After the D.C. Council gave its unanimous consent to advance a bill that will give daily deal giant LivingSocial a $32.5 million tax abatement, the company’s spokesman said it has every intention of living up to its end of the bargain.
The bill passed today will give LivingSocial a generous break on its tax bill beginning in 2016, provided the company has met certain benchmarks in hiring D.C. residents for at least half of all positions it creates. The company, which is still looking for its first profitable balance sheet, has grown quickly since its 2007 founding. About 1,000 of its employees work in D.C. out of a worldwide payroll of about 5,000.
But the D.C. staff is spread out across six offices, and the company would like to consolidate eventually. That’s something LivingSocial intends to do while remaining in the District, said the spokesman, Brendan P. Lewis.
“There are a couple of set things we have to achieve,” he said. “We need to hire at least 50 people a year for D.C.-based jobs.”
Any singular D.C. headquarters for LivingSocial will need to be at least 200,000 square feet. (In previous reports, the company has said it is looking for as much as 350,000 square feet.) A space that size would necessitate a greatly expanded workforce, Lewis said. Under the terms of the tax deal, LivingSocial will grow it’s D.C.-based payroll to 2,000 in the coming years.
“You don’t build 200,000 square feet just for 1,000 employees,” he said. Right now, the six offices LivingSocial inhabits add up to about 134,000 square feet.
But in the run-up to today’s Council vote, not all observers were as sanguine about LivingSocial’s future with the District. The D.C. Fiscal Policy Institute said the tax deal, as worked out between the company, Mayor Vince Gray and Deputy Mayor for Planning and Economic Development Victor Hoskins, did not give enough back to the city. Ed Lazere, DCFPI’s director, told DCist earlier today that he’d like to see LivingSocial be compelled to repay the tax breaks if it fails to meet the hiring benchmarks.
In an official statement, LivingSocial called Washington is part of “our DNA.” Lewis said the company will meet the staffing goals by hiring local programming and marketing talent and people who are willing to move to D.C. for the express purpose of working for the daily deals site.
Of course, companies and governments tend to be optimistic when entering such partnerships. In 2010, Illinois Gov. Pat Quinn enthusiastically gave a $3.5 million tax package to Chicago-based Groupon for that company to add 250 jobs. Today, Groupon is a publicly traded company whose stock has lost 68 percent of its peak value.
Still, LivingSocial says it wants to be a foundation of D.C.’s business community, especially as the District seeks to grow its high-tech sector. “What Dell was to Austin we hope to be to the District,” Lewis said.