FBI relocation would mean fewer jobs but more tax dollars, study says


The loss of the Hoover Building could mean a big gain for city coffers. (Jeffrey MacMillan/For The Washington Post)

Moving the FBI’s longtime headquarters on Pennsylvania Avenue NW to a suburban site would mean 4,800 fewer District jobs but an additional $28 million in yearly tax revenue if the site were redeveloped, a study commissioned by city officials has found.

The study, done for Chief Financial Officer Natwar M. Gandhi by the National Academy of Public Administration and Bolan Smart Associates, reflects the impact of replacing the FBI’s property-tax-exempt building with a mixed-use private development at one of the city’s most desirable addresses. The findings reinforce the positions of many city officials who feel that even if the agency moves to a suburban site, the relocation could represent a net gain for the city economy.

In sum, says the report: “There is a substantial yearly tax revenue benefit flowing to the District from replacing the current FBI Headquarters with a private-sector redevelopment. There will be a net overall loss of jobs if the FBI leaves the District. The District can realize both incrementally higher yearly tax revenue and employment gains from having Poplar Point, or another District property selected as the relocation site, particularly when the transaction is structured as a private lease.”

Currently, about 5,750 are employed at the FBI’s Hoover Building, with another roughly 3,000 agency employees working in private office buildings elsewhere in the city. But the study estimates the direct revenue impact of having those workers leave the city — with their workplaces and most of their income already unable to be taxed under D.C. charter restrictions — is only $9.2 million.

A redeveloped site offering a mix of 50 percent office, 35 percent residential, plus retail and other uses would have a net revenue impact of $36.9 million — in part by attracting 438 additional tax-paying residents to the city. In addition, the redevelopment project itself is expected to generate more than 1,700 construction-related jobs and $41 million in government revenue.

In the rosiest revenue scenario, where the FBI abandons the Pennsylvania Avenue site then consolidates its headquarters within city limits — in particular, at the Poplar Point location floated by Mayor Vincent C. Gray (D) — the city would see a net revenue increase of $62 million per year.

How the FBI relocation project proceeds depends mainly on the federal government’s alacrity in moving ahead with its stated plans. The General Services Administration earlier this year received an initial round of relocation proposals, and the OCFO study assumes a formal request for proposals will be issued next year. Under the scenario studied, the FBI would remain in the Hoover Building until 2022 or later, delaying redevelopment until as far ahead as 2025.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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Mike DeBonis · July 1, 2013