Washington, D.C., appears to shout success as redevelopment spreads from downtown to Capitol Hill, Chinatown, Dupont Circle, Georgetown and formerly rundown sections of Northeast and Northwest.
"Compared to most large American cities, [economic development in Washington] has been pretty darn good," said J. Pat Galloway, president of the Greater Washington Board of Trade. "Everywhere you go, you see cranes building new buildings. That's a healthy sign because that means jobs."
Yet for all its aura of success, the District is having growing pains.
Washington is unable to offer all the financial incentives its Maryland and Virginia suburbs use to attract and retain business, and it frequently is unable to compete adequately with the suburbs. Its precarious financial situation does nothing to improve the city's image.
The piecemeal quality of much development in Washington discourages mixed-use buildings that house restaurants and entertainment facilities as well as office -- buildings that would help to reduce the ghost-town effect at night.
The District still has a problem attracting and retaining businesses that supply jobs for blue-collar workers. At least 80 percent of the District's 26,000 unemployed people are unskilled, but most new jobs for them are being created in the Maryland and Virginia suburbs, say city officials.
However, as Galloway pointed out, blue-collar industries "aren't one of the strengths of the entire area. You do not have to have a blue-collar industry to hire people. I don't think the District will ever be much for attracting blue-collar industries." But other ventures such as hotels and restaurants will be around to hire entry-level workers, he said.
Many of Washington's problems are endemic to large cities, D.C. city planners say, but they still are trying to take measures to ease the city's development-related problems without stunting its growth.
One such action was a recent study of 250 District businesses involved in construction, manufacturing, transportation, communications, wholesaling, retailing, insurance, real estate and services. Preliminary results showed that at least half the business had considered moving from the city and still are troubled by the city's high unemployment and workman's compensation payments, crime, limited room to expand and inadequate city services. "There is little question the maintenance and repair of city streets is of real concern in a financial squeeze," Galloway said.
"We [in the District] are losing business on a continuous basis," said Lawrence Schumake, executive director of the city's office of business and economic development.
The District mainly is trying to hold onto the businesses it has, rather than to attract new ones. As part of efforts to stem the flow of businesses to the suburbs, for example, the city is attempting to keep the 35 to 40 food wholesalers in the New York Avenue NE corridor from leaving because of high taxes, fears of crime and inadequate city services, Schumake said.
The city is using the big sell on the New York Avenue corridor and within the past year has convinced seven firms to move there. One of those firms, Super Concrete Corp., said it will expand in that area from its Georgetown waterfront location and generate 230 jobs, according to Chris Britton, assistant director for program planning for the city.
City planners intend to survey to food wholesaling industry to find out more about its problems, Schumake said. In the District, that industry employes between 8,000 and 9,000 people, and food processors such as bakeries hire about 1,200 workers.
"Light industry and services are revenue producers for the city, and they produce jobs," Schumake explained. "Blue-collar jobs are what we need . . . to retain in the District."
Schumake's office is considering proposals for tax breaks for companies that move or expand within certain areas of the city or that hire disadvantaged workers, he said. The city is unable to provide industrial revenue bonds because they would have to be included as a line item in the city's budget, which can be lowered or eliminated by Congress, Schumake said.
Many manufacturers and wholesalers choose to keep only their offices in the city but expand facilities that provide skilled and unskilled jobs outside of D.C., where land is more plentiful and less expensive. "That kind of investment in land isn't going to happen in the District," Schumake said.
A few companies complain about poor streets, but more gripe about higher taxes. For example, a major Washington printing concern is planning to lease warehouse space in Maryland rather than across the street from its present District location because the city charges manufacturers a tax on invetory, Schumake said. The inventory tax has been phased out except for manufacturers and booksellers.
Schumake and Galloway regard downtown -- where business is strong in office construction -- as the core for expansion throughout the rest of the city. For example, the city is encouraging developers who are planning a furniture merchandise mart similar to the one in Chicago in an old regrigerated warehouse near Fourth and D streets SW, Schumake said.
"It is an old, special-purpose building that would be expensive to renovate," Schumake said, but it's close to the Metro subway, and vacant land for expansion is adjacent to it.
"The facility currently generates no taxes," he said, but a merchandise mart could generate 250 businesses, 400 direct jobs and potentially produce $3 million in tax revenues a year. The parties are still dickering over the price, he said.
"All areas with Metro stations have potential for new development," Schumake said.
"We need to continue to assess the incentives" the District has Galloway said. "There's much the District of Columbia has to offer.
"It's an ongoing process. You enhance the areas outside of the central core by enhancing the central core."
City planners are considering segmenting sections of the city as special planning districts so that they will be developed with social as well as financial considerations in mind, Schumake said. It also should prevent picemeal development. Such a plan now is being encouraged for the downtown area.
"The city loses out in the long run with just office buildings," Schumake said. Mixed uses of land are "an important revenue producer and job generator. We're not trying to take development out of the hands of the private sector, but we're trying to guide the development."
One example of such planning with community participation is taking place in the Brookland section of Northeast Washington, Schumake said. "You don't just talk about a Metro station, but how it affects the neighborhood two to three blocks beyond it," he said.
Brookland residents asked the city to look into revitalizing their 12th Street NE commercial area, Schumake said. "But it's important to look at how that commercial strip relates to the surrounding community," he said. For example, if revitalizing the strip raises property values, many of the area's homeowners who live on fixed incomes won't be able to pay the property taxes, he said. "You might look at tax deferment for those residents," he said.
In Washington, in addition to having financial problems, "When you have rent control in effect, it's a real detriment to development of the housing segment," said John R. Tydings, executive director of the Board of Trade.
"There's an image consideration for business," he said. "Fairfax County has the image that it works hard . . . [and that] makes it easy to expand."
The central city is somewhat unusual, Tydings said, because the business district runs from Southwest to Capitol Hill, from 16th Street to Georgetown, up Wisconsin Avenue to Western Avenue. "The gap is in the historical old downtown" between 7th and 15th streets.
"The next generation of development will be beyond those traditional areas" into Brookland, Florida Avenue and Bladensburg Road NE, where the new Hechinger Mall has opened, Tydings said. The District also has available land in Southeast off Martin Luther King Drive, along Florida Avenue and New York Avenue, he added.
Why will development move from the old downtown to other areas of the District?
"The market is there," Tydings said.