Located near a number of major universities and North Carolina's prestigious Research Triangle, Durham, N.C., could become home to a majority of the American Institute of CPAs' staff following a vote by the institute's governing Council.
After nine months of tightly guarded discussion and research, the AICPA Board and the institute's executives released the financials for the proposed relocation last week and waited until the start of fall Council to disclose the actual destination for the move, saying they didn't want to cause needless unrest among the nearly 400 staffers in its Jersey City, N.J., offices.
According to financials generated by the institute, the move would come with a first-year loss of about $49 million, but should provide the AICPA with a net present-value savings of approximately $100 million over the next 15 years.
The move would not affect any of the AICPA's other offices, including its headquarters in New York City, or its presence in Washington, and must be approved by a simple majority of the AICPA Council members. Outgoing chairman Robert Bunting, who moderated the first day of discussions, said one way or the other, the matter would be put to rest -- and a vote -- at the fall Council. AICPA leaders have said delaying the move's completion beyond August 2007 would greatly impact potential savings because of the need to sublet the New Jersey offices through the end of the current lease in 2012.
AICPA president and chief executive Barry Melancon presented a number of goals the group considered necessary goals for any relocation -- including a five-year return on investment, a minimal first-year outlay of cash, minimal disruption to member services and revenues, and finding a location that that would allow the group to serve its national member base as well as be attractive to staff members considering relocation.
Melancon also noted that the group had no desire "to be in the next hotbed for relocation," areas where real estate and wages were expected to escalate in the coming years.
The reasons presented by the AICPA for the move were mostly cost-centered, and members' questions largely related to the financial specifics of the project and how the estimates used in the projections had been generated. The 15-year projection used for much of the savings scenarios assumes the AICPA would stay in the current offices for another eight years after its lease expires in 2012.
"I'm not going to tell you there won't be some disruptions," Melancon said in response to questions about the impact of anticipated staff turnover on member services, volunteer committee projects. "But we're in a very competitive labor market right now. We run significant risks of turnover today... What I will tell you is we're going to do everything we can to convince key people to make this move."
In addition to some 360 employees based in New Jersey, an additional dozen or more employees located in the New York City offices might also be affected. The move would still leave about 60 employees in Manhattan, most who work in the communications department or technical standards-setting.
Tony Pugliese, senior vice president of finance and administration for the AICPA who will be among the affected employees, said the range of workers expected to make the move could vary greatly according to consultants. The institute has heard estimates ranging from as little as 5 percent, to as many as 50 percent, and used a retention rate of 20 percent for their estimates.
Real-estate consultant the Staubach Co. assisted in the search for a new location, reducing the number of suitable U.S. cities to nine based on a number of statistical characteristics. Appropriate cities were those where accountants/auditors earning below $70,000 a year, and database administrators and programmers making below $80,000 a year, fell into the top "quarter-centile" of salaries. Other specific criteria included:
- A population of between 400,000 and 1.6 million,
- More than 1,750 CPAs being located in the area,
- At least 3,000 accountants and auditors in the area; and,
- At least 200 editors and technical writers being located in the area.
By the numbers, Hampton Road, Va. and the Greensboro/Winston-Salem, N.C. area made up the top three along with the Durham/Raleigh, N.C. destination. Jacksonville, Fla. was also given consideration, in large part to leverage Florida's attractive economic development incentives in any real estate negotiations.
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