Should Anacostia Businesses Get Steep, Long-Term Tax Abatements?
Councilmember Marion Barry wants to make it easier to open a business in Anacostia. To do that, he’s proposed a bill that would slash taxes for 20 years on businesses within a 1,500-foot radius of the Anacostia metro station: Making sit-down restaurants (not fast-food restaurants) exempt from 50 percent of sales taxes, freezing personal property taxes at approximately 2010 levels, and cutting income taxes for all businesses by 25 percent.
The property owners there think it’s a great idea. At this morning’s hearing in the committee on finance and revenue, Richard Powell, who runs the Heavy Equipment Training Academy within that zone—branded the “Poplar Point Business Corridor”—called Barry's bill “the area’s best chance to ignite economic progress.” And Fred Greene, who helped develop Gallery Place in Chinatown, reminded Councilmembers that the mixed-use project would never have happened without city tax incentives.
The D.C. Fiscal Policy Institute, however, issued a strong warning against giving away so much of the tax base for such a long time. “It’s an incredibly blunt economic development tool,” said DCFPI director Ed Lazere, speaking quickly to get all his reasoning in. “There's no defined cost here. The cost could explode.”
Grocery store tax incentives, he said, hadn’t proven to be a dealmaker in previous instances (indeed, Yes! Organic Market developer Tim Chapman was also at the hearing this morning to ask for additional property tax breaks for his project at 2300 Pennsylvania Avenue SE). Lazere suggested a more targeted approach, setting up a fund to help businesses that could really use a boost to locate in the area.
Barry was having none of it.
“Investors are going to invest where they think they can make the most money,” Barry said, starting a lecture after arriving characteristically late. “It's the proper role of government to subsidize these projects...I reject outright any objection to these projects. It's not fair to the residents of Ward 8.”
“Ed Lazere, don't come down here again with that kind of nonsense,” Barry finished. “Just don't do it.”
Anacostia isn't the only one looking for tax breaks. The Committee also heard from backers of a special tax district on Rhode Island Avenue and North Capitol Streets which would put a freeze on property taxes for the next five years in order to encourage small, local neighborhood developments. Councilmember Harry Thomas supported this Ward 5 measure as vehemently as Barry had supported the one in Ward 8.
For his part, Committee chairman Jack Evans seemed torn, wanting to support businesses while issuing a stern warning at the top of the hearing that the spending needs to stop.
“This government has put us financially in jeopardy by passing the budget that we just passed,” said Evans, noting that the D.C. government will now have to borrow more than it ever has, ever. “And it's everybody's fault. Because nobody wanted to say no.”