If LivingSocial’s bottom line doesn’t improve, it may never see its marquee tax break. (Jacquelyn Martin — AP)

Updated 2:50 p.m.

A cornerstone, if not the cornerstone, of Mayor Vincent C. Gray’s economic development strategy is for the District to lure technology firms and their high salaries to the city. The poster child for this effort is LivingSocial, the daily deals behemoth that employs nearly 5,000 and operates out of several spaces in the Chinatown/Penn Quarter/Mount Vernon Square area. With Gray’s backing, the D.C. Council this summer approved a $32.5 million package of tax breaks meant to keep LivingSocial and its approximately 1,000 D.C.-based employees here in the District.

So Wednesday’s news that the firm will lay off about 400 employees — nearly 10 percent of its workforce — might represent an unwelcome counter to Hizzoner’s economic narrative, no?

Not that he betrayed that in an interview Thursday morning on NewsChannel 8. Gray told NewsTalk host Bruce DePuyt that LivingSocial remains a “promising company” worthy of city investment, despite the layoffs and the fact it recently reported a stunning $565 million quarterly loss. (Disclosure: LivingSocial CEO Tim O’Shaughnessy is the son-in-law of Washington Post Co. Chairman Donald Graham.)

“We think LivingSocial has a very bright future,” Gray said. “I think they will continue to be an important part of our economy in the city.”

“But,” he added, “remember our economic strategy is not tied to one company, either.”

Gray noted that the tax-break package is “incentive-based” — that is, if LivingSocial doesn’t meet certain targets, it doesn’t get the tax incentives. 

Under the legislation, to take advantage of the property, wage and income tax breaks, the company will have to employ at least 1,000 in the District as of 2015; subsequently make 50 new hires yearly till 2025, or earlier depending on how fast they use up the credits in the bill; and move into a new headquarters of at least 200,000 square feet. The subsidy is also reduced if less than half of the new hires are D.C. residents. And, of course, there won’t be a corporate income tax break if the corporation has no income.

Update, 2:50 p.m.: A LivingSocial spokesman tells the Washington Business Journal that the company still intends to consolidate its D.C. offices and take advantage of the tax break.