A smart shopper never pays more for something than they need to. That applies to holiday gift-buying, but also to the DC government. No one wants the city to pay more than it has to for the services it provides. Efficient use of DC resources helps stretch our dollars and make the city as strong as possible.
In the case of economic development, being a smart consumer means holding off on subsidies for certain developments when it is not clear they are needed. The Howard Town Center ‘ a housing and retail development near Howard University ‘ falls into this category. An independent financial analysis found that the developer does not need the ten-year property tax abatement it has requested from the District. The project should be able to move forward on its own.
Nevertheless, the $11 million tax break for this development will be before the DC Council this Tuesday, and the position the Council takes on this bill is important. Just last year, the Council set new requirements to analyze the costs and benefits of every proposed tax abatement ‘ because it wanted to better understand whether a given project really needed special tax treatment. The proposed property Howard Town Center abatement is the first time the DC Chief Financial Officer has unequivocally concluded that a proposed tax break is not needed for a project to proceed. The CFO found that the developer should be able to re-arrange financing by:
- Seeking Low-Income Housing Tax Credits for the development’s affordable housing component;
- Charging higher rents than currently planned, given the project’s location in one of the most rapidly developing parts of the city; and
- Deferring a portion of the developer’s fee from the project.
If those steps are taken, the project should be able to move forward ‘ without getting special tax assistance from the city. Setting aside the proposed tax break does not mean the District doesn’t support the Howard Town Center. It would just mean DC is being a more responsible consumer when it comes to economic development. And the District could continue to help the project in other ways, such as helping the developer seek federal Low-income Housing Tax Credits.
We hope that the DC Council will take into account the financial advice it asked for ‘ and set aside this tax abatement.
