At the request of Office Depot, Palm Beach County could terminate the $100,000-a-year incentive program it has with the office supply retailer.
The deal was put in place to incentivize Office Depot Inc. (NASDAQ: ODP) to build and keep its headquarters in Boca Raton.
The county and Office Depot have had a similar deal in place since 2009, and while it was set to expire in August 2019, there was a clause built into the economic development agreement that would have automatically re-upped the grant if Office Depot continued to meet the requirements of the deal, which it did.
"The intent of the cancellation of [the agreement] is to relieve the parties of any liability or obligations thereunder," wrote David Bleisch, chief legal officer at Office Depot, in a letter to the county.
As part of the agreement, Office Depot had to keep its world headquarters in Boca Raton, keep over 2,000 people employed at that headquarters and a minimum average annual salary of $104,000 for those employed there. In a county commission agenda item, county staff states that Office Depot met all these requirements.
Kelley Smallridge, CEO and president of the Business Development Board of Palm Beach County, said Office Depot asking to terminate the agreement shouldn't be seen as a red flag that the company is struggling or planning to move headquarters.
She said it is common for a company to stop taking incentives after years of being in a city or county.
One of the reasons a company might decline the money is that they feel the incentive isn't worth the effort and manpower it takes to report all the data needed in order to receive the money, Smallridge said.
Additionally, she said, companies like Office Depot may want to keep information like employment numbers and average salary private, which isn't an option if they have to report it to the county.
Another possible reason is that Office Depot doesn't want to commit to another five-year deal is because it doesn't know how its business will look in 2024.
"Companies are nimble, the economy changes and a company may not want to commit to five years out," she said.
The board of county commissioners will vote on the agenda item on June 4.
Office Depot Inc. is one of South Florida's Fortune 500 companies. It operates 1,500 retail stores – with 50 slated to close this year – and has been expanding its B2B services through CompuCom. It's Boca Raton headquarters has 2,000 of it's 44,000 employees.