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The D.C. Council has approved $1.7 billion in tax breaks and other subsidies to developers over the past decade — with more than one-third of the subsidies going to 10 developers who donated the most to council members’ campaigns. Kojo talks with WAMU reporters Patrick Madden and Julie Patel about their investigative series detailing the influence of money in D.C. politics and public policy.
- Patrick Madden Reporter, WAMU 88.5 News
- Julie Patel Reporter, WAMU 88.5 News
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Special Report: Deals For Developers
The District government gave away more than $200 million of public land to private contractors at deeply discounted prices. Explore the database of D.C. campaign contributions and tax breaks by address, developer and public official.
For example, real estate firms Blue Skye Construction and Donatelli Development won or partnered on five projects since 2008, a quarter of D.C.’s land deals. Payment for this land, according to city records, totaled $88. But the appraised value is nearly $17.5 million.
See a breakdown of properties below:
Chart the network of donations to D.C. officials and candidates from 133 groups linked to development teams that were awarded subsidies. For example, click on Mayor Vincent Gray and see that he received more than 220 contributions worth about $220,000. Click his largest donors and see its contributions and who they went to.
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. It's no secret that the District has one of the hottest real estate markets in the country. All the cranes and construction sites in the nation's capital are daily reminders of that. But less obvious are some of the deals that pave the way for developers to cash in on the city's hot properties.
MR. KOJO NNAMDIThe D.C. government awarded more than $1.7 billion in subsidies to private developers in the past decade, and a recent WAMU 88.5 investigation unearthed that more than a third of that money went to the developers who donated the most to local political campaigns. Joining us this hour to explore the relationships that they uncovered by comparing the city's tax subsidies with its political donations and the extent to which the District is fostering a pay-to-play political culture is WAMU 88.5 reporter Patrick Madden. Hi, Patrick. Always a pleasure. Good to see you.
MR. PATRICK MADDENGood afternoon.
NNAMDIHe is joined in studio by WAMU 88.5 reporter Julie Patel. Julie, thank you so much for joining us.
MS. JULIE PATELThank you, Kojo.
NNAMDIIt's a conversation that some of you may want to join by calling 800-433-8850. Are there new development projects in your neighborhood in Washington? Are they contributing to where you live in a way that would justify the city giving the developer behind that project a generous tax subsidy? Give us a call, 800-433-8850, or send email to email@example.com. Subsidies are part of the toolbox that local government officials can turn to, to spark economic development.
NNAMDIBut you two undertook a massive investigation to look at who received them over the past decade, where the developments that got breaks were located in the city and the relationships between those developers and local political campaigns. Why was this a necessary investigation to you, and what did you hope to learn by doing it?
MADDENWell, what we really set out to do is we were looking at two different things. On one hand, where were these tax breaks going, where were these subsidies going, which developers were receiving them. And then on the other hand, we wanted to see sort of the -- how many contributions, campaign contributions these developers had made and sort of looking at those two different data sets and to see the connections.
MADDENAnd so as we started uncovering this, you know, we looked at, you know, that developers -- and this is not going to surprise a lot of people -- but they give a lot of money to local campaign, and they have sort of an ability to give more than other people through these limited liability companies that we touch on. These are sort of LLCs that they create for legal real estate purposes, but because of that, they can give multiple donations to candidates, to councilmembers and sort of seen how those two worlds collide.
NNAMDIJulie, what was the scope of the data you looked at to piece together this story?
PATELYeah. The bottom-line is we had a campaign finance data, database over 10 years, so 100,000 campaign contributions that we examined. We looked at 110 different projects, and a lot of this work -- a lot of stories had been written in the past or had been broadcasted about the idea that developers -- a developer here or there might receive a large subsidy.
PATELAnd certainly, other news outlets have looked at campaign contributions. But what we did was we sort of connected the dots and broadened that to look at everything, everything that we could find in over 10 years. So -- and what we found is, you know, nearly the 10 developers that donated the most over those 10 years, they received more than a third of the subsidies over that time.
MADDENYeah. And that was I thought the great thing about this because every one we talked to at the official level would say, no, these donations do not influence any of these decisions that we're making when it comes to these subsidies or these land deals. But it's great when you actually crunch the numbers, you see that whether it's, you know, what the connection is, but the groups that are winning the most subsidies are the ones donating the most money.
NNAMDIBy some remarkable coincidence the ones who are the major donors happen to be the one who end up getting the major subsidies.
MADDENAnd in fairness, though, I mean, you know, as developers would tell you, when you do engage in one of these public-private partnerships, that means you are constantly in contact with the city. You're meeting deadlines. You're meeting requirements. And so it does mean that you do -- you will have these much more engaged relationships with city officials, and so they'll tell you that that is one reason why, you know, there are so many donations.
PATELAnd there are cases where a certain developers donated a lot of money and didn't receive very much in subsidies, and there were cases where certain projects or huge projects receiving huge subsidies and the developers didn't donate very much. So there are certainly cases like that.
NNAMDIWhy do councilmembers argue that these subsidies are necessary in the first place, and when did we start to see them being given out more often? Your reporting indicates that they apparently increased consistently from 2002 to 2011, Julie?
PATELI'm sorry. What was the question?
MADDENBasically -- yeah. What we found basically is that these subsidies have been skyrocketing.
MADDENWhen we looked at it in 2002, we saw $4 million in these economic subsidies awarded to developers, 2011, 100 -- nearly $100 million. So what we saw if you can just picture a graph, imagine, like, a big line going all the way up. And it's because it really started out as a targeted program. Think about -- you know, look at Chinatown, other places in downtown D.C. where this started.
MADDENAnd then as we saw, it just seemed like more and more projects started getting these tax breaks. Councilmembers in their specific wards wanted a tax break for a project in their ward. And, you know, I think councilmembers will say, well, look at the skyline, look at all the cranes. This is -- it's work, you know.
NNAMDIWell, most councilmembers, I guess, would argue that this is about sparking neighborhood development. That's the main reason for this. But if that is indeed the case, how many of these deals went to projects in the major low-income sections of the city? I'm thinking Ward 7 and Ward 8.
PATELLess than 5 percent.
NNAMDILess than 5 percent in Ward 7 and Ward 8? Where were the majority of these projects going?
MADDENWe're talking downtown D.C., Chinatown, Columbia Heights, Shaw, I mean, all the -- the waterfront, all those areas that have been heavy redevelopment. That's where these subsidies are going. And one thing that critics we spoke with, Good Jobs First, which is an economic subsidies watchdog -- and their point is -- well, they have a couple points.
MADDENBut it's mainly, how do we know that these subsidies are needed? I mean, it's a hot real estate market. Why -- does a developer really need a, you know, some subsidies to build a project in a neighborhood that is booming? And that's -- it's unclear because of the system's
NNAMDIWell, how often did you find deals where -- that were going to boost projects where the subsidies were not needed in the first place?
PATELThere were a dozen cases where we found that the subsidies weren't needed because the buildings had already been built, the properties had been built already or in some cases, in half a dozen cases, there were condo buildings where the unit owners that we interviewed said they didn't even know they were getting the property tax exemption.
PATELThe developer might have won it for them initially, but they didn't even know that they were getting it. And in that case, critics say, well, if it wasn't needed and if a project was already built, you're not going to get very much out of it. The city can't leverage that to offer public benefits, like jobs or affordable housing.
NNAMDIWell, a detailed financial analysis done by the city since some new requirements were put into place found that the $11 million proposed tax break for the Howard Town Center project in Shaw was not needed at all. That was a project that was being developed by Cohen companies and others. But in that particular case, let's take a listen to some of Patrick's report on how at least one councilmember saw the value of that apparently unnecessary subsidy.
MR. VINCENT ORANGEI just don't understand why all this controversy over the Howard Town Center.
MADDENThis is Vincent Orange.
ORANGELet's just go around the city and look at what we've done.
MADDENHe starts ticking off all the tax breaks the city has awarded over the years.
ORANGEAll over the city, we give money, but here, we're arguing over a measly $11 million.
MADDENOrange is right. Eleven million dollars is measly.
NNAMDIWhy is $11 million measly? It's not measly to me.
MADDENWell, Orange was right. He actually went around. He, you know, he's very good with numbers. He's an accountant, and he listed off just all the tax breaks. He talked about the Mandarin Hotel, LivingSocial, Giant. I feel like Vincent Orange right now. They're...
MADDENYeah. He just -- and he listed -- and it's true. The city has given out a lot of tax breaks, and his real point -- his other point was just, you know, "Why not this project?" Especially one that he felt needed to happen in that ward.
NNAMDIYeah. But if why not this project, what did that tell you both about the discipline that councilmembers are exercising in how these deals are or were doled out to developers?
MADDENWell, that's the funny thing because during that hearing -- and it was a great hearing. I advise people to go back and watch it. Mary Cheh, she spoke right after Councilmember Orange or maybe not right after, but she said, you know, we can't just do that. You know, we can't just throw money. She called it throwing money out the window when you say, all right. We'll give to Developer X because we gave to Developer Y, and that's -- that was actually what she said that we exercise no discipline.
NNAMDIIn case you're thinking of joining the conversation, give us a call at 800-433-8850. We're talking about the WAMU 88.5 News series that Patrick Madden and Julie Patel have done about the relationship between political campaign contributions and development projects in the city. 800-433-8850. Do you believe D.C. councilmembers when you hear them say that campaign donations do not influence their decisions as lawmakers? Why or why don't you believe them? 800-433-8850.
NNAMDIBy the way, if you go to our website, kojoshow.org, you'll find there a searchable database of all projects in recent years by the city's chief financial officer as receiving a subsidy and several that are scheduled to receive one. That table lists developers connected to the project and the subsidies estimated total value. The total contributions are based on 10 years of data from the D.C. Office of Campaign Finance. And I used to think Patrick Madden had a short attention span. Let's go to the callers now. Here is Oliver in Washington, D.C. Oliver, you are on the air. Go ahead, please.
MR. OLIVER HALLHi, Kojo. My name is Oliver Hall, and I'm an attorney who's representing the petitioners in one of the cases that Patrick and Julie covered...
HALL...the West End deal. And first, I just wanted to say Patrick and Julie have done an amazing job. Here, the amount of information they have covered in this investigative report is really astounding, but it's actually just the tip of the iceberg. And I wanted to address a couple of points regarding this West End deal, just by way of example.
HALLAnd so just a little background here, the West End deal involves public property where there's currently a library, the West End Public Library, and a fire station, which -- that property is being conveyed to a developer, East Bank, free of charge in exchange for East Bank's promise to build two separate private residence buildings, well, mixed-use buildings. The main one is going to be on the library lot, and it's going to be, I believe, a 10-story luxury condo building.
HALLAnd all that East Bank has to do in exchange for obtaining this really valuable property is to include a new library on the ground floor of the luxury condo building where the library currently exists. And then at the fire station lot, they're also going to build a private residence building, which will include a fire station on the ground floor of that building. I don't know who's going to want to live above that fire station, but maybe that's why they consolidated all the affordable housing units in that one building and got a waiver from -- including them in the library building.
NNAMDIAnd you're appealing that, why?
HALLWe appealed that on behalf of many members of the neighborhood and a group called the D.C. Library Renaissance Project who -- they oppose the privatization, essentially, of what is currently a free-standing public library. And the more you dig into this deal, the more you realize just what a raw deal taxpayers are getting.
HALLSo, for example, Patrick and Julie have reported that the value of the property conveyed to East Bank in this deal is $30 million. And they're right. That's what the appraiser estimated the value of the land to be. But, in fact, when the land is conveyed to East Bank in order to accommodate the luxury high-rise building, it has to be upzoned from a zoning of R5B to CR. That greatly increases...
NNAMDIWell, that -- it also complicates the discussion that we're having a little bit more. I'd like, Patrick Madden, for you tell me what the essential point of this here is.
MADDENOK. The basic gist of this is -- well, there a couple of them. But basically, what Oliver is talking about is it all depends on how you appraise this property. Is it worth $30 million as it's appraised right now? Or is it worth potentially a lot more if it gets the zoning change, which would allow the developer to build more units essentially? And so they are contesting how -- they're contesting a number of things, but mainly the process in which this happened.
NNAMDILet's talk process for a second before -- and, Oliver, thank you very much for your call. Because we've talked a number of times on this broadcast about your digging into how political campaigns are financed in the District. Your reporting on this project notes that developers take advantages of loopholes in the system to maximize their influence. How does that work?
MADDENYes. They call this the LLC loophole. Now, essentially, real estate firms, you know, if you're a real estate firm and you're going to start a project, you're going to want to create usually a limited liability company 'cause it will protect you in case something happens to that project. So these developers have a lot of these LLCs at their disposal and...
NNAMDIEvery single property that they own can be a different LLC.
MADDENExactly. And what's happened is that because of either lax oversight from the Office of Campaign Finance or just that -- or -- I won't say that, but that these are treated legally as separate entities under the campaign finance law, they're allowed to make multiple donations using these LLCs to a single candidate. And as I, you know, mentioned in the story that these donations really can add up over time.
NNAMDIJulie Patel, how often do developers take advantage of that, if you will? Some people will think of it as a loophole to create new subsidiaries of themselves when they take on different projects.
PATELWell, we looked at 133 different groups, developers, mostly, and nearly half of them had multiple affiliates donating. Nineteen had at least 10.
NNAMDITen affiliates donating. And on that note, we're going to take a short break. If you have called, and we have both developers and regular listeners calling, 800-433-8850 is the number to call. If the lines are busy, you may want to go to our website, kojoshow.org, ask a question, make a comment there, or send us an email to firstname.lastname@example.org. Or send us a tweet, @kojoshow, if you like to be brief. I'm Kojo Nnamdi.
NNAMDIWelcome back. We're talking with WAMU 88.5 reporters Patrick Madden and Julie Patel. They are reporting on a series on the relationship between political campaign contributions and development projects in the District of Columbia. We are taking your calls on 800-433-8850. But the lines are all busy. So you may want to send us an email to email@example.com.
NNAMDIPatrick, land is a precious commodity in the District. There is not a lot of it to go around. But you reported yesterday that the District has sold or leased $200 million worth of land in the past five years at discounted prices. We're talking a dollar payment for property worth $1 million, that kind of discount. How does it work?
MADDENWell, right. So remember the previous caller, Oliver? He was talking about that West End deal. That's one of these properties where the city is essentially -- it's got a public property that at the sides is surplus, run down or vacant or needs to be refurbished. And they essentially will sell it or lease it long term to a developer for very deeply discounted prices, and in some cases, you know, $1, basically giving the land to a developer. And in return, the developer promises to build affordable housing to higher District firms. And so that's sort of the deal.
NNAMDIWhat were the political connections of the firms that received those kinds of what some people would think of as sweetheart deals?
MADDENWell, I mean, that's what was interesting. We highlighted how two firms that have partnered on several of these deals -- or they partner on one deal, but have worked on several of them. Donatelli and Blue Skye were, you know, by all intents and purposes, close to the Fenty campaign. And Donatelli hosted the first fundraiser for Mayor Fenty in 2008. It was also Fenty's birthday, and this was at Donatelli's home.
MADDENAnd Blue Skye, you know, as we've put in the radio story, even caught a campaign ad for Mayor Fenty. So we were just highlighting how the firms winning these properties, in some cases, had close ties to the administration. And that's not even brining up all the campaign contributions that we totaled up from all the developers winning these deals.
NNAMDIYou mentioned that someone did -- in fact, one of these developers made a campaign ad...
NNAMDI...for former Mayor Adrian Fenty. Well, let's listen to that ad.
MR. SCOTTIE IRVINGSome people say that Adrian Fenty does not care enough about local small businesses. I'm a local small business owner in Washington, D.C., and I know for a fact that Mayor Adrian Fenty is making sure that local small businesses have an opportunity in rebuilding Washington, D.C.
NNAMDIWho are we listening to right there?
MADDENThat was Blue Skye Developments owner Scottie Irving. And as he mentioned, yes, Mayor Fenty did give opportunities for small businesses like his own to redevelop land in D.C. And again, it's just -- our questions were about the process. Who were the developers picked, and how much money had hey contributed over the years? And so that's our, you know, that's our big -- that's what we were looking at. We wanted to see the connections, the political contributions to developers winning this land.
NNAMDIWe mentioned the name Donatelli. Let's go to the phones where Chris Donatelli awaits us. He likes to make his own case. Chris Donatelli, thank you for calling.
MR. CHRIS DONATELLIThank you. Thank you for having me.
NNAMDIGo ahead. You're on the air. What would you like to say about this series of reports as it relates to you in particular?
DONATELLIOK. Thank you. Just a couple of things, and I, you know, I appreciate Patrick and Julie including me in their story and some of my quotes that I gave. One of the important things that I wanted to address was the land value that was listed in the articles. What isn't often understood is that in addition to -- as a requirement of our developments is that we have to include a large portion of affordable housing.
DONATELLISo whereby the city may appraise a piece of that property or have it assessed at a certain number, OK, which would be the market value, if they would go ahead and sell that property, you know, in the open market without having any covenants regarding affordable housing, without having any other rules and regulations that are special to the property, then, in fact, that would be or could be the value of the property.
DONATELLIHowever, in almost all of these profit partnerships and certainly in all of ours, they've included a large portion of affordable housing. For example, at Minnesota-Benning, we have 93 percent of the units that we're building, and we're building 376 of them, 93 percent of them include affordable housing. So it's not really an accurate portrayal to say that they're selling us property worth $13 million for a dollar when, in fact, they -- we are building all affordable housing.
NNAMDIWell, Chris Donatelli -- and I think the objective of building affordable housing is one of the reasons that D.C. councilmembers say these things are done. But I like to go to Julie Patel for a second and talk about what the report found out about how does the city track or verify the affordable housing units created by developers who receive subsidies on the basis of promises to create affordable housing.
PATELThe city does very little. We -- Patrick and I, we did some Freedom of Information Act request to the city in trying to delve into what promises are made and what actually happens. And we received very little information from the city, and that's because the city, for years, just hasn't been tracking it. They're starting to do a better job. They're starting to realize that they have to, you know, actually track and enforce and monitor all the benefits that are pledged.
PATELBut they really haven't been doing it, you know, for most of the projects that we look at. When we looked at them, we found that, you know, even in cases where the developers were providing affordable housing, there might be other loopholes. So for instance, the residents -- low-income residents might get into the place, but then, there'll be fees, new fees that are imposed that drive them out. So...
NNAMDIChris Donatelli, how do you respond to that, that the fact is that the city, until recently, had not been keeping track of whether or not the promises the developers made were actually kept? And some people would say that's why some low-income people were driven out of the city.
DONATELLIWell, I -- the public-private partnerships that we're involved in, the one being that off in Columbia Heights at Highland Park, we do have quarterly reporting that we do to the District to demonstrate to them that we are providing the affordable housing that we promised in our project. We have one building that's complete with 229 units.
DONATELLIAnd we are adding an addition, another 144 units. And that building is nearly complete. And, you know, they do monitor. It -- the whole program, in essence, is somewhat new. And so they -- and I believe they are understaffed. But at least, at our projects, there is a -- there's reporting required, and we do comply.
PATELI guess the question I would have is what kind of reporting is done about some of the other benefits that are pledged. So, for instance, Chris, we talked about this a little bit but, you know, there was the neighborhood fund that Donatelli Development had proposed back in 2001 to share profits from Highland Park with Columbia Heights with local groups. There's a 17,000-square-feet of retail shops and restaurants for the park place development near the George Avenue Metro. And since those benefits haven't been delivered, what is the company doing about that now?
DONATELLISure. Let me address that. OK. So at -- we mentioned the neighborhood fund at Columbia Heights. That is what we've pledged. We did pledge to share with the community a percent of our profits there. But we haven't had distributable profits yet with the project. We have built one building. The second one is nearly complete. We just haven't had the serial profits. That being said, since we've been involved in Columbia Heights, we've donated more than $600,000 to local charities. And I appreciate you, Julie, including that in your article today.
NNAMDIChris Donatelli, we got a tweet from Jonathan O'Connell of The Washington Post, who has nothing better to do than listen to this broadcast. He says, "Please ask Donatelli what he would think if D.C. did away with the rule allowing every LLC to contribute maximum campaign dollars." What would you think about that?
DONATELLIYes. I would think that would be a great idea. And I would certainly welcome that. It does create, you know, the need for a lot of fund raisers. It can create the appearance of a conflict of interest. The companies and businesses that create LLCs, you know, have an advantage. And, you know, the council or whoever has the power to address that, I certainly would welcome that.
NNAMDIOK. Thank you very much, Chris Donatelli, for your call. You, too, can join this conversation by calling 800-433-8850. And while we are on the subject on Columbia Heights, Julie, you reported that Chris Donatelli's group gave generalcy to the councilmember for that Ward. Jim Graham, then, of course, Donatelli receives subsidies to build there, but here's what the councilmember himself had to say when you questioned him about this.
MR. JIM GRAHAMHave I been influenced by campaign donations? Absolutely not. And there is not a shred of evidence that I'm aware of to suggest that I have. You know, I could've done without that 5,000 and still had more than ample funds. Go to UC. Compare it to what it was. Go to Columbia Heights. Go, in fact, to Georgia Avenue.
NNAMDIToday's report has this statement. Graham said the projects have revived the areas, producing jobs and creating new affordable housing units. He said that's why he supported them. The contributions from Donatelli over the past decade make up less than 14 percent of his total contributions during that time.
NNAMDIJim Graham writes in the email, "As I have told you, in three re-election campaigns, I raised $850,000, much of it in small donations from Ward residence. The Donatelli donations are under $10,000 in that period. It truly is below 14 percent." But don't you mean 1.4 percent? This needs an immediate correction to my mind. Please advise. Julie.
PATELYeah. We looked at campaign contributions from 2003. So it was 10 years of campaign contributions. Councilmember Graham is including his contributions from his 2002 race.
NNAMDIIn their discussion. On to the phones again. Here is Dan in Brooklyn, in D.C. Dan, you're on the air. Go ahead, please.
DANHello, Patrick, Julie, Kojo.
DANHi. You know, you're concentrating on contributions to campaigns and -- you also just have the basic distortion of urban planning, and the preferences to parts of the city. We're in northeast. Every available space that should be preserved for community recreation and healthy, you know, tree canopy and quality of life are being developed. The McMillan Sand Filtration plant is being surplused right now. I mean, a 25-acre park held back from public use for almost 30 years in order to save it for $700 million development...
NNAMDIYou say this to say what, Dan?
DANWell, you have urban planning that is not objective or academic. It's about moving funds, moving land fortunes to developers. And our government may or may not be taking bribes, basically. But the government -- the environment is damaged. We have hideous flooding in Bloomingdale because of distorted zoning approvals, dangling up development upon development. And, you know, the city was planned by...
DAN...brilliant people like McMillan.
NNAMDIAnd what you seem to be saying is that the politicians and the contributions that they are getting from developers are spoiling it all.
DANI agree. But it is business as usual...
NNAMDIOK. I said that because we are running out of time.
DANBusiness as usual is moving assets to the private sector without objective urban planning and the community...
DAN...does not consent. We don't consent to this kind of distorted government.
NNAMDIOK, Dan. Thank you very much for your call. Julie and Patrick Madden, we have heard from at least one, maybe two members of the council who see not a great deal wrong with what this is, have you been speaking with other members of the council about this and what has been their response?
MADDENOh, certainly. I mean, we spoke with Councilmember David Grosso earlier this week. And he was telling us basically that, you know, following our reports, he thinks that this is evidence that this city needs to go in another direction when it comes to campaign finance. You know, public financing, tightening up the campaign finance loopholes. He even talked about sort of that council members -- when they're voting on a proposal that involves a contract or something like that for a company that, you know, is giving contributions to the councilmember, he thinks that's got to stop. So I...
NNAMDIWould recuse themselves.
MADDENAnd that's what he -- he actually votes present when a contract comes up before the council. But he is alone in that regard.
NNAMDIDid he say anything about having a law that prohibits members of the council from voting on contracts that involve contributors to their campaigns?
MADDENWell, what's so interesting is that this has been proposed. The attorney general, Irvin Nathan, has -- as part of this campaign finance reform package that is basically been sitting at the council for almost two years now, because they haven't acted on it. They've held many hearings on it, but it still is in committee.
MADDENOne of the provisions would tackle this appearance of pay-to-play, as Nathan would put it, and it would ban contractors who have business or seeking business with the city from making a donation to a councilmember. But what's interesting is that everything that we found in our reporting, this $1.7 billion in subsidies, would not apply to that. Only talking about grants and contracts, not these subsidies and tax breaks.
NNAMDIWell, we talked about affordable housing. A couple of weeks ago on The Politics Hour, when Ward 8 councilmember, Marion Barry, was our guest, I asked him if he thought that affordable housing was the number one priority in the city. He said no. Jobs are the number one priority in the city. What did you find when you explored how developers fared in abiding by rules that require D.C. residents to be hired for 51 percent of jobs on subsidized projects, Julie?
PATELWhat we found is that largely they're not doing it, and they weren't for a while. And partly the regulators in the city blame the law, and they said the law was just too weak. It didn't have teeth in it until about a year ago when they beefed it up. And since then, they're trying to make a better effort. But, you know, we received very little information from the agencies that are supposed to control and monitor and enforce that jobs rule. We've received very little information from them.
NNAMDIAgain, there was not, it would appear, a great deal of tracking being done in terms of whether or not that rule was being properly applied.
MADDENNo. I mean, it is remarkable when you hear councilmembers. I mean, I've been to countless groundbreakings where they'll show up with a big shovel and a construction hat and talk about how many jobs are going to be created, how many affordable housing units will be built, how many local firms will be brought in sort of on the contracting. But then after that groundbreaking, there's little follow-up, there's little oversight, and it really was hard for us to even figure out these numbers.
MADDENAnd it's not just us. The city's own auditor has looked at this stuff and said, we don't know, you know, how -- the CB participation rate. That's the local businesses that are supposed to be brought in as subcontractors or, you know, the Department of Employment Services when it comes to hiring of District residents. So it's just unclear.
NNAMDI800-433-8850 is the number to call. Do you think elected officials in D.C. have contributed to the rapid transformation of neighborhoods throughout the city? How do you think subsidies given to developers have affected the affordability of neighborhoods or whether certain residents have been uprooted? Give us a call, 800-433-8850. If you've done that already, stay on the line. We will get to your calls. If you'd like to send us a tweet, @kojoshow, or email to firstname.lastname@example.org, you can do that, too. I'm Kojo Nnamdi.
NNAMDIWelcome back. WAMU 88.5 news reporters Patrick Madden and Julie Patel have been reporting all this week on the relationship between political campaign contributions and development in the District of Columbia. They join us now in studio to discuss what they have uncovered. We're inviting you to join the conversation by giving us a call at 800-433-8850. Allow me to go back to the telephones. Here is Dave in Bedford, Pa. Dave, you're on the air. Go ahead, please.
DAVEHey, Kojo, Patrick and Julie. I just wanted to call and say thank you so much for your effort in this great reporting. I -- I'm a member from afar and looking in on the D.C. scene there, and it's a fascinating thing -- city to observe and to learn about and visit. But I'm a member of the station, and it's just really very gratifying to see that the money that I contribute is going towards your effort and trying to be a good investigative news reporting team. Thank you again.
NNAMDIThank you very much, Dave, for making that comment. It's one of the things we say during our membership campaigns. And in this particular case, people can actually listen to the results of their contributions in the reporting that we're talking about here. Patrick Madden, how does the city's system for appraising the land involved in these deals work? We just heard from a caller a complaint that what was evaluated or appraised at $30 million is probably worth a lot more. Who is monitoring whether the city is conducting fair market evaluations?
MADDENWell, it goes to the mayor's development office, and they'll hire an appraiser, and they'll sort of score the land at its sort of maximum best use and what it would get if you could build as much as you could on it. And, you know, there are critics that say the city doesn't do enough to sort of require, you know, a real hard appraisal of this to make sure that developers are getting enough in return.
MADDENYou heard the activist who was talking about the West End deal earlier. But it -- you know, it's complicated. Some of these properties are vacant. Some of these are, you know, unused properties, as Donatelli, you know, was mentioning before. So, you know, there's definitely...
NNAMDISo there can be some legitimate argument over exactly what a property is worth, you're saying.
MADDENThere's definitely an argument over what it's worth, and, you know, there are people who -- for neighbors in a neighborhood, they definitely see value in turning this land over into something new. So, you know, there's many ways to look at it.
NNAMDIOn to Michelle in Washington, D.C. Michelle, your turn.
MICHELLEYes. Hi. Thank you. I'm very pleased to see that's exactly the action being done. But I wanted to know if you had any -- had done any research on the $46 million tax abatement that was awarded to develop a hotel in Adams Morgan and the connection to Jim Graham and the developers.
NNAMDIThey looked at everything, Michelle. Here is Patrick Madden.
MADDENWe looked at everything on that, and I live around there, so I see it -- or it's not built yet. So, yeah, I mean, that's -- it's another example of a tax abatement that was sponsored, in this case, you know, by Jim Graham, the councilmember in the ward. And it's one of those things where -- there are a lot of activists who are upset about it.
MADDENIt's going to ruin the neighborhood. There's going to be parking issues. Other folks say, well, this is great. This is going to bring jobs. This is going to bring, you know, a place where people can really learn a new trade. The real question is, though, is does the developer need a $46 million abatement to build in Adams Morgan, you know?
PATELA five-star hotel, no less.
MADDENRight, a boutique hotel. And that's the real question, and I think citizens should be, you know, asking, is this where we want our public dollars going?
NNAMDIBecause Adams Morgan, one presumes, is a very hot real estate market right now. OK. Thank you very much for your call, Michelle. The Council, the D.C. Council tried to overhaul the land disposition process a few years ago. But when you checked public records, another thing you found is that people who won contracts since then have been campaign consultants, managers of campaigns, treasurers of campaigns, all of them scoring deals on taxpayer-owned properties, Patrick.
MADDENWell, as one councilmember told me, development is the name of the game in D.C. And so it's -- it really is. I mean, this -- the -- it's developers are often funding the campaigns. But also it's that this is sort of what D.C.'s main industry is when you look around. I mean, development, real estate, this is what councilmembers spend a lot of time doing.
MADDENSo when you talk to people, they were sort of shocked that I would even be asking questions about why someone is working on a campaign and also working in the development field 'cause they've -- you know, it's been -- it's not -- they say it's just not uncommon. This is how it's always been done. But my question is, how can, you know, you have a councilmember who's approving a project, but, you know, on that project, there, you know, is a contract that went to a former campaign manager? It just seems...
NNAMDIFor that councilmember.
MADDENFor that councilmember. So...
NNAMDICouncilmember, I'm thinking of changing careers. What would you suggest? Well, how about getting into development? That might be a good career for you. And then next thing you know, that person is getting some kind of tax subsidy.
MADDENRight. And again, I mean, there is nothing against the law saying that people that have worked on campaigns or worked with councilmembers cannot be working on these development deals, but it just -- it was something that needs to be pointed out.
PATELBut there have been a number of cases where people have gone from overseeing these projects to going -- and then working for the developer. And so they are going before the very people that months ago they were working alongside with. And, you know, this is sort of what's critics called a revolving door between government and the industry, and it can give some of these developers some extra access and perhaps unfair access.
NNAMDIHere now is John in Washington, D.C. John, you're on the air. Go ahead, please. John, are you there? But, John, you've been waiting so long. I assumed you'll be there.
MADDENJohn, where are you?
NNAMDIJohn, are you there? OK. If John is not there, let's move on to Jackson in Washington, D.C. Jackson, your turn.
JACKSONHey, Kojo. What's up? How are you doing, man?
JACKSONGood. You know, I don't want to place blame on Chris Donatelli. I mean, he is a good business guy, and he's -- you know, he's a private citizen. I think the blame ultimately falls on the citizens here in the District. Primarily, when you look at those two -- the West End deal, average household income in that area is about $122,000.
JACKSONAnd there is no real places for low-income housing to, you know, places to shop. There is no -- it's not really suitable. Now, in my ward, Ward 7, I live close to their property that they're building. And 93 percent just doesn't make sense in regards to 93 percent affordable housing, especially when it's right across the street from one of the largest or one of the most notorious public housing communities in our ward. So I think there's an issue.
JACKSONAnd they ultimately send the people for allowing us -- and your previous caller -- one of your previous callers mentioned this in regards to potentially abstaining if there's a conflict if interest, if you have taken money or even if you had a member of your campaign on this contract. And ultimately, the people need to aware of that. So that's my main concern. I don't want to start placing judgment on Hodgkin's office or anyone else because I think it's important that the people know what's going on. And we can do the blame game all you want, but it defaults a lot of the people in D.C.
NNAMDIThe citizens cannot afford to be asleep at the switch, Julie Patel.
PATELThey can't because it's their -- ultimately, it's money that could have gone to schools, to libraries, to other programs. This -- it's money that's diverted and given to developers who are making money. And as for the point that, you know, not to blame just the developers, that's true. I mean, a lot of the developers we talked to said they don't like the system, you know, any more than the critics do. They would prefer not to have to fork overall this cash every time someone comes knocking on their door.
MADDENAnd so I guess the real question is, who is benefiting from this system? And, you know, you think about it, and it's clear that the politicians in this town because they have -- they are able to raise money through this. I mean, when Chris Donatelli mentioned before that he would support getting rid of these LLC donations. I mean, that's important, you know?
NNAMDIGlad you brought that up. How -- I'd like to ask members of our listening audience, how do you think the District is served by its current campaign finance rules? What would you change about them if you could? Give us a call at 800-433-8850, or send email to, email@example.com. Here is Pria (sp?) in Washington, D.C. Pria, you're on the air. Go ahead, please.
PRIAHi. Thanks for taking my call. I had a question about whether any of the pledges that developers make, you know, such as building affordable housing, involve any environmental concerns or even some of the recreational space issues brought up by one of the other callers. Do developers ever pledge -- for example, have environmentally friendly buildings, green roofs? What kind of plants and trees...
NNAMDIPlant -- planting trees, green building codes, that kind of thing.
PATELThey do. And part of the problem is that the city comes up with these rules on a case to case basis. So for one project, they might require something, for another project, they'll be something totally different. And there is no detail financial analysis to say what should be done for what project, and there is no sort of measure of that. And then there's very little tracking.
PATELSo, for instance, at the Capper/Carrollsburg community in Southeast D.C., where the residents there have been waiting for 11 years for their promises, the developers still haven't built the community center. And the community center was torn down more than six years ago. It was a vibrant part of the community, a vital part of the community. The children went there after school. You know, they had their sports there.
PATELAnd it's no longer there and hasn't been replaced yet. So, yeah, there are definitely -- that's part of, you know, green building, parks, community centers, it's all part of the promises that are made.
NNAMDIThank you very much for your call, Pria. We got an email from Mike in Brookland. And it's pretty long, so bear with me. "I'm a Brookland, Ward 5 resident, lived in D.C. since 2001. Do developers win favors with contribution? Sure, but I'm fine with that," says Mike. "I think we have to look at the big picture. Why are people moving back into the District? Because it has become an attractive place to live, and that's due to the developers.
NNAMDI"Look at Columbia Heights, Shaw, Logan, U Street, Chinatown, H Street, Northeast. No one wanted to go to these places in the early 2000. Now, they are the hottest places to live. The developers invested a lot of their own capital and took risks on some of these neighborhoods. Real estate development is a gamble. If the city can help entice investment, this is a good thing. People with high incomes are moving into the District, which means tax revenue for the city.
NNAMDI"People are moving in, demanding better schools, which is good for the children. Streets and neighborhoods in Northeast D.C. are safer. Property value is increasing for existing long-time residents. It may not be pretty, but we can all be proud of today's District, it's future. And the developers have played and continue to play a major role.
NNAMDI"Campaign finance reforms are certainly needed and reforms in how the city government oversees, how the developers carry out their project once they receive assistance from the city are necessary. But these developers should not be seen as bogeymen, which is not, I think, the point of the series. The point of the series seems to be to give some transparency to the system that's in place here."
MADDENRight. I mean, people should know where their tax dollars are going, and people should know, you know, contributions when their -- when councilmembers are receiving them, who are they coming from. I mean, this is what we set out to do. We're not, you know, whether development is good or not good wasn't the point of this. We were trying to show you the connections and...
PATELAny other issue is -- the other issue, if I may, is that...
PATEL...the contributions or the developers that received the subsidies haven't really justified or proved that they needed them, and the city doesn't require that. The city still doesn't require that developers show that they really, really need it. What is required -- there is a new rule now that says that there will have to be a detailed analysis done. But as the Howard Town Center case showed us, you know, that essentially was just ignored by the Council when they voted to approve that tax break.
MADDENI mean, and the bottom line is this. When a developer receives a tax abatement or another subsidy, they are getting preferential treatment. They are getting something that no one else is getting, whether it's another developer or any one of us who would like to get less off in our taxes. So...
NNAMDICan't let you both go without talking about what Alex wants to know about. Alex, you're on the air. You only have about 30 seconds, Alex.
ALEXOK. I'm in Arlington. And I was wondering if this investigation would be expanded to include developments in the suburbs. Here in Arlington, we have some developments -- one is Pen Place -- where the developer is just steamrolling ahead without any community input of the development that'll increase the height of buildings here double.
NNAMDIWell, that gives them to opportunity to tease out about the upcoming installment that includes reporting on how Maryland and Virginia handle these kinds of issues. Patrick.
MADDENYeah. We're going to be tackling sort of how other states handle the subsidy issues and also campaign finance. And what's interesting about Virginia is that D.C. actually has really strict contribution limits. Virginia, it's like the wild, Wild West out there, so you can contribute a lot of money if you're a developer or another business person to a local candidate or a governor. So it would be very interesting to look at that stuff.
NNAMDIWill we also be having conversations from anyone on the Council or in the mayor's office, who is offering solutions, ala David Grosso, I guess?
PATELYes. We'll be talking to them as well.
NNAMDIIn the ongoing series, Patrick Madden is a reporter for WAMU 88.5, who has a much longer attention span than I guess. Patrick, thank you so much for being with us.
MADDENWhat was that, Kojo? I...
NNAMDISee, right, he forgot already. Julie Patel is a reporter at WAMU 88.5. Julie, thank you for joining us.
NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.
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