A year after D.C. officials approved up to $32.5 million in tax breaks for the homegrown tech firm LivingSocial, the company is far from having a large enough presence in the city to collect any of the incentives.
Last summer, the D.C. Council quickly approved a package of incentives for the company, which Mayor Vincent C. Gray (D) said he hoped would serve as the centerpiece of a growing technology sector in the city.
At the time, the online deals company, founded in Georgetown, said it had nearly 1,000 employees in Washington, nearly half of whom also lived in the District, and was hiring dozens more every month. It had grown to six offices in the District and received bids from real estate developers looking to build the company a massive new headquarters.
LivingSocial chief executive Tim O’Shaughnessy projected he would have as many as 2,000 local employees in a few years.
Since then, it has shrunk further. LivingSocial reports having 602 employees in the District, 244 of whom are D.C. residents, and has moved to sublease some of the space that it gobbled up during its push to expand.
That’s a long way from what it will need to receive any of the tax breaks when they first become available, in October 2015. For any incentives to kick in, the company must have a minimum of 1,000 employees in D.C. and open a consolidated headquarters of at least 200,000 square feet, according to David Zipper, the city’s director of business development and strategy.
The incentives increase based on how many hires the company makes and how many D.C. residents it employs, up to a maximum of $32.5 million.
Sara Parker, head of communications for the company, said in an e-mail that LivingSocial was “actively working” with the city on meeting its commitments.
Last month, LivingSocial announced that it was moving away from the business on which it made its name, daily e-mailed deals, and focusing on a Web site and mobile app through which people can browse thousands of offers. LivingSocial describes itself as “the local marketplace to buy and share the best things to do in your city.”
Company executives said recently that they plan to hire “a couple hundred” employees, some of them in the District. Last week, LivingSocial had nearly 40 openings in the District listed on its Web site, including sales managers, programmers, marketing directors, accountants and administrative support staff.
Zipper said that if the company doesn’t reach those milestones, the District does not stand to lose any money. He said there have been no discussions with LivingSocial executives about reworking the incentives since the company began reducing its workforce.
“At that time, LivingSocial was growing extremely rapidly and they were a huge presence,” Zipper said. “We knew then that the future was unclear. We knew there was tremendous upside to them being in the city.”
LivingSocial has begun to live up to other commitments it made to the city, Zipper said, among them hiring District teens through the city’s summer youth employment program, providing tech training to small businesses and offering products to businesses in corridors temporarily hampered by construction or other disruptions.
Zipper said that LivingSocial was serving as a good corporate citizen and that he hoped the company could begin to grow again.
“We hope they do take advantage of the incentives, because that means they are doing very, very well, and that’s great for the city,” Zipper said. “If they don’t, the city is protected.”