What’s So Special About View 14?
...I only ask the question because today a resolution came before the D.C. Council allowing View 14 to be exempt from up to $5.7 million in city taxes.
View 14 is an erstwhile condo project, turned apartment project, turned sitting construction site. It's located at the intersection of 14 Street and Florida Avenue.
Back in October, it was the subject of a story in the New York Times Key Magazine, one of the paper's fancy, sleek, clearly-oriented-to advertisement-dollars publications. The piece—"A Cure for the Condo Glut"—described how developers Jeff Blum and David Franco had wiggled their way out of a tough condo sales climate by converting the building to rentals, thereby performing "an act of real estate hocus-pocus that’s starting to become common," according to the story.
Favorable coverage, yes. But I walk by the site all the time, and haven't seen visible progress for months.
The emergency resolution, introduced by Ward 1 Councilmember Jim Graham, that came before the D.C. Council—and passed today—states that action is required to "avoid jeopardizing the success of View 14 given the current unfavorable economic climate and need to efficiently continue construction, and to avoid the imposition of certain real estate and gross sales taxes related to financing, refinancing, construction, equipping, furnishing, and operation of the View 14 Project."
Well, hmmm, aren't many projects in D.C. struggling with financial meltdown? The resolution states why View 14 is particularly worthy. The developers contributed $1 million to a nearby tenants' association that wanted to purchase their building. The partners also gave $40,000 collectively to several local groups: The Parent Association of the Boys & Girls Club of Greater Washington, The Children's Studio School at 13th and V Street N.W., the Meridian Hill Neighborhood Association, and the Cardozo Shaw Neighborhood Association.
Yeah, that's great and all. But what happens when the next charitable developer comes a-calling for a government handout?
5:57 pm
I'd love to see a link to this. The Perseus development- 14W- is the next to get this favorable tax treatment, I believe.
FWIW, I think it's a good idea. It's could basically be DC's answer to the stimulus package, since these projects create jobs (not only construction, but for the maintenance and retail once it's built). I think we should focus on Ward 5, 7, and 8 though and give hefty tax abatements to projects that need financing in those wards. Particularly if they involve significant retail. Retail provides tons of jobs and DC would be able to keep it in-house rather than leaking those $ and jobs to MD and VA.
9:34 am
Follow the money to see the trail from the developers to the Council members.
11:02 am
Ruth, you failed to mention who introduced the "emergency resolution." I mean I think we can all figure it out, but it would have been helpful to put that in your piece.
11:10 am
Right, right: Jim Graham, Ward 1 Councilmember
12:37 pm
The Perseus Development project already received similar favorable tax treatment back in December 2008 through the "14W AND THE YMCA ANTHONY BOWEN PROJECT REAL PROPERTY TAX EXEMPTION AND REAL PROPERTY TAX RELIEF EMERGENCY ACT OF 2008".
http://dccouncil.us/lims/legislation.aspx?LegNo=B17-1052&Description=14W-AND-THE-YMCA-ANTHONY-BOWEN-PROJECT-REAL-PROPERTY-TAX-EXEMPTION-AND-REAL-PROPERTY-TAX-RELIEF-EMERGENCY-ACT-OF-2008.&ID=21647
From the Washington Business Journal: http://www.bizjournals.com/washington/stories/2008/12/15/daily51.html
"The YMCA of Metropolitan Washington received 20 years of tax abatement and $1 million in forgone sales taxes on construction materials so it can redevelop its Anthony Bowen clubhouse at the corner of 14th and W Streets NW, the first YMCA for African-Americans in the country, into a mixed use project including 231 rental apartments, 12,000-square-feet of retail, 170 below grade parking spaces and a new 45,000-square-foot clubhouse"
2:04 pm
It would seem to me that the development team is strong enough to withstand the issues in this market. This property was not slated as a 100% affordable housing transaction and the developer is far from being a non-profit provider. If this deal "deserves" special dispensation from The Council and from Jim Graham, what deal is undeserving?
Just look at the web sites of the co-developers and ask yourself if they 'need' the help?
http://www.level2development.com
http://www.centrumproperties.com
FROM THE 2005 ORIGINAL PRESS RELEASE FOR VIEW 14:
Centrum Properties is a leading real estate developer based in Chicago, Illinois with over 5,000 residential condo units completed and in development throughout the country. “This will be our first project in the DC area,” said Dan Tucker of Centrum Properties, “we waited for the right project to come along and this is it. View14 will be a landmark project in the hot 14th and U corridor and we are excited to be a part of it.”
For additional information, please contact David Franco or Jeff Blum at 202-483-1110.
2:07 pm
The Perseus Development project already received similar favorable tax treatment back in December 2008 through the “14W AND THE YMCA ANTHONY BOWEN PROJECT REAL PROPERTY TAX EXEMPTION AND REAL PROPERTY TAX RELIEF EMERGENCY ACT OF 2008″.
http://dccouncil.us/lims/legislation.aspx?LegNo=B17-1052&Description=14W-AND-THE-YMCA-ANTHONY-BOWEN-PROJECT-REAL-PROPERTY-TAX-EXEMPTION-AND-REAL-PROPERTY-TAX-RELIEF-EMERGENCY-ACT-OF-2008.&ID=21647
From the Washington Business Journal: http://www.bizjournals.com/washington/stories/2008/12/15/daily51.html
“The YMCA of Metropolitan Washington received 20 years of tax abatement and $1 million in forgone sales taxes on construction materials so it can redevelop its Anthony Bowen clubhouse at the corner of 14th and W Streets NW, the first YMCA for African-Americans in the country, into a mixed use project including 231 rental apartments, 12,000-square-feet of retail, 170 below grade parking spaces and a new 45,000-square-foot clubhouse”
7:01 pm
Ruth,
This is terrible reporting. The building was coming out of the ground in December. Since then they have "topped off" and are now framing for windows and putting on brick. It's made a ton of progress. Your reporting is entirely based on conjecture with no basis for fact. You clearly don't understand development and construction timing in the slightest.
As for the tax exemption that's another issue on the whole. However, should the project be in financial duress, I argue that the District is better off giving a tax exemption, having a viable rental building and new residents and getting the ensuing property tax revenue, rather than having a vacant failed project. I'm not saying that this will happen were the resolution not passed, but in principal it makes sense.
Brant
9:51 am
@ Brant -- With the so-called exemption, would it not make more sense for the government to provide a deferral of the taxes [interest bearing or not is not so important] [TARP2?] where the developer is on the hook to make payment of those taxes when and if there is profit / cash flow down the road? This way the rightful obligations are paid to the government before the developer is provided with profits.
If there is no standard requiring repayment [even non-recourse], there are few buildings going up without some level of stress and as a result should they not each get the same sort of treatment that the principals of Level2 and Centrum seem to be receiving?
2:45 pm
My comment primarily took issue with the bias involved in the original reporting, rather than the structural vehicle used to give the tax exemptions. The reporting was not accurate and paints a picture that construction has stopped and the project is unlikely to be completed, which is simply not the case.
I haven't read the legislation and am not really in a position to opine on whether or not it makes financial sense for the District government to grant this exemption. That being said, a successfully completed project with it's improved land values (which are taxed) and several hundred new tax payers can only be a boon to the District's coffers.