DC’s budget may have just been passed, but the debate over the use of limited taxpayer dollars isn’t over. Today, the Finance and Revenue Committee held a hearing on six different bills that could cost the city $3.3 million in FY 2010 and $13.7 million from FY 2010-FY 2013. The bills would provide property tax abatements for multiple commercial development projects in the District. Those property owners would get a break for some – or even all – of their property taxes for up to 20 years.
Each bill is unique, but together, they leave some big questions unanswered.
Why these projects? All were planned without tax abatements, and two of the projects are completed or nearly complete. They are in some of the strongest markets in the city – just above the Columbia Heights Metro, for example. Could it be the economy? That was the justification for a recent tax abatement for a project called View 14. Yet, it’s likely that every project is having difficulty right now. A changing market is part of the risk a developer takes on. We can’t subsidize every struggling commercial project
Why do these projects get priority over the many affordable housing projects that also are stuck as a result of the economic downturn and a cut in the Housing Production Trust Fund? We think it’s more important to get those projects moving than a luxury hotel in Foggy Bottom.
What’s the cost? Too often, the official fiscal impact for tax abatements way understates the ultimate cost. Until projects are completed, which can take several years, the official cost covers only the tax break for the land. DC’s 2010 budget includes tax abatements that ultimately will result in $13 million in annual revenue losses, but only $1 million had to be set aside in 2010 because most of the projects are still in the early stages.
How can we make the process fairer and more transparent? Having an idea upfront of what the full cost to the District will be, and a financial analysis from the CFO that justifies that the project cannot go forward without the assistance, are two critical steps. This information can help ensure we can make well informed decisions over the use of limited tax payer dollars.
DCFPI testified at the hearing about these tax abatements and solutions to improve the process. Copies of the testimony on property tax abatements for:
Square 50, Lot 87, Kelsey Gardens, Highland Park I and II, and Park Place, can be found here
The Studio Theatre Housing can be found here
The Union Station Redevelopment Corporation can be found here