Our View: Just say ‘no’ to subsidies for developers

Our View: Just say ‘no’ to subsidies for developers
Nov. 13 City Council public hearing. (Photo/Olivia Anderson)

Correction: The editorial below, which was printed in the Jan. 20 Alexandria Times, incorrectly states the level of government support for the 699 Prince Street project. While the project does include “taxpayer support of a for-profit, private luxury hotel” it is in the form of: a grant “for the purpose of inducing Prince Street to develop the Project,” according to the project performance agreement, along with historic tax credits and taxes generated by the site. The total government subsidy for the project is $16,620,000, according to the site’s performance agreement, which is “Attachment 3,” and the tourism development plan, which is “Attachment 2.” Both documents are part of the docket for the Jan. 21 City Council public hearing. This public subsidy includes up to $10,270,000 in “net historic tax credit proceeds,” which come from the federal and state governments, $6,100,000 in “gap financing,” half of which will come from state and half from local portions of Virginia sales and use taxes generated by the site, and the $250,000 grant from the City of Alexandria and the Alexandria Economic Development Partnership, which receives city funding, to the developer. This $16,620,000 subsidy does not include salaries for city or AEDP employees whose time is spent working on the project. The docket for the meeting, which contains the individual documents, can be found at https://legistar.granicus.com/alexandria/meetings/2022/1/2244_A_City_Council_Public_Hearing_22-01-22_Docket.pdf

The editorial, as it appeared in the Jan. 20 print edition of the Alexandria Times, is printed in full below.

The city of Alexandria has no business financing private, for-profit development.

And yet, City Council is likely to approve taxpayer support of a for-profit, private luxury hotel at Saturday’s public hearing. We think this is wrong on multiple fronts: optically, philosophically and practically.

The optics of providing $21 million in tax dollars to a private developer to build a luxury hotel in Alexandria’s richest neighborhood – while our overworked and understaffed police officers and firefighters are begging for a pay raise – is appalling. How could city leaders be so tone deaf to even consider this proposal at a time when public safety, the first function of government, is so underfunded?

According to staff documents for Saturday’s public hearing, the City of Alexandria is offering to finance a loan for 30% of a $69.6 million development project from taxpayer dollars for this project. This is $20.9 million dollars that could surely be put to better use either in the city or back in resident’s wallets.

The public hearing document lists the developer as one “J. River 699 Prince Street LLC.” While we haven’t yet found specific information about this LLC, the D.C. development firm May Riegler, which according to a 2019 CityBizList article had “created more than 600 million in value,” calls this project “Heron” on its website and says May Riegler is the developer.

Contrast the city giving a $21 million loan to a for-profit company with the abysmal pay status of Alexandria’s first responders. To recap a few statistics: Part one crime in Alexandria has risen by 17% in the past two years, while police staffing has declined by 10%, according to Marcus Downey, vice president of IUPA Local 5. Additionally, Downey says the Alexandria Police Department’s starting salary ranks 23rd out of 24 Northern Virginia jurisdictions, even after the recent increase by City Council.

The first responder staffing shortage is so pronounced that Alexandria firefighters are being forced to work an average of 56 hours per week, compared to the regional average of 42 hours, Josh Turner, president of the IAFF Local 2141 union, told the Times in October 2021.

Government funding of private, for-profit development is also plain wrong.

It’s not a proper or just function of government, particularly local government, to fund private sector business ventures. The only way to keep public sector spending, that is residents’ tax dollars, under some semblance of control is to follow the “air, water, food” metaphor for spending. Government should definitely fund “air” functions, that is, those that are most essential for survival. Public safety is at the top of that list, followed by education and transportation.

Public funding of a wealthy developer isn’t even at the bottom of the “food” category. Anything this far down should not be paid for with public funds at all.

For all of its flaws, our market-based economy is pretty efficient. Where there is profit to be made there is usually a company ready and eager to step in. The fact that apparently developers don’t want to, or can’t, fund a luxury hotel at this site without government assistance means building it isn’t a good business decision.

Individuals and cities have many things we want, or think would be nice. It would likely be nice to have a luxury hotel at 699 Prince St. However, it wouldn’t be wise or right or appropriate for the City of Alexandria to fund it.