Report

DCFPI Analysis of the Adams Morgan Hotel Real Property Tax Abatement

The DC Council is considering legislation that would give a 20-year property tax abatement to a proposed luxury hotel in Adams Morgan. The abatement would result in a $2.6 million revenue loss in 2015, the first year of the tax break, and $46 million over the full life of the abatement. Developers of the property say the tax abatement is needed to finance the project, which will generate jobs and contribute significant sales and other tax revenue to the District.

DCFPI believes the case for the Adams Morgan hotel tax abatement is unproven.  In particular, it is not clear whether building a five-star hotel in Adams Morgan — and providing subsidies to speed that development– should be a priority for the District. It also is not clear whether the project has meaningful benefits to outweigh the $2.6 million in annual lost tax collections.

The issues raised in this analysis suggest that the District needs to reform the process for awarding tax abatements. This would include setting priorities, creating mechanisms to determine when a subsidy is needed, and developing tools to weigh the costs and benefits of abatements.

The complete analysis can be read here.

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