THE VIRGINIAN-PILOT 
              Copyright (c) 1994, Landmark Communications, Inc.

DATE: Friday, December 23, 1994              TAG: 9412230516
SECTION: BUSINESS                 PAGE: D1   EDITION: FINAL 
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 
DATELINE: VIRGINIA BEACH                     LENGTH: Short :   49 lines

CITY, STATE TRY TO CONVINCE LILLIAN VERNON TO EXPAND IN VIRGINIA BEACH BUT THE RETAILER IS BEING COURTED BY AT LEAST 3 OTHER STATES.

City and state economic leaders are trying to convince Lillian Vernon to spend $36 million on an expansion to its sprawling warehouse and distribution center in Virginia Beach.

But the New York-based catalog retailer is considering offers from at least three other states: South Carolina, Kentucky and Tennessee, sources said Thursday.

Six years ago, Lillian Vernon Corp. opened its 486,000-square-foot center on 52 acres in Virginia Beach. It recently bought a 153,000-square-foot warehouse annex.

Business is booming and the company needs more room, spokesman David Hochberg said.

``We're not moving,'' he said. ``The question is: Where will we expand?''

Lillian Vernon has told economic officials that it wants to expand its warehouse space by 125,000 square feet and its distribution center by 216,000 square feet.

If the company expands in Virginia Beach, 1,000 jobs would move to the area in 1996. About 400 of those positions would be full-time and the remainder would be seasonal, according to preliminary discussions.

Gov. George F. Allen and his secretary of commerce, Robert T. Skunda, met with founder Lillian Vernon in New York on Nov. 16. The half-hour meeting went smoothly, but the company still has no intention of announcing its plans right now, Hochberg said.

Lillian Vernon is holding out for economic incentives.

Skunda and his staff are trying to put together an enticing economic incentive package. It may include job training for Vernon's new employees and tax credits for every 100 people given work, said Mark Wawme, Virginia Beach's acting economic development director.

The city's offerings might include faster improvements to London Bridge Road and International Parkway, which take drivers to Lillian Vernon's warehouse and distribution center. The City Council, however, would have to give its approval.

The expansion is large enough to make a tax collector's eyes gleam. It could be worth up to $1 million for Virginia Beach and even more to the state, Wawmer said. by CNB