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Native Intelligence
The little guys deserve D.C.'s help
(Published July 11, 2005)

By DIANA WINTHROP

A few weeks ago the Bureau of National Affairs, the 59-year-old news and information publisher, announced it was taking its roughly 1,000 employees and moving to Crystal City in Virginia. The deal was brokered by Charles Smith Commercial Realty, which is giving BNA a renovated building in exchange for the four buildings it currently owns and occupies at the edge of Georgetown.

Reportedly, the Smith Companies are not planning to build middle-income homes near schools and transportation on the old BNA site, but another group of million-dollar condominiums where people with no children, and little emotionally invested in D.C. as their home, will reside.

Arlington County sweetened the pot by giving BNA $1 million (not in cold cash, but in building, area improvements and tax breaks) to make the deal more attractive. It was icing on the cake for the employee/owners of the company, which, according to BNA sources, had been shopping for a better deal since 1997 -- when D.C. City Council Finance Committee Chairman Jack Evans gave the employee-owned company in his ward a 10-year tax deferral (which, coincidentally, expires in 2007 -- the same year the company plans to leave D.C. and move into the renovated property in Arlington).

Recently, another pot-sweetening deal was rushed through the legislative process before the council's summer recess begins July 15. Ward 5 Councilman Vincent Orange won approval of a six-year tax abatement to lure more businesses into the Brentwood Road complex in Northeast Washington, where there is a huge Giant grocery store and the first Home Depot in D.C. Orange argued that the "emergency" was necessary for offering a deal to big-box retail outfits (Marshall's and Staples, among others, are now being dangled) to replace the Kmart deal that collapsed after the discounter filed for bankruptcy.

Orange's emergency deal generated little controversy, as his colleague and friend Evans used the BNA departure as an ominous example of what might happen if the developer doesn't receive the six-year tax break. Evans argued that if we don't offer these incentives to businesses, they will go elsewhere.

Councilman Phil Mendelson, D-At Large, piped up and said "a lot of good it did to give BNA a break when they are leaving anyway." Evans again cited the "need to offer these breaks to businesses to stay competitive with our surrounding neighbors" as he alluded to the prospect of a massive exodus of business to the suburbs. Mendelson says he is generally weary of these deals, where companies virtually blackmail the District with the threat of moving if they don't receive tax breaks similar to those received by businesses building in so-called enterprise zones. In those instances, businesses are lured to relocate in depressed areas in exchange for not paying taxes for a period of time.

According to BNA sources, BNA wanted the same tax-free status as businesses relocating in those "enterprise zones." In 1997, Evans wanted to give his constituent BNA a tax abatement, but gosh! -- didn't have the votes. Now BNA employee/owners are picking up their cookies and moving to the Old Dominion.

Mendelson, like Chairman Linda Cropp, complained about Orange's need to have the measure approved as an emergency. He pointed out that there was no vetting of the proposal by the District's chief financial officer, the mayor or the public. "There was no idea whether anyone was ready to sign a deal," Mendelson added. Of course, Cropp who, like Evans and Orange, is considered a friend of the business community -- was happy to allow the emergency measure to proceed, even without hearings or proof that any emergency required immediate council action.

If companies don't feel any commitment or loyalty to the District, why are we going begging for them? One corporate source said "duty" requires getting the best deal possible for the company's owners and stockholders, regardless of the ethics or morality of the deal. Take the money and run.

The problem, of course, is as one elected official said, if you give to one business, then you have to give to others -- which means soon homeowners will be squeezed once again while businesses receive breaks. The use of tax-free zones in economically depressed areas sounds, on the surface, like it makes good sense. It is when the "large employers" try to get a piece of the action simply because of the shear size of their operation that it becomes institutionalized blackmail. There are always pro-business elected officials like Orange and Evans around to give the business community anything they want, regardless of the social consequences for residents.

Smaller businesses have more loyalty to their communities but little clout compared to the big guys. Shouldn't we be working toward incentives for the smaller operations? Shouldn't we be rewarding them with help to grow and prosper in return for the hard work, risks and sacrifices their owners endured to locate here and remain in business? As a start, how about parking fee moratoriums to lure more customers or more sales tax amnesty days?

I guess that's not as attractive for most of D.C.'s elected officials who, like Evans and Orange, enjoy rubbing elbows at parties with the big boys and receiving campaign contributions or other handouts from their big companies.

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Diana Winthrop is a native Washingtonian. Contact her at diana@thecommondenominator.com.

Copyright 2005 The Common Denominator