Photo by Darren Cullen on Flickr.
The DC Council today will vote on an $11 million property tax break for the Howard Town Center that the DC CFO insists is unnecessary. At a time of crumbling schools and budget cuts, we can’t afford to hand out optional property tax abatements like Santa Claus.
What else could we do with $11 million? It costs $11 million to modernize Stuart-Hobson Middle School and McKinley Tech High School. It would cost $11 million to extend library hours to their full schedule for a year.
I’ve defended the DC Council for its development subsidies, such as Gallery Place, where they are warranted. A good tax break is one that produces knock-on benefits for the city and where we don’t overpay.
DC would be overpaying for the Howard Town Center development, in the midst of rapidly developing Shaw/LeDroit Park.
The developers plan to build 445 apartments with 74,000 square feet of retail space, including a grocery store, and 320 underground parking spaces.
Development of retail amenities is great, and helps reduce crime, increase pedestrian traffic while boosting tax revenues. But we have a right to know if developments would happen anyway before spending taxpayer dollars to subsidize them.
Thanks to a law passed last year, the CFO must assess whether individual developments actually need the tax break or loans to get financing to build the project. The Howard Town Center is the first tax abatement proposal that CFO Natwar Gandhi has unequivocally opposed on these grounds.
Gandhi identified these problems with the tax abatement:
- The project, in a redeveloping neighborhood, should be able to charge higher rents than the developer is claiming.
- The developer, who is setting aside 20% of units for affordable housing, should be able to secure financing through Low-Income Housing Tax Credits.
- The developer can save money by deferring the developer’s fee, a common practice with developments that include affordable housing.
Greg LeRoy, director of subsidy watchdog Good Jobs First, says “There is a time and a place for development incentives, but the problem is that elected officials don’t know when to take their foot off the gas.” That certainly applies at this location, where earlier this year Harris Teeter signed a letter of intent for a development only 2 blocks away.
Between Columbia Heights and Shaw, 1,321 apartment units are under construction while another 797 units are expected to be completed in the next 3 years. The trend of development moving eastward along U street and northward through Shaw is likewise driving up housing values to between $450,000 and $700,000 for 2-bedroom condominiums, according to a Trulia search.
In addition to the objections the CFO raised, there is another glaring problem with the claim that $11 million is necessary for this development: The 320 parking spaces. Are the spaces really necessary 3 blocks from Shaw Metro? The developer could save a lot of money by cutting down on the number of underground floors.
The DC Council should reject this unnecessary tax abatement. Otherwise, it will further undermine public confidence in its ability to operate free of corporate influence.