Property tax abatements (in DC) are a messy messy process

Today's Examiner reports, in "Union Station tax break would cost city millions," that Union Station is seeking a property tax abatement. From the article:

The managers of Union Station stand to reap a tax break of more than $2 million a year under a bill offered by a pair of D.C. Council members to nullify what its backers claim is a prohibitively expensive yearly tax bill.

Legislation introduced by Ward 6 Councilman Tommy Wells and Ward 2 Councilman Jack Evans would replace the station’s $3 million-a-year “possessory interest” tax bill with a payment in lieu of taxes of $253,000 annually.

“Union Station appears to be doing quite well,” Wells said Friday. “The concern is that there is not enough money to put back into Union Station, because it’s paid out in taxes.”Union Station is leased by the federal government to the nonprofit Union Station Redevelopment Corp. and then subleased to New York City-based Ashkenazy Acquisition Corp., which owns the office and retail spaces.

I haven't read the legislation. But what troubles me about this, at least from the article, is that it isn't clear that it is required that 100% of the tax abatement should go to improvements.

It also isn't clear on a business basis, why this for profit business (leasing the interior of the Union Station) isn't profitable enough to pay for investments back into the business.

I remember past articles in the Post such as this article from 2007 "Union Station Is Leased to N.Y. Firm for $160 Million," which states that Union Station has some of the highest sales per square foot of any retail stores in the region. From the article:

The 130 retail stores and restaurants have sales per square foot of $700 to $800, and 29 million people visit the station each year.

The net present value of the lease in 2007 was $160 million (for 84 years). What happened to that $160 million? Great that the investors made so much money. Too bad it didn't go towards upgrading and maintaining Union Station.

The whole commercial property tax abatement is a crop of worms.

To the best of my knowledge, truly independent financial reviews aren't conducted of the requests.

And they are negotiated between the Councilmembers who introduce them and the benefitee, with little if any public input early on in the process. And just the opportunity to testify at a hearing, which by that point, the deal is already done.

E.g., there is a 14.5 year tax abatement approved for the Gateway Residences project in Florida Market, without consideration of the overall needs of the market and how to best address these needs, and what would be adequate and needed amenities. Instead the Councilmember imposed a couple of b.s. amenities that are relatively worthless and not focused on the needs of the market.

Note that wrt the Union Station matter, I haven't talked with CM Wells and maybe this is the best crafted tax abatement legislation ever. (But I doubt it.)

In any case, I think that there should be a system of independent review of property tax abatemetn requests. And that guidance on public finance issues needs to be a part of the Comprehensive Land Use Planning process as well as in the creation of Small Area Plans.

For example, the Florida Market Small Area Plan lacks substantive guidance on these kinds of issues. Plus, to add more "sunshine" to the process, ANCs might want to start weighing in on these matters (even though the typical ANC is unsophisticated and likely to fall under the sway of the organizations requesting the abatements).

But wrt CM Evans, I don't think that there has ever been a commercial property tax abatement request that he hasn't ever embraced.