Lawmakers Question Fidelity's Move Out Of Mass.Play
The Massachusetts Senate wants to put Fidelity Investments on the spot. Senators are planning a hearing to ask executives why the Boston mutual fund company is vacating its Marlborough offices and moving more than 1,000 employees out of Massachusetts.
WBUR's Curt Nickisch has been looking into this move and the motivations for it.
Sacha Pfeiffer: Curt, one reason state government workers say they're disappointed in this move is that they feel blindsided by it. Gov. Deval Patrick learned about it while he was on a trade mission in England, ironically trying to drum up more economic development for Massachusetts.
Today Patrick released a statement about Fidelity's move:
I am disappointed and frustrated with this news. Massachusetts has been good to Fidelity, just as Fidelity has been good to Massachusetts. Their leadership was in my office recently and is in frequent touch with [Economic Development] Secretary Bialecki, and yet they gave us little notice of this decision and no opportunity to compete for these jobs. We stand ready to show Fidelity or any other company the competitive advantages of doing business in the Commonwealth.
Curt Nickisch: The news wasn't only a surprise for the state. It was also a surprise for the mayor of Marlborough, which is still stomaching this tough news. Mayor Nancy Stevens told Radio Boston earlier Wednesday she wishes there was something the state could have done to keep the company there:
I wish I did...Their business practices are such that they make their internal decisions and they're not looking for outside influence. And that was the message I got yesterday — that, you know, 'we're making our decisions based on our business and we don't want to waste anyone's time because we're going to do what we need to do for our business plan.'
I suppose if Marlborough and Massachusetts economic development types never got the chance to make their pitch to try to keep Fidelity here, then Fidelity really didn't want to be here.
Well, folks here can cross their arms and be dismayed, but if you just look at the numbers, Fidelity has long made a commitment to other locations like Merrimack, N.H., and Smithfield, R.I. In fact, Rhode Island already has close to 3,000 Fidelity employees. Contrast that with the little over 1,000 in central Massachusetts It's naturally easier to move the molehill to the mountain.
There has to be a financial reason for doing so.
Fidelity gets tax benefits of around $2.5 million per year from the state. The state actually owns the buildings where Fidelity works, and Fidelity can write off the rent as long as they have decent-paying jobs there. Employees also get a break on bonuses.
And Rhode Island Gov. Lincoln Chafee wants to lower the corporate tax rate. Right now it's higher than in Massachusetts, but if his plan goes through, it will be lower.
Mike Trainor is a spokesman for Chafee, and he's thrilled that what they're doing for Fidelity is working:
The governor is delighted that Fidelity has indicated that Rhode Island will receive some significant portion of the jobs that will be relocated from the Marlborough facility.
It's important to note that Rhode Island's Economic Development Corporation did not offer any new tax incentives to Fidelity. This wasn't a case of getting lured there thanks to a more competitive tax incentive package compared to what Massachusetts was offering. The tax benefits have long been in place and Fidelity simply carried out on what may have been a longer-term plan.
This program aired on March 16, 2011.