Tony Williams takes DC Govt to task for failing downtown and budget mismanagement

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

The residential assessments are going to go up to recoup the lower tax collections from vacant commercial property.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

The residential assessments are going to go up to recoup the lower tax collections from vacant commercial property.

It will be interesting if they pass a residential rate increase or just increase assessments regardless of market conditions. I will suspect the latter, which will fall on the “middle class” because more wealthy homeowners will hire attorneys to appeal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

Mortgage applications are down by more than 40 percent.

[Anonymous]

"Where have you gone, Tony Williams? The District turns its lonely eyes to you, woo, woo, woo."

Best mayor ever.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

Mortgage applications are down by more than 40 percent.

In DC? Where many people are paying with cash and not mortgages?

Again, I haven't seen prices in DC (proper, not the region) softening at all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

Mortgage applications are down by more than 40 percent.

In DC? Where many people are paying with cash and not mortgages?

Again, I haven't seen prices in DC (proper, not the region) softening at all.

Obviously, housing prices here are declining and will continue to decline for the foreseeable future. Funny what happens when the Fed dramatically increases interest rates. The difference between a mortgage that begins with a seven and one that begins with a three is the difference between the gravity on Earth and the gravity on Jupiter. Everyone should contest their property tax assessments.

[Anonymous]

Our current council has ZERO understanding of business and how it works. Even though DC is losing population and the downtown commercial real estate market is tanking, the city's budget keeps increasing. City government is sticking its fingers in its ears and refusing to accept the realities in front of them.

[Anonymous]

I will come back to the office when I can walk around downtown without being harassed by multiple mentally ill homeless people.

[Anonymous]

I try to avoid going downtown because driving and parking have become too difficult. All the bike lanes have made it a lot worse.

[Anonymous]

The DC Council responded. Pinto and Henderson introduced a bill to provide 35 YEAR! property tax abatement for any commercial office conversions downtown for other uses. That is the full IRS depreciation schedule for commercial real estate. They need to do something, but this seems wildly irresponsible.
https://www.bizjournals.com/washington/news/2022/12/01/dc-office-vacancy-incentives.html

[Anonymous]

Anonymous wrote:The DC Council responded. Pinto and Henderson introduced a bill to provide 35 YEAR! property tax abatement for any commercial office conversions downtown for other uses. That is the full IRS depreciation schedule for commercial real estate. They need to do something, but this seems wildly irresponsible.
https://www.bizjournals.com/washington/news/2022/12/01/dc-office-vacancy-incentives.html

You need to encourage businesses to come to DC or for landlords to convert their vacant property into something useful. There are no signs that people are going to move out of DC or stop buying homes to move in to DC so there's no need to offer any incentives to residential property owners. In fact, more of the DC budget is going to have to come from sales taxes and residential property taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am not sure why this hasn’t gotten more attention, but holy cow Tony Williams and the Federal City Council just send the DC Govt a letter that the equivalent of a nuclear bomb. The letter was addressed to the CFO, probably for the optics of Williams not directly criticizing Bowser, but I’m not sure how it can be interpreted as anything but a shot at Bowser.
https://www.federalcitycouncil.org/wp-content/uploads/2022/11/Letter-to-CFO-Glen-Lee-on-Commercial-Property-Vulnerabilities-11.14.22-final.pdf

Key highlights:
- Downtown commercial vacancy rate = 20%
- 137 out of the 733 largest buildings downtown are over 25% vacant and that is expected to rise to 238
- DC budget wrongly assumes the commercial vacancy rate will decline
- Investment in commercial real estate in DC is dead, properties cannot be sold and many are distressed

The implications of the letter are that DC real estate investors are going to start demanding reassessment of property taxes purposes and that the assumptions underpinning commercial property tax rates are wrong and when this happens it will seriously negatively affect DC’s budget. They are saying that the city needs to plan now.

This article, which includes an interview with one of the co-signers of the letter is even more alarming.
https://www.bisnow.com/washington-dc/news/office/office-owners-say-dc-faces-economic-disaster-due-to-lost-tax-revenue-116571

Key Highlights:
- Placing hope on residential conversions is not viable, because it would first require ”devastation”
- The process of reaching such a loss would significantly hurt DCs finances and the resulting residential property would further hurt DCs finances because it’s taxed at a lower rate
- Conversions are expensive and there is zero appetite for financing right now (all conversions underway were financed before rates went up)
- The Federal government is also reducing its office footprint at the same time as not aggressively requiring workers to return in person
- DC is headed for a fiscal cliff in 2024 when stimulus funds expire right as the lower valuations will hit the budget
- At that stage major cuts in services would be required or else there is a risk of a return of the Control Board

Yikes!

Probably true of homeowners too. The city's assessments are way out of whack with the market...

Really? I haven't seen the residential real estate market soften at all.

Mortgage applications are down by more than 40 percent.

In DC? Where many people are paying with cash and not mortgages?

Again, I haven't seen prices in DC (proper, not the region) softening at all.

Obviously, housing prices here are declining and will continue to decline for the foreseeable future. Funny what happens when the Fed dramatically increases interest rates. The difference between a mortgage that begins with a seven and one that begins with a three is the difference between the gravity on Earth and the gravity on Jupiter. Everyone should contest their property tax assessments.

You contest your own property tax assessment if you want. I don't see why it matters to you if the rest of us do, though you keep insisting we all need to join your crusade.

[Anonymous]

Anonymous wrote:
The DC Council responded. Pinto and Henderson introduced a bill to provide 35 YEAR! property tax abatement for any commercial office conversions downtown for other uses. That is the full IRS depreciation schedule for commercial real estate. They need to do something, but this seems wildly irresponsible.
https://www.bizjournals.com/washington/news/2022/1...office-vacancy-incentives.html


You need to encourage businesses to come to DC or for landlords to convert their vacant property into something useful. There are no signs that people are going to move out of DC or stop buying homes to move in to DC so there's no need to offer any incentives to residential property owners. In fact, more of the DC budget is going to have to come from sales taxes and residential property taxes.

While well-intentioned, I'm not sure that this legislation will make a significant difference in the distressed downtown commercial real estate market. It is very expensive, and often impractical, to convert a mid-block office 30 to 40 year old office building to residential use---the interior column structure of many of these buildings is not conducive for residential layouts. Not to mention that it is difficult to convince people to move downtown with its current safety and quality of life issues. I'm not sure that the boost from the property tax savings can overcome those factors.

[Anonymous]

The council is full of morons. I’m not sure the mayor is any better. Get ready for a control board redux.

[Anonymous]

Anonymous wrote:The council is full of morons. I’m not sure the mayor is any better. Get ready for a control board redux.

D.C. has a $1.6 billion reserve fund right now -- I think it's far, far from the days of the control board. And why would a Democratic Senate and White House go along with an attempt to put unelected financial managers in charge of the District?