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Big Money Firms Abandon States For Ones With More Favorable Terms

RACHEL MARTIN, HOST:

Silicon Valley and Wall Street are shrinking. Corporations and the people who work in them are relocating because of the pandemic and a change in the tax laws that makes states like Texas and Florida more attractive places to set up shop. Florida officials believe it's a trend that will reshape their local economies. Here's NPR's Greg Allen.

GREG ALLEN, BYLINE: David Blumberg runs a venture capital fund with hundreds of millions of dollars in assets. He's a fourth-generation Californian with deep roots in the San Francisco Bay Area. But late last year, like many active in California's tech scene, he decided it was time to move - in his case, to Florida.

DAVID BLUMBERG: I like palm trees. I've discovered that. I really like looking at palm trees. They're very calming. There's a kind of a Zen aesthetic.

ALLEN: Blumberg relocated to Hallandale Beach, just north of Miami. His company is still based in San Francisco. But like many others in tech and finance, the pandemic has opened his eyes to the benefits of working remotely.

BLUMBERG: During the 10 months of lockdown, we realized we didn't have to commute, we didn't have to do so much business travel and that, frankly, a lot of the meetings have a lot of wasted time.

ALLEN: There's a long list of venture capitalists, entrepreneurs and companies that have joined Blumberg in what some are calling California's tech exodus. Some, like billionaire Elon Musk and major Silicon Valley companies Oracle and Hewlett Packard, are moving to Texas. Others, like Blumberg and fellow venture capitalist Keith Rabois, have relocated to Miami. Much of it has to do with changes in the federal tax law that have encouraged the wealthy to leave New York and California for low-tax states like Florida and Texas. But Blumberg says there's another factor, citing a Wall Street adage - capital goes where it's welcome.

BLUMBERG: Florida is actively engaging. Texas is actively engaging. They have a lighter regulatory touch. They have a lighter approach to it. They're pro-business, and they're active about it.

ALLEN: In Miami, Mayor Francis Suarez has been waging a campaign to lure tech entrepreneurs to the city. This month, investment firm Blackstone signed a lease on a Miami property for its 200-person tech division. Suarez says it's changing the city and its brand. Miami, he says, is no longer just sun, fun and retirement.

FRANCIS SUAREZ: Now our brand is slowly but surely - or, actually, rapidly now metamorphosizing (ph) into a place where tech heavy hitters and the financial world is really paying attention to Miami and is relocating for a variety of reasons.

ALLEN: Just up the coast from Miami, Palm Beach County is seeing a surge of finance and investment companies relocating some part of their workforce there. Elliott Management, a $41 billion hedge fund, is moving in, and Goldman Sachs is reportedly looking at offices for one of its divisions. Kelly Smallridge, head of the county's business development board, says it helped that before the pandemic, many CEOs already had homes in the area.

KELLY SMALLRIDGE: They realized that Florida is open for business, that Florida's elected officials were providing certainty in terms of open schools, open retail, open restaurants. And the cost is significantly cheaper.

ALLEN: In many ways, the pandemic has just accelerated a trend that's been going on for decades. That's the view of Richard Florida, professor at the University of Toronto, who writes and speaks about cities and their future. But he doesn't buy the view that the wealthy and powerful will abandon places like New York and San Francisco.

RICHARD FLORIDA: Pandemics do not dislodge big cities from their place in the urban hierarchy. In fact, we can't find a pandemic going back, you know, B.C., that has really altered the great arc of urbanization, the great force of clustering that really powers innovation and economic development.

ALLEN: Professor Florida thinks the movement of the moneyed class out of New York and California will continue after the pandemic, although Congress may slow the exodus if it restores the federal deduction for state and local taxes.

Greg Allen, NPR News, Miami.

(SOUNDBITE OF MARLEY CARROLL'S "STARLINGS") Transcript provided by NPR, Copyright NPR.