The city's business community views the District government as hostile to its interests, and only an aggressive campaign including tax incentives and industrial revenue bonds can halt the flight of industry from the city, a task force appointed by Mayor Marion Barry has concluded.
The task force on attracting and retaining business stressed that in some cases it does not believe the city government is as hostile as business sees it.
"The committee feels the general business community's perception that the District government has in the past lacked a positive and cooperative attitude toward business is one of the significant deterrents affecting the retention and attraction of firms in the District," the report stated, however.
The panel also concluded that the government has made little effort to keep firms here and attract new businesses to the city's boundaries.
"The city's apparatus for zoning, licensing, incorporating and other formalities is difficult to deal with and there is a prevalent perception that some agencies are unavailable, indifferent and uncoordinated," the report said. "Further the attitudes of District civil servants are frequently perceived to be indifferent to hostile."
The committee is headed by Donald A. Tollefson, a managing partner of Arthur Andersen & Co. and the president-elect of the Greater Washington Board of Trade. The task force report is expected to be presented today to Mayor Barry's Economic Development Advisory Committee.
The committee noted that the city's tax policies include disparities -- such as real estate taxes which are about 50 percent higher for commercial properties than for residential properties -- but added that the business perception about the city's policies is as important as the tax structure itself.
At the same time, the committee said reductions in the overall rate or application of major taxes would be impractical now.
Instead, it recommended adoption of a selective tax rebate program or a tax credit of limited duration to bring new businesses into the city.
The cost of these rebates would be minimal, the group said, because the location of a new business here ultimately would add to the city's coffers through job creation and future tax revenues.
Industrial revenue bonds would permit a company to borrow at a low interest rate and are used in most states. Maryland and Virginia have the authority to issue these bonds, but the District does not.
The committee recommended that the city set up an industrial or economic development authority to issue these bonds.
In addition to the tax and bond recommendations, the panel suggested that the city enlarge its Office of Business and Economic Development, phase out rent and condominium conversion laws, lift its multiple-tier property tax structure and develop a land bank to aid business in obtaining land appropriate for expansion or relocation.
But the report stresses the need to create a better psychological climate for business in the city.
"The District should continually strive to demonstrate publicly an awareness of the importance of the business community to the District economy," it concluded.
"Few, if any, elected representatives of District government have been willing to actively advocate programs that would favorably impact the business climate," the panel said.