Takes Money To Get Money - When Welfare Is Development

D.C. gives H Street developer $5 million tax break

By: Bill Myers
Examiner Staff Writer
March 4, 2010

The D.C. Council has given a multimillion-dollar subsidy to a developer of the gentrifying H Street corridor. Without dissent, the council approved an emergency measure that grants a tax abatement to Steuart Investment Co., owner of the lot at the corner of Third and H Streets Northeast. The tax break is designed to help the Chevy Chase developer build a high-rise building with shopping, restaurants and apartments or condos. Under the law, Steuart's property taxes will be frozen at what it paid in fiscal 2010 for 10 years. The company then will pay a portion of taxes above the fiscal 2010 level through fiscal 2030. The breaks are capped at $5 million -- 7 percent of the project's expected costs.

Third & H Street project

» $67.5 million

» 42,000 square feet of retail, including a multi-story grocery store

» 210 apartments or condos

» Parking garage with up to 270 spaces

A planned grocery store gets its own 10-year tax break, but that isn't capped. In the fall, Chief Financial Officer Natwar Gandhi warned the council against the legislation because the city -- facing nine-figure budget gaps -- can't afford it. The legislation was championed by Councilman Tommy Wells, D-Ward 6, who represents H Street. The Steuart development, he said, "is the linchpin to the revitalization of H Street." "H Street, since the riots of 40 years ago, has been a street noted by chaos, disorder, drug sales," Wells told The Examiner. "The street is really rebounding, but it takes investment and city help." Developers and city planners have been eyeing the H Street area between Third and 15th streets as a potential real estate gold mine as young professionals spill out of Capitol Hill and head north looking for nests. A series of boutiques and high-end restaurants and bars have sprouted on H Street in the past decade, and the city is planning to build a streetcar line there. In related legislation, the council also passed a bill that would allow business owners along H Street to obtain a property tax deferment this year. Wells said the deferments would help compensate owners whose businesses are being hurt by the city's reconstruction efforts on H Street. A similar law was passed last year. Two businesses inquired about the tax deferment, and one applied for it, finance office spokesman David Umansky said.

bmyers@washingtonexaminer.com