The Committee of 100 on the
Federal City 1 March 1998 The Honorable Charlene Drew Jarvis
Chairperson, Committee on Economic Development
Council on the District of Columbia
441 4th Street, N.W., 7th Floor
Washington, D.C. 20001 Dear Ms. Jarvis: This transmits the comments of the Committee of 100 on the Federal City
with respect to Bill 12-514, the
"National Capital Revitalization Act of 1998." As you know, the Committee of 100, in our position paper entitled, "A
New Economic Development Strategy and Structure for Washington, D.C." supported
creation of a new, public-private organization to assist the economic revitalization of
the District. We used the five guiding principles presented in that paper to evaluate and
offer suggested amendments to the draft bill. Enclosed for reference is our 11 February
1998 letter to you conveying our key comments. Since that time, we have been working diligently with the Committee on
Economic Development to better understand various positions affecting legislative
composition and to fashion language that might improve the bill. We commend you and the
staff for making a number of changes. And, we understand that a number of additional
improving amendments that do not appear in the "Final Committee Print" version
of 13 February 1998 will be offered at first reading. The Committee of 100, however, based on that 13 February version
of the bill, is not able to support enactment without additional substantive amendments.
Our principal concerns focus on four remaining critical flaws: 1) misconceived orientation
to only large projects, 2) inadequate consolidation of programs and agencies, 3)
overreaching delegation of authority, and 4) perpetuation of isolated decisionmaking on
key economic development issues between the District and federal governments. Back to top of page The following discusses those concerns and how the bill might be modified
to address them. 1. Misconceived Orientation. The bill segregates District
businesses into two classes: a) "large," over $2 million, and b) small, $2
million or less. The Corporation would take responsibility for the large project. The
current governmental agencies, principally DHCD, would be retained to handle
"small" projects. That provision is bad economic development and worse
government. The focus of the Corporation must be growing healthy and diverse
businesses. Most of these businesses will start "small." Two thirds of all jobs
(probably a greater percentage of District resident jobs) will come from small businesses.
These businesses will be located downtown, in neighborhoods and commercial/industrial
outlying areas. Recognizing the key role of small businesses, "best practices"
among other jurisdictions places particular emphasis on fostering small business
attraction, retention and growth. The current bill goes in the opposite direction with its
focus on large development projects. In doing so, it is misdirected and of marginal
benefit as a vehicle for true economic development. We understand that a number of persons and organizations supporting the
distinction between large and small projects offered concern that the Corporation will
focus almost exclusively on development of very large projects and that smaller businesses
and projects will not, therefore, be able to compete for attention and resources. We
appreciate that concern; but conclude that it is precisely the reason that this
Corporation should be reoriented and should undertake comprehensive assistance regardless
of size. To separate smaller businesses from the assistance of the Corporation
will, we fear, deprive them of both resources and exposure to opportunities they need to
succeed and grow. Further, the proposed classification would perpetuate, potentially
strengthen, residual segregation of interest and investment between the Downtown and
neighborhoods, small and large businesses, and, to a heightened degree, majority and
minority-owned businesses. That is not a prescription for true economic development. Further, the principal rationale for governmental involvement with most
large projects is not the benefits they directly create, but the "spin-off"
growth engendered by them. That spin-off is where the majority of new economic activity,
business opportunities, job creation, and tax revenues is generated. That’s where the real
action is. Much of it will be with small businesses. And, it is a sad fact that the
District has too often failed to capture its share of those benefits for its residents and
businesses – because it has lacked the orientation and rigor to undertake integrated
planning and systematic service delivery. The Corporation offers an opportunity to correct this deficiency.
Unfortunately, the bill, as currently constituted, maintains and even reinforces protocols
that have failed to deliver for the majority of District businesses and its residents. The bill should be amended to remove the project size distinction.
It should specifically direct the Corporation to focus on small business and project
development. Further, when contemplating major redevelopment projects or large special
project initiatives, the Corporation should be required to prepare and implement a program
that identifies anticipated business and employment opportunities and ensures, to the
maximum extent feasible, that District businesses and residents have the resources and
skills to complete successfully for those benefits. Back to top of page 2. Integration and Consolidation. The Committee of 100
views the Corporation as an opportunity to make necessary improvements to government
structure to increase coordination, effectiveness and efficiency. Regrettably, the bill
(with the exception of incorporating the RLA and EDFC into the Corporation) fails to
adjust governmental structure to follow shifts in function. This will undoubtedly result
in continuing, potentially even exacerbating, duplication of services, inefficiencies and
waste, lack of accountability – and general confusion among businesses and citizens
as to where they should go for services. That result is just the opposite of the expressed
interest of Council and the Authority – and one of the reasons given by Congress for
rejection of the previous legislative attempt to form a corporation. It is recognized that failure to make governmental consolidations is in
large part a consequence of the bill’s current two tiered (large/small project) system
discussed above. Indeed, we suspect that the reason for those classifications has as much
to do with preservation of existing structure and associated relationships as with
concerns over service delivery. Council should seize this opportunity to reorganize the government and its
programs to improve service delivery. In doing so, it should reassure business and civic
organizations that the Corporation will make available programs assisting them, not seek
to usurp or duplicate their efforts. Further, Council should make known existing
provisions of the bill that offer protections to employees of agencies consolidated into
the Corporation, many of whom can be expected to compete successfully for jobs with the
Corporation. The bill should be amended to consolidate DHCD, OED, and the job
training/employment matching components of DOES into the Corporation. The HFA should be
made a subsidiary of the Corporation (maintaining its current authority, staff, and
separate Board) to improve coordination and integration of its important programs; and
further the HFA should assume certain programs (e.g., HPAP) now managed through DHCD. The
duties of the Office of Tourism and the Committee to Promote Washington should be
consolidated into the Corporation. The bill should provide a timeframe, say 90 days, for
the Mayor, the Authority and the Chief Management and Financial Officers to propose
reorganization plans for these consolidations as well as provide a date by which the
transition in responsibilities will become effective (not more than one year from the
effective date of the Act). Back to top of page 3. Too Extensive Delegation of Authority. The Committee
of 100 supports providing the Corporation with the powers and resources it needs both to
create an environment that encourages economic revitalization and to be responsive to the
needs of specific businesses and projects. We see it, however, as a vehicle for the
implementation of economic development policy – not as the maker of that policy.
Making policy must be reserved for out elected officials. No matter how hopeful we are for the sensibilities of the appointed board
members, our elected representatives should establish the policy parameters within which
the Corporation operates, have oversight over use of public funds and assets, and provide
guidelines for how the Corporation operates. In a number of important respects, we believe
the bill would inappropriately delegate those responsibilities to the appointed Board
members. They follow: A. Comprehensive Plan. The Comprehensive Plan, through
its local and federal elements and the more detailed ward and small area components,
delineates policies which the public participated in formulating and elected officials
have adopted. It provides the appropriate policy guidance for the Corporation. The bill should explicitly state that the Strategic Economic
Development Plan (SEP) is to be consistent with the Comprehensive Plan – and that SEP
and major development initiatives of the Corporation are to be reviewed and certified as
being consistent by the Office of Planning or the CPC, as applicable. Further, in areas
where the Corporation proposed to undertake extensive redevelopment, it should (as in the
example of the Pennsylvania Avenue Development Corporation) be required to prepare a small
area plan for the consideration and adoption of Council as an element of the Comprehensive
Plan.
Back to top of page B. Use of Public Resources. To the extent that the
Corporation makes use of public funds and resources, which it does in very substantial
ways – and would even more extensively given the recommended consolidation of agency
functions – it should do so with the appropriate oversight and approval of elected
officials (and in a control year, the Authority). While we support providing the
Corporation with broad and flexible use of public resources, the bill provides inadequate
policy input and safeguards with respect to the use of public resources. The bill should be amended to give the Corporation responsibility
for preparation of annual Action Plans that describe the programs and projects the
Corporation will undertake and the proposed allocation of public funds and resources
related to them. Such Action Plans should meet requirements for use of federal grant funds
(e.g., CDBG, EDA, SBA, Labor). Council should approve the Action Plans – by
resolution, if possible. Further, with respect to the disposition of publicly owned
property (local or federal) to private parties, the bill should explicitly state that
sites are to be competitively offered unless the Corporation shows cause for another means
of disposition and the Council concurs.
Back to top of page C. Eminent Domain. The Committee of 100 recognizes the
value of the power of eminent domain to implement public policy. That power, or the threat
of its use, is sometimes necessary. We support making it available to the Corporation.
But, we feel equally strongly that no group of appointed individuals should have the
authority to take a person’s land without first having the approval of the elected
officials. The bill would give the Board that power. The bill should be amended to require the prior approval of
Council before eminent domain may be exercised by the Board.
Back to top of page D. Compliance with Law, Regulation and Process. The
Council and Authority have and are making progress in improving outmoded and cumbersome
laws, regulations and systems affecting the District’s businesses. More work remains. The
focus of the government should be to continue that work for the benefit of all businesses
– not on providing certain entities, like the Corporation, with relief. You are to be
commended for removing certain language from the bill that would have had the effect of
giving the Corporation the ability to override local law, regulations and processes. However, the bill still contains troublesome language in this respect. In
addition, it effectively provides the Corporation with bumping rights in regard to
governmental reviews and the issuance of permits. Those provisions have the harmful effect
of putting all businesses not in the Corporation’s priority areas or otherwise receiving
the assistance of the Corporation at a competitive disadvantage. In effect, the business
is hit with a double whammy – no assistance and pushed back in line. This is unwise
and unfair. The bill should be amended to delete any reference to the
Corporation having special interpretive or handling priority. Instead, the bill should
explicitly state that the Corporation and the businesses and projects it assists must
abide by all District laws. regulations and procedures related to business operation and
development approval and permitting (e.g., zoning regulations, historic landmark and
district preservation pursuant to DC Law 2-144, design review, etc.).
Back to top of page 4. Expanded District and Federal Partnership. At the
inception of the process leading to the legislation, we were hopeful that the Corporation
would provide a vehicle for ending the isolation in meaningful economic development
coordination between the District and federal governments. In one of the most damaging
outgrowths of limited Home Rule, a system evolved where the federal government makes
critical decisions affecting the District’s economy with no real regard for local impact
– and the District does likewise. Both governments seem more intent on preserving
some notion of automy than in identifying areas of mutually benefiting cooperating and
pursuing it. The federal government is the District’s biggest business, far and away
the major landowner and the largest employer. In any other jurisdiction, the local
government and biggest industry would have a strong working relationship. Very little in
the bill suggests any meaningful shift in the current situation. Aside from a three presidentially appointed Board members (and, we
understand, a separate proposal of some federal contribution to funding), the bill does
not address the issue. No substantive provisions deal with delineating an agenda, much
less procedures, on which the two governments can work to strengthen economic development
for their mutual benefit and that of local businesses and residents. As such, it
represents a failure to take advantage of an important opportunity to correct a flawed
relationship and system – by both government. The bill should, at a minimum, include an agenda for developing a
working relationship with the federal government. That agenda should include: coordinated
planning and use of surplus federal property, facility location decisions to catalyze area
economic development, business development programs to facilitate use of local businesses
for goods and services, tourism coordination, job training and matching programs, and
integrated development plans for properties retained, in whole or part, in federal
ownership (e.g., the Southeast Federal Center and St. Elizabeth’s Hospital, etc.).
The Committee of 100 continues to support the creation of a public-private
organization to assist in the economic revitalization of the District. We hope that the
Council will consider amending the proposed bill to incorporate the suggestions included
in this letter. Sincerely, Joseph R. Bender
J. Kirkwood White Enclosures [enclosure not on-line] cc: Members of the Council | 
