It seemed like every few months last year Fidelity Investments disclosed new plans to expand its presence in Rhode Island – and the trend has carried over into 2006.
Fidelity announced plans last week to construct a 500,000-square-foot office building next to its two existing buildings off Route 7 in Smithfield.
The new building, which is an expansion of plans announced in July to spend $65 million to erect a 275,000-square-foot structure, will house at least 1,000 employees on top of the 1,600 already at the campus. Aiming to complete the building by 2008, Fidelity also wants room to grow beyond the 1,000 workers, said John C. Brockelman, a company spokesman.
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“That is a very significant event for this state,” said Michael McMahon, executive director of the R.I. Economic Development Corporation. “The number of the jobs, the quality of the jobs, and the fact that they are knowledge workers makes it a victory for the region.”
McMahon said the additional jobs could bring the state between $3 million and $4 million in annual income tax revenue.
The state is the beneficiary of the Boston-based mutual fund giant’s goal to move 1,200 to 1,500 employees out of Massachusetts over the next three years, according to Brockelman. The company plans to send 800 people from its Personal Investments division to Smithfield, he said, with the remaining 400 to 700 going to company offices in places such as Merrimack, N.H.
Until the new Smithfield facility is complete, the company plans to lease the former American Express building near the State House, and move 400 people from the Personal Income division there by June, said Brockelman.
He expects the company to sign a lease “very soon” with the state pension fund, which took ownership of the 114,000-square-foot building last September in U.S. bankruptcy court.
Brockelman said the company has chosen to expand in Rhode Island for three main reasons: desire for geographic diversity, access to talented workers, and the state’s economic conditions.
The last reason at first was an impediment to Fidelity bringing more jobs to the state. As a result, and at Fidelity’s request, state legislators passed the Jobs Growth Act last summer.
The act allows workers to pay taxes on only half of their “performance-based” income, such as bonuses and stock options. In return, the employer pays a 5-percent tax on all performance pay. To qualify, employers must add $10 million in payroll and 100 workers, all of whom are paid at least 125 percent of the state’s median wage.
Still, Gov. Donald L. Carcieri has called for broader reforms of the state’s progressive income tax, which has a 9.9-percent rate for people earning more than $319,000 per year. That is double the amount for that level of pay in Massachusetts and Connecticut.
“The tax legislation went a long away to provide a positive economic environment in Rhode Island,” said Brockelman.
“Here you have a case where the General Assembly came up with a solution,” McMahon said of the act, “and as a result, it’s not going to cost us a nickel in tax revenue.”
The state has a large pool of highly educated workers to attract companies like Fidelity, according to Brockelman. He said the company has a partnership with Bryant University in Smithfield, from which it recruits business school graduates.
