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Will Arlington's sweetened tech tax breaks be enough to keep Opower?

Friday - 8/22/2014, 4:09pm  ET

With little fanfare, the Arlington County Board in April unanimously moved to tweak its "technology zone" incentives, expanding the types of businesses eligible to receive a break on their business license (BPOL) tax. Most importantly, the incentives could now be applied to retain growing tech businesses already in the county, not just attract new ones.

The move meant that Opower Inc. and others would likely now be eligible for an attractive new local tax cut. Following a report on Friday that Opower Inc. is considering a relocation to D.C. once the lease on its Courthouse space expires in two years, those incentives — as well as Arlington's overall efforts to attract and retain tech companies — suddenly look far more important.

Opower, which went public earlier this year, is Arlington's most visible young tech company, representing the sort of homegrown startup success story that any county would covet. Its employee growth has been explosive, expanding from 162 employees by the end of 2010 to a staff of 545 at the end of June, according to its most recent quarterly statement. It employs roughly 200 at its Arlington headquarters, according to the Washington Post, which broke the story of the company's potential relocation on Friday.

In an interview Friday afternoon, Arlington Economic Development officials said Opower first floated the possibility of relocating at the end of its current lease more than a year ago. The April change to the tax break eligibility wasn't solely targeted at Opower, officials said, although they believe the expanded tax breaks, which hinge on headcount growth, would apply to the energy data company.

"According to all the published numbers of what they're saying, in terms of expansion, they would definitely qualify" for the tax breaks, said Troy Palma, regional economist within Arlington Economic Development.

Businesses don't necessarily make relocation decisions based on the economic-development packages offered by localities. Arlington County, however, is up against D.C., which has — at least in the past — shown a willingness to carve out massive incentives for a single company, LivingSocial specifically.

It's too early to tell how serious Opower is about its plans to relocate. The threat of a prized company's departure can be enough to spook a local government into showering that business with tax cuts (see LivingSocial, above). Arlington, however, has been so far hesitant to approve the same sort of gifts aimed at a single company, opting instead for broader-based initiatives. Opower, however, is big enough, hot enough and important enough to test that policy.

In a statement, Opower spokeswoman Margot Littlehale wrote: "Opower loves working in Arlington, and has benefited greatly not just from the welcoming community, but also from the tremendous resources that Virginia has to offer for small businesses. We look forward to exploring all our options — both in Virginia and in DC — as our lease comes due in the next couple of years."

© 2014 American City Business Journals, Inc.

Tags: arlington