On Friday, the DC Council Committee on Finance and Revenue held a hearing to consider a pilot program to offer up to a $20 per-square foot tax abatement incentivizing office-to-residential conversions in the Downtown and Golden Triangle business improvement districts (BIDs), neighborhoods which have the highest concentration of office space in the city.
The Golden Triangle BID is south of Dupont Circle, roughly bound by New Hampshire and Pennsylvania Avenues and 16th Street NW; the Downtown BID is to the east, between Massachusetts Avenue NW and the Mall.
Much of Friday’s conversation centered around the question of what should take priority: adding vibrancy to downtown neighborhoods via additional residences, or the city getting a high return on investment. Any affordable housing produced via the bill would be the minimum 8 percent required under inclusionary zoning.
Golden Triangle BID Executive Director Leona Agouridis testified in favor of the bill, stating that while there is 33 million square feet of office space in the BID, only 23 people live within its bounds (on Jefferson Place). “If we rely solely on market forces, these buildings will be refurbished as office buildings,” Agouridis stated in her testimony, as the residential market there is unproven compared to the office market.
Several developers also testified in favor of the bill, stating that while the market may lead developers to retrofit their office properties for residential use ten years down the line, most are unlikely to take the initiative to do so.
“The cost of building residential vs. office is comparable, but the rents that are achievable, generally, for office are about 50 percent higher than residential, so while we might want a more diverse environment, the economics don’t really allow that,” explained Greg Meyer of Brookfield Properties and boardmember of the Golden Triangle BID.
Another bill introduced this spring would create a task force to consider the impacts of converting vacant offices to affordable housing; the Committee on Housing and Neighborhood Revitalization is scheduled to hold a hearing on the bill next month.
Whether the city should lead the charge on conversions may be a chicken-or-egg problem: if more people reside in those BIDs, will the increase in tax revenue help the city further leverage Housing Production Trust Fund dollars to increase workforce and low-income housing in the city? Or would the city’s dollars and efforts be more effective if concentrated toward workforce and low-income housing needs?