Kelvin Spath, director of the City of Dallas Office of Economic Development, released a statement officially terminating the tax abatement deal established with The Richards Group, a Dallas-based ad agency. The termination occurs as a result of the agency’s inability to maintain at least six hundred employees.
The incentive, which was supposed to last until 2025, was reached when the ad agency was searching for a new headquarters in 2013. Previous city estimates projected this deal would save The Richards Group around $1.8 million in taxes throughout the agreement while providing a $4.3 million net fiscal impact benefiting the city of Dallas.
The agreement required The Richards Group to spend at least $40 million on improving the property where its headquarters is now located and retain at least six hundred employees through the deal’s lifespan. At the same time, the city would grant a fifty percent property tax cut.
“In the most recent year’s compliance review, the company had dropped below 600 jobs. As such, the agreement was terminated,” Spath said in a statement.
The Richards Group has also confirmed that it has relinquished all future tax abatements for 2021 and beyond.
“Because of COVID-related downsizing in 2020, our total employee count dropped below 600. Therefore, in compliance with the agreement, we relinquished all future tax abatements as the city requested for 2021 and beyond. The Richards Group remains financially healthy and debt-free, and is one of the largest independent agencies in the country,” spokeswoman Meghan McPartland said in a statement.
Stan Richards, the founder of The Richards Group, left the company after making racial comments about client Motel 6 that were publicized in October 2020.
The incident caused the company to lose around forty percent of its annual revenue due to clients leaving. The revenue loss led to mass layoffs, and as recently as August, the company had 330 employees.