No mas in NoMa: Booming Neighborhood Doesn’t Need More Subsidy for Market-Rate Housing
There’s no question DC’s NoMa neighborhood is hot. New commercial and residential buildings – such as the mixed-use Constitution Square and Loree Grand – have transformed the area North of Massachusetts Avenue (aka “NoMa”). There’s been an infusion of $3 billion in private investment over the past six years, and construction cranes continue to dot the sky. Metro’s board of directors literally put NoMa on the map, by formally changing the name of the “New York Ave-Florida Ave-Gallaudet U” stop to “NoMa-Gallaudet U”. The new question is whether the District needs to provide any more incentive to keep the neighborhood booming.
Tomorrow, the DC Council’s Finance and Revenue Committee will consider legislation to amend a subsidy program authorized in 2009 by the NoMa Residential Development Tax Abatement Act. According to DC’s Deputy Mayor for Planning and Economic Development, this legislation was “intended to provide tax abatements as incentives for the production of new housing in the NoMa area.” It capped the amount of property tax subsidy the District could provide each year at $5 million and the total number of residential units that could qualify for the abatement at 3,000. The legislation being considered tomorrow seeks to remove the residential unit cap to allow more developers to obtain this subsidy.
DCFPI urges the council to keep the cap in place. If the council does want to put the money toward housing, it might want to consider ways to maintain and build affordable units. Clearly given the building boom in NoMa, private investors see NoMa as a good bet.
Initial indications from DC’s Chief Financial Officer are that the District is currently subsidizing roughly $4 million a year in residential property taxes in NoMa. Supporters of removing the residential unit cap want to do so in order to access the remaining $1million per year in subsidies. But there is no clear rationale why the District should do this. Clearly, the District has achieved its goal of spurring development in NoMa – so much so that there is demand from private investors to bring more residential development to the area. But just because the District reached its goal of 3,000 residential units for less money than it initially anticipated doesn’t necessarily mean that it should spend more money subsidizing market-rate housing.
Spending money simply because you can has never made for sound fiscal policy.
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