As D.C. Mayor Muriel Bowser (D) embarks on an endeavor to revitalize downtown D.C., she has called on District government leaders, heads of downtown-based business improvement districts (BIDs), and District residents to collaboratively execute what’s dubbed D.C.’s Comeback Plan.
Through D.C.’s Comeback Plan, Bowser hopes to bring 15,000 new residents to downtown D.C. within the next five years. These residents, along with those who visit downtown, will be able to enjoy live music, family-centered activities and other neighborhood amenities within walking distance of their homes.
In espousing support for a revitalized downtown sector, some people, like Ward 2 resident Gigi Nelson, hope that District officials make it easier for small businesses to flourish.
In years past, Nelson, a federal government employee and former ANC commissioner, has suggested that the District eliminate building height restrictions and implement zoning changes that pave the way for more affordable housing.
While she remains certain that an increase in the downtown housing stock will help regulate rental costs to some degree, Nelson questioned whether District officials will take the steps needed to attract entrepreneurs who can provide services desired by the people living in those communities.
“I’d like to see a revitalized downtown with small businesses, not chains and conglomerates, but that depends on the rent,” said Nelson, a Penn Quarter resident.
“Over time, rent rose exponentially, which was a primary reason that many businesses closed in the first place,” Nelson added. “However if you have large groups of people who are going to be living there and creating residential communities, any entrepreneur would look at that situation and see a need for service-oriented businesses. The question is whether they’ll be able to do that if the rent remains prohibitive.”
Striking a Balance to Reimagine Downtown
In the couple of years since the pandemic, thousands of businesses moved from downtown, Shaw, Logan Circle and Georgetown to either areas east of the Anacostia River or the suburbs of D.C., according to an analysis of U.S. Postal Service address-change data that The Washington Post conducted.
Despite accounting for less than 3% of taxable property in the District, downtown generates 37% of the property tax revenue collected. Before the pandemic, more than $1 billion in annual revenue came from downtown D.C.
The federal government accounted for 35% of downtown’s workforce and 25% of office space utilization. Bowser recently revealed that she’s still conferring with federal partners about if and how workers are still coming into the city.
That inquiry hasn’t stopped plans to shift to a residential downtown sector.
The latest edition of the Washington DC Economic Partnership (WDCEP)’s The Development Report highlighted five current office-to-residential conversion projects that will yield more than 1,100 residential units. By the end of this year, more than 7,000 residential units are expected to be completed. According to the report, more than 430,000 square feet of retail space construction is also on track for completion.
On the day before WDCEP’s annual meeting at the Washington Convention Center, Bowser and other administration officials presented D.C.’s Comeback Plan at Union Station.
The plan focuses on changing the usage of the downtown sector so there’s more festival and gathering space. Bowser said this will be done in collaboration with EventsDC and the D.C. Office of Planning. Additionally, the Bowser administration recently launched a $7.5 million grant for the creation of permanent and semi-permanent family-friendly attractions throughout D.C. She has also called on Downtown DC BID and Golden Triangle BID for the development of a comprehensive plan that expands upon the revitalization of the Franklin Square BID.
Another element of Bowser’s plan involves the Housing in Downtown program, which sets out to induce downtown residential development through financial relief for developers. One aspect of the program that caught the ire of housing advocates concerned developers’ 15-year exemption from the Tenant Opportunity to Purchase Act, legislation that has allowed tenants first right of refusal when landlords want to sell the building.
Even so, some people like William Rich said that the development of these residences and surrounding businesses can generate round-the-clock economic activity that curbs downtown sector crime that’s been a concern lately.
Rich, president of real estate consulting firm Delta Associates, spoke favorably about the Housing in Downtown program. He pointed out that the 20-year tax abatement puts developers wary of building downtown more at ease about an expensive office-to-multifamily residential convergence process. He also cited the expansion of an inclusionary zoning program that sets aside up to 15% of affordable units in new properties in an area currently exempt from inclusionary zoning requirements as a valiant effort to ensure socioeconomic diversity in downtown D.C.
However, Rich said that there would need to be similar incentives for small businesses that want to set up shop around the new residences in downtown D.C. Otherwise, high operating costs would prevent them from affording to pay what Rich described as exorbitant rent.
“There are different strategies to help with diversifying the types of retailers that open up downtown,” Rich said. “The developers and landlords could work with tenants to attract more mom-and-pop stores versus corporate tenants. Retail rents downtown are higher than in other parts of the city so it limits the type of tenants that can afford to pay that rent.”
Downtown BID President/CEO Makes a Play
On April 14, the D.C. Council’s Committee of the Whole conducted a budget oversight hearings that attracted more than 100 witnesses, including Gerren Price, president and CEO of DowntownDC BID, which oversees economic activity and aesthetic maintenance of 138 blocks of downtown D.C., including the Washington Convention Center and Capital One Arena.
Price’s testimony followed that of Richard Lake, board president of D.C. Building Industry Association, and others who emphasized the need to pour into downtown, D.C. Days later, he counted among those who Bowser acknowledged at Union Station during her unveiling of D.C.’s Comeback Plan.
In his testimony, Price expressed support for tax incentives Bowser provided developers in her fiscal year 2024 budget proposal. He also touted the importance of funding the safe commercial corridor grant program and increasing the presence of D.C. police officers in downtown D.C.
With what he described as a $300 million drop in downtown revenue, Price said time is of the essence to act upon the universal enthusiasm for revitalizing downtown, D.C.
“The lack of daytime foot traffic has been detrimental to our retail viability. Our theater and arts venues are experiencing declines,” Price said. “We cannot allow this decline to continue. Bold investments are needed to help downtown. We need a strong downtown for tax revenues. In a difficult budget year, we must prioritize long-term and short-term action. I applaud the mayor for the reimagining of downtown to create a more diverse and thriving community that’s necessary with multiple tax revenues and mixed usage.”
Great article. Good to hear voices calling for a smart mix of market and affordable housing along with amenities that are needed, attractive and differentiate Downtown from the suburbs.
Sounds like the Mayor wants to privatize downtown as has been done elsewhere in the city where BIDs are already governing much of our public space. Note that BID boards are not democratically elected and primarily represent property owners/developers but not renters or residents. Also, requiring “up to 15%” of new housing to be “affordable” does not actually guarantee that any of it will cost less than market-rate, or that it will be affordable to individuals earning less than around $80,000 a year (80% of DC’s Median Family Income).