[Congressional Record Volume 159, Number 112 (Wednesday, July 31, 2013)]
[Extensions of Remarks]
[Pages E1173-E1174]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 THE INTRODUCTION OF THE DISTRICT OF COLUMBIA INCENTIVES FOR BUSINESS 
                     AND INDIVIDUAL INVESTMENT ACT

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                        of district of columbia

                    in the house of representatives

                        Wednesday, July 31, 2013

  Ms. NORTON. Mr. Speaker, I rise today to introduce the District of 
Columbia Incentives for Business and Individual Investment Act, to 
reauthorize the federal tax incentives for investment in economically 
distressed areas in the District of Columbia, commonly known as the 
D.C. empowerment zone, and the D.C. $5,000 first-time homebuyer tax 
credit, both of which expired at the end of 2011. This bill would 
reauthorize the tax incentives through the end of 2015, and would be 
retroactive for 2012 and any period in 2013 during which they remain 
lapsed, consistent with similar empowerment zone legislation. The 
empowerment zone incentives include a special capital gains rate, 
expanded tax-exempt bond financing, additional expensing for equipment 
purchases and a wage credit of up to $3,000.
  The D.C. tax incentives were due to be extended with the package of 
temporary tax provisions that Congress regularly extends, commonly 
known as ``tax extenders.'' However, the D.C. tax incentives, for the 
first time, were not included in the most recent tax extenders package, 
the American Taxpayer Relief Act (ATRA or P.L. 112-240), which was 
approved at the beginning of the year. This omission was possible, and 
we believe occurred, because the D.C. empowerment zone was separately 
and specially created in 1997, several years after the first, similar 
urban empowerment zones were created.
  Although the D.C. tax incentives, as well as a small number of other 
expiring temporary tax provisions, were not extended in ATRA, Congress, 
in the same bill, recognized that the benefits of incentives for 
investment in economically distressed communities outweighed their 
costs when it extended all the other empowerment zones. This same logic 
has particularly strong application to the D.C. tax incentives.
  The Republican Party Platform first proposed the D.C. tax incentives 
in 1996, a year before Congress created them. Republicans, who saw D.C. 
as a demonstration for what tax incentives could do to revitalize a 
city, wanted to make the entire District of Columbia an empowerment 
zone. The Republican platform stated, ``We endorse proposals by the 
congressional Republican Leadership for dramatic reductions in federal 
taxes . . . within the District . . . . A Republican president will 
make it part of a comprehensive agenda to transform the nation's 
capital into a renewal community, an enterprise zone leading the way 
for the rest of urban America to follow.'' Every Republican platform 
since 1996 has indicated strong support for one or more of the D.C. tax 
incentives.
  Senate and House Republicans took the lead in the creation of the 
D.C. tax incentives after an unprecedented financial crisis revealed 
the unique peril for a city required to pay for many state-like 
functions. They reasoned that the tax incentives would revive and 
sustain the District, and where they have been applicable, they have 
met that test. The success of the tax incentives is a vindication of 
the work of the cosponsors. The D.C. tax incentives were proposed by, 
among others, then-Senators Trent Lott (R-MS), Connie Mack (R-FL), Sam 
Brownback (R-KS), Spencer Abraham (R-MI), Kent Conrad (D-ND) and Joe 
Lieberman (D-CT), as well as by then-Representative Amo Houghton (R-
NY), and have always been embraced by both Republican and Democratic 
Congresses and presidents.
  The wisdom of the bipartisan use of modest, targeted tax incentives 
has been amply and visibly demonstrated in the economic resurgence in 
parts of the city designated as empowerment zones, including parts of 
downtown Washington. Effects of the empowerment zone incentives are 
apparent throughout the city, but among the most visible are the Penn 
Quarter neighborhood, which had limited residential, commercial and 
retail spaces and is now a popular mixed-use neighborhood, and the 
vibrant area around the Verizon Center, then a virtual downtown slum 
but now surrounded by offices, restaurants and nightlife.
  Before the business tax incentives, the city found it difficult to 
retain, much less attract, businesses. However, one of the business tax 
incentives enabled the city government to issue more than $155 million 
in tax-exempt bonds on behalf of for-profit and non-profit entities for 
capital projects. For example, $15 million was issued for the 
construction of the International Spy Museum, which has brought the 
added benefit of increasing tourism.
  In addition to the business tax incentives, the $5,000 homebuyer tax 
credit has provided invigorating nourishment to the District's badly 
starved residential tax base. This credit, which applied citywide, 
almost immediately reversed the city's alarming residential decline. 
According to the 2010 census, the District gained population (5.2%) for 
the first time since the 1950 census, with much of this increase 
traceable to the homebuyer tax credit. Not only did the homebuyer tax 
credit staunch the taxpayer exodus for the first time in decades, but 
with the stability that the credit initiated, other individuals and 
families began moving to the city. The District is attracting 1,100 
residents a month, but these are mostly young, unmarried people. 
However, the goal of growing the residential tax base by 100,000 to 
ensure sustainability, set by Alice Rivlin, chair of the D.C. Financial 
Control Board, as well as a respectable business tax base, is far from 
being achieved. The city's residential tax base remains well below the 
Washington metropolitan region and the nation, where it trails all 50 
states. In 2012, the homeownership rate in D.C. was 45%, compared to 
the national rate of 65.4%. D.C.'s homeownership rate was also lowest 
among the 75 largest Metropolitan Statistical Areas and significantly 
lower than in the statistical area for the Washington metropolitan 
region, which was 66.9%. The reauthorization of the homebuyer tax 
credit is essential if the District is to reach the 100,000 residents 
the Financial Control Board said was required for the city to sustain 
itself.
  For all of its recent economic progress, the District remains a city 
without a state backstop. Recognizing this anomaly, Congress passed the 
National Capital Revitalization and Self-Government Improvement Act of 
1997, but the city continues to operate many state-like services, such 
as higher education, roads and bridges, and health and human services. 
Furthermore, the federal government continues to impose significant 
revenue constraints on the District in the Home Rule Act, including a 
tax exemption on the federal government's use of the city's most 
valuable real property, a federal limit on the height of buildings in 
the District and a prohibition on taxing non-resident income.
  Now, the city's low-income neighborhoods east of the Anacostia River 
and in Northeast are on the brink of developing economically, similar 
to the development experienced in other parts of the District such as 
NoMa and Capitol Riverfront. The new headquarters for the U.S. Coast 
Guard will open in August, the first in a complex of buildings Congress 
has authorized for the federally owned West Campus of the St. 
Elizabeths hospital. The tax incentives have demonstrated that they can 
revitalize the eastern half of the nation's capital. Particularly after 
the recent recession, the business and homebuyer tax incentives are 
essential for these neighborhoods to see the revival that the 
incentives have contributed to in downtown and near-in neighborhoods. 
Withdrawing these incentives, particularly after they have proven 
effective elsewhere in city,

[[Page E1174]]

leaves the nation's capital with essentially half of a revival, and 
would be tragically timed just as the lower-income parts of the 
District, which need the incentives most, are ready for residential and 
commercial redevelopment.
  There is no reason to extend incentives to the other large 
empowerment zone cities but not to the nation's capital, which lacks 
many of the advantages of other cities. Like the health of many other 
cities, the District's fiscal health has improved since the tax 
incentives were established in 1997, but the incentives continue to be 
indispensable for ensuring that lower-income areas of the city are part 
of the city's economic progress. It would be tragic to single out the 
nation's capital as the only empowerment zone city not to be renewed 
just as the eastern sections of the city are about to take off. As 
essential as the federal incentives have been, their costs have been de 
minimis compared to the billions of dollars in construction, new local 
revenue and new taxpayers the incentives have generated. They deserve 
to be extended.
  I urge my colleagues to support the bill.

                          ____________________