The woes of accounting giant Andersen that started in Enron’s glass towers in Houston will soon be felt in St. Charles, especially with the city, its businesses and the arts.
With trainees down to a trickle at the sprawling Center for Professional Education that Andersen runs in the city, Mayor Susan Klinkhamer said most of the $250,000 the firm pays a year in hotel taxes may evaporate. If the center closes, the city could lose more than half of the $1.3 million a year Andersen pays in property taxes plus thousands more in taxes from displaced homeowners.
In the early 1990s, the firm began paying taxes on the 1,600 on-campus rooms it used to lodge its trainees, even though the facility was not technically a hotel. “They didn’t have to, but they came to us and offered to pay it,” Klinkhamer said. “We always referred to it as our Andersen windfall.”
After Andersen recently laid off 500 of the 1,200 employees who worked at the prestigious center and in nearby offices, the St. Charles City Council last week cut $125,000 from the Cultural Commission budget in anticipation of the losses. That leaves about $25,000 for the commission, which offers grants to various local arts groups.
Guy Bellaver, a commission member, said 12 organizations and events received money last year, including the Norris Cultural Center, the St. Charles Arts and Music Festival and the St. Charles Heritage Center.
The Andersen pullout, coupled with the poor economy and the aftereffects of Sept. 11 have combined to hurt this year’s projected giving, Bellaver said. Groups can expect to receive less, he added.
“We’ve been hit with a couple of different things all at once, and it was a big surprise,” he said.
The greatest financial impact of Andersen’s downsizing is likely to be felt by local businesses, many of which have counted on the 60,000 accountants and consultants who came from around the globe to train on the picturesque campus each year.
“These people would train hard during the day and come out to spend money at night,” Klinkhamer said. “These cuts are devastating to the town as well as the Andersen employees, because the center really put St. Charles on the map.”
One Andersen executive said the accounting firm plans to shut down its training operations altogether, but it will use a “drastically” scaled-down staff to continue instruction for other companies, such as Accenture Ltd.
In 2000, when Andersen Consulting split off from the main company and became Accenture, it agreed to train 60,000 of its employees at the center over five years. But with only three years remaining on the contract and Andersen’s future more uncertain than ever, many in the St. Charles business community are worried.
In addition to renting limousines, dining out and going to bars, trainees were often booked into off-campus hotels during the center’s busier weeks.
“If they had an overflow of guests, it was nothing for Andersen to just take a floor of rooms at the Hilton Gardens, the Holiday Inn or Pheasant Run,” Klinkhamer said.
Oak Brook Hotels, which owns Pheasant Run Resort & Spa, will likely lose thousands of room-nights a year, said Stan Soroka, its senior vice president of operations.
“Needless to say, [losses] will be in the hundreds of thousands of dollars, a lot of money. We will have to find replacement business for [Andersen] or hope that things turn around.”
St. Charles had gotten used to the cash since the learning center opened in the 1970s.
“The demise of Andersen is going to have a ripple effect in this town and the neighboring ones,” said Ann Carlson, who has worked for five years as a software developer at one of Andersen’s off-campus support offices in St. Charles. “We use the limos, taxis, vans, and we used to have outings at Oscar Swan and Pheasant Run … and a lot of other restaurants.”
Andersen bought St. Dominic’s College, a 150-acre former Catholic women’s college on the east bank of the Fox River just north of downtown in 1970, and spent $80 million in the 1980s to expand the facility, which now boasts 1,675 guest rooms, 145 meeting rooms, three auditoriums, a fitness center and a bar.
The campus’ assessed value in 2001 was more than $51 million, and Andersen paid $1.3 million in property taxes for that year, according to St. Charles Plan Commission Chairman Mark Armstrong.
As long as the center is up and running, the city will continue to collect that money, Klinkhamer said. But if the firm should shutter the facility, the firm could apply for a rate reduction of up to 60 percent.
And the layoffs could drive homeowners from St. Charles, a town of roughly 30,000, and the surrounding areas. About 250 of the center’s employees live in St. Charles, Klinkhamer said.
And though Carlson isn’t ready to pack up and relocate just yet, she acknowledges her hopes are growing slim.
She and a handful of fellow Andersen employees appealed to the St. Charles City Council on Monday to draft a resolution of support for the company’s employees. The council agreed unanimously.
“I fully expect to lose my job,” Carlson said last week. “But I believe enough in Andersen that it’s worth fighting for.”
