- The Washington Times - Monday, November 20, 2000

Washington has always been thought of as a government town.

But that image is likely to change now that the region has climbed to the No. 4 spot on Fortune Magazine's "Best Cities for Business" list out on newsstands this week.

Metropolitan Washington including southern Maryland, Northern Virginia and the District languished at No. 12 last year and in 1998. Now, behind only New York, San Francisco and Chicago, strong business and financial centers, Washington has caught the attention of business executives across the country.

"The major draw to the area is its cost-effective space, its quality of life, its educated work force, the transportation system and the diversity of the culture in D.C. that has made us No. 4," said Hugh Panero, president and chief executive of XM Satellite Radio in the District.

Mr. Panero, the new D.C. Chamber of Commerce Business Leader of the Year, has worked extensively with the city to help get Washington so high on the list.

"We've worked to make D.C. an attractive place to do business, but I don't think it's completely paid off until we're ranked No. 1."

Mr. Panero attributes much of the success to D.C. Mayor Anthony A. Williams' business-development incentives such as tax breaks for entrepreneurs and convincing high-profile companies like Home Depot and Kmart to set up shop in the District.

"The city has recovered from its financial problems," he said. "Obviously, you have to start off with that as a foundation."

Tim Priest, an economist with the Greater Washington Initiative, said it will be much harder for Washington to jump from No. 4 to No. 1 than it was to get from No. 12 to No. 4.

"People in Silicon Valley still think of Washington as a government town," Mr. Priest said. "We've been working to change that, and that will be our continued challenge."

Fortune magazine added seven new D.C. companies to its 1,000 Best Companies to Work For list which gave the area more exposure among Fortune readers, Mr. Priest said.

The Arthur Anderson consulting firm conducted the survey for Fortune, basing its analysis on business growth, diversity of industries, technology occupation, education attainment levels and quality of life.

Washington already ranks No. 2 behind Salt Lake City, Utah, among the "354 Best Cities to Live in North America" by Places Rated Almanac.

And, Washington was named by Inc. magazine as the No. 1 city in the United States for young, fast-growing companies.

Local companies driving Washington's emerging image as a leading business town include: Exxon Mobil Corp., Lockheed Martin Inc., General Dynamics, Fannie Mae, Freddie Mac, America Online Inc., Marriott International, and Sodexho Marriott Inc.

Apart from the major companies, the budding relationship between business and local government also has helped, Mr. Panero said.

"I think if you look where this city was four or five years ago and where it is today, I think it's a major tribute to Mayor Williams and the city council," Mr. Panero said. "Mayor Williams has helped forge partnerships between the private sector and the public sector to impact change effectively."

Washington is becoming a haven for young entrepreneurs. But established companies also are pulling up stakes and moving to the area.

The Greater Washington Initiative reported that last year, 783 companies around the country either moved their headquarters to Washington or expanded into the region. That is up from 642 in 1998.

"A lot of different types of businesses want to be in this area. This area is friendly compared to the northeast, and [outside businesses] know they can get the type of workers they need," said Anna McKean, who works for Washington-based KPMG Inc. helping other companies relocate. Some companies that have recently moved to the Washington area include: Wilson Sonsini Goodrich & Rosati, a San Francisco law firm, Simpson Gumpertz & Heger Inc., a Boston-based engineering consulting firm, and Corporate Payroll Services, an Atlanta filer of payroll taxes.

As a gauge for new business growth, the Greater Washington Initiative reports the region took in $2.8 billion in venture capital, up from $1.9 billion last year.

"We are seeing the venture capital on the rise and the sheer number of companies," Mr. Priest said.

Ms. McKean spent several years working with the state of Virginia to find incentives for businesses to move into the area. At KPMG, she does comparative analysis for companies that are interested in moving into the area.

One of the prime incentives for companies to relocate to Washington is the cost of living.

"When you look at the overall picture, [Washington] stacks up really well," she said.

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