Housing Complex

Ian Schrager’s Adams Morgan Hotel Just Waiting on its Tax Abatement

Does the city need to kick in millions of dollars to bring this back to life?

Does the city need to kick in millions of dollars to bring this back to life?

For a while now, the City Paper's landlord has been planning to turn the First Chuch of Christ Scientist on the corner of Euclid and Champlain Street NW into a boutique hotel and restaurant, in a massive project that could wake up the sometimes-sleepy Adams Morgan daytime scene (perhaps even making up for the loss of the staff of this august publication). Today, Michael Neibauer reports that Ward 1 Councilmember Jim Graham is proposing a 15-year property tax break that could be worth $21 million–something that Chief Financial Officer Nat Gandhi might be reluctant to grant.

Despite the District's tight financial situation, developer Brian Friedman argues that since every other hotel has gotten tax relief, shouldn't his project–called "The Edition"–get one as well?

“It’s like any other hotel built in this city,” said Friedman. “There’s always a subsidy. This thing is ready in every aspect from food and beverage to the gym and spa and retail. All those things are in place.”

The very nature of this project would be a community benefit–more activity on that corner, more traffic for a commercial strip where it seems like another shopfront goes dark every week. But a high-end hotel doesn't offer other things the city usually asks for in exchange for tax relief, like affordable housing or some element of public accessibility (though Friedman has said he'd kick in a few thousand square feet of non-profit office space). And this isn't a needy developer: The hotel would be the next in a 100-hotel chain planned by New York hotelier Ian Schrager and Marriott, which started in Waikiki and is now expanding in Istanbul, Barcelona, Mexico City, Bangkok, and South Beach. I doubt that they asked for tax incentives in all of those cities. But in D.C., since tax relief is the norm rather than the exception, developers can simply say that if they don't get their abatement, they'll walk.

Yes, there are some projects that need the city's help to get off the ground. Ideally, the city then leverages community benefits for the citizens of D.C.–but often, as with the TIF-funded Mandarin Hotel, they just take the money and screw the city's requirements. In handing out tax breaks so freely, the city has backed itself into a corner, with little ground to stand on when it comes to playing development chicken. No politician wants to be the one who scuttles a neighborhood's crack at prosperity, and there are plenty of other neighborhoods for Schrager to put his hotel. So on this one, I'm giving him good odds.

  • John

    I think this project will certainly be a boon for Adams Morgan and I'm all for a subsidy. But how bout cutting them a break for say, 5 years? I feel like DC has some weak negotiators. Either way I hope this comes to fruition. If I was visiting DC Adams Morgan would be the kind of hood I'd want to stay in. "The Edition" sounds hella douchy though. I guess they are going for the guido demographic. I think they would be better off as a laid back arts hotel with an accessible restaurant with a champagne brunch.

  • Jason

    Is the building currently in use, for any reason? If not, how long has it been sitting idle?

  • Diggums

    Too bad none of the canidates for Ward One Council talked about the problems around Jim Graham's repeated use of long term tax abatements at the U Street Debate last week.....oh wait they did.....Housing Complex just didn't think those "Critiques" would "Stick"

  • MtP

    @Diggums,

    "they just take the money and screw the city’s requirements. In handing out tax breaks so freely, the city has backed itself into a corner, with little ground to stand on when it comes to playing development chicken. No politician wants to be the one who scuttles a neighborhood’s crack at prosperity"

    Really!

    How is it that the Afro-American picked up Bryan Weaver quotes talking about this very problem at the debate but City Paper didn't....bring back DeBonis!!

  • SG

    This would be a transformative project for Adams Morgan, and worth every bit of a tax abatement. What most people don't realize is that these projects actually make money for the city- that is, more than it is currently generating as a small office building and empty church. There are few uses for defunct churches of this size other than- another church (already an oversupply), concert venue (unlikely and controversial), or condos (very difficult to do). SO you return this property to productive use with great density, employ hundreds of people, and bring crucial daytime business to Adams Morgan. This isn't the same as bringing a hotel to an already-bustling downtown, where the land would be developed with or without an abatement eventually. This is a complicated, ambitious project that brings quality to a neighborhood that frankly needs a shot of energy. I really hope the council agrees to this abatement.

  • MtP

    @SG Agreed on this project. This guy has a very progressive PUD that he worked out with the Adams Morgan ANC. (negotiated by the earlier mentioned Bryan Weaver) The overall problem is that we have no indpendent agency that looks at the long term financial impact of tax abatements.

  • DB

    fiscal impact studies are useful, but often wholly fantasized nonsense (like the latest on McMillan reservoir... estimates just pulled out of the air).

    *An* abatement (not necessarily this abatement) *might* be of benefit to the community *if* it actually is (balancing cost/benefit).

    Such trades aren't inherently in the black. They are if they are.

    Will the city pull in more than $21M in sales tax & income tax in 15 years?

  • AMTaxpayer

    What are the odds of this getting substantial tax abatements?

    Simply check Councilman Graham's campaign contributors.

    When Friedman and Schrager and their friends, family and LLC's have bundled together huge donations into Graham's coffers then they will have a bulldog advocate working to award them millions in tax abatements.

    See Donatelli Development, Perseus Realty and David Franco projects in Ward One and follow all of the pay-to-play action.

  • Korrupt

    Vote Jim Graham out of office in September!

  • Rick Mangus

    How cozy, how cozy indeed!

  • SG

    DB- with a working knowledge of just how easy it would be to get to that $21M, it's in the bag. Only one project in the history of the city has not met its TIF predictions (West Elm, but now those are being covered by Forever 21, which will gross far, far more, and easily cover the payments).

    Did you know that the Nationals Stadium generates, above and beyond the city's debt service payments, over $10M per year for the city? And that's with mediocre attendance. A winning team packing the house every night will generate even more.

    For whatever reason (reflexive anti-business sentiment that seems to prevail now?), TIFs and abatements seem to have become a hot topic for hatred, even though they've done more to develop the city over the last 12 years than anything besides the federal government itself. A quick look at reality suggests that they pay for themselves and creative economic activity where none existed- and did it more quickly than if we simply left it to the "free market" (in which companies have natural biases against areas they consider blighted or undesirable or just too much effort to do business, and therefore won't make a unilateral investment).

  • a

    i'm not against this project, or even for tax easements on some business, but how exactly would this be a "boon" or a "transformative project" for adams morgan?

  • Mtp

    Day time business. But are we sure that Marriott couldn't fund this on their own?

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