The Washington Post

City will study fiscal impacts of FBI move

Letting the FBI leave might not be the worst thing in the world. (Jeffrey MacMillan/The Washington Post)

Updated Wednesday 10:45 a.m. with Gray administration comment

With Mayor Vincent C. Gray poised to pitch Poplar Point as a potential location for FBI headquarters — thus proposing to reserve one of the city’s most valuable potential development sites for an untaxable federal compound — you’d think someone in the government would have done a rigorous cost-benefit analysis of such a move.

You’d be wrong! That’s because Gray and D.C. Council members just asked Chief Financial Officer Natwar M. Gandhi to do one this morning, at their monthly breakfast meeting.

Council member Tommy Wells (D-Ward 6) broached the subject during a budget briefing from Gandhi, asking about the fiscal impact of the FBI move. Gandhi said no formal study had been done but “we would be delighted to do something of that nature.”

The fiscal implications are considerable. On the downside, losing thousands of employees to a suburban location is never good — even if the city can’t tax the income of suburban residents, it still collects taxes on parking, meals and other daytime purchases. On the upside, whatever replaces the antiquated J. Edgar Hoover Building on Pennsylvania Avenue will generate property taxes for the first time in at least 50 years and it will host thousands of employees — and perhaps even house residents who would pay income tax here. Also, building a new compound — at Poplar Point or elsewhere — could keep those incidental economic boons inside the city, while perhaps sparking private investment in underdeveloped parts of the city. Back on the downside, that would also mean semi-permanently removing 40 to 55 acres of city land from the property tax base.

The discussion Tuesday morning helped sketch out the lines of debate: Jack Evans (D-Ward 2) and David A. Catania (I-At Large) appeared skeptical of letting the FBI leave the city, citing not only the potential loss of employees but the loss of government contractors as well. Wells and Gray seemed more inclined to account for the impact developing private uses would have on the city revenue base. “Look at the potential impact of all those property taxes,” the mayor said at one point.

The recognition that the FBI’s departure might not be such a terrible thing after all, given the major opportunity costs, raises the possibility that Gray’s Poplar Point proposal might not be a whole-hearted one. While politics might demand that the District not bow out of the regional derby entirely, a sensible look at the city’s future growth might also demand concluding that a high-security government compound is not a wise use of a prime development parcel. An independent fiscal analysis could start to make that case.

Gandhi pledged to complete the report “as fast as we can.” A spokesman said a study should be complete within 60 days.

Update, 2/27, 10:45 a.m.: Gray spokesman Pedro Ribeiro said the administration’s economic development office has previously done an analysis of FBI relocation options. He declined to share the report.

Mike DeBonis covers Congress and national politics for The Washington Post. He previously covered D.C. politics and government from 2007 to 2015.



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Mike DeBonis · February 26, 2013

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