Read the new Unified Economic Development Budget Report
In certain parts of DC, building cranes crowd the skyline so much that a public official recently commented that the towering structures have become the District’s unofficial mascot. So just how much is the city spending on economic development? Answers can be found in the newly issued Unified Economic Development Budget (UEDB) report for Fiscal Year (FY) 2011, which was released to the public last week by the Office of the Chief Financial Officer (OCFO). Sure, the UEDB won’t challenge The Hunger Games for favorite bedtime reading, but if you are interested in how the city leverages its resources for economic development, it’s a page-turner.
The report identifies all economic development incentives over $75,000 given by the District in FY 2011, including tax increment financing (TIF), payments in lieu of taxes (PILOTs), tax credits, tax abatements, and expenditures on contracts and grants, among other finance tools. While the methodology remained the same from last year’s report, the presentation of this year’s report is improved and more reader-friendly with enhanced graphics and explanations.
What are some of the highlights? According to the report, in FY 2011 the District spent $278 million on economic development-related programs. This is a 15 percent decrease from FY 2010, which totaled $327 million. The biggest factor in this drop was a sharp decrease in expenditures on contracts by the Deputy Mayor for Planning and Economic Development. These contracts include spending on activities such as construction, planning and asset management services provided by third parties. Additionally, property tax abatements and exemptions that were approved in previous years by the DC Council cost the District $28 million in FY 2011.
Another notable fact is that the issuance of new property tax abatements and exemptions slowed dramatically in FY 2011, according to the report. In FY 2010, for example, the DC Council passed new abatements and exemptions estimated to cost the District $166 million in forgone property tax revenue. Yet in FY 2011, the Council approved abatements and exemptions worth an estimated $62 million in future revenue. Some of the slowdown might be attributed to increased scrutiny over the cost of property tax abatements triggered by the Exemptions and Abatements Information Requirements Act. The act, passed in 2011, requires more financial information about projects that are seeking abatements and exemptions.
Once again, the report compares economic development spending by ward. According to the report, in FY 2011 Wards 2 and 6 received a combined $152 million in economic development incentives, well over half of what the District spent citywide. This figure includes the $33.5 million to pay off bonds on the convention center headquarters hotel in Ward 2 and $31 million spent to pay bonds on Nats Park in Ward 6. But even if those figures are removed, the report still indicates that over a third of economic development dollars spent by the District in FY 2011 went to Wards 2 and 6.
So if you’re attending Opening Day at Nats Park today, and wondering how those cranes in Ward 6 relate to city spending and investment, check out the UEDB. And speaking of unofficial mascots, we’re rooting for Teddy to win (at least once) this year!