District of Columbia officials and Washington business leaders want to create what amounts to a mini-government for downtown Washington, a public-private partnership to oversee the 660 acres between the Capitol and the White House.
In much the same way that the Pennsylvania Avenue Development Corp. is rebuilding "America's main street," a new organization is envisioned to direct the redevelopment of downtown Washington.
The new agency doesn't have a name yet. It's described as "the management entity" by the Mayor's Downtown Committee, which proposed the idea in its recent recommendations for determining the future of the Capital's retail core.
What downtown needs, the panel said, is an organization to "provide leadership and management to ensure that the objectives of the downtown plan are achieved."
Downtown already is on a roll--despite the present recession--and the job now is to be sure that as the center city is redeveloped, it becomes more than an urban office park. Stores big and small, theaters, tourist attractions and housing are going to be needed to create the "living downtown" that is now everyone's goal.
Other cities have made good use of similar agencies. They built the downtown skywalks that link dozens of buildings in Minneapolis, directed the rebirth of Baltimore's inner harbor and are aiding redevelopment in St. Louis.
It will be up to the City Council to charter the new agency and delineate its powers. The mini-government will probably be run by a board made up of people from the various government agencies and the private sector.
City planning director Jim Gibson stresses that it would not usurp any authority of the present zoning commission, the Fine Arts Commission or any of the other groups with jurisdiction over downtown.
But the mini-government would advise the other agencies and the council itself on actions necessary to accomplish the city's goals for downtown and would have the power to take action on its own.
Unlike past volunteer groups such as Downtown Progress, the new agency would be more than a cheerleader; it would have both clout and money. If someone tries to build an inapppropriate office building in the area that's to be preserved as Chinatown, the agency would stand up and say "No." If a plan for moderate-income housing downtown runs into financial trouble, it could find the funds.
The Downtown Committee suggests a spectrum of tax and financing tools to make theaters, housing and shops economically viable. None of the amenities that make the difference between boring blocks and a real neighborhood can make as much money as office buildings, so some economic nudge is necessary.
The mini-government would not have the power to tax, but the downtown district should be designated as a "special tax district" utilizing either or both of two proven tax techniques to finance additional services and public improvements for the area.
The simplest method would be to levy a small surtax on downtown real estate and spend the extra money on downtown amenities--extra police, more frequent trash removal, fancier sidewalks and the like. hat city officials prefer is to use a technique called "tax increment financing" to tap the additional revenues the city is sure to get from downtown redevelopment. Estimates are that by 1986, the District will be getting $50 million in added revenues as a result of downtown redevelopment. Not only property taxes, but sales and income tax revenues will rise, too.
The idea is to have the City Council designate a portion of that new tax revenue to be reinvested in downtown. The city would figure out how much it is collecting in taxes in the neighborhood already and say, "Okay, from now on, a few cents of every additional tax dollar collected will be plowed back into downtown through the mini-government." Nobody is saying yet what portion of the incremental revenue would be recycled.
Some 20 states already permit tax increment financing, so the technique is known to work. More controversial are some of the other financial techniques that are being advocated--tax abatement, tax incentives, industrial revenue bonds and transfer of development rights.
Tax abatement means waiving all or part of the taxes for a few years on new projects that contribute to a better downtown. The lower taxes would encourage developers to build housing, theaters and stores. Tax abatement has been used extensively in New York City for renovated apartment buildings, but a backlash is developing because abatement has turned into a subsidy for rich landlords.
Lowering tax assessments for landmark buildings, historic structures or arts facilities is another possibility, though tinkering with property values also opens up potential abuses.
Transfer of development rights also is suggested as a way to preserve historic buildings. Rather than tear down an elegantly aging four-story building to put up a 10-story office tower, the owner of the small structure would be allowed to sell the right to build the extra floors to someone else. he District is one of the few local governments in the country that has not given itself authority to issue industrial revenue bonds as a means of subsidizing economic development. Planning chief Gibson predicts 1983 will be "the year of the IRB for the District."
Industrial revenue bonding authority would allow the city to sell tax-exempt bonds at relatively low interest rates and pass that cheap money on to someone who wants to build apartments or to some other project needing a subsidy.
Industrial revenue bonds, too, face a backlash, because they have been widely used to give low-cost financing to projects that would be built anyway. If Congress decides to adopt a flat-rate income tax or to dramatically simplify the tax system by eliminating special tax exemptions, tax-free revenue bonds will lose their advantage.
Downtown planners say the whole mix of financial incentives--as well as cold cash--are needed to assure that the center city rebuilding produces more than offices and incidental retail shops.
The mini-government would provide the mechanism and the financial incentives the means to create an exciting downtown D.C. It remains to be seen what the plans and the leadership will really produce.