“If we can just keep the heart beating, that’s what this is about,” said Monty Hoffman, founding member of the new organization and chairman of the real estate development company Hoffman & Associates. “It’s not making profits, it’s trying to keep these businesses and the jobs they create going.”
Hoffman and other business owners told council members that the sector employs 30 percent of working D.C. residents and provides $2.7 billion in annual District tax revenue. But many of the entrepreneurs behind these businesses are thinking of shutting down and doing something else.
“And if they do something else, then it’s going to cost an enormous amount of capital and time to get someone else to come back in, if we are ever able to get someone else to come back in,” said real estate developer Richard Lake of Roadside Development.
Members of DC2021 told council members they were hopeful for a partial reopening in the summer, but that they expect many businesses to suffer for many more months.
“I believe we are looking at a year or more time frame,” Lake said. Government help could mean “the difference between losing 40 percent of these businesses or losing 70 percent of these businesses,” he said.
Andy Shallal, DC2021 member and owner of the restaurant chain Busboys and Poets, said the District stands to lose a substantial portion of its business tax base.
“For a lot of businesses, they’re paying yesterday’s bills with today’s revenue, and when that spigot is cut off, the avalanche is overwhelming,” Shallal said. “For many businesses that I’ve talked to and many restaurateurs that I’ve talked to, the idea of folding is very real.”
And Shallal said there isn’t much time to help. “This cannot be an issue of months,” he said. “This has to be an issue of days, and maybe weeks at the most.”
The group presented dire potential recovery curves for the restaurant, retail, hotel and entertainment sector, with a best-case scenario showing a 70 percent recovery by early 2021, when a vaccine for covid-19 might be available. The worst-case scenario showed a less than 30 percent recovery for the sector into 2022.
Mary M. Cheh (D-Ward 3) questioned the accuracy of the dismal projections. “I think that what we have here is a period of time when there’s an issue and then a bounce back,” she said.
But Council member Charles Allen (D-Ward 6) called the projections an important “dose of realism.”
“Unfortunately, I think it’s a realistic modeling of what recovery’s going to look like,” Allen said. “It’s not like there’s a switch that’s going to get flipped one day and everything just goes back to the way it was five or six weeks ago.”
Among other tax reductions, the DC2021 members suggested a one-year property tax abatement for District businesses in the sector, which they said would provide $346 million in relief. They said that landlords would pass the tax savings to rent-paying restaurants and other businesses, many of which are failing to pay rent anyway.
The business leaders said the District won’t be able to collect the lost property tax revenue from businesses that have gone under.
Nizam Ali, who’s worked in his family’s historic restaurant, Ben’s Chili Bowl, since he was a child, said the small chain did not pay property taxes due in March on the three buildings it owns.
“We pay $103,000 out of pocket every year for property taxes, and I know that that funds the city, and it’s essential in that way,” Ali said. “But with no income coming in, or extremely little, it’s devastating for us and for other businesses.”
Council members appeared receptive to helping the sector, but said the details would take time to work out and would likely come as part of a broader rescue package for the District’s economy.
“We need to get cash in the hands of those who need the help the most,” Council member Elissa Silverman (I-At Large) said. But the question is: “What is the most efficient means of doing that?” she asked.
Council member Vincent C. Gray (D-Ward 7) said he supports efforts to lift the District’s larger economy, but residents in his ward will want to be assured that there’s something in it for them.
“Let’s remember the people who are living in areas of the city where they haven’t seen much of the greater good as yet,” he said, “and will need to be convinced . . . in terms of why the investments that we’re arguing need to be made should be made.”