Today, the DC Council gave preliminary approval to a $32.5 million tax break for daily deal coupon company LivingSocial. The legislation will come up for a second and final vote on July 10th. Chairman Phil Mendelson made a few additions to the tax break deal sent down by Mayor Gray, but the Council can strengthen the bill more on July 10th to get an even better deal for our city.
The Chairman added in two provisions. First, the bill passed today clarified that the hiring requirements LivingSocial must meet will be certified by the DC Department of Employment Services. A second provision requires the mayor to put together a business development and learning partnership strategy with LivingSocial that would be sent to the DC Council for approval. (The strategy will be approved unless the Council acts to reject it.) These are steps in the right direction.
LivingSocial currently employs more than 1,000 people in its DC offices, and half of these workers live in the city. The company says they plan to expand to 2,000 employees in DC in the next few years. That’s great, and LivingSocial should be incentivized to keep doing what they are doing. DCFPI suggested several amendments that would do exactly that: Tie the subsidy to the number of additional positions added and the percentage of DC residents in those new jobs. We believe that would bring the multiplier effect of additional residents, tax revenue, and creative resources for our city.
During today’s debate, a few councilmember mentioned the city’s unemployment rate. Yet LivingSocial’s ambitious business plan to expand in the next few years will create few opportunities for low-skill workers because a bachelor’s degree is the minimum credential needed for jobs at the company. That’s why outlining partnerships between LivingSocial and the District is so important. Both Mayor Gray and LivingSocial have said that the social media and marketing company might be a catalyst to develop an innovative high tech sector. It would be even better if LivingSocial could help develop a farm team, so to speak, from McKinley high school, the University of District Columbia and the city’s nascent community college to employ homegrown talent.
Finally, LivingSocial should be expected to pay DC back if they break the terms of the deal. Some councilmembers mentioned the fact that if LivingSocial leaves DC or falls below 1,000 employees here, subsidies would be cancelled moving forward. But the deal would not address the subsidies that LivingSocial would have already received. The Council should include a money-back guarantee into the legislation so that that if LivingSocial leaves DC early or falls below 1,000 employees, it must repay the subsidies it received from the District.
