The American Institute of CPAs will ask its Governing Council to consider relocating more than 400 of the trade association's employees from their Jersey City, N.J., offices to an undisclosed location in the Southern Atlantic region.
Relocation could begin as soon as August 2006, and would be completed by the middle of 2007.
AICPA executives said that 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 AICPA Board has already secured a loan commitment to cover costs for the first year, which is expected to be paid back within five 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 in a vote scheduled for Oct. 25. The destination for the jobs will be revealed the day before, but cannot be disclosed earlier due to negotiations with state officials.
Tony Pugliese, senior vice president of finance and administration for the AICPA, said that the overwhelming majority of the one-time $49 million price for the move would be the write-off of the group's liability for the New Jersey offices. Severance and stay packages, as well as the actual moving costs and work at the new office, round out the figure.
Pugliese said that executives have regularly heard concerns from members about the high personnel and real estate costs associated with keeping operations centered around New York City. As a national organization, Pugliese said that members had a valid point that there was no reason the AICPA should not explore other options, a process that started about six months ago.
"The ultimate goal was to find out if there was a way to lower costs without compromising services," Pugliese said. "Looking in other markets, we think that's a goal that can be accomplished. Fiscal responsibility is a goal of both our members and of the AICPA."
According to conservative calculations, the move could save the AICPA about $900,000 a month over the long term. Pugliese also said that the relocation would bring the group's operational cost structure more in line with those of the national membership.
A move, if one is to be made, needs to come soon. The AICPA's lease on the Harborside offices extends for another seven years, and real estate consultants have said that the ball needs to begin rolling in order for the property to be sublet.
If the council approves the measure, Pugliese said that the next step would be to complete the real estate negotiations to finalize the new site and begin work to get the property ready for use. Beginning next month, visits for employees and their families considering the relocation would also start taking place.
While the square footage of the two buildings would be similar, around 160,000 square feet, the footprints of the two would be different -- making better use of empty space in a new location.
The AICPA moved into the New Jersey offices in 1992, pulling many of the employees from the New York headquarters. Harborside employees operate the customer service and call centers, as well as handling functions such as the group's finance and accounting, information technology, and human resources needs. Some member-facing departments, such as peer review, are also located there, as are a number of the group's creative departments, including its Web publishing team, the Journal of Accountancy staff and CPA2Biz.com.
Pugliese said that a number of factors, including the critical nature of an employee's job, would be considered in determining what sort of relocation compensation was awarded. He did say that anyone who was willing to relocate would have a job, and that every employee would be offered some sort of incentive to move. Employees will be asked to make a decision on their plans no later than Jan. 31, 2006.
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