WEX, Scarborough pull the last plug on deal that would have created $50M operations center

Courtesy / Crossroads Holdings LLC An early rendering shows what WEX's planned $50 million operations center in Scarborough might have looked like.

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By William Hall

One year since the company said it was pausing plans for a $50 million operations center in Scarborough, WEX Inc. (NYSE: WEX) and the town are officially breaking off the $2.25 million tax break that helped forge the deal.

The Scarborough Town Council on Wednesday is scheduled to review termination of a credit enhancement agreement that would have funneled $150,000 a year to the Portland-based company until 2035. In return, WEX was to have become a key tenant at the Downs, a mixed-use community under development on 525 acres next to a former harness racing track.

WEX, a payment services provider with 5,000 employees worldwide, had planned to build an operations center at the Downs at an estimated cost of $50 million. The facility would have consolidated several South Portland offices and accommodated up to 1,200 staff.

But the credit enhancement agreement was inked during the early days of the pandemic — the contract was authorized in February 2020 and signed two months later.

As the COVID-19 crisis worsened and employees everywhere began working remotely, WEX said it was holding off on the project and might cancel it altogether.

“We just thought it prudent to step back and evaluate what we're doing," WEX Chair and CEO Melissa Smith told Mainebiz in October 2020. The company said it would make a decision about the new location in 2021, and informed the town earlier this year that plans were off.

On Tuesday, WEX Vice President of Global Real Estate Safet Cobaj said ending the incentive was a “formality” since it had in effect been canceled. Nevertheless, WEX and the town plan to complete a termination agreement since “the project did not move forward as expected,” according to the town.

Other such formalities aren’t necessary. For example, since the project was in the early planning stages, there was never an executed lease.

Cobaj commented in an email: “The change in remote work for operational roles such as customer service significantly reduces our requirement in office space for those roles. We are finding that the majority of our employees that would have occupied the Scarborough campus are thriving in the remote work environment.”