Bulk of AICPA Operations Heading to N.C.

The members of the American Institute of CPAs Governing Council approved the relocation of most of the institute's staff to North Carolina by an overwhelming voice vote.

While there were a few naysayers after another half-hour of discussion, few concrete comments arguing against the move itself were made.The primary concern voiced by members was over the calculation of the 25 percent average labor savings that would be achieved over the next 15 years -- which most of the savings calculations were based upon.

"No other factor is as critical as maintaining effective ongoing membership service," said AICPA president and chief executive Barry Melancon, in a statement. "For this reason, we are planning a significant period of duplicate operations for impacted functions."

According to financials presented to Council, 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.Asked at what percentage the "break even" point for the move fell at, Melancon said such estimates hadn't been made, but both he and Tony Pugliese, senior vice president of finance and administration for the AICPA, said the 25 percent labor savings estimate was a conservative figure after having had discussions with labor consultants and recruiters and employers in the area. The expectation is that roughly 20 percent of the AICPA's roughly 400 affected workers, possibly a dozen of whom are located in the New York City office, will make the move.

Melancon said the biggest risk component of the move would be the subleasing of the New Jersey rental property, which will hopefully bring in about $6 million a year over the next six years. Melancon said the sublease was the "most out-of-control element" in the plan, though real-estate consultant the Staubach Co. has said based on the proposal's relocation timetable, which is spread out over the next two years, there should be no problem in finding a taker for the sublease.

In response to questions about the process itself, which was kept under tight wrap until just a week before the meeting, and the roles of the AICPA staff and board versus the at-large Council members, outgoing AICPA Chairman Robert Bunting reminded Council that the AICPA staff and executive board was not required to take the final decision to the Council.

Following the vote Bunting urged the audience to offer their wholehearted support and enthusiasm for the move over the course of the coming months and years to ensure the best possible outcome. "It's our duty to get the best possible outcome," he said. "As leaders, we need to think about the needs of the whole profession."

Included in the relocation will be about half of the institute's senior vice president and vice president positions -- six or seven employees, including Pugliese. Pugliese said the choice between project management firms who will oversee the move has been narrowed to two choices and a decision will be made within the next week.

Beginning next month, visits to the area will begin for staffers considering the move and by January 2006, the lease and financials for the site will be finalized. Staff decisions on whether or not they will be making the move will also be due after the holidays.

The new facility's target date to be ready for occupancy is August 2006. Over the course of the next year, the moving of personnel will be completed in phases. The move and the Council's discussion of the decision were driven largely by the escalation of labor costs in the New York metropolitan area, as well as excess space in the current Jersey City, N.J., offices.