Tech firm may be on hook for $140K
Draft termination agreement for Decartes Labs to end 10-year deal will be evaluated by city committees in August
Descartes Labs may have to pay back $141,321 in state and city incentives the company was promised when it renovated the downtown building it called home for a time.
The 10-year agreement called for the hightech firm — acquired in July by a private equity company — to receive $800,000 in state and city funding, with the stipulation Descartes have at least 70 employees in Santa Fe by June 2022.
A draft termination agreement to end the 10-year agreement will be evaluated by city committees in later August and then go to the City Council, Economic Development Department Director Rich Brown said.
Descartes had asked to terminate the agreement in the early months of the coronavirus pandemic in 2020 as the company sent all its employees to work at home and also laid off some Santa Fe workers.
The public funding in 2018 had largely helped subsidize renovating 20,000 square feet within the Firestone Building that housed Descartes. At the time, the startup was regarded as Santa Fe’s most successful tech company, with abundant growth potential as a company and local employer.
Descartes, however, abandoned the Firestone building in mid-2020 and Los Alamos National Laboratory took over the Descartes lease and space in February 2021.
Descartes Labs has remained a remote work company and intends to remain that way into the future, new Chief Operating Officer Graeme Shaw said
“The company is a cloud-based company,” said Shaw, who became COO in July as private equity firm Antarctica Capital acquired a controlling interest in Descartes Labs in July.
“The remote work worked well. Employees enjoy the flexibility of it.”
In December, Descartes had 105 employees but only 30 in Santa Fe. As Antarctica took charge, Descartes had 90 employees in multiple states and Santa Fe was down to 17 workers, the most in any location.
Descartes Labs creates technology for satellite imagery analysis and performs scientific analysis of geospatial, remote sensing and diverse complementary data sets.
The agreement with the city — which involved $700,0000 in Local Economic Development Act funding from the state Economic Development Department and $100,000 from the city of Santa Fe — required 70 jobs to be retained by Descartes Labs until June 30, 2022.
The agreement stated Descartes Labs would generate $2.29 million in net benefits to the state and $1.23 million to the city, but the city calculated the net benefit to the state was only $1.22 million with $198,000 to the city.
Descartes had requested only $490,000 in development act funds from the $700,000 pledged by the state and $50,000 of the $100,000 pledged by the city. Cities and/or counties act as the fiscal agent for state LEDA grants.
Calculating the state and city funding distributed and the net benefits derived, the city determined Descartes Labs must pay back $122,378 to the state and $18,943 to the city.
“The net benefit is what was the economic impact and how many jobs were retained,” Brown said. “Each quarter we measure the impact of our companies (with LEDA funding). If things don’t happen, we take measures to adhere to the contract.”