The Washington Post

LivingSocial to provide daily deals, services for small D.C. firms

District-based LivingSocial must provide daily deals, technical and marketing training, and other services for small businesses in the city in order to qualify for the hefty tax incentive that the D.C. Council passed this summer.

The legislation passed in July requires eligible social e-commerce companies to hammer out an agreement with Office of the Deputy Mayor for Planning and Economic Development that benefits local small businesses.

The largest stipulations in the $32.5 million tax incentive package, called the Social E-Commerce Job Creation Tax Incentive Act of 2012, require eligible companies to employ at least 1,000 people in the District and establish a 200,000-square-foot headquarters within city limits.

The feasibility of those requirements was called into doubt last week when LivingSocial announced it would lay off 400 workers across the United States, including 160 here in Washington. Those requirements must be met before the tax exemptions take effect in 2016.

The recently finalized agreement cover conditions that take effect next year. Its provisions include:

●LivingSocial will distribute daily deals every year for at least 20 companies in areas of the city disrupted by construction. LivingSocial could instead provide those merchants with services, including “social media subscriptions or engagement services” or other “special marketing efforts.”

Businesses in areas like Adams Morgan and H Street NE have complained to the city in recent years that road projects drive their customers away. City officials said the deals or services may help affected businesses attract new patrons.

●LivingSocial must also design and administer at least 18 hours of social media marketing and technology training annually for small business owners in the city.

These sessions will cover “the use of social media, online marketing mechanisms and other technology platforms that may enable entrepreneurs to increase their customer base and sales.”

●The company must provide at least 32 hours of engineering-related training annually for 20 software developers in hopes of recruiting and retaining technical talent for companies in the District.

LivingSocial already operates an internal training program called Hungry Academy, which is designed to groom engineers for the firm itself. That would satisfy the requirement, city officials said, because those students may eventually leave LivingSocial and join other local firms.

● Finally, LivingSocial will employ interns each year as part of the city’s Summer Youth Employment Program. The intern salaries are paid by the District and the total number of interns must equal 1 percent of LivingSocial’s local workforce.

If LivingSocial fails to meet any of the requirements in a given year, it will be expected to make up the difference in the next year, the agreement states.

“When we developed the package that turned into the Social E-Commerce Act several months ago, we wanted to make sure whatever happened with LivingSocial. . .that the District would see benefits from the package,” said David Zipper, the city’s director of business development and strategy.

Follow Steven Overly on Twitter: @StevenOverly

Steven Overly is a national reporter covering federal technology and energy policy with a focus on Capitol Hill. He previously covered the business of technology, biotechnology and venture capital.



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