Earlier this year, the tiny Persian Gulf nation of Qatar was looking for a safe place to park some of its vast oil wealth. Qatar’s investment arm chose to pump $700 million into the new CityCenterDC, a downtown Washington apartment, office and retail complex that doesn’t have a major tenant signed up yet. The District, the Qataris decided, was as low risk an investment as could be found anywhere in the world.
Oil-rich gulf states, German investment partnerships, Canadian pension funds — the foreign investors who visit real estate adviser Joel Coren uniformly savor the District’s growing population, increasing affluence and relatively stable jobs picture. Scandal and dysfunction in the D.C. government never even come up: “It’s funny,” said Coren, who opened a Washington office for Savills, a global real estate firm. “When we’re educating our clients about how far D.C. has come in a very short amount of time, the city government just doesn’t factor into it. Politics is really not essential.”
(Bill O'Leary/WASHINGTON POST) - A flood of jobs, an influx of new residents and a huge increase in tax revenue are among factors that have helped the District rebound over the years. This is a view from Meridian Hill looking south along 16th Street NW.
In the past two years, a majority of the D.C. Council’s 13 members have either faced questions about or investigations into their spending. Most recently, federal prosecutors have been looking into allegations that council member Harry Thomas Jr. (D-Ward 5) diverted $300,000 in city money from youth programs and used some of the cash on a luxury SUV and fancy trips and that the campaign of Council Chairman Kwame R. Brown (D) funneled more than $200,000 to a firm operated by his brother Che.
Scandal is nothing new to Washington, or any other big city. In the 1980s, the District’s top prosecutor described Mayor Marion Barry’s government as “raw corruption.” By the end of Barry’s third term as mayor, 14 administration officials had been convicted of or pleaded guilty to crimes related to their official duties.
By the early ’90s, the impact on the city had become devastating. Jobs poured out of the city, as did taxpayers. Washington was the butt of comedians’ cracks on late-night TV. And investors steered clear. “There was this perception that we didn’t know what we were doing,” said Kevin Chavous, who served as the Ward 7 council member from 1992 to 2004. “It really held back the city in so many ways.”
But the current rash of ethics allegations, federal investigations and a clumsy start to a new mayor’s term in office have had little such impact. The economy, although slowed by the same forces that have hit the rest of the country, remains relatively strong. The population is still growing. Housing and commercial real estate prices are the most resilient of any major U.S. city. “These scandals don’t have any of the traction you saw when the city was going broke,” said Tom Downs, who was city administrator under Barry in the 1980s and is now vice chairman of Metro’s board. “This is a different city now.”
It’s different because its financial house is in far sturdier shape. A federal control board and Anthony A. Williams, then the finance chief and later a two-term mayor, as well as his successor as CFO, Natwar M. Gandhi, imposed fiscal controls that restored the city’s top-shelf bond rating for the first time in more than a decade. Since Williams and Gandhi came along, the D.C. government has shed 22,000 employees while dramatically improving service.