First, Get Tax Break. Then, Flip Building for $60 Million.
Here's one to make a tax break hawk's blood boil: The Costar Group, to which the D.C. Council granted $6.1 million in tax breaks over a ten-year period in exchange for moving to the District from Bethesda, announced today that it will flip the downtown D.C. building it then bought for a profit of $60 million. Talk about incentives!
On the one hand, who cares? CoStar, a real estate data company, made a savvy real estate decision and capitalized on D.C.'s robust office recovery by selling the building to a German property fund manager for $101 million. The District will even make another $1.464 million off the deal from the deed recordation tax.
On the other hand, a cynical person might wonder whether CoStar's pleas of financial hardship should it move to the District might have been a little overblown, if it could have forecasted such a windfall profit from the sale. D.C.'s corporate income tax might be high relative to surrounding jurisdictions, but CoStar would have had a much harder time coming by such a phenomenal real estate deal in the suburbs. One can hardly blame the company for being a smooth operator–it's the Council that ends up looking like the rube.
Oh, and did I mention that $6.1 million was only a little more than what it took CoStar CEO Andrew Florance to upgrade from Chevy Chase, where he sold a house for $1.9 million, to new digs in Cleveland Park?