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Posted at 3:45 PM ET, 12/29/2010

Marriott's $46 million tax abatement for Adams Morgan hotel still a hot topic

By James Buck

Public debate continues over the D.C. Council's decision to grant a $46 million dollar tax abatement to Marriott for a luxury hotel planned in Adams Morgan. The abatement, which exempts the hotel from paying real estate taxes for 20 years, has drawn the ire of many concerned about the District's $440 million budget shortfall and deep cuts in services.

The 170-room hotel to be built on this block in Adams Morgan will preserve the Christian Science Church. (By Jeffrey MacMillan/The Washington Post)

The council approved the abatement near the end of its 2010 session, as Mike Debonis reported. Jim Graham of Ward 1, the council member considered the driving force behind the abatement, says the abatement "is good news for our neighborhood and the city. It will bring substantial new daytime commerce to Adams Morgan. It will provide $7 million in new tax revenue. It will provide hundreds of construction and hotel jobs to Ward 1 and city residents," NBC said. Furthermore, no other developer has offered a proposal, he said.

The D.C. Fiscal Policy Institute, which conducts research on budget and tax issues in the District, said in a report Dec. 16 that the impact of the abatement is "unclear" at this point. The subsidy is needed to attract the hotel, which has said it cannot raise the necessary capital on its own, but whether the jobs created and revenue from foot traffic to local businesses would be a sufficient gain to the city remains unknown.

The developer has agreed to comply with the D.C.'s First Source law, which requires "making an effort" to hire more than half of the hotel's employees from the District, but most businesses subject to the law don't meet the 51 percent goal, DCFPI said.

Harry Jaffe of the Washington Examiner wrote a sharp criticism of the policy, saying the District should have waited for an alternative to come along instead of caving to the demands of the developer. " 'This is $46 million to a private developer where we are being asked with a gun to our head to take it or leave it or an apocalypse happens,' at-large council member David Catania said of the deal. 'It is a false choice,' " Jaffe wrote, encouraging the city to "let the free market rule."

Washington City Paper points to a report by the D.C.-based nonprofit Good Jobs First that ranks the District's financial disclosure standards for government incentives among the worst in the country, saying that in any case it's good that there's so much public debate about the plan and sharing a list of pros and cons.

By James Buck  | December 29, 2010; 3:45 PM ET
Categories:  Budget, D.C. Council, Economic Development, Jim Graham  
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The criticism raised by opponents is that the hotel tax abatement somehow steals tax revenue. There is no tax revenue to steal from a property today that generates nothing.

The hotel will employ more than 500, generate sales taxes, and provide a needed economic boost to Adams Morgan business district.

If the hotel is killed by the opposition, then, in time the church will be reused. Without a tax break, a condo or apartment complex will be built on the site once the housing market improves.

It is possible a tax break may be used as an incentive to preserve the church architecture (which is what the hotel developers are doing). But the condo won't create jobs or set a new standard for the business district.

Posted by: smoke111 | December 29, 2010 5:12 PM | Report abuse

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