Since January, 2003
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From Tuesday's Washington Post, confirmation at last at what has been reported since 2002, but with a bit of a twist:
"Whole Foods Market and a D.C. real estate firm are interested in building a new store in Southeast Washington near Nationals Park, but the developer says that luring the grocer would require $8 million in tax breaks. William C. Smith and Co. is proposing a 39,000-square-foot Whole Foods for 800 New Jersey Ave. SE as part of a building that would include 375 apartments."
More: "Smith said the $800,000 annual tax break would cover requests by Whole Foods including an additional level of underground parking, extra elevators and higher ceilings on the bottom floor. Without the tax break, he said, he would either wait to develop the site or build a smaller apartment building with little or no retail."
Tax breaks for developments are being requested more frequently during this Era of Economic Difficulties, but the city's own financial troubles, and the amount of assistance that has been going to Ward 6 in comparison to other parts of the city, may make a request like this a tough sell, the article says.
There are already plans to bring a not-officially-named grocery store (*cough*Harris Teeter*cough*) to the neighborhood perhaps in 2013 at 4th and M in the Yards. This Whole Foods site, though, would also be a draw not only for Near Southeast residents but for folks on the south side of Capitol Hill, given its location just on the other side of the Southeast Freeway. You can see some photos of the site here.
WC Smith has been planning a four-building, 1.1-million square foot office/residential/retail project on this block (Square 737) for some time. The transfer of a small plot of land known Reservation 17A was finally completed last year from the Feds to the city, clearing a long-time bureaucratic hurdle to getting the site redeveloped. (This will also allow I Street to be built through between 2nd and New Jersey once the DPW building just to the south is demolished, which may happen this year.)
There has been chatter over the past few months that Smith was pitching the entire site for the 1.1-million-square-foot Department of Homeland Security lease that GSA currently has out for bid--this movement on getting a residential building started might seem to signal a shift from that possibility, along with being another indication that developers are sensing Near Southeast is a strong residential market.
This lot is next to 225 Virginia Avenue, the old Star/Post plant that is hours away from starting its transformation into 200 I Street, which will be home to three city agencies when its "re-skinning" and renovation is completed within the next two years.
(A note: The article says that WC Smith purchased the land from the Post in 2000 for $50 million; I think a decimal point got lost somewhere, because DC Property Records say that the lot, which used to be home to an old warehouse owned by the Washington Star and then the Washington Post, sold for $50,000 in December 1999. That number might not be right either, but considering that even now, in a completely changed neighborhood 11 years later, the 800 New Jersey land is assessed at just over $19 million $58 million, I doubt that Smith paid $50 million. [UPDATED because I looked at only one assessment record instead of three.] The WC Smith parcels were assessed at about $2.5 million in 2001, the oldest records that I have.)
Comments (91)
 More About WC Smith/Square 737 Home


SE_Resident says: (2/14/11 10:47 PM)
This would be amazing for the neighborhood! I think the New Jersey location is much better than the one on 4th street for actual residents of Near Southeast. The 4th street location would benefit workers at DOT, but a Whole Foods on New Jersey would be perfectly situated for people living in Capitol Quarter, Axiom, Capitol Hill Tower and Velocity.

I think this would also bridge the gap between Capitol Hill and Near Southeast as more people from north of the highway would make their way southward more often for shopping and possibly restaurants.

I hope this deal gets made!

JD says: (2/14/11 10:51 PM)
(Just an aside--don't forget that eventually The Yards will be chock full of residential offerings, so a Harris Teeter at 4th and M will have plenty of non-office-workers to patronize it, down the road.)

JOT says: (2/15/11 1:40 AM)
I think a Whole Foods would be a vote of confidence for the neighborhood. Also, it seems like dirt cheap for an $8 million dollar tax abatement over 10 years if the promised new development would bring in $11.5 million in other taxes annually (income taxes from new residents and sales taxes from the new store). Of course, everyone wouldn't be a new DC resident, but the promise of at least some is enough. Even if those estimates end up being too rosy and it brought in just about half of that ($5 million or so), it would still be a net win for the District. An $800,000 tax annual abatement in exchange for between $5 million and $11.5 million in new taxes.

Also, maybe the development will be all residential since the WaPo article suggests 4 buildings with about 1,100 units.

5th Street says: (2/15/11 8:48 AM)
I am a major fan of Whole Foods and as a property owner blocks from the proposed new location this would likely increase the market value of my property. Thus I would support a Whole Foods store but not on the backs of taxpayers and the community. Near SE has enough of a draw to bring more business to the area without heavy subsidies in the form of tax breaks. I know it’s taken longer than most of us wanted it to take to get businesses opening up in this area but a lot of that had to do with the economy, the banking collapse, large properties going into foreclosure and the high retail rent prices in the neighborhood (which make it hard for small businesses to open).

Its time that we get our financials in order in DC. We are already cutting services and the district is talking about raising personal income taxes on higher income individuals. This $8 million tax break is not going to end the need for more reductions but it definitely doesn’t help. How many other projects in the city are we subsidizing? What is the total lost in tax revenue for all of those projects?

My recommendation is we focus on continuing to overall DCRA so a business can open its doors without major headaches or a landowner can rent their house without jumping through hoops. Reform, reduction in regulations and overall increase in the speed of approval (e.g. DCRA) will stimulate the economy.

G says: (2/15/11 9:30 AM)
A $800,000 annual tax break is a drop in the bucket for D.C.

That's basically the salary of nine D.C. school teachers... And, as D.C. recently was ordered to hire back 75 of their absolute WORST teachers (all fired), one shudders at the costs of keeping this deadwood on the tax rolls forever (jobs for life).

At least the Whole Foods brings tax revenue and the apartment building brings property taxes back to the community.

Go over to Clarendon, Virginia sometime and see the Whole Foods over there and the surrounding neighborhood - fantastic. They don't locate their stores in war zones.

Will says: (2/15/11 9:47 AM)
A new Whole Foods sounds promising for the hood. Yet, I've never understood this statement:

"I know it’s taken longer than most of us wanted it to take to get businesses opening up in this area..."

Perhaps it's because we moved in after the downturn, but my wife and I continue to be impressed with Near SE developments. What did other folks expect?

Alan says: (2/15/11 9:49 AM)
I'm fine with the tax abatements under one condition: they don't kick in until the 4th or 5th year of occupancy. I think it's a reasonable request of a developer and a legitimate compromise.

JW says: (2/15/11 9:56 AM)
Those that live in Near Southeast benefit from an abundance of tax breaks. EYA received millions in grants, bonding and other tax breaks. Those by and large have been successful draws for investment. An $8 million tax break is large and is the opening bid so they might take a $6 million break in the end. Those that live in Near Southeast are likely there because of the benefits investors and developers received. Therefore I hope the council approves this deal.

F says: (2/15/11 10:04 AM)
The tax breaks are essentially investmenst the city is making in rebuilding the city. Eventually, the taxes collected from new residents (including those in the apartments colocated with Whole Foods) ocer time will dwarf these tax breaks. The important thing is to bring in the right type of establishments, which I think Whole Foods represents. Whole Foods generally takes a long term approach to its stores and I like the idea that it will connect Near SE with the rest of Capitol Hill. I would rather see a Whole Foods there than a series of sandwich shops and fast food locations.

Mark says: (2/15/11 10:45 AM)
Neighbors -

Tax breaks may sound expensive (particularly when the total is considered and not the by year amount), but when you consider:

1) the increased tax revenue from the store itself;

2) the increased traffic into the area - and the resulting increase in the number of additional stores and restaurants that will result from the addition of a Whole Foods as a "magnet" store (and all of the resulting taxes from those entities);

3) the increased value of the surrounding property (and increased property taxes);

4) the increased interest in offices and individuals relocating to the area due - particularly when this magnet store has an established track record of doing all of the above, the $800,000 per year tax break is a fantasitc investment for the city to make.

And, let's not loose sight of what the tax break is: it is an investment by the city in the future of DC, and this investment is sure to pay off for the city and for all of JD Land.

I for one will be contacting my councilmember, the chairman of the council, and the councilmembers at large and encourging them to vote in favor of this investment in the future of DC and of Near SE. I recommend that everyone else interested in continuing to improve our hood do the same.


b says: (2/15/11 10:52 AM)
WF scuttlebut in this vicinity is old news to some, but the word I had was closer to NJ & L

BillP says: (2/15/11 11:11 AM)
I am curious as to what tax breaks are associated with the grocery project at 401M. Given the amount of new urban grocery projects in the past few years, the market for this sort of thing should be fairly well established. If $8M over 10 yrs is the going rate (or at least within the range of going rates) then it should be enthusiastically supported. If, however, this is much larger than the established subsidy for similar projects, it should be negotiated downward or, if that is not possible, rejected.

As taxpayers of the District in addition to residents of near SE, we cannot allow a developer to dangle the Whole Foods carrot (organic, no doubt) in front of us to yield a disproportionately large tax subsidy for their overall project. I will wholeheartedly support the project if it falls within established parameters but we non-RE people should not just pull $8M out of the air and say that is a reasonable amount without further research.

I am hopeful that Councilman Wells and his office will do the necessary due diligence to strike the appropriate balance between greatly-desired development and fiscal responsibility.

MJM says: (2/15/11 11:16 AM)
How many people on here who own property (and live w/in the CapRvfrnt BID) pay a BID tax each year? Not many. The folks in Cap Qrtr (aka 'public housing') don't pay because they received public money to build those homes - so they get a free ride. Yet they reap the same benefits (BID events, free movies, etc) of those of us who do pay. So tax breaks for this Whole Foods is the same thing - it doesn't benefit all the people who will have to pay for this store - is someone from NW gonna come down to SE to shop? Guess same thing could be said about the stadium but different story.

Rhetorical questions: Is FCE asking for tax breaks for the Harris Teeter/Fitness center? Can I get huge tax breaks if I want to start a small business in the area - probably not. Does this tax break also relieve or reduce WC Smith’s BID tax? Problem is only a few people pay for these benefits yet all don't have to pay yet they get all the benefits. Did any other Whole Foods in the area to include Arlington receive tax breaks? Is Wal-Mart or Giant or any other new ‘box’ store getting tax breaks? Is the funding for Giant (link below) for the housing piece that is getting city help for O St Market?

Whole Foods would be a huge boost and would like to see one but at the same time sounds like WC Smith is blackmailing by saying we don't get what we want we won't bring Whole Foods and we will provide less ground floor retail. I'm for tax incentives to bring business into areas that really need help (like east of the river) but eventually the way the DC govt is set-up something is gonna give and it will be either higher property taxes or sales tax or something else to fund these unneeded breaks (is this the right time with deficits?). Just coupled with the 'outstanding' teachers DC may have to higher back that quickly adds up to $15.5 million.



MJM says: (2/15/11 11:17 AM)
Mark, why don't you contact the BID and the council and say you want to pay CapitolRiverfront BID taxes each year while you are contacting them.

JD says: (2/15/11 11:28 AM)
It's not going to be by New Jersey and L.

BillP says: (2/15/11 12:02 PM)
@MJM - commercial real estate owners pay the BID tax in the Cap Riverfront and all other areas of the District having BIDs. presumably, all or part of those costs are passed along to their tenants via rents.

also @MJM - your notion of CQ homeowners getting a "free ride" is ludicrous. we pay DC property taxes every year based on the market rate sale prices. how many other cap riverfront residents pay property tax on $700k - $800k + of assessed value per year?

MJM says: (2/15/11 12:17 PM)
BillP - true and it is on assessed property value so depends on how that tax break is packaged. So if their assessed property value is lower than $800K WC Smith is also paying less BID tax. But not sure on the tax break details but its an open question.

Oh, so just because you pay $700K means you shouldn't pay a BID tax? Don't go around thinking everyone isn't paying $700K in the hood and I pay property tax too. Did you attend one of the free movies I paid for? Or the farmer's market that my BID tax went to help pay for? Or any of the other BID events? Just asking...

BillP says: (2/15/11 12:27 PM)
@MJM - first, you are correct that if the assessed value of the WC Smith bldg is $800k lower as a result of the proposed abatement, they would pay less BID tax as well.

second, i don't follow your logic w/r/t BID tax and CQ property owners. no single-family homeowners within this area pay a BID tax.

MJM says: (2/15/11 12:29 PM)
But the point is not the BID tax - its how some folks pay for something that others will benefit from. The tax base from NW will pay a larger share of the $800K a year than Near-SE residents will pay but yet we get to get high-priced organic food.

MJM says: (2/15/11 12:31 PM)
The folks in CHT and Velocity pay BID taxes. Only a few property owners pay the tax and a lot are exempt because of where they live or what they live in. CQ residents don't pay the tax because the houses were built with public funds.

m says: (2/15/11 12:46 PM)
MJM, are you sure that Cap Quarter doesn't pay BID b/c of the public money used in the H6 development? I thought residential property was exempt from BID taxes, unless there was a commercial component to the property (which both CHT and Velocity have, which is why they have to pay). I may be wrong, but my understanding seems to match the basic BID taxing explanation on ( link

Jay says: (2/15/11 1:17 PM)
I think the fact that the Capitol Riverfront is starting to see development start back up again is a good thing (Akridge Residential across from the ballpark, Foundry Lofts, 200 I Bldg, Cap Qrtr Phase 2, 401 M St). Now add WC Smith to the mix with more residential plus a Whole Foods. If DC can make this deal happen, this may just be the spark the area needs to get the Half Street development totally underway. Everyone who's been following this area for the past few years should know that the Half Street projects are the ones that will complete the area. Imagine the Verizon Center.... Half Street will be better once completed.

C says: (2/15/11 1:52 PM)
Would you please tell us why you said construction of canal park would begin today - simply commentary from your earlier reporting of a mid-February start or something else? Confused.

MJM says: (2/15/11 1:56 PM)
To the people in CQ - have you ever gotten a BID tax in the mail? And whether you want to call it public housing CQ is exactly that: "publically subsidized housing is not subject to the BID tax."

Half St is the center piece to the area and Canal Park will be a gem. Not sure you really need incentive to bring anything else. Looks like things are moving along with tax credits. But why does WF need a tax break and FCE/HT doesn't (or are they getting tax breaks).

BillP says: (2/15/11 1:58 PM)
@m - the funding of CQ has nothing to do with why the residents do not pay a BID tax. as you noted, residential property appears exempt from BID tax according to the DC website you linked.

if CHT and velocity are the exceptions to this rule, their residents should take issue either with their particular property or this particular BID, not their other neighbors who simply fall into the general rule that residential property owners do not pay BID taxes.

JD says: (2/15/11 2:03 PM)
Curt, I never said Canal Park construction would begin today. That was DCMud. I never linked to their report (though I did reference their mention of Feb. 15 as a start date in a tweet), because I had a strong suspicion that they would be wrong, as they nearly always are.

See my post from last night about "end of the month" for the start of digging, as said at the ANC meeting.

I know better than to ever tie an exact date to a construction start.

Sorry to disappoint you for wanting so badly for me to be wrong.

MJM says: (2/15/11 2:07 PM)
BillP - CQ is 'public housing' and by law can not be charged a BID tax. I'm a property owner and pay. You are a property owner and do not pay. The people in units with less than 10 units (rowhomes) do not pay. The funding of CQ has everything to do with not paying. Its not an even tax yet we all pay property tax.

No issue with the neighbors, its a point of getting others, through a tax break, to pay for us to have a WF when the tax break is probably not needed. The rent is probably too high for WF and they want a lower rent and the way to do that is hold hostage the development and seek to lower costs.

C says: (2/15/11 2:12 PM)
sorry Jacqueline was really just curious

B says: (2/15/11 2:20 PM)
All good points...99.9 percent of residents in residential buildings with over ten units (CHT and Velocity) have zero commercial interests in the area and yet are subsidizing the BID efforts to attract business and residents. Thats not to say that attracting residents and business is a bad thing...the burden should be shared by all residents...just likes shared by all commercial interests...or not at all. BID programming and efforts directly benefit everyone whether through facilitation of business or neighborhood programming for residents.

Since the bylaws established these rules three or four years might be time to revisit them since there are residents in the velocity and CHT now who may care this is happening. And frankly- shared burden is a good thing. As a CQ resident there IS incentive to pay the tax.

Do apt renters have to pay the BID tax?

B says: (2/15/11 2:26 PM)
that being said I realize this thread is about the whole foods and not the BID.

And on that- I am with Mark. Very eloquently stated.

JD says: (2/15/11 2:40 PM)
Don't stop, I'm finding all this discussion of all kinds of taxes totally fascinating! (and that's maybe only slightly sarcastic :-) )

Paul says: (2/15/11 2:42 PM)
Didn't a site in Adams Morgan recently get awarded a $34 tax abatement for a hotel? This $8 million abatement is fantastic deal in comparison. Whole Foods would be a great investment for the neighborhood.

BillP says: (2/15/11 2:55 PM)
@MJM - you continue to characterize all of CQ as "public housing" when that is definitely not the case.

some units within the CQ footprint are "public housing" in that they are owned and rented by DCHA. as these units are owned by the District, they were obviously publicly financed. since no US or District owned property can be subject to ANY tax in the District, it is also exempt from the BID tax.

other homes within CQ were sold at market rates and were not publicly financed and are, in no way shape or form, "public housing." these homes, just like EVERY OTHER single-family residence that falls within the boundaries of the Cap Riverfront BID, is exempt from BID tax. existing homes, such as those directly to the south and east of Cornercopia, do not pay the BID tax either.

CQ owners do not pay the BID tax because that is the general rule for residential properties throughout the city, not because of any mythical preferential status granted to CQ.

your issue should be why CHT and velocity owners are liable for the BID tax while NONE OF THE OTHER residential owners within the BID boundaries are liable for the BID tax.

BillP says: (2/15/11 2:57 PM)
@JD - sorry for my role in the tax hijack. as a tax professional and CPA by trade, i feel oddly compelled to correct misstatements about tax policy!

JD says: (2/15/11 3:00 PM)
@Bill, don't worry about it. I'm just seeing it all as blah blah blah TAX blah blah Whole Foods blah blah blah BID blah blah TAX blah blah blah. :)

But really, I think it's a good discussion, and I'm not worried about it being "off-topic." (Not sure I've ever really brought down the Off Topic Hammer anyway. Though I always reserve the right!)

Continue on.

B says: (2/15/11 3:16 PM)
"Your issue should be why CHT and velocity owners are liable for the BID tax while NONE OF THE OTHER residential owners within the BID boundaries are liable for the BID tax."

Exactly. Why is that? We should revisit the bylaw given that there are actually residents around now to represent those persons in units with 10 units or more. I believe there is a voting member of the BID that is supposed to represent those individuals...

Wholefoods. Yes. Good.

CA says: (2/15/11 4:13 PM)
Am I incorrect in believing that CQ residents pay a monthly fee for garbage, common areas, etc? If so, this sounds like an "association" of some type where there are common areas has more than 10 residences. I would therefore believe these should not be considered single residences and should have the same consideration as CHT and Velocity and therefore be required to pay the Bid tax, minus the "public housing" residents. Maybe this is something to be looked in to by someone with more free time than I.

MJM says: (2/15/11 4:34 PM)
The BID tax was an example of some paying for what others dont pay and use - i.e. $8M of the tax break would be paid by most people who won't use the WF, right?

So then why does Velocity pay a BID tax and CQ doesn't - they are both real property? BID has already said that they can't charge CQ a BID tax because of the funding used to build the homes. Call CQ what you want but it gets lumped together under a protective umbrella of public housing, right? And they can't change it because of the DC Council by-laws so yeah that can be changed but as "B" put it, sharing across the board would be nice to see but who is gonna impose a tax upon themselves.

(But to keep the off-topic going a little more :)
Which part does CQ fall under since they are exempt? C or D or C&D)
(18) "Nonexempt real property" means real property that is not exempt from paying real property taxes pursuant to Chapter 10 of Title 47, is not residential property, and is not the residential
portion of a property used for both residential and nonresidential purposes; except, in the case of the Mount Vernon Triangle BID, NoMa BID, or Capitol Riverfront BID, "nonexempt real property" means
real property that is neither:
(A) Exemptfrom paying real property taxes pursuant to Chapter 10 of Title 47;
(B) A residential building where, upon March 17, 2005, 90% or more of the leased units are restricted to households with at least one individual of 62 years of age or older and all individuals of 55 years of age or older;
(C) A residential building where, upon March 17, 2005, 20% or more of the units are subject to a
contract for project-based assistance under Section 8 of the United States Housing Act of 1937; nor
(D) A residential building with fewer than ten residential units.

BLUF: BillP I totally agree with you that WC Smith is holding hostage development with this $8M tax break and the council needs to review this. WF would be great and I hope they build it but it can be done without the tax break. Its interesting because WF brought in over $2B in revenue last year. This city has enough money problems and $800K a year will be made up somewhere else....

m says: (2/15/11 4:59 PM)
MJM-Definitely not (C), since (C) is referencing a very specific type of subsidized housing that is not being used in CQ (Section 8 homeownership vouchers and public housing are being used for the subsidized units in CQ, not project-based Section 8 rental assistance). (D) appears to be the appropriate exemption for the market-rate CQ units and surrounding non-CQ row homes and small apartment buildings (on 3rd and the other side of 8th). If you eliminated that exemption, all of your CQ neighbors and surrounding row home neighbors would be subject to the tax and the BID could either lower rates for everyone or get a fair bit more money.

Rob says: (2/15/11 6:13 PM)
I bet CSX doesn't pay a BID tax either. :)

jg says: (2/15/11 6:27 PM)
We all pay taxes for lots of things that none we don't actually use. I don't attend or have a family member attend DC public schools, but my taxes still support them. There's a legitimate debate to be had over whether WC Smith should receive an $8M tax break, but there are better grounds to argue the point than "some people who pay taxes won't shop there"

Michael says: (2/15/11 8:13 PM)
Has Whole Foods or Safeway (such as what's on P St or in City Vista) gotten similar or different tax abatements?

Mark says: (2/15/11 8:19 PM)
The irony to me in all of the griping about the BID "tax" is that the BID serves exactly the same purpose as the potential tax break Whole Paycheck might receive: it's an investment in the future.

Folks created the BID and pay for the BID because they believe that it will increase the value of the neighborhood - and their investments. That is exactly why the City might be interested in providing a tax break to WF - they city may believe that doing so will have a net positive effect.

B says: (2/15/11 9:26 PM)
Mark hits it on the head again.

Its not the TAX that's the issue- its the shared interest we all have in seeing the neighborhood appreciate in value and diversity. That shared interest should see a contribution from everyone.

I make an assumption when I say that the BID tax bylaw concerning residents with 10 units and above was intended for the owners of all the apartment buildings in the area, ie making sure that developers and management companies contributed to improving the area through the active management by the BID even though their stakes weren't "commercial". Continuing through using that logic current renters don't pay the BID tax, the apt owners do. Somehow, condos got overseen in that by-law or no one with a vested interest was around to speak up when the BID was established. I bet single family home owners would not have been more excited by the idea of having HOA fees, property tax, a mortgage AND a BID tax. Well, condo owners shouldn't be none too happy with it either.

I wonder- and I would poll this- how many HUD-1(s) show a "BID tax" for condo purchasers buying in CHT or Velocity. And then if it DOESNT show it, what recourse a current owner has since that cost wasnt disclosed. Additionally, I don't think explaining to a condo owner the current language of the by-law is an acceptable way forward, but rather a reason to initiate a change in the law itself. Either we all invest in the BID and it's shared purpose or we don't.

I take issue with the argument concerning "We all pay taxes for lots of things that we don't actually use. I don't attend or have a family member attend DC public schools, but my taxes still support them".

The underlying assumption in that argument is that one doesn't reap ANY services from property taxes (that help pay for city "stuff"), but in fact the roads, the public transpo (metro), public safety, etc. are all services for the public good. Therefore one IS getting services when paying into the city "money" pool. The difference between property tax and BID tax is that not everyone is paying into it but everyone is deriving some benefit, residents and commercial interests alike in this neighborhood.

To summarize, the Wholefoods tax is a way to subsidize development of a premium grocery store that will drive growth and development in the neighborhood (and beyond...Capitol Hill residents all of a sudden want to walk under the freeway....maybe it'll be because of the new artwork under there :o)...). I have only empirical data but I believe the body of information out there reflects that Wholefoods is "good" for development. Prove me wrong or substantiate that there is another viable perspective on this. It's something to improve our collective self interests and build upon our presumed desire to see the Capital Riverfront bear fruit as an investment, as a vision and as a neighborhood. The fact DC may even consider HELPING us do that by taxing the WHOLE city- is a gift. We SHOULD think about taxing ourselves and leveraging the BID to attract businesses (like wholefoods). That's the whole point- but we should share that burden equitably.

B says: (2/15/11 9:51 PM)
As an aside- if you own in the Velocity- just a bit of history:

The developer was straddled with the BID tax for the building this year and then had the city of DC actually tax each individual owner of each unit, thus breaking up what otherwise would have been an enormous bill for the developer. The closing company for the developer delivered those notices.

This reinforces the assumption that these BID taxes on residential units may have been intended for owners of large residential units of "over ten units" ie the Axiom, Jefferson, the Onyx, etc, thus taxing those owners for the BID's services of attracting residents to fill those huge rental properties. I don't think it was ever intended for an owner of a condo. I can't imagine why a condo owner is subject to contributing to the BID while a single family home owner is not.

Furthermore, and potentially exasperating and cause to file a complaint, is that HUD-1s may not reflect the BID tax that developers or sellers KNEW was inherent to the purchase of the property.

jg says: (2/15/11 9:52 PM)
B - I think you may have misunderstood my point (or perhaps we're in violent agreement). What I left unsaid, though I thought I had implied, is that while we all pay taxes for things we don't personally use, we all benefit collectively as a community, directly and indirectly, by paying for these community and social goods/assets. The argument that I don't use or directly benefit from "X", therefore my taxes shouldn't support it, is a bad argument. I think the fairness of the BID tax is a separate issue altogether.

B says: (2/15/11 9:58 PM)
We are, in fact, in violent agreement.

BID tax is separate from the WF thing. Or interwoven throughout depending on you look at it. It just sort of sprouted from this discussion since the convo shifted to taxes and I realized there was an "inequity" or at least a perceived inequity on my part on who is contributing to the BID. Again, not that I am AGAINST the tax, rather I am interested in burden sharing for all who stand to gain or lose.

Andrew in DC says: (2/15/11 10:58 PM)
"I bet CSX doesn't pay a BID tax either. :)"

Actually, according to CSX, they do, in fact, pay a BID tax.

But I bet their mothers are ugly. And their dogs bark.

Rob says: (2/15/11 11:19 PM)
Burn! Haha.... I bet those CSX mom's would have to pay extra money at the new banana stand at the park. The banana taxes are not exempt from the bid tax either. What can a guy do to get a tax free banana around here?

Do you want a plastic bag with that? $.05 puhleeze!

Rick says: (2/15/11 11:30 PM)
Canal Street:
"The transfer of a small plot of land known Reservation 17A was finally completed last year from the Feds to the city, clearing a long-time bureaucratic hurdle to getting the site redeveloped."

I think you're referring to land that will create a square block for this building by eliminating the only piece of Canal Street in SE (it follows the path for the L'Enfant's canal). Seems to me the historic preservation folks should have fought hard to prevent this from happening especially since the L'Enfant plan is a protected historic feature of the city. Would have been a nice park if the new 'Canal Park' continued northwest replacing Canal Street and following the path of the original canal to connect with NJ Ave rather than just another huge square block building.

Cap Riv Frnt Resident says: (2/16/11 12:21 AM)
I love to see a great discussion :)

Bring Whole Foods!

Develop the "hood" more--and everyone will be happy!


jg says: (2/16/11 8:20 AM)
Got it, B - it's been a looong week, even though it's only just now Wed morning :)

The BID tax conversation is very interesting, and I'm curious if the rules regarding who pays and doesn't pay is unique to each BID/Community Improvement District, and if BIDs and CIDs are different animals entirely. I'm a CQ owner, and I do not pay the BID tax (though I wouldn't have a problem doing so - the BID does valuable work). I also own a condo in another neighborhood in DC that is within a CID. We have payed a CID tax for several years, even though the building is a condo, no longer has any developer interests, and does not contain a single square foot of commercial property. I assume that's all by the book, and again, I have no problem paying, b/c the CID does great work that would otherwise not happen.

Bruce says: (2/16/11 8:22 AM)
Great chatter. if the tax break makes sense as a good investment for the District, then fine. The math will determine ROI over time.
I'm glad CSX pays BID tax although i'm not sure how that fits in unless their employees live here or they have offices here..
We need more retail such as a supermarket although I much prefer a Safeway or Giant.
CQ residents pay more than their fair share of taxes.

Matt says: (2/16/11 10:21 AM)
JD, anyone else who knows: What's the process from here? How does this get addressed by the developer and the city?

B says: (2/16/11 10:52 AM)
jg- It. Is. Only. Wed.

This BID/CID discussion IS very interesting. I did some surfing online about special tax districts and it appears at the surface that they are both "special" tax districts and unique depending on each District.

The BID seems pretty transparent about where the money goes ie I think I saw them publish employee salaries and allocation of funds per fiscal year. That's good and I appreciate the good hard work they do for the community. (Just like I'd appreciate the wholefoods that gets brought cause of subsidies)

We can't (at least not from a position that makes much sense) as a community, want THINGS and not pay for them so NOT paying a BID tax seems far left of center (I want THINGS- park maintenance, nice flowers on the sidewalk, people to pick up trash, etc.). So from that logic, I'd contend that the by-laws themselves need to be amended.

Conversely, maybe we do truly want only commercial interests in the area to pay for BUSINESS improvement and therefore no residents pay (lets pt the "B" back in BID!). That argument seems inherent flawed and based only in semantics....the COMMUNITY wants to see improvement and I don't care if it's a BID, a CID, whatever "_ID", bottomline being Improvement District.

I am not a tax lawyer or expert in tax law although these would be interesting questions about how to initiate change.

I suppose the two questions that need to be answered by the residential property owners of the capitol riverfront are:

1) Do single family home owners want to pay the BID tax?

2) Do owners in condos mind if they are the only residential property owners in the current Capitol Riverfront BID (outside of developers) who are paying the BID tax?

There are some serious discussions to be had depending on the answers to those questions.

To conclude- there will one day (hopefully) be a lot of residential property owners in the area from ALL the developments and it would be nice to build that sense of community through a shared sense of burden and movement toward a common goal- improvement of the capitol riverfront.

Separately but equally interesting: now that WC Smith and Wholefoods want to build in the neighborhood if you're a BID tax payer and either WANT or DON'T WANT the wholefoods, I'd think one would want to know what the BID's role in the process is.

Andrew in DC says: (2/16/11 11:25 AM)
"1) Do single family home owners want to pay the BID tax? "

No. At least, I don't.

Firstly, we already have, through our HOA, - groundskeepers to do the things that the BID-maintenance folk do in the BID-area. A BID-tax there would be duplicative and generate nothing for us.

Secondly, as you mentioned, B, the BID's goal is to boost *business* growth. MJM talks about CQ owners "taking advantage" of the movies and what not - but offering a free movie is not the goal of the BID. Getting people outside and buying stuff in their neighborhood is. So the argument that we're getting a free-ride is sort of irrelevant when the point is precisely to provide such free-stuff with the goal being the incidentals.

A quick look at their board proves this point nicely:

One after the other, a business interest: Akridge, JPI, Lerner, Monument, the Marriott, CSX, Barracks Row Main Street -- and of *course* that's it's focus. That's its whole raison d'etre. It's a communitarian-effort among them for their mutual gain. Residents' interests aren't (and won't be, and shouldn't be) represented on there.

It sucks that condo owners get hit with a BID tax. My gut reaction is to say that it's farked up and it's wrong. Maybe one of the BID folk can explain why the discrepancy exists. But from my perspective, from what I can tell their goals and methods are - no, I don't think residents ought to pay the BID tax. The BID's benefit to us is an externality - not a goal.

BillP says: (2/16/11 11:27 AM)
I truly believe the CHT and velocity owners need to follow up on the BID tax issue with their developers and associations.

The following excerpt from the DC web site strongly indicates that residential properties are exempt from BID taxation:


Taxable Properties within a BID

"Non-exempt real property" within the boundaries of a BID are considered taxable for the BID. This includes real property that is:

1. not exempt from paying real property taxes,
2. is not residential property, and
3. is not the residential portion of a property used for both residential and non-residential purposes.

My analysis of the law is that (1) pertains to all government-owned properties (whether DC or Federal) as they are exempt from real property taxes, (2) pertains to single-family residences and (3) pertains to large, multi-family residences (as these are almost always built with first floor retail -- i.e., non-residential purposes).

It seems to me that the general BID authorization laws prevent BIDs from taxing residential properties.

It also seems that, for whatever reason, the multi-family ownership properties within the Capitol Riverfront BID (CHT, Velocity) are exceptions to this general rule.

From the Capitol Riverfront bid website:


# The amount of $96.00 per unit annually for nonexempt residential properties. Residential property units with less than ten (10) units shall not be subject to the BID tax.

Therefore, the $10,000 questions (actually, the $96 questions) are (1) why the Capitol Riverfront BID includes this provision about "nonexempt residential properties" since all residential properties appear to be excluded from BID tax by the general BID rules copied above and (2) what exactly is the definition of a "nonexempt residential property."

IMO, once these items are known, the CHT/velocity owners can take further action.

Andrew in DC says: (2/16/11 11:30 AM)
slight addendum -

I see the CHT co-op differently than I do the Velocity. Because they're invested as owners of the building, not just residents, then they have a commercial interest. So a BID tax on the building-mortgage piece I could understand.

MJM says: (2/16/11 1:44 PM)
Why isn't EYA/CQ part of the board? Has anyone called the BID, insted of guessing and found out why CQ is exempt (it is because of public funds / HOPE VI) - some can choose to beleive that or not?

So who pays for the movies? Who is paying for the artwork under the overpass? Who helps pay for the clean teams to pick up plastic bags, candy wrappers and dog poop from the sidewalks/grass areas around the hood to include CQ sidewalks? Who pays for the BID employees and the greeters at the metro? Who pays for the BID to make this a better area? Its the companies and few select residents who pay - they are the ones who brought in over $1M to the BID. The BID benefits all and not sure how that is a duplication of the EYA HOA. The artwork, Yard events, soon to be Canal Park events, movies, other BID events are funded by the BID tax (and donations) and those events get people out of their homes to buy things. Not sure where the EYA HOA duplicates those efforts but apparently they pay more than their fair share. The only way it will change is through the DC council, it should be an all or none BID tax for residents.

As cornercopia put it in a tweet - where is their tax credit? How can I get my property taxes lowered? Maybe WCSmith can lobby for that. Who is next to ask for tax breaks in SE? Akridge? Monument? Plaza on K folks, etc? Sooner or later we will all pay for it with higher taxes (all taxes) along the way

BillP says: (2/16/11 2:12 PM)
@MJM - you certainly know about believing what you want to believe!

i and others have provided multiple links to support the fact that NEARLY ALL residential properties are exempt from BID taxes under the District rules that authorize the creation of BIDs. BIDs are created and funded by commercial property owners to further their interests in the neighborhood.

instead of repeatedly commenting about something that is ultimately irrelevant to your situation (i.e., the fact that the CQ residences are treated like 99.9% of the other DC residences that fall within the boundaries of a BID), you should instead figure out why your situation is different.

personally, i do not believe that any residents should pay BID tax because the clear language of the BID authorization laws (that i have both linked and copied in this thread) exempts residential property.

Andrew in DC says: (2/16/11 2:30 PM)

"Why isn't EYA/CQ part of the board?"

For starters, EYA and CQ are two separate entites.

The CQ HOA isn't a part of the board because, for all the reasons BillP listed, we don't pay BID taxes. But why limit it to CQ? There's non CQ (and non-"public housing") homes on squares 0824 and 0799 (the one with Cornercopia) which also don't pay BID tax. Which is fine, because who'd represent them? No one. And for good reason - the BID is not for the residents. (You can choose to believe that or not).

EYA itself, as a corporation, and the lands it still holds is exempt from the BID tax, I'd guess, because the whole property/project was under a tax-abatement - which may go back to the public-funds issue you raised. So that's (probably) why EYA's not on the board. Call them and ask.

"The BID benefits all..."
I think the weakest part of your argument is that you're confusing methods/tactics with goals.

The BID does x, y, and z - because they want to create an environment for their businesses to do well -- not for the sake of doing x, y and z. So they pay for it. By making the neighborhood a pleasant destination, they hope to bring people to the neighborhood to spend their money here and rent an apartment/buy a condo/loft. And the BID-paid-for maintenance probably shouldn't be patrolling the CQ sidewalks with their pick-sticks. Anyway, it's more accurate to state that the BID's actions benefit all, but their goal, is to benefit the businesses *financially*.

"Sooner or later we will all pay for it with higher taxes (all taxes) along the way"

Maybe I missed something - but isn't the WC Smith building going to be have hundreds of taxpaying residents? And consider part of the tax-abatement-time will be during a year or so of construction. So the taxrolls lose, temporarily, a portion of their total future take and while the neighborhood gets something desperately wants/needs.

Half a cookie is better than none. And this is way more than half a cookie for almost everyone involved.

Andrew in DC says: (2/16/11 2:38 PM)

Does the corporate-entity-status of CHT differentiate it to the point that it subjects them to the BID-tax?

Since co-op residents technically own no property - they're just shareholders of a corporation. ...And that corporation owns the building and all the units in it - to include the leased retail spaces on the ground floor?

Condo owners, on the other hand, legally own real property individually - so I'm with you on this - I can't fathom why on earth they pay BID taxes.

JD says: (2/16/11 2:38 PM)
One thing to remember--EYA is not the *developer* of Capitol Quarter. They are the builder. The DC Housing Authority along with Forest City Washington and Mid-City Urban (as Capper/Carrollsburg Venture LLC) are the developers of the entire Capper/Carrollsburg Hope VI redevelopment.

Andrew in DC says: (2/16/11 2:46 PM)

Great point. EYA "holds" no land, it's just building on land owned by DCHA. (Gah! I wish I could edit my comments)

B says: (2/16/11 3:29 PM)
So I for one am thankful that this site exists for an additional reason outside of the fact it's amazing for situational awareness and that to see the shared interest that everyone has in the neighborhood. JD- you're a great American.

In my day job I am pretty practical so practically speaking I have questions to help me overcome my own ignorance of the subject and hopefully find a method to initiate change. There are several:

1) Andrew- Great question. I have no idea and I wondered that too for the better part of the afternoon (when not doing day job). Do owners in a Co-Op actually get a split of the rent of commercial tenants through some type of shareholder dividend? I would like to see this answered.

2) How does the Capper/Carrollsburg Venture LLC affect who owns and profits from the building and subsequent sales of the houses? This is digging way deep but the bottomline is: there are market rate houses that are exempt from the BID tax- why? I can't (in my mind) think of a good explanation (therefore conversely- why are condo owners subject to it).

(sidenote- Question 2 may be irrelevant if BillP's digging up of BID laws exempts residential holdings from the BID taxes and that can hold up in say- a hearing)

3) Who does one go to, to adjudicate this without a biased party like- the BID itself or the developer of the condos that don't want to shoulder the cost of the BID tax bill in its entirety.

To conclude: just because the Velocity is a residential building with GREATER than ten residential units is not a justification for why there is an apparent inequity. It may be what was explained to residents- but it is NOT an acceptable status quo.

That would be my position rooted in my current knowledge base.

B says: (2/16/11 3:35 PM)
BillP's analysis is spot on as far as I can tell from what's available. And I am a layman reader of legal documents...except during my day job.

BillP says: (2/16/11 6:02 PM)

1 - I wish I could answer the question about whether CHT's organization as "co-op" affects the BID taxability issue but I simply cannot as I just don't know. My educated guess is that it is NOT overly relevant in this issue if Velocity (condo) owners are also being charged a BID tax.

2 - As others have pointed out, all other residential properties within the BID are also exempt from BID tax, not just the CQ homes. I am not going to address CQ separately as it pertains to the BID taxability issue anymore as it is not relevant.

3 - As I have pointed out, nearly all residential properties in the District are exempt from BID taxation. The entirety of this issue revolves around why (a) the Cap Riverfront BID taxes certain residential properties and (b) how it was determined which properties were subject to this tax.

4 - So you don't have to take my word for it, here are links and excerpts from other BIDs. These BIDs appear to not tax ANY residential property owners:

(a) Cap Hill - "The Capitol Hill BID is a 501(c)(6) nonprofit organization funded through an assessment on COMMERCIAL PROPERTY OWNERS" (emphasis added)


(b) Downtown DC - "More than 800 COMMERCIAL PROPERTIES comprise the Downtown BID area" (emphasis added)


(c) Golden Triangle BID - "ALL COMMERCIAL PROPERTY OWNERS within the Golden Triangle are members of the Golden Triangle BID" (emphasis added)


However, some BIDs appear to have rules similar to Capitol Riverfront regarding BID taxation applying to residences of 10 or more units. Whoever tackles this issue on behalf of CHT and Velocity (I would LOVE to do it but, after this lengthy free analysis, I'm going to have to insist on not doing any more "free" work on behalf of this issue!) might want to align with similarly situated property owners in these other BIDs.

(d) NoMa BID - "The BID's FY2009 budget... is funded by an assessment that applies to commercial property (including land and parking lots), residences of ten or more units, and hotels"


(e) Mount Vernon Triangle CID - "The current MVTCID tax structure is $0.35 per square foot of undeveloped land, or $0.15 per square foot of commercial property, or $120 per residential unit, or $90 per hotel room. Exempt properties include those institutions that are exempt from District real property taxes, properties with more than 25% Section 8 housing, senior housing, and residential properties with less than ten units."



(f) Georgetown BID - The language is vague so there is nothing for me to quote but, from reading the website and their 2009 annual report, I am strongly of the opinion that only commercial property is taxed.


Believe it or not, I believe that condo and co-op owners should NOT be assessed BID tax. If any of the owners or groups of owners at CHT and Velocity would like for me to pursue this issue further on your behalf, feel free to let me know!

JoeNDc says: (2/16/11 6:15 PM)
WF = good for the near southeast. Yea!!!

WF + residential in same building = MORE TAXES for DC. Yea.2!!!

TAXES for DC = good for DC. Yea.3!!!

TAX break for WC Smith over 10 years when compared to the above... a mere pittance since it will be easily offset by a net increase to the coffers of the city through the taxes generated over the same period. And... the near southeast gets a coveted retail partner. Yea.4!!!

And for the record... I don't shop at WF as a rule and have probably spent no more then $100 ever... total,on the rare occasion that I have. However, tons of well heeled folks do and those are exactly the folks that we all want as neighbors. They will spend (I would argue foolishly... but who am I to judge) lots of money, and n doing so will generate tax revenue for the city. As a result more businesses will eventaully come which in turn means even more taxes for the city and a stronger, more vibrant near southeast.

Now if anyone is upset, and rightfully so, about paying a BID tax and feel like they got rooked... I say grap a pitchfork, gather up some of yer town folk and meet with your good ol' elected representaives at your condo association's monthly meeting. They are the only ones who can possibly change this. At least that is where I would start. Until more businesses are attracted to and locate in the near southeast, the BID and the good work that they do must unfortunately be supported somehow. Once more businesses come, the tax burden to support the BID can and should rightfully be shifted to those business.

And don't forget, what the BID does for the immediate area where the condo buildings are located (like keeping the streets clean for one)and attempting to attract new businesses may not seem all that evident, but in their doing so, they are also ensuring, to some extent, that the condo owners property values are protected in the long run.

I understand the frustration but I also see the bigger picture. Some of you may not agree with me and that is your right. I just thought I'd offer my opinion.

Lastly, if there are any typos in my post... they were intentional. I was just trying to keep you on your toes. :)

Albert says: (2/16/11 6:37 PM)
Walmart who is not asking for a tax break will probably take the spot.

B says: (2/16/11 7:45 PM)
BillP- you're right that those are the two questions. Here's some more info:

The "association" for the Velocity is still in the hands of the developer.

This is significant.

1) The BID was established when 50%+ of property owners in the BID signed a petition to establish and self tax. This was in 2006. The velocity wasn't built then so I wonder if the BID legislation can be amended to reflect the majority wishes of the NEW number of owners now that there is more than "one" owner of the property in the Velocity. According to the BID, Velocity can nominate a representative to the board of directors for the BID. Why does the BID see Velocity or CHT as ONE representative when the CQ houses seem to be treated as single entities? Is that part of the legislation that was enacted?

Condo property owners were supposedly petitioned about imposing the self tax for the BID. I can't ignore the opportunity to be sarcastic when I say that that must have been easy when the only property owners in the area were developers.

2) I wonder if it's in the condo docs that Velocity owners would be subject to a BID tax.

BillP says: (2/16/11 8:14 PM)
B - I would think it would have to be in the condo docs if that were the case. And, if that is the case, owners would appear to have little recourse. If not the case, that could get interesting.

Other musings - A co-op is technically owned by a corporation which then issues "shares" to its individual unit owners; therefore, I would like to amend my earlier statement above because I could see a legal technicality (again, not my area of expertise) where a co-op building could be treated differently than a condo building for BID tax purposes.

Finally, again I am not a lawyer (where are all the lawyers anyway?!?!?) but I think the plain language of "residential properties with less than ten units" exempts all single-family homes because each residence is both legally and functionally separate. Whereas a condo building, because all of the residences share things like a roof, certain mechanical systems, common interior space, elevators, etc., could be considered to be a single residential property with more than 10 units. Not saying I necessarily agree with that, mind you, but I could at least see how that argument could be made.

Kelsey says: (2/16/11 10:54 PM)
I think almost everyone is in agreement that a whole foods would be beneficial to Near SE. So, who do we need to contact in the DC government to convince them?

MJM says: (2/17/11 9:57 AM)
@BillP - I hear ya but could you do a favor, please? Call the BID, instead of looking at the DC links provided (gone that route with the DC/BID office (and who gave permission to set up the BIDs) pointed back to the BID for answers on taxes) and ask the BID their take on how and why they charge. Ted will give you an intersting spin on things. And yes condos are high density units so fall outside of the single residences and why those old rowhomes don't pay. I only believe what the tax masters tell me - CQ is exempt because of the public funds used for the creation of CQ. However CHT pays, they must pay somehow because they have a seat on the board. And once Velocity gets a board they might get a seat on the board. But the next set of bylaws I believe expire in 2012. Maybe the BID is petetioned to make all w/in the BID boundaries pay or hopefully no one has to pay.

B, no mention of BID tax in any of the documents.

Andrew - as you know DC is running a little in the red and will be a little more in the red next year. How do you get out of the red? The next step (more than likley) is to raise taxes and reports like the one released today showing DC is paying less taxes than surrounding communities doesn't help. So offerring tax breaks to a developer and company that have 'deep' pockets is probably not the way to go 'right now.' WF will be in the hood and will create revenue but its not like 275 people or whatever the apartment count is- will all be new DC residents. Some will some wont. So to think it will be all new taxpayers is wrong (plus not everyone changes their residences like their car registration/license plates) so not sure how that impacts revenue w/in the city.

And the BID doesn't benefit (or impact) the residents? Did you take that free BID river cruise? Okay if you beleive that - don't complain to the BID if they endorse something CQ residents don't like like a train tunnel or residents don't like the artwork (any input into that), or the summer movies are boring, right? Some of the BID decisions that impact the hood are made in a vaccum - havent seen the BID trying to get inputs except for movies and cool things to host. Or is that still weak?

WC Smith is on the BID board - does the BID support them trying to get the tax break? Does that lower their BID dues?

B says: (2/17/11 10:45 AM)
So there's no mention of a BID tax in the condo docs?

This is going to get interesting.

@BillP- there seems to be things going on here that need explaining...from either the BID, the tax office of the city of DC or the developers of the condo properties. agree?

Andrew in DC says: (2/17/11 2:56 PM)
"How do you get out of the red?"

Well that's a long discussion, and I'd be very interested in a link to the report you cited.

That said, since you asked, I'll give my take: I'd suggest encouraging businesses to set up shop and to put in shiny new apartments to encourage immigration (rather than the emigration we've seen over the last 50 years) - particularly immigration of people who are weighing their options between DC and Arlington/Alexandria/The Sticks.

DC's tax rates are not competitive with the outside area. This area, in particular, is operating a disadvantage due to the stalled nature of some of the neighborhood projects. DC's task of getting back to "green" isn't going to be done by taxing everyone who's already here into a hole. And it's not going to be done by NOT negotiating with people who'd like to move in and build here. It's going to be done by increasing our competitiveness with the surrounding area. They're have to lure the money here - and to do that, they're going to have to incentivize people to come live here. A WF would help do that.

"And the BID doesn't benefit (or impact) the residents?"

Since that's not what i said - at all - Yeah, pretty weak. Especially since I have no idea what on earth you're talking about/getting at in that paragraph.

Mark says: (2/17/11 9:56 PM)
Kelsey - contact our three coucil represenatives at large, the chairman and our coucilmember for Ward 6: Tommy Wells. You can find all their contact info on the DC Council webpage.


Kelsey says: (2/17/11 10:31 PM)
Will do, thanks Mark!

B says: (2/18/11 8:02 AM)
anyone have an idea about where one might go to talk BID tax concerns...besides the BID itself?

BillP says: (2/18/11 9:25 AM)
@B - i would agree with you. IMO it is time for a collective effort by the owners at each of the taxed properties to pursue the issue further. i would think you need an attorney to review your condo documents, the actual BID tax laws that were passed for the cap riverfront BID, and to work with city lawmakers for assistance. however, you should also do a cost benefit analysis of what this would cost versus everybody's BID tax of $96 per year.

Scott says: (2/18/11 10:30 AM)
@Andrew in DC:

Is your statement regarding DC taxes correct? DC income taxes are certainly higher than Virginia's (about $1,800 a year on taxable income of $100,000). However, DC does not have a car tax, which in Virginia would be about $1,000 on a $20,000 car. It also has a lower real property tax rate - $1,200 less on a $500,000 property per year than Fairfax County, for example.

Look at this article, for example: link

Scott says: (2/18/11 10:38 AM)
That's not including the homestead exemption, which saves everyone another $550 a year on DC property taxes for their principal residence.

I think the difference between the tax burden of DC and surrounding counties is less than most people believe.

A more valid debate is the quality of services you receive for those taxes...

MJM says: (2/18/11 10:54 AM)
AndrewNDC - per your request, you know as well as I do there are tax loopholes and things that aren't counted, perks, etc and this is one report and I'm sure some people will run with it and other won't but its out there to chew on - here is the link:


BillP - the cheapest way is the get the BID to drop the residental tax (which they can do) via their board or go the DC Council route???

hope to see folks around the hood this weekend before the snow returns on Monday :(

B says: (2/18/11 11:46 AM)
"@B - i would agree with you. IMO it is time for a collective effort by the owners at each of the taxed properties to pursue the issue further. i would think you need an attorney to review your condo documents, the actual BID tax laws that were passed for the cap riverfront BID, and to work with city lawmakers for assistance. however, you should also do a cost benefit analysis of what this would cost versus everybody's BID tax of $96 per year."

Agree- There is rapid reduction in return as soon as I say- pick up the phone of an attorney.

That being said- its unfortunate that money would be the issue with righting two wrongs: 1) "unfair" tax 2) tax not being disclosed during sales.

Very shady and unfortunately, how does one take on a developer?

Andrew in DC says: (2/18/11 11:49 AM)
@Scott -

The residents of this building would be renters (I assume, from the use of the word "apartment") - so the benefits of lower property tax don't apply to them.

When it comes to *owners* you're absolutely right, and DC becomes more competitive then, precisely for the reasons you cite. But the renters we're looking to attract to this building? Not so much.

Also, as you mentioned, the DC bureaucracy is far less responsive and far more wasteful -- Certainly moreso than any other municipality I've encountered in my short life. So there's another negative.

Scott says: (2/18/11 12:01 PM)
The benefits of lower property taxes certainly do apply to renters, who benefit from the lack of a personal property tax (i.e. car tax) the same as owners.

For example, a single renter owning a $20,000 car and making $75,000 a year would break even between Northern Virginia and DC taxes. That renter would probably come out FAR ahead if they lived in the District and used Zipcar in lieu of owning a car, something that would be pretty unthinkable in the suburbs but is very common in the city.

Andrew in DC says: (2/18/11 2:49 PM)

Now you're moving the goalposts. We were talking about the combined effect of real property tax and personal property tax. I said one was irrelevant. you *disagreed* and proceeded to restate your argument based solely on the personal property tax with an assumed calculation result on an equation you didn't even bother to run.

If they're going to come out so "FAR ahead", do the math. Then make your case. I'm willing to listen, but don't disagree simply to disagree.

Andrew in DC says: (2/18/11 3:17 PM)
I like math and I wasn't willing to wait, so I went ahead:

From the article you cited: "All told, if you ... make $75,000 a year, ... tax burden ... : D.C., $6,986, Fairfax, $6,903, Arlington, $6,886 and city of Alexandria, $6,769."

So we start at roughly a wash. I don't think anyone makes lifechanging decisions based around a difference of $215/yr.

+914 for the car tax (on a 20k car -- but that's a pricey vehicle for a depreciating asset) vs. $60 annual fee + having never used a zipcar, i have no idea what the average usage is - I'd guess and say $200/yr is reasonable. And yet, we're still at roughly a wash (now DC's ~$500 cheaper than Alexandria)

But why are we making an assumption that the person would give up their car when the move into the city? Isn't it just as likely they'd keep it? A coin-flip, even. Jefferson charges $200/month for parking - $2400/yr, far outweighing a car tax. It would be fair to assume WC Smith would charge market rates for their underground spots. At the same time, we'll factor in a probability of our straw-man giving up his car (50%) giving us an expected value (2400+260)*.5 = 1330 - or still above the car tax.

We can muck with the numbers all day. We can factor in insurance (higher in DC lower outside), gas costs (reverse), utility costs (no idea!) -- we can make this thing the most rigorous model in the world.

And you know what we'll conclude at the end?

Having a Whole Foods in this neighborhood would absolutely kick ass. This building would be a huge boon to the 'hood. Having it announced might help get Akridge and Monument off their duffs. And if that costs DC 8M over 10y, I'll take that investment.

Also, this was an opening offer from WC Smith - no one's said yet whether they'd accept less - or perhaps a deferred abatement (pay the 3 years on the front end, get 10 off, pay from then on). I think its at least worth negotiating.

BillP says: (2/18/11 4:43 PM)
@MJM - i think you are right, if the BID could be persuaded to drop the residential portion of the tax, that would obviously be wonderful. i am guessing, however, as stewards of the BID on behalf of the other property owners, that would be a tough sell and, possibly, not even legal based on how the bylaws of the BID were drafted.

again, i am a tax accountant, not a lawyer (nor do i even play one on tv); hell, i didn't even stay in a holiday inn express last nite so take these comments for what they are worth:

1. team up as owners - CHT and velocity owners should absolutely come together as separate groups to scour their sale documents, condo association (or whatever you call it in a co-op) bylaws, etc. hopefully, you will find the lawyer you need amongst yourselves. this would be to find a potential recourse against your developer for failing to adequately disclose a cost of ownership to you (in which case they might be willing to help with #2 below).

2. learn as much about the BID as possible, including when the authorization was enacted, how/when the condo developers became involved, what was the intent of the residential provision included in the BID taxing laws (i.e., was the tax per unit intended to stay in place after ownership transfer even though this runs counter to the general rule of not taxing residential properties in most BIDS), when the BID is up for re-authorization, the process for changing the BID bylaws, etc.

3. team up as taxpayers - take your findings to tommy wells' office and ask him to advocate on your behalf based on homeowner equity (i.e., why would a condo/co-op unit owner be charged a tax that other homeowners do not have to pay). although i am a proud Cap Qtr resident, i honestly believe that our not paying a BID tax is a "red herring" to the issue of why CHT/Velo owners are paying it since other homeowners within the BID boundaries (homes directly to the south and east of cornercopia, homes on 5th st se across from capper seniors, etc.) do not pay it either. you want to keep your message as straightforward and direct as possible!

again, i am far afield from my tax expertise in some of these comments but figured i'd throw in my "what i would do next" observations since we've come this far. good luck and keep us posted!

ps - as far as the other issue of overall tax fairness, my short answer is that DC homeowners are actually similarly taxed to virginia/maryland homeowners due to lower property tax rates; however, renters in DC are definitely taxed more than renters with similar incomes in virginia and maryland. of course, if you fold in variables such as different income levels, whether or not you have a car, etc., you could likely determine numbers to successfully advocate any of these positions.

JD says: (2/20/11 11:43 AM)
What, the thread has died out after only 88 comments? :-)

mikescorpio says: (2/20/11 7:11 PM)
That would interesting. Whole Foods next to the horse stable.

B says: (2/21/11 7:52 PM)
BillP- Great commentary. I think this is an issue worth looking into. Based on principle- the lack of disclosure, the lack of transparency (developer- as I have said- BID is pretty good at disclosure) and the inequity with the BID tax between condo unit owners and other residents in the BID district of capitol riverfront.

It's hard to believe (or maybe not so hard to believe) that even in this day and age that there's no vetting of the process to ensure it's all above board.

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