Some Question Nordstrom Financing

Developer Herbert S. Miller wants to lure Nordstrom to his mall, the Shops at Georgetown Park.

And last month, he told city officials that he planned to ask the District for financing help to make that happen.

The help would be in the form of tax increment financing (TIF), which lets the city sell bonds to finance private projects, particularly in underserved areas, that would otherwise not come to fruition.

Proponents say the District needs another major department store to help build its retail base, and Nordstrom would fit the bill, acting as an anchor for the mall and generating more business in Georgetown and more taxes that would easily cover the city's subsidy.

But critics of a TIF in the bustling Georgetown neighborhood say Nordstrom might come regardless of a subsidy, which might be better used to develop other emerging commercial areas such as the old convention center. They also worry it might set a bad precedent for undeserving projects.

"On the surface one has to scratch their head and wonder why the city needs to provide $20 million in subsidies to get a high-end retailer to go into a strong retail area like Georgetown," said Ed Lazere, executive director of D.C. Fiscal Policy Institute.

"A TIF is supposed to create incentive to bring business to areas that are underserved or where the market is weak. Those adjectives don't apply to Georgetown."

In talks between Miller and D.C. officials, a figure of at least $20 million was bandied about, but Miller has not officially requested a subsidy, according to two D.C. Council members.

The council must approve TIFs and be convinced that property and sales taxes generated by the project will eventually cover the city's contribution.

The renovation may include new shops in the mall along the Chesapeake & Ohio Canal, but Miller said the TIF would only be used for the Nordstrom project and improvements in public areas.

Miller says that without a subsidy it would be economically unfeasible for his company Western Development Corp. to renovate the mall, move tenants, add more than a 100 parking spaces and offer a nominal rent comparable with what Nordstrom pays at other malls.

"If they don't go to Georgetown, most likely they'll go to the close-in suburbs," he said. He said the project would generate an extra $13 million a year in sales tax, far exceeding the cost of the TIF. "The fact is this, this is not Georgetown versus Anacostia. What we need is the right stores to get that money in the city."