Greater Greater Washington

Development


Howard Town Center doesn't need an $11 million tax break

The DC Council today will vote on an $11 million property tax break for the Howard Town Center that the DC CFO insists is unnecessary. At a time of crumbling schools and budget cuts, we can't afford to hand out optional property tax abatements like Santa Claus.


Photo by Darren Cullen on Flickr.

What else could we do with $11 million? It costs $11 million to modernize Stuart-Hobson Middle School and McKinley Tech High School. It would cost $11 million to extend library hours to their full schedule for a year.

I've defended the DC Council for its development subsidies, such as Gallery Place, where they are warranted. A good tax break is one that produces knock-on benefits for the city and where we don't overpay.

DC would be overpaying for the Howard Town Center development, in the midst of rapidly developing Shaw/LeDroit Park.

The developers plan to build 445 apartments with 74,000 square feet of retail space, including a grocery store, and 320 underground parking spaces.

Development of retail amenities is great, and helps reduce crime, increase pedestrian traffic while boosting tax revenues. But we have a right to know if developments would happen anyway before spending taxpayer dollars to subsidize them.

Thanks to a law passed last year, the CFO must assess whether individual developments actually need the tax break or loans to get financing to build the project. The Howard Town Center is the first tax abatement proposal that CFO Natwar Gandhi has unequivocally opposed on these grounds.

Gandhi identified these problems with the tax abatement:

  • The project, in a redeveloping neighborhood, should be able to charge higher rents than the developer is claiming.
  • The developer, who is setting aside 20% of units for affordable housing, should be able to secure financing through Low-Income Housing Tax Credits.
  • The developer can save money by deferring the developer's fee, a common practice with developments that include affordable housing.
Greg LeRoy, director of subsidy watchdog Good Jobs First, says "There is a time and a place for development incentives, but the problem is that elected officials don't know when to take their foot off the gas." That certainly applies at this location, where earlier this year Harris Teeter signed a letter of intent for a development only 2 blocks away.

Between Columbia Heights and Shaw, 1,321 apartment units are under construction while another 797 units are expected to be completed in the next 3 years. The trend of development moving eastward along U street and northward through Shaw is likewise driving up housing values to between $450,000 and $700,000 for 2-bedroom condominiums, according to a Trulia search.

In addition to the objections the CFO raised, there is another glaring problem with the claim that $11 million is necessary for this development: The 320 parking spaces. Are the spaces really necessary 3 blocks from Shaw Metro? The developer could save a lot of money by cutting down on the number of underground floors.

The DC Council should reject this unnecessary tax abatement. Otherwise, it will further undermine public confidence in its ability to operate free of corporate influence.

Ken Archer is CTO of a software firm in Tysons Corner. He commutes to Tysons by bus from his home in Georgetown, where he lives with his wife and son. Ken completed a Masters degree in Philosophy from The Catholic University of America. 

Comments

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Yes and no. Giving the project a tax break against the CFO's advice is probably a bad idea on the merits. At the same time, though, Howard has been dragging its feet on this for years. If the market forces were that strong or the case for development that clear, it would have been built already.

In the absence of forward-thinking, decisive leadership at Howard and truly overwhelming market demand, external pressure and incentives may still be needed to get this thing going. This move would also give the District leverage to dictate some terms.

Would that reward bad behavior? Probably. But I for one am willing to overpay a little bit (less than $11 million, but more than nothing) if it's in the service of getting this right. Given Howard's seeming indifference to neighborhood development, it's important to show them that a different path exists.

by Ben on Dec 4, 2012 10:20 am • linkreport

Howard can't seem to get out of it's own way to do anything. Not sure how a taxpayer subsidy is going to address that problem. They're sitting on a huge parcel within walking distance of the metro station in central DC and they can't get it developed in, what, 10+ years of trying. Strikes me as though DC taxes are just enabling incompetence.

by Jake on Dec 4, 2012 10:41 am • linkreport

No subsidy and cut the amount of parking!

by H Street LL on Dec 4, 2012 10:53 am • linkreport

No subsidy. I am generally against subsidies in pretty much all but a very, very limited set of circumstances (jump-starting development in an area like Chinatown would be among them). Ken is right that boosting property developers in this area is completely unnecessary.

If Howard is dragging their feet, there are other ways to get them to move. Anybody know if the property is subject to the blight tax?

by Adam on Dec 4, 2012 11:01 am • linkreport

Since many of the apartments will be Section 8, not only is DC subsidizing a huge amount of parking, but providing it to Section 8 recipients within 3 blocks of a Metro and on major bus lines.

by Tom Coumaris on Dec 4, 2012 11:09 am • linkreport

@Tom

I'm amazed at how many subsidized housing developments have off-street parking. I'm even more surprised by how many of those spaces are occupied by some very expensive cars.

by Adam L on Dec 4, 2012 11:14 am • linkreport

I'm not saying that the subsidy is a good idea in this case, but telling us what other things the $11M could buy sets up a false choice if the project might not get built without the subsidy. Those dollars won't exist if the project doesn't get built.

Perhaps these sorts of subsidies can help encourage organizations and land owners to act sooner rather than sit around with vacant or underused parcels?

by MDE on Dec 4, 2012 11:21 am • linkreport

I'm amazed at how many subsidized housing developments have off-street parking. I'm even more surprised by how many of those spaces are occupied by some very expensive cars.

Amen. On a less egregious but just as irritating note, it seems that every other subsidized housing unit in my neighborhood has a satellite dish. Drives me nuts.

by dcd on Dec 4, 2012 11:21 am • linkreport

DC subsidizing a huge amount of parking,

Is parking available to all in the bldg or just those who can afford it? I don't know about this particular project but in some communities, parking is included as an "add-on" of sorts. Even if they don't get (which they should) the credits, wouldn't parking have to be calculated as part of the person's income qualification?

by HogWash on Dec 4, 2012 11:25 am • linkreport

Even if they don't get the LIHTC....

Ignore the 1st sentence

by HogWash on Dec 4, 2012 11:26 am • linkreport

I assume the tenants pay their own satellite service and not the taxpayer. But I don't think it's terribly Scrooge-like to say that providing free garage parking worth $200mo goes against DC transit policy in such a transit-served location. Especially since Section 8 recipients would be entitled to low-cost or free Metro.

There has to be a way DC can unbundle parking from subsidized units.

For DC to say that we want to get away from over-reliance on autos for transportation but then to say that it's a necessity to be given to subsidized tenants is hypocritical.

by Tom Coumaris on Dec 4, 2012 11:48 am • linkreport

@Tom

The taxpayers are not directly funding satellite TV, of course. But I know that part of the money those residents are saving on rent is going to subsidize other luxuries that I, as a taxpayer, don't spend money on.

Such things make people like me and dcd wonder what we're doing wrong that we pay hefty taxes and full market rates for our homes and yet we still don't have luxuries like fancy cars and satellite TV.

In any event, your point is well-taken that the two government policies are in conflict.

by Adam L on Dec 4, 2012 11:57 am • linkreport

And a point of clarification: I am fully understanding that lower-income people pay taxes (and often at a higher percentage than some of the wealthiest in our society) and I am also fully aware that the majority of people who need subsidized housing live modestly. However, there seems to be enough anecdotal evidence of people gaming the system that it becomes especially irritating.

by Adam L on Dec 4, 2012 12:03 pm • linkreport

Such things make people like me and dcd wonder what we're doing wrong that we pay hefty taxes and full market rates for our homes and yet we still don't have luxuries like fancy cars and satellite TV.

I get your point. And as someone who has at some point lived in subsidized communities at both ends of the scale, I've long disabused myself of the notion of the "welfare queen" who represents all those receiving subsidies. In fact, it's the farthest thing from the truth. Have I seen people purchase cars "I" don't think they can afford? Sure. But those instances are so minimal it shouldn't be a concern.

FWIW, people on subsidy's have cell phones and other utilities. Having a satellite won't break the bank

by HogWash on Dec 4, 2012 12:19 pm • linkreport

@dcd, @Adam -- Satellite TV isn't even a luxury. It's less than half the cost of the local cable monopoly -- $30/month or about 4 hours of minimum wage. When I see subsidized housing littered with those little dishes, I want to commend our local residents for their thrift.

As for parking in subsidized housing developments, I thought the idea was to enable the residents to survive while holding low-paying jobs. Often that means having a car. As long as they're not renting out their spaces, I don't see the problem.

by Matt C on Dec 4, 2012 12:56 pm • linkreport

Satellite TV isn't even a luxury. It's less than half the cost of the local cable monopoly -- $30/month or about 4 hours of minimum wage. When I see subsidized housing littered with those little dishes, I want to commend our local residents for their thrift.

I don't want the comments to spin entirely off onto this tangent, but I don't buy this at all. Just because one luxury costs slightly less than a comparable luxury doesn't mean it's appropriate for someone in subsidized housing. TV is not a necessity, and cable/satellite certainly are not necessary.

I know that these things are a drop in the bucket, and won't break the bank. But the amount of the expense really isn't the point (although as the amount increases, so does the irritation factor). People live in subsidized housing because they cannot afford to pay for a place to live on their own. If they cannot afford to pay for a place to live on their own, they certainly cannot afford luxuries like 4000 channels, late-model cars, PDSs with data plans, etc.

I'm not suggesting that public housing residents should wear sackcloth and ashes and live on bread and water, but I am suggesting that spending money on things that are unquestionably luxuries is inappropriate when they can't provide for basic necessities, such as housing. I'm also not suggesting that there is anything we can do about this - my comment was more along the lines of a vent.

However, parking at subsidized housing? The taxpayers should subsidize housing, potentially give the developer a tax break, AND also make sure there are private parking spots? No. Lots of people who pay a lot of money in rent or mortgage circle the block looking for parking every day. There is no reason residents of subsidized housing should be provided gratis what is a very valuable luxury in this city.

OK, rant over.

by dcd on Dec 4, 2012 1:16 pm • linkreport

Just because one luxury costs slightly less than a comparable luxury doesn't mean it's appropriate for someone in subsidized housing. TV is not a necessity, and cable/satellite certainly are not necessary.

I believe this is the inherent problem w/us dictating what others should/n't do based on what "we" believe is appropriate for them. It's essentially the recent political/presidential argument on full display.

The GOP believes that people who receive gov't assistance are leeches and shouldn't avail themselves to things they don't believe they can afford. The Democrats argument is that the majority of these people pay taxes and aren't sitting idle waiting for a handout.

Let's take a bit from both of those. Why do we feel as if we have the right to dictate how people should spend our tax dollars? Fact is, we don't. And if the argument simply rests on the idea that people who receive subsistence should have their purchasing power dictated by the rest of us, then where's the line? Do we then begin to dictate what companies that receive gov't subsidies should purchase? Nonprofits who receive gov't money?

My point here is that it's always easiest and most appropriate to "hit down." That is, much like the GOP, it's easy to convince people that "those" people are doing things w/their money "we" don't think they should. But at the same time, these people also pay taxes and their tax dollars also help to fund the gov't.

Moreover, if having cable tv/satellite/internet are the luxury items we don't think "gov't recipients" should have, how is that different from the GOP who don't think they should fund bills that would help their own rural base have access to internet? It isn't.

by HogWash on Dec 4, 2012 2:02 pm • linkreport

"Moreover, if having cable tv/satellite/internet are the luxury items we don't think "gov't recipients" should have, how is that different from the GOP who don't think they should fund bills that would help their own rural base have access to internet? "

Do people really use cable TV to search for jobs, as they do the internet?

by AWalkerInTheCity on Dec 4, 2012 2:09 pm • linkreport

All very good points, HogWash. (I know, I'm as surprised to be writing this as you are to be reading it. Next, I'll be agreeing with Ken. I'll give you a moment to collect yourself.)

Anyway . . . this in particular was right on:

Why do we feel as if we have the right to dictate how people should spend our tax dollars? Fact is, we don't. And if the argument simply rests on the idea that people who receive subsistence should have their purchasing power dictated by the rest of us, then where's the line? Do we then begin to dictate what companies that receive gov't subsidies should purchase? Nonprofits who receive gov't money?

And intellectually I recognize that there's little to nothing to be done about it, and that I may be being unreasonable. And I also recognize that I get plenty of assistance in the form of tax breaks, deductions, etc. But that doesnt help me on an emotional level when I see, for example, late model cars parked in subsidized housing's subsidized parking as I circle the block looking for a street spot in my 7 yo sedan that I'm keeping for another year.

by dcd on Dec 4, 2012 2:10 pm • linkreport

Do people really use cable TV to search for jobs, as they do the internet?

My cable and internet go hand-in-hand. I imagine it's the same for many others.

(I know, I'm as surprised to be writing this as you are to be reading it

HA!HA! No, I'm not surprised at all. It's not uncommon for me to agree w/something someone said...even my cybernemisis. I believe that separates me from a lot of people here. I gain little by deciding that I'm never going to consider or agree w/anything my nemisis say.

But that doesnt help me on an emotional level when I see, for example, late model cars parked in subsidized housing's subsidized parking as I circle the block looking for a street spot in my 7 yo sedan that I'm keeping for another year.

Not sure who you determine which car belongs to which Section 8 recipient but I get your point. I'm also guessing that the number subsidized residents on your block w/late-model cars is very, very small..right? As in, 1 out of 20?

I too get beside myself as I'm loading up my groceries debating between steak and lobster and here comes Todd and Mindy w/lobster, steak, crab and shrimp..all paid for using that WIC card. It stings..but it's my responsibility to keep it all in perspective...

by HogWash on Dec 4, 2012 2:33 pm • linkreport

neme

by HogWash on Dec 4, 2012 2:34 pm • linkreport

"My cable and internet go hand-in-hand. I imagine it's the same for many others."

Really? I get my internet from the local cable company - they give a discount on a bundle, but its still more expensive to get cable and internet than internet alone, last I looked. Does the cable co in the District really add free cable when you get internet from them?

by AWalkerInTheCity on Dec 4, 2012 2:42 pm • linkreport

Comcast has very reasonable rates for home internet for families that receive any type of public assistance. I see the posters for it in the library.

by Adam L on Dec 4, 2012 3:44 pm • linkreport

even my cybernemesis

I can't imagine I have replaced Oboe . . . big shoes to fill.

by dcd on Dec 4, 2012 3:48 pm • linkreport

I get my internet from the local cable company - they give a discount on a bundle, but its still more expensive to get cable and internet than internet alone, last I looked.

So do I. Comcast. Yes, it's more expensive to get any additional service than just one. I have a bundle, so mine go hand-in-hand.

by HogWash on Dec 4, 2012 3:48 pm • linkreport

so if it costs more to add cable, then someone getting cable is paying extra $$ for an entertainment service, which is not at all like funding rural internet, which is an economic tool (though also a source of entertainment)

by AWalkerInTheCity on Dec 4, 2012 3:52 pm • linkreport

so if it costs more to add cable, then someone getting cable is paying extra $$ for an entertainment service, which is not at all like funding rural internet, which is an economic tool

I'm confused. What's your point here? That because "poor" people don't need cable, then shouldn't have it?

by HogWash on Dec 4, 2012 4:00 pm • linkreport

remember how this discussion started?

Someone said seeing sat dishes at a subsidized housing complex was annoying, because many people not eligible for such housing find sat or cable TV to be an unaffordable luxury.

You asked how this annoyance differed from opposition to rural internet subsidies.

I explained how they are different. That is all.

by AWalkerInTheCity on Dec 4, 2012 4:05 pm • linkreport

Why are we having a discussion about what people buy? The way we have decided to split up resources in this country is that if your income is below a certain threshold, you qualify for certain benefits (food stamps, WIC, section 8, etc.) What you choose to spend your money on otherwise is your business because we allow low income people to have some damn dignity and don't go poking through every aspect of their lives.

The research has shown time and again that a)"welfare queens" (by any name) are largely a myth and b)money spent on efforts to contain this kind of spending would outweigh the savings gained.

by MLD on Dec 4, 2012 4:13 pm • linkreport

MLD

Someone with the spare funds to pay for Sat TV may well be far from a welfare queen, yet still have sufficient discretionary income to bring into question the level of certain benefits. Housing programs, which are, AFAICT, more complex, and less universally available, may also be somewhat different from bare survival things like food stamps. There is much debate about the amount of affordable housing set asides in our region (esp in DC, Arlingon, and Alexandria). Some have suggested abolishing such set asides (which in Arlington are only available as density bonuses, and in Fairfax do not exist at all except for select workforce housing, IIUC) I am NOT taking the position that there should necessarily be less such set asides but I don't think that attempts to estimate the real standard of living of people in such programs is unfair - and if such discussions are to take place, I think the different role of internet vs cable/sat TV are worth pointing out.

by AWalkerInTheCity on Dec 4, 2012 4:31 pm • linkreport

Someone with the spare funds to pay for Sat TV may well be far from a welfare queen, yet still have sufficient discretionary income to bring into question the level of certain benefits.

Questioned by whom? Us? We who feel as if should be able to dictate what "other" people spend their money on because they receive help from the gov't and make less than the rest of "us."

Having the ability to afford a house on your own w/o the help from gov't is a good thing...although that's rare. Assuming that people who make less than we do should limit their public utility options is a whole 'nother ball game, especially when you consider (in many cases) the rental rates for one month almost exceeds the monthly utility cost.

It's an apple to persimmon comparison.

by HogWash on Dec 4, 2012 4:53 pm • linkreport

Almost exceeds a year of utility costs

by HogWash on Dec 4, 2012 4:54 pm • linkreport

"We who feel as if should be able to dictate what "other" people spend their money on because they receive help from the gov't and make less than the rest of "us.""

we who pass on cable TV to save money, and who A. Pay taxes that go towards said govt help and B. face a housing market where market rate housing in TOD locations MIGHT be cheaper were there no IZ. We certainly have the right to determine whether we support the same amount of such programs, or more, or less. And seeing people consuming a luxury entertainment product that we pass on to save money does NOT inspire one to support more, I would say.

by AWalkerInTheCity on Dec 4, 2012 4:58 pm • linkreport

we who pass on cable TV to save money. And seeing people consuming a luxury entertainment product that we pass on to save money does NOT inspire one to support more, I would say.

Well I don't pass on cable tv to save money and the same likely applies for most who have access to it in their areas.

But you may have missed my point. You've essentially played a card right out of the GOP's playback. That is, "those people" don't pay taxes and have the nerve to have cable tv.

Since we already know they do pay taxes, it stands to reason that they should have say over how taxdollars are spent as well. Or are they excluded because they pay less?

by HogWash on Dec 4, 2012 5:15 pm • linkreport

Since where on the subject of affording housing without government help how many have loans (home, student, car etc) made possible by government subsidies, programs or anything that involves the government.

by kk on Dec 4, 2012 8:37 pm • linkreport

Is it the parking or the east-of-the-river location of the project that so many people here upset?

by ceefer66 on Dec 5, 2012 8:12 am • linkreport

This project is next to Howard University (hence the name), it is not east of the river.

by Alex B. on Dec 5, 2012 8:37 am • linkreport

@Ceefer

Nice one.

Regarding the satellite dishes and such, meh, I don't see much of an issue there. Even though many of these people shouldn't be getting it, it happens, and stopping it is impossible.

The 320 parking spots is a joke. Subsidized housing, sure, subsidized parking in an extremely well served transit area, absolutely not.

by Kyle-W on Dec 5, 2012 10:55 am • linkreport

Having the ability to afford a house on your own w/o the help from gov't is a good thing...although that's rare.

Judging by the outraged howls of protest that ensue any time a politician even suggests that she's thinking about considering eliminating the mortgage interest deduction, I'd say it goes well past rare - it's virtually nonexistent.

by dcd on Dec 5, 2012 11:34 am • linkreport

Judging by the outraged howls of protest that ensue any time a politician even suggests that she's thinking about considering eliminating the mortgage interest deduction, I'd say it goes well past rare - it's virtually nonexistent.

lol. Well I was being generous. But I doubt that homeowners see themselves as recipients of the govt's largess. Maybe others who receive gov't assistance (and pay taxes) should protest and start to dictate what those homeowners should and shouldn't buy. I mean, they are using our tax dollars.

by HogWash on Dec 5, 2012 3:02 pm • linkreport

Whatever you think of the mortgage interest deduction, lots of people pay taxes, rent, and do not benefit from it. Probably many of the owners who DO get that deduction could afford to rent a house or apartment without help.

By the way, I don't really know what the justification for the deduction is. Certainly I can see the case for limiting it. If that limit is to be debated, I don't see why the ability of those who take it to afford luxuries should be off limits. I beleive President Obama, in discussing raising tax rates on incomes above 250k, made the point that that would still leave rich people with lots of disposable income.

Why is it off limits to discuss how much disposable income is left to poorer people if housing set asides or similar are made less valuable? The point is not to say which luxuries they "should" be spending on - its to use the expenditure on any luxuries as an indicator of how poor they genuinely are.

by FreeMarketRenter on Dec 5, 2012 3:12 pm • linkreport

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