaining in the region," Magellan's Barr said. "This agreement with the county is an example of the type of public-private partnership that provides long-term stability to Magellan as an employer of choice and long-term economic strength to the St. Louis region." Added Gov. Holden, "Once again, as a result of the strong public/private partnerships that exist in Missouri, today we are celebrating yet another company's growth in Missouri."
        "Magellan's selection of St. Louis affirms the benefits of the state and region working in a unified fashion for economic development," said Richard Fleming, RCGA president and chief executive officer.


bd0128bbd0128b ©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.