The Districts Dime

How to Ensure DC Gets the Most Out of The Advisory Board Tax Subsidy Deal

November 2nd, 2015 | by Wes Rivers

The DC Council should reject the proposal to offer $60 million in tax breaks to the Advisory Board Company – or at least modify the deal to ensure DC gets the best bang for its buck. In particular, the Advisory Board could get a large share of the tax breaks even if it falls far short of its commitment to add 1,000 DC residents to its payroll over 10 years. Any tax breaks should be tied to the actual share of the hiring goal that is met.

As the District’s Dime has noted, it is not clear that the Advisory Board needs a large tax break to stay and succeed in the District. And it would be a bad precedent to offer tax breaks to companies simply because office space is expensive to rent in DC, as the Advisory Board has argued. DC is an attractive place for young, highly skilled professionals, and that in turn is attracting businesses and helping the economy grow. Given that, and the research showing that companies locate where it makes the most sense in the long-term, tax breaks shouldn’t be necessary to attract or keep businesses like the Advisory Board in the city. Instead, the better long-term approach to keeping and attracting companies is to continue city investments that make DC an attractive place to live, such as in DC Public Schools and public charter schools, transportation, and libraries and recreation spaces.

If the Council feels that a tax subsidy is needed to keep the Advisory Board in the city when it takes a vote on the tax subsidy deal next week, it should take the steps to get a better deal for the city. Here are a couple of ways to improve the deal:

  • Tax breaks should be more closely tied to jobs created. The tax break formula would allow the Advisory Board to collect a large share of the tax breaks even if it falls short of resident hiring goals. For example, if the Advisory Board increases DC resident employment by 500 in 5 years, and then stops growing, the company could still claim 82 percent of the tax-break package – even though it only met half of the 1,000 hiring goal. Instead, the formula should be adjusted so that the share of the $60 million received matches the share of the 1,000-job goal met. For example, if the company only hires 500 new DC residents, it should only get $30 million in tax breaks.
  • Require good paying jobs: While the deal calls for new DC resident hires, it says nothing about the annual salaries of those hires. The Advisory Board could staff most of the DC resident positions at levels below their average pay. DCFPI believes the DC Council should apply the Living Wage requirements for government contractors and grantees to the Advisory Board. This will ensure that residents who are hired by the Advisory Board and the company’s subcontractors (like food and janitorial workers) can continue to live here and afford the cost of living.

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Next Week: Two Opportunities to Impact DCPS Budgets

October 30th, 2015 | by Soumya Bhat

As you’re getting ready for those cute and scary trick-or-treaters, it’s also a great time to jot down your top priorities for how the city will invest in educating our wonderful children next school year! That’s because there are two public hearings next week that give DC residents a chance to speak up and influence decisions about spending for DC Public Schools – both in the classroom and on buildings.

Mark your calendars:

  • Nov. 2nd Council Roundtable on DCPS School Modernizations – This Council oversight roundtable will focus on changes to the school modernization process this year, as well as an update on current and future capital projects. The witness list is closed, but you can still submit written statements to be included in the public record.
  • Nov. 4th DCPS Public Budget Hearing – This budget hearing is being held by DC Public Schools and will allow the public to offer feedback on their priorities for the 2016-17 DCPS budget. The registration deadline has been extended to Wednesday at 3:00 p.m.

There also is good news that DCPS will start engaging parents and other stakeholders very soon about what they would like to see at their local schools next year. Typically, DC Public School principals and Local School Advisory Teams (LSATs) have very little time – less than a week – to review their school’s budget and make changes. This is mostly due to the timing of the city’s February revenue forecast, which lets the Mayor know how much money the city has to spend on schools in the next year. That information is needed to determine whether or not the city’s school funding formula can be increased or at least adjusted for rising costs from year-to-year. While that decision still needs to happen in March, the school budgeting process does not need to be put on hold until that time.

This year, the budget process will be starting much earlier. DCPS shared at this week’s budget forum organized by DCFPI and S.H.A.P.P.E. that their FY 2017 Budget Development Timeline is starting in November. This means that meetings with LSATs, students, and parents are expected to start next month and school budget allocations will be released in February. DCFPI has testified on this timing issue before, and we are glad to see progress being made to engage schools even earlier when making major decisions that will affect students, teachers, and families next school year.

Have a safe and spooky weekend, District’s Dime readers!

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CareFirst Has an Obligation to Invest $56 Million in the Health of DC Residents

October 29th, 2015 | by Wes Rivers

Late last year, the DC Department of Insurance, Securities, and Banking (DISB) found that CareFirst BlueCross BlueShield’s DC-based subsidiary owes the District $56 million in community reinvestment because of excess surpluses accumulated by the nonprofit health insurer. But instead of developing a plan that makes fruitful investments towards DC’s most pressing health needs, CareFirst is skirting their responsibilities to rate payers and District residents. DISB’s Commissioner, the Bowser Administration, and DC Council need to work together to ensure that CareFirst meets its community obligations. The District should prevent CareFirst from raising prices of their health plans until they do so.

DISB found CareFirst to hold excessive surpluses of $268 million – or money beyond what is needed to run the nonprofit company – of which $56 million is attributable to revenue made in DC. Under current law, CareFirst must reinvest excess revenues into community health needs. The former commissioner of DISB ordered CareFirst to submit a plan for reinvesting the $56 million, but so far CareFirst has not complied. Now, DC residents must wait for the newly appointed DISB Commissioner Stephan Taylor to make a final ruling on the matter.

DCFPI and other advocacy groups are asking the Commissioner and DC Council to ensure that CareFirst reinvests in community.

  • The Commissioner should issue a final order requiring CareFirst to submit a plan as soon as possible and gather community input for that plan. There are several pressing health issues in DC, including access to services for homeless residents, immigrants, and those facing mental health and substance abuse issues. (See this letter for a full list.) The Commissioner should require that a plan be submitted with clear and expeditious timelines and that the plan be subject to public input.
  • The Commissioner and DC Council should ensure that CareFirst face penalties if does not comply with community reinvestment. Current law says that if CareFirst fails to submit a community reinvestment plan, the company cannot raise prices (rates) on its health plans for 12 months. DISB and the DC Council should ensure that this penalty is upheld.
  • The DC Council should clarify the law to enable DISB’s Commissioner to develop his own plan should CareFirst continues to stall. We believe the Commissioner has the authority to develop his own community reinvestment plan for the $56 million. Again, he should seek out robust community input on the needs of the community.

CareFirst has an obligation to the public health of the District, and we think that DISB and the DC Council have a responsibility to hold the company accountable.

To read our testimony on the issue, please click here.

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New Shelters for Homeless Families Should Provide Private Bathrooms for All

October 27th, 2015 | by Ed Lazere and Kate Coventry

As the District works to finalize plans for replacing the dilapidated DC General homeless shelter with a series of smaller shelters, DCFPI feels it is reasonable for the new shelters to have single rooms for each family, rather than a full apartment as called for under current law. Using smaller spaces per family will help limit the number of replacement sites and costs. But those rooms should have their own bathroom and minimal cooking options, such as a microwave and small refrigerator, to meet basic safety and privacy needs of homeless families.

Mayor Bowser, who led the charge to replace DC General and provided funding to do so, has sought to have the new shelters offer a single room for each family, rather than a full apartment. Private rooms take up less space than apartments, allowing the District to shelter more families at each site.dc general photo

DCFPI has indicated that we believe this could work if safety issues are addressed and if the District maintains enough apartment-style units in other shelters for families with special needs. Shared bathrooms pose safety concerns, given that many homeless families have experienced trauma. Additionally, some families have disabilities that require a private bathroom or cooking facilities to prepare special diets.

There is broad agreement that the new shelters should have a substantial number of private bathrooms. A special committee created by Mayor Bowser – the Committee on Design Guidelines for Emergency Housing for Families Experiencing Homelessness concluded that the “overwhelming recommendation was to maximize private bathroom space however possible without delaying closing DC General.” Recent surveys of homeless families suggest that most, but not all, feel a private bathroom is very important for their family.

It appears that the best way to balance families’ needs while limiting the space requirements for each shelter may be to provide a small private bathroom for each family. The District could design new shelters with most units having a private bathroom, as well as some communal bathrooms. But this could actually require more space than providing small private bathrooms for each room, since communal bathrooms tend to be large. Given that, DCFPI recommends that the legislation needed to move the shelter replacement plan forward should call for private bathrooms for each room, along with a microwave oven and small refrigerator.

This may add to the costs of replacing DC General, and may require more replacement sites than currently planned. But if that is what is needed to provide shelters that meet the safety and privacy needs of families, the District should find the resources to do so. It is not uncommon for the costs of major construction projects to rise as the plans move forward. The cost of modernizing the Duke Ellington School for the Performing Arts has risen dramatically, including a recent requested addition of $10 million by Mayor Bowser. Moreover, Mayor Bowser recently proposed $60 million in reprogrammed funds, much of it to capital projects (including the funds for Duke Ellington), a sign that the city can find resources when needed to adequately fund capital projects.

Even if new funds are needed to replace DC General, the District already has set aside a substantial amount of funding for this purpose and should be able to start moving ahead to acquire at least some of the sites needed.

Kate Coventry is a DCFPI Policy Analyst and voting member of the Interagency Council on Homelessness.

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DC Should Seize the Opportunity to Strengthen Inclusionary Zoning To Create Affordable Housing For More Low-Income Residents

October 26th, 2015 | by Claire Zippel
Ted Eytan, Flickr

Ted Eytan, Flickr

The District has a program that creates affordable housing in new market-rate developments, but the program could be doing more. Fortunately, the Zoning Commission will soon consider changes to the Inclusionary Zoning program (IZ) so that it can produce more low-cost housing and at prices affordable to more DC households. A public hearing before the Zoning Commission is scheduled for November 19th. The Commission should take assertive steps to make the most of this important program.

Inclusionary Zoning harnesses DC’s strong housing market to create low-cost apartments and condos throughout the city. It works by allowing new residential buildings to be larger than normally allowed by zoning rules. In return for the extra square footage (called “bonus density”), 8 to 10 percent of the building is required to be set aside as affordable.

IZ has many great benefits, but it could be doing more. It creates low-cost housing in high-cost neighborhoods, where access to public transportation, good schools, retail amenities, and job opportunities are likely to be best. And it does so without requiring tax dollars. About 770 IZ units have been built or will soon be coming on line in DC, with thousands more planned. But there are ways to ensure that Inclusionary Zoning does as much as possible to address DC’s growing housing needs. Most IZ units built so far are affordable to households at 80 percent of area median income, or $78,600 for a family of three. Yet the families most likely to struggle to afford housing in DC are at lower income levels. This means that the vast majority of IZ units – which rent for $1,600 a month for a one-bedroom – are out of reach for too many DC residents.

DCFPI is part of an advocacy campaign recommending that future IZ units should be more affordable to the low-income residents who need it most. There are encouraging signs that the Zoning Commission will move in this direction. For example, the Bowser administration proposed making all IZ units in new rental buildings affordable to families with incomes below 60 percent of Area Median Income – or $59,000 for a family of three – with IZ condo units targeted to somewhat higher income levels. This proposal is a step in the right direction—and several Zoning Commission members have asked the administration to look into even stronger affordability scenarios. Several Commission members are also interested in exploring how to create more IZ units by giving developers more bonus density in their buildings. A DC Council resolution passed this year also calls for strengthening IZ’s affordability.

With low-income families increasingly feeling the crunch of DC’s affordable housing crisis, now is an opportune time to ensure IZ fulfills its potential. And with encouraging signs from the Bowser administration, DC Zoning Commission, and DC Council, we are hopeful that, in the future, IZ will produce more affordable units that low-income families sorely need in DC’s high-cost market.

The Zoning Commission will hold a public hearing on the proposals to strengthen IZ on Thursday, November 19th. Read more about the recommendations the Zoning Commission is considering here.

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