IBM announced Wednesday it will establish a first-of-its-kind software development center at the former site of The Advocate, a move that will create 800 jobs and be a “transformational” project for downtown Baton Rouge.
The company’s Domestic Delivery Center will be the centerpiece of a $55 million riverfront office-residential complex on Lafayette Street, bordered by North and Main streets and River Road. An 11-story residential tower, with 95 apartments and nine luxury townhomes, also will be part of the development.
The eight-story IBM building is set for completion by spring 2015, while the residential section should open a few months later.
The Louisiana economic development department said the project also will create 542 new indirect jobs and 600 construction jobs. A partnership between public and private sources paved the way for the downtown project, which had been rumored for several months.
“This is the worst-kept secret in Baton Rouge,” Gov. Bobby Jindal said Wednesday at the news conference in the Shaw Center for the Arts.
IBM officials, along with leaders from LSU, local economic development agencies, the Metro Council and the Legislature, lined up several deep behind Jindal.
“Today’s announcement is a game changer that will have a generational impact on Baton Rouge and our entire state,” Jindal said. “This project will continue to position Louisiana as a leader in the global technology sector as we are bringing in one of the largest, most successful, most innovative companies to create a first-of-its-kind software development center in Louisiana.”
The IBM center will deliver technology services to clients, such as application development, application management and system integration to its clients.
Software design is an industry the Baton Rouge Area Chamber has targeted for several years. In December, BRAC released a report on five industries it was concentrating its economic development efforts on and software design for enterprise, industrial and gaming applications made the list.
“It’s hard to put an exclamation point on how big this announcement is,” said Adam Knapp, BRAC president and CEO.
Knapp said the software development industry could rival the pillars of the Capital Region economy, such as the petrochemical and chemical industry, education and state government.
IBM’s decision is a culmination of policies that have been in place for more than a decade, Knapp said, including building up Baton Rouge’s downtown, investing in the high-performance computing center at LSU and prioritizing digital media.
“The potential we have seen in this area for so long is now real,” he said.
The state will provide $14 million in funding over the next 10 years to expand higher education programs and increase the number of computer science graduates to ensure a steady pool of workers for IBM. Of that funding, at least 65 percent will go to LSU’s School of Electrical Engineering and Computer Science in order to expand the computer science division.
Richard Koubek, dean of the College of Engineering, said the plan is to triple the number of computer science graduates from 30 to 90 and to increase the size of computer science faculty from 13 to 25 in the next three to five years. This would put LSU among the top 15 universities in the country in terms of the number of computer science degrees awarded annually, Koubek said.
LSU’s College of Engineering will launch the “Geaux Digital Louisiana” consortium — a statewide partnership with high schools, community and technical colleges and other universities — to promote interest in computer science-related career fields and enhance student recruitment.
Ravi Arimilli, an IBM Fellow who serves as chief technology officer over the company’s Power Servers line, is a Baton Rouge native who grew up next door to Jindal. Arimilli now works in Austin, Texas, but will play a role in establishing the Baton Rouge center and recruiting employees.
Arimilli said Baton Rouge is underserved by the number of programming jobs available. The Baton Rouge center will provide a place for recent graduates from LSU and nearby colleges with strong computer science departments, such as Southern University, the University of Louisiana at Lafayette and Tulane University, to get good jobs while staying close to home.
LED offered IBM a performance-based incentive package that includes grants totaling $29.5 million over 12 years, including a $1.5 million contribution from the city-parish to reimburse costs related to recruiting personnel, relocation and other workforce-related costs; internal training; and facility operating expenses.
The company also will use the state’s LED FastStart workforce development program for recruiting support, as well as Louisiana’s Quality Jobs program.
The IBM project has been in the planning stages since fall. Baton Rouge beat out Lincoln, Neb., for the development center.
Colleen Arnold, senior vice president of application management services for IBM, said during the announcement that the incentives weren’t the deciding factor in luring the company to Baton Rouge. Access to workers who can help IBM meet the demand of its clients was the key, she said.
Arnold said IBM will temporarily lease space in the Essen Centre office complex beginning in April until the riverfront site is completed. The company has launched a website to recruit workers for the service center at http://www.ibmlouisiana.com/jobs. The plan is to have 300 employees by the end of 2014, 500 workers by the end of 2015 and 800 workers by 2016.
IBM would not provide specific information on the salary range for Baton Rouge workers.
LED Secretary Stephen Moret said in an email that the company would offer salaries “competitive with the market for computer science graduates and other technical/quantitative fields” such as engineering.
According to GlassDoor.com, a website that provides information about companies to potential employees, IBM pays an average salary of $67,334 for an application developer, one of the positions the company is looking for locally.
The complex will be developed by Commercial Properties Realty Trust, a real estate investment trust that manages and develops property holdings of the Baton Rouge Area Foundation.
The BRAF-affiliated Wilbur Marvin Foundation will own the approximately $30.5 million office building.
The office building will be funded by $14.8 million from the state of Louisiana, $3 million from the city-parish and $12.7 million in federal Community Development Block Grant money.
The Metro Council is set to take up the issue of funding for the project next month.
Moret said the state will utilize a mix of sources, including the Rapid Response Fund, Mega-Project Development Fund, Community Development Block Grant funds and capital outlay
BRAF is working on lining up financing for the residential segment, said Tina Rance, a spokeswoman for Commercial Properties. Residential rents have yet to be determined.
A purchase agreement is in place for the sale of The Advocate property, said Richard Manship, president and CEO of Capital City Press, which owns The Advocate. Manship would not disclose the sale price, but said his family was selling the land at “a 20 percent discount.”
The Advocate property has been vacant since September 2005, when the newspaper left its downtown office and moved to an office building on Bluebonnet Boulevard. The 72,000-square-foot property had been listed for sale for $6.5 million.
Editor’s note: This story was changed on April 1, 2013, to delete an incorrect statement that the Commercial Properties Realty Trust could use the IBM building as collateral to obtain financing for the residential building.