Although Chesapeake Energy Corp. has shed more than 700 positions at its Oklahoma City headquarters over the past three years, the company remains eligible to collect $572,500 this year in job-creation incentive money from the city.
Chesapeake inked the deal in 2011 with Oklahoma City for incentive payments up to $3.5 million in exchange for creating 350 new jobs in the city, as well as for investing $50 million in capital improvements on its corporate campus at 6100 N Western. The company has received $1.92 million in incentive payments from the city since signing the job-creation deal with Oklahoma City.
Funding for the incentives is from the Oklahoma City Strategic Investment Program, a job-creation program that provides payments to companies to relocate or expand in the city. Funding for the program comes from a $75 million bond package that Oklahoma City voters approved in 2007.
When Chesapeake signed the deal, the company employed 3,984 full-time employees. However, the company finished up its third fiscal year in the program with 3,252 jobs, according to an Oklahoma City Economic Development Trust report — 732 fewer jobs that when it entered the incentive program. The company said it laid off 640 workers in Oklahoma City in September 2013.
Chesapeake still is eligible to receive additional incentive payments from the city because the company was above the required threshold number of jobs for eight out of 12 months from February 2013 and January 2014, said Brent Bryant, economic development program manager for Oklahoma City.
Oklahoma City’s agreement with Chesapeake also lacked any clawback provision that would require the company to repay the Strategic Investment Program money if it later lays off workers.
According to the terms of Chesapeake’s contract with the city, Chesapeake must fail to document an increase in the number of full-time employees for two consecutive years before Oklahoma City has the right to terminate the incentive deal. The company wrapped up the second year of its contract with the city with 4,722 jobs, more than 700 positions above the contract baseline.
As of April 30, Oklahoma City had paid out more than $9.8 million in incentives as part of its Strategic Investment Program, according to city records. The city has signed economic development agreements with 27 companies to participate in the incentive program.