Comments on Breakfast links: Not easy being a business - Greater Greater Washington

Comment by Falls Church

Tue, 05 Jun 2012 18:06:40 EDT

5:2 odds that as soon as they drop the PLA preference, then end up awarding a PLA contract anyway, McDonnell shakes his fists and pulls his pledge again.

That's entirely possible. But, even in the above scenario, no one has lost anything by giving up on the PLA preference now. Maybe if we do that, a PLA contract is awarded anyway and the Gov. pulls back the $150M, but we'd still be no worse off then sticking to the PLA preference now and losing the $150M automatically.

Also, if the Gov. pulls the $150M even if the PLA preference is dropped, there will be political consequences for him. We're in a much better position to make our argument against him at that point.

Comment by Rich

Tue, 05 Jun 2012 17:05:06 EDT

The Corcoran has been in and out of financial straits for years. They will lose their limited profile if they relocate away from the Mall. That they dropped $600K on a management study (no doubt full of b-school cliches) suggests that they are in real trouble. What they probably need to do is find people who know how to run a museum.

Comment by Tom Coumaris

Tue, 05 Jun 2012 16:22:38 EDT

Adam- Some of the problem is the spread of impervious surfaces and some of the problem is basement sump pumps in residences. But a lot of that could be remedied by discouraging concreting of rear yards for parking, doing away with the means Zoning uses to allow 100% lot occupancy in many areas, and generally coming up with some rules encouraging surface water absorption. The use of sump pumps in residential is actually going down.

But these huge underground garages are a totally different matter. A garage may use almost no metered water while pumping millions of gallons of ground water into the combined system. I know a project by me that has a 2-level underground garage had to have two huge pumps installed during construction and I never fail to hear them working for days after a heavy rain. I know the building I used to work in on Constitution with one underground floor was the same. Almost any underground structure below the escarpment
will be the same.

While the occasional use of sump pumps for ground water from residences may have some merit, I don't think that we collectively should be footing the bill for ground water removal from underground garages.

Comment by Adam L

Tue, 05 Jun 2012 14:28:15 EDT

@Tom

That very well may be the case. That said, many buildings big and small have sump pumps. It's generally assumed that the prices set for water service (and now, impervious surface water fees) balance out to cover the total cost of the water and sewer system. Perhaps the same assumption can be made with larger buildings that pay more for water usage and have high runoff fees?

Comment by worthing

Tue, 05 Jun 2012 14:21:13 EDT

5:2 odds that as soon as they drop the PLA preference, then end up awarding a PLA contract anyway, McDonnell shakes his fists and pulls his pledge again. He's the trolliest of all governors.

Comment by Tom Coumaris

Tue, 05 Jun 2012 14:12:06 EDT

Adam L.- I think a part of the problem may be the way sewage is billed. I know my bill is metered by the amount of water coming in with the assumption I guess that the same amount would go out. I know when I had a sump pump in a basement apartment a whole lot more was going out there than coming in through the meter.

This may be how underground garage water pumping gets around sewage fees.

Comment by Falls Church

Tue, 05 Jun 2012 13:58:03 EDT

Also, that post op-ed is kind of silly. So now we are supposed to take McDonnell at his word?

Yes, he's deadly serious about not giving the $150M unless the PLA is dropped. He has every political incentive to stick to his threat.

As for not providing the money even if the PLA is dropped, we can cross that bridge when we come to it. But, the bottom line is that the PLA is not worth losing the $150M.

Comment by H Street Landlord

Tue, 05 Jun 2012 12:30:32 EDT

Also, that post op-ed is kind of silly. So now we are supposed to take McDonnell at his word? He has backtracked and not followed through with what he has said repeatedly. What's different this time?

Amazing so many VA politicians are willing to cut off their nose to spite their face.

Comment by Adam L

Tue, 05 Jun 2012 12:08:16 EDT

@Lance

The suburban jurisdictions that feed into the DC Water sewer system are paying for the upgrades through increased fees as well. And now that the federal government has said that it too will pay the new fees, it's not just DC residents shouldering the costs by ourselves. Everyone who uses the sewer system is contributing to its rehabilitation. The issue is that I believe the WaPo Op-Ed writer was suggesting that an even larger share of people, including those who do not feed into the sewer system, should have to bear an increased cost. That is, at least to me, a bit too far off base.

@Tom and Jim

I contacted DC Water and asked them for specifics about the underground pumping situation. They said they would get back to me with details in response to the discussion here.

Comment by H Street Landlord

Tue, 05 Jun 2012 12:06:50 EDT

re China/government bonds.

There have been numerous articles in the past couple of years about all types of foreign investors (including the Chinese) wanting to own infrastructure and other hard assets rather than just buying government debt (for obvious reasons). This seems to be another example of this phenomenon. I'm not entirely sure how i feel about it, but I think if they want to finance it (and are offering reasonable terms) I think we should go for it.

By the way, this is another example of Gray showing big time vision.

(CAHSR is also looking at having foreign companies that want to build the high speed rail network help finance it).

Comment by Lance

Tue, 05 Jun 2012 12:00:52 EDT

@Jim "As a DC Water customer, I just can’t see the justification for expecting neighboring jurisdictions to pay for sewer upgrades on the basis that “they benefit the region.”

DC WASA may may sound like it's just Washington, but this regional authority services large parts of surrounding jurisdictions in addition to DC. Arlington may be issuing bonds for their system, but they don't have to worry about all their residents needs since a good porion of them are serviced by DC WASA. I guess this harkens back to the days when they these suburbs were just small towns (if that) and the federal goverment which then ran all this kind of stuff just expanded beyond the boudaries of DC to provide water and sewer services to those communities which weren't then able to handle it on their own. So since it's not only DC residents who benefit from the rework, it makes complete sense to me that Virginia and Maryland should help shoulder the costs of the rework in the same proportion as they are benefiting from the rework.

Comment by Tom Coumaris

Tue, 05 Jun 2012 11:34:35 EDT

Jim- Even though these huge underground structures are not pumping ground just after heavy rains, that is still the problem. The combined system overflowing after heavy rains. So even if the ground water were being pumped only after heavy rains when the water table is high it doesn't matter.

I've had enough experience with DC ground water to know how huge the amounts that have to be pumped out are.

And yes, I wish someone would total how much ground water is pumped out of these underground garages. And if there are any that are totally waterproof, how much that affects the surrounding water table. I'd suspect it would raise it and require more pumping by neighbors. (But I haven't seen any that are really waterproof).

Comment by jim

Tue, 05 Jun 2012 11:05:34 EDT

@Tom
It’s a little disingenuous to suggest that your water bill will increase $50-100/month based solely on the presence of high rise buildings in the district.

From DC Water’s website, 600,000 DC residents and 1.6M residents of Maryland and Virginia are provided sewer service through DC Water’s collection system. As I suggested above, the cost of the project should be shared amongst the rate payers. If that were the case, you would be able to pay off the entire project in a year or two. That’s not even including the rates paid by commercial space for the 17.8 million annual visitors to the city within the city or the non-residents 700,000 who work in the city (DC Water’s #s).

Secondly, I’d love for a source that quantifies the amount of ground water you believed is being pumped into the system. Deep foundation structures are generally designed to limit ground water intrusion. Where ground water is high, these structures are typically placed on piles to prevent uplift from the ground water. The quantity of actual groundwater seeping into these structures is minimal compared to the overall capacity of the sewer system.

Now what you may refer to as “groundwater” might actually be stormwater collected off the impervious area of the building and that makes its way into underground parking structures via surface openings. This water would enter the sewer regardless of whether the structure is 100% above grade or it is pumped from a subgrade structure. In areas with high ground water, it is likely that more groundwater is infiltrating the sewer at joints in the sewer than being pumped into it from underground structures.

While I am not familiar with the exact depth of the water table throughout the city, I am confident assuming that the underground portion of a number of high rises are above the water table and aren’t subjected to any groundwater forces (namely areas of the city much higher than the river).

The real problem is stormwater. We can either pay to separate the storm and sanitary sewers (>>>>$2.6B) or we can pay for these tunnels and stop discharging our raw sewage into our rivers.

Comment by Kyle W

Tue, 05 Jun 2012 11:04:17 EDT

@Falls Church

My brother and I are starting a business this fall. He lives in Arlington, I live in Petworth. While I like DC quite a bit more than Virginia, we are forming in Virginia, for obvious reasons.

It will just be him and I to start, but at some point, if we do hire employees, those employees will be in Virginia as well. Wish we could do DC, as I love the place, but the numbers/logistics just don't make sense. Unfortunate to put it mildly.

Comment by Falls Church

Tue, 05 Jun 2012 10:50:56 EDT

It would be more useful to see some objective metrics about how long it takes to start a business in DC compared to, say, Bethesda or Laurel.

Having gotten a basic business license in DC I can provide some anecdotal evidence. Having spent considerable time trying to figure out what needed to be done and calculating the cost of my time to do it, I realized I was better off paying $400 to a private company that can handle the process on my behalf. No such services are available in VA or MD that I'm aware of since the process is much easier.

Comment by Falls Church

Tue, 05 Jun 2012 10:38:23 EDT

Pretty sure that's a complicated economic financing tool known as "a loan."

Not sure why we need a "private" company to do this instead of just selling infrastructure bonds and then paying back the debt out of... government revenues.

Selling infrastructure bonds could easily impact DC's bond rating since DC is pretty close to its limit for debt without triggering a downgrade.

Comment by Tom Coumaris

Tue, 05 Jun 2012 10:34:28 EDT

Adam L.- I've heard from a friend who works for a Councilman that 10 years ago he had a bill passed exempting underground commercial structures from ground water discharge fees. I've not been able to locate it yet, I've only found that temporary pumping during construction is exempt. I'm searching and hoping someone else takes an interest.

But obviously just the increase in impermeable surfaces alone has not caused this huge increase in ground water disposal. All buildings in the Old City have extraordinary underground water problems and it's the norm for these buildings to pump out ground water almost 24/7 to keep these structures dry. That a huge amount of ground water pumping.

And it's not just commercial buildings, the IRS building had to be emptied for 2 years while it's underground water problem was solved and it has just a small garage and offices on one underground floor.

You can't try to put all these new underground garages into what was naturally a swamp and marshland without huge amounts of ground water having to be pumped.

Comment by Gray

Tue, 05 Jun 2012 10:33:21 EDT

@charlie: I'm not following how that's related to municipal bond issuance.

Comment by Falls Church

Tue, 05 Jun 2012 10:31:26 EDT

I submitted a tip for the below op-ed in the WaPo but it didn't make it into today's links. It's an important one:

The Post’s View -- Airports authority should drop preference for PLA for Silver Line

LIKE THE GREEK economy, the $6 billion project to build Metro’s Silver Line extension to Dulles airport and into Loudoun County has faced so many critical junctures that its recent history resembles the “Perils of Pauline.” Still, Dulles rail’s current cliffhanger, which may come to a climax Wednesday, may be the most decisive yet.

The immediate question is whether the Metropolitan Washington Airports Authority, which is building the Silver Line, will drop its stated preference for a union-friendly contract for the project’s second phase of construction. It should, because it’s the only way to maintain the project’s momentum — and because the contract is likely to turn out the same way anyway.

http://www.washingtonpost.com/opinions/airports-authority-should-drop-preference-for-pla-for-silver-line/2012/06/04/gJQAx2aKEV_story.html

Comment by charlie

Tue, 05 Jun 2012 10:19:42 EDT

@Gray; It think the issue of bonds came up on GGW before. The study showed that the bulk of increase in real estate values didn't come from new buildings, but from increases in old ones. I'm sure private home/condo owers will be delighted by that finding.

Comment by Gray

Tue, 05 Jun 2012 10:00:50 EDT

@MLD:

Pretty sure that's a complicated economic financing tool known as "a loan."

Not sure why we need a "private" company to do this instead of just selling infrastructure bonds and then paying back the debt out of... government revenues.

I was thinking the same thing. This is not allowing some capability we don't have. It's just making the funding mechanism less transparent, allowing us to say we haven't added to government debt--but at the same time, giving up future revenues and almost certainly also control over future fares. Probably also future control over the streetcar system itself. Not to mention that it would surely end up being more expensive than simply issuing bonds...

But hey, we get to say we aren't taking on more debt, so that's totally worth it, right?

Comment by JustMe

Tue, 05 Jun 2012 09:56:02 EDT

Small business owners give DC a D+ for friendliness. It's not so much tax rates, but rather licensing regulations and other hoops to jump through.

I don't doubt that the DC government is horribly inefficient and difficult to deal with when it comes to getting your small business paperwork in order and filed, but the truth is that small business owners are the biggest group of whiners and complainers there is, and the fact that they give DC a "D+" is no surprise. Every small business owner has some story where an inspector told them to get rid of all the rusty nails sticking out of their floors, causing them to scream, "OMG! This place is so unfriendly to business!"

It would be more useful to see some objective metrics about how long it takes to start a business in DC compared to, say, Bethesda or Laurel.

Comment by charlie

Tue, 05 Jun 2012 09:53:16 EDT

@MLD: It's the Export Bank of China. Get a loan, buy Chinese product. Otherwise known as vendor financing.

I'm not sure of the funding mix, but I seem to remember buy America was invoked in the last round of purchases of "streetcars". That has been such a cockup that I could be mistaken, however

Comment by Adam L

Tue, 05 Jun 2012 09:52:29 EDT

@Tom Coumaris

You've mentioned that ground water problem several times before, but I haven't read anything else about it other than your comments here. Do you have more information?

Comment by Adam L

Tue, 05 Jun 2012 09:47:37 EDT

I agree with jim. I'm a DC Water customer, and the rates are going up. But I also understand that we have a century-old system that is no longer up to the job. So as long as everyone who uses the system (residents, local governments, and feds) are chipping in then I can see no further justification for asking others to chip in. That said, if there really is a concern over the bonds (or rather the accelerated rate at which they will have to be repaid), then perhaps the federal government can step in with some lower-interest loans to help with the financing cost to help us comply with their own requirements.

Comment by Tom Coumaris

Tue, 05 Jun 2012 09:45:45 EDT

The $2.6 Billion should be paid for by the high rise commercial buildings with underground parking garages who are pumping ground water into the city system and overflowing it.

It is ridiculous to expect DC residents to pay $50 to $100 extra per month to foot the bill for these high rises while they are exempt from sewage bills for ground water pumping.

Comment by jim

Tue, 05 Jun 2012 09:28:31 EDT

RE: DC Water Sewers

As a DC Water customer, I just can’t see the justification for expecting neighboring jurisdictions to pay for sewer upgrades on the basis that “they benefit the region.” The rest of the region is paying for their own sewer infrastructure to meet federal regulations. For example, Arlington is in the process of completing upgrades to both their wastewater collection system and treatment plant at the cost of $582M. I don’t recall anyone calling for the region to pitch in to pick up a portion of the cost.

The rate payers should (me included) should foot the bill for these sewer upgrades required to bring the system into this century. Note that rate payers include money collected by WSSC in MD and Fairfax that is passed onto DC Water for allocated sewer capacity.

Comment by MLD

Tue, 05 Jun 2012 09:18:14 EDT

@charlie

How would financing from a Chinese bank in any way impact who you buy stuff from? How would it run afoul of Buy America?

Beyond that, Buy America only applies if you're using federal funds for things. If you use your own funds you can buy whatever you want.

Comment by charlie

Tue, 05 Jun 2012 09:09:00 EDT

And how are you going to meet the buy-america requirements? wasn't that an issue with the last purchase.

There are significant restirctions on the ability of chinese companies to move money abroad. They want to get their money out of china. While a prestige project like this might get approval, there are a lot of checklists that need to be made. DC officals are not the best people to be dealing with this.

Comment by MLD

Tue, 05 Jun 2012 09:05:34 EDT

One plan would be for the government run Bank of China to pay for the project and then collect a portion of the revenue once the system is up and running.

Pretty sure that's a complicated economic financing tool known as "a loan."

Not sure why we need a "private" company to do this instead of just selling infrastructure bonds and then paying back the debt out of... government revenues.

Comment by Jasper

Tue, 05 Jun 2012 09:01:48 EDT

China might invest in DC's streetcars.
One plan would be for the government run Bank of China to pay for the project and then collect a portion of the revenue once the system is up and running.

Oh great :-s Tolling out the streetcars. Wow. The stupidity never stops.

Comment by drumz

Tue, 05 Jun 2012 08:57:01 EDT

Re: Tysons,

Fairfax county should do what it can to preserve the buffer. But it doesn't have to be either/or. The county should scratch the new exit to the toll road but keep the new road to help with the connectivity within tysons. I think the county is completely able to preserve the buffer (while maybe adding pedestrian/bike access through the park if there isn't already) while improving the street grid.

Comment by Michael Perkins

Tue, 05 Jun 2012 08:51:22 EDT

How do you collect "a portion of the revenue" from a subsidized transit system?

This sounds like we're just collecting fares years in advance to help fund construction?