COUNCIL OF THE DISTRICT OF COLUMBIA
OFFICE OF COUNCILMEMBER BROOKE PINTO
THE JOHN A. WILSON BUILDING
1350 PENNSLYVANIA AVENUE, N.W., SUITE 106
WASHINGTON, D.C. 20004
October 18, 2021
Nyasha Smith, Secretary
Councilofthe District of Columbia
1350 Pennsylvania Avenue, N.W., Suite 5
Washington, DC 20004
Dear Secretary Smith,
Today, I am introducing the Rediscover Equitable Central Occupancy Vitality and Encourage
Resilient Yield (RECOVERY) Amendment Act of 2021. Please find attached a signed copy of
the legislation.
The purpose of the Rediscover Equitable Central Occupancy Vitality and Encourage Resilient
Yield Amendment Act of 2021 (Recovery Act) is to provide a comprehensive and inclusive
economic recovery package for the Central Business District (CBD). The RECOVERY Act is
targeted at those District residents, workers, and businesses hardest hit by the pandemic, with the
goaloftransforming the CBD from solely commercial uses to a vibrant city core that drives growth
for the next generation.
The CBD is ata critical juncture, With its concentration of commercial offices, the CBD has long
been a driverofthe citys economy. However, in the wake of the societal changes brought by the
COVID-19 pandemic, the CBD must reimagine itself for the future. The pandemic has taken a
heavy toll on the CBD, resulting in 5 million square feet of vacant office space and retail vacancy
rates at record highs. Only a fraction of the CBDs former workforce now works fromtheiroffices,
causing transit ridership to dramatically drop and daytime foot traffic to all but disappear.
Unless we take strong action now, there will be a significant loss of District sales tax revenue as
the CBDs commercial real property tax base continues to erode into the future.If the District does
not soon change the current course of the CBD, the decline will undermine our recovery and cause
lasting harm to the city. We will have squandered a unique opportunity for equitable and shared
growth.
To chart the necessary new course for the CBD, the RECOVERY Amendment Act advances three
strategies of tax incentives and grant programs that together will catalyze growth for a resilient
CBD that benefits the entire District:
Incentivizing Mixed Uses ~ The Recovery Act provides for a real property tax abatement to
incentivize the conversionofoffice space to workforce housing, hotel, retail, restaurant, sports,
 entertainment, and cultural uses. The Recovery Act requires that certain conditions be met for
the abatements, including requiring CBE, First Source, and economic inclusion agreements.
Hotels are required to enter into project labor agreements and retailers must enter into
economic inclusion agreements. Further incentives are offered for developing family size
residential units and finally, retail and restaurants would benefit directly from reduced taxes
under triple-net leases.
Attracting Businesses to the CBD ~ Modeled after other recovery initiatives launched in the
District and Maryland, the Recovery Act offers two-year operational grants for businesses that
come to or expand in the CBD and for building owners that provide benefits to existing CBD
business tenants.
Catalyzing Innovation Complementing the new Pennsylvania Avenue Innovation District
and based upon the START-UP NY program in New York, the Recovery Act provides
temporary tax relief for innovative businesses that locate in the CBD and meet hiring and
economic inclusion requirements.
Through the Recovery Act, currently empty or underutilized commercial buildings will be
repurposed for the future. Mixed use and inclusive development will bring residents and workers
downtown and near to high-growth jobs and opportunities and will generate new revenue for the
city. By enacting and funding a transformative CBD recovery package now, we will ensure that
the Districts downtown core does not just rejuvenate itself, but also builds upon its past successes
and sustains the Districts recovery as a more equitable and resilient city for the 21* century.
Should you have any questions about this legislation, please contact my Legislative Director, Barry
Weise, at bweise@decouncil.us.
Thank you,
BEWS
Brooke Pinto
 fi
fy
Councilmember Christina Henderson Councilmember Brooke Pinto
SwowmirdsHawn
ABILL
IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
u
12
13 To establish incentives to transform the Central Business District into a place to live, work, and
14 play, and to promote the equitable and resilient recovery of the entire District of
15 Columbia.
16
7 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
18 act may be cited as the Rediscover Equitable Central Occupancy Vitality and Encourage
19 Resilient Yield (RECOVERY) Amendment Act of 2021.
20 Sec. 2. Chapter 8ofTitle 47 of the District of Columbia Official Code is amended as.
21 follows:
22 (a) The tableofcontents is amended by adding a new section designation to read as
23 follows:
24 47-859.07. Rediscover Equitable Central Occupancy Vitality and Encourage Resilient Yield
25 (RECOVERY)..
26 (b) A new section 47-859.07 is added to read as follows:
27 Sec. 47-859.07. Rediscover Equitable Central Occupancy Vitality and Encourage Resilient
28 Yield (RECOVERY).
29 (a) Real property tax imposed by section 47-811 shall be abated and real property shall
30 be exempt from tax imposed by sections 47-903 and 42-1103; provided, that:
31 (1) The real property is designated and certified as eligible to receive a tax
32 abatement and a tax exemption by the Deputy Mayor pursuant to subsection (4) of this section;
33 (2) The real property is located within:
34 (A) The Downtown Business Improvement District, as defined in section
35 2-1215.51(b); or
36 (B) The Golden Triangle Business Improvement District, as defined in
37 section 2-1215.52(b);
38 (3) With respect to real property abated from tax imposed by section 47-811, for
39 the duration of the period set forth in subsection (b)(2)(A)ofthis section and with respect to real
40 property exempted from tax imposed by sections 42-903 and 47-1103, at the applicable time,
41 there is a change in use resulting in the development or redevelopment, of:
42 (A) Housing units, provided that at least 20% of the housing units are
43 affordable to and rented by households earning on average 80% or less of the median family
44 income; provided, that during such period no such household earns more than 100%ofthe
45 median family income;
46 (B) One or more establishments in the hotel sector, provided, that any
47 establishment shall enter into a project labor agreement;
48 (C) One or more establishments in the retail sector, provided, that any
49 establishment shall enter into an agreement with the Deputy Mayor requiring such economic
50 inclusion requirements for the operationsofthe establishment that the Deputy Mayor may
51 require;
52 (D) One or more establishments in the restaurant sector; or
53 (E) One or more establishments in the sports, entertainment, and culture
54 sector, provided, that the establishments shall occupy at least 50% of the gross floor area of the
55 development; and
56 (4) Real property abated from tax imposed by section 47-811 also meets the
37 requirements of subsection (b) of this section.
58 (5) Real property exempted from tax imposed by sections 42-903 and 47-1103
59 also meets the requirements of subsection (c) of this section.
60 (b)(1) In addition to the requirementsofsubsection (a)ofthis section, real property tax
61 imposed by section 47-811 shall:
62 (1) Be abatedifthe developer:
63 (A) Files a covenant in the land records of the District, binding
the developer and all ofits successors in interest with respect to the property, covenanting to
65 comply with the applicable requirementsof subsection (a)(3) of this section;
66 (B) Enters into an agreement with the District that requires the
67 developer to, at a minimum, contract with certified business enterprises for at least 35% of the
68 contract dollar volume of the construction and operationsofthe project, in accordance with
69 section 2-218.46;
70 (C) Enters into a First Source Agreement for the operations of the
u project;
nR (D) Enters into an agreement with the Deputy Mayor requiring
B such economic inclusion requirements for the construction and operationsofthe project as the
14 Deputy Mayor may require; and
15 (E) The developer enters into an agreement with the Deputy
16 Mayor setting forth the requirementsofthis subsection and such other terms and conditions as
1 the Deputy Mayor considers appropriate.
8 (2) The tax abatement shall:
19 (A) Begin in the tax year immediately following the tax year during
80 which the certificate of occupancy was issued for the use counting toward satisfying the
81 requirements of subsection (a)(3) of this section and shall continue until the 35th tax year after
82 the tax year during which such certificate is issued.
83 (B) Be in the amount 100% of the real property's tax liability during each
property tax year in which the tax abatement is in effect; provided, that for a real property that is
85 eligible only under subsection (a)(3)(C) or subsection (a)(3)(D) of this section, the amount shall
86 be the pro rata shareofthe gross floor area occupied by the eligible use.
87 (C) Not exceed a total of $10 million, increased by 4% in Fiscal Year 2024 and
88 further increased by 4% in each fiscal year thereafter.
89 (c) In addition to the requirements of subsection (a) of this section, real property shall be
90 exempt from tax imposed by sections 42-903 and 47-1103, if:
91 (1) The real property is eligible under subsection (a)(3)(A) of this section
92 and least 10% of any housing units developed or redeveloped are family-sized; or
93 (2) The real property is eligible under subsection (a)(3)(B) or subsection
(a)(3)(E) of this section.
95 (d) The Deputy Mayor:
96 (1) May through a competitive process, designate real property to be eligible to
97 receive a tax abatement and a tax exemption under this section.
98 a real
(2) Shall certify to the Office of Tax and Revenue the eligibility of
99 property for an abatement provided by this section. The certification shall include:
100 (A) A description of the real property by street address, square, suffix,
101 and lot;
102 (B) A statement that the conditionsof subsection (a)of this section have
103 been satisfied;
104 (C) The date the certificate of occupancy was issued for the use counting
105 toward satisfying the requirements of subsection (a)(3)ofthis section;
106 (D) For real property tax imposed by section 47-811:
107 (i) The date the tax abatement begins and ends under subsection
108 (b)(2)(A) of this section; and
109 (ii) The amount of abatement allocated to the property pursuant to
110 subsection (b) of this section; and
Mt (E) Any other information that the Deputy Mayor considers necessary or
12 appropriate.
113 (3)(A) If at any time the Deputy Mayor determines that the real property has
114 become ineligible for the abatement provided by this section, the Deputy Mayor shall notify the
11s Office of Tax and Revenue and shall specify the date that the property became ineligible.
116 (B) The entire property shall be ineligible for the abatement on the first
M7 day of the tax year following the date when the ineligibility occurred.
11g (e) The tax abatement provided by this section shall be in addition to, and not in lieu of,
119 any other taxrelief or assistance from any other source.
120 () The requirements of the First Source Act shall not apply to the construction or
121 developmentof a project developed on real property designated by the Deputy Mayor pursuant
122 to subsection (b) of this section.
123 (g) For purposes of this section, the term:
124 (1) CBE Act means the Small and Certified Business Enterprise Development
125 and Assistance Act of 2005, effective October 20, 2005 (D.C. Law 16-33; D.C. Official Code
126 2-218.01 et seq.).
127 (2) Certified business enterprise means a business enterprise or joint venture
128 certified pursuant to the CBE Act.
129 (3) Deputy Mayor means the Deputy Mayor for Planning and Economic
130 Development.
131 (4) Developer means the owner of the use developed or redeveloped on real
132 property eligible for a tax abatement under this section.
133 (5) Family unit meansarental unit with 3 or more bedrooms.
134 (5) First Source Act means the First Source Employment Agreement Act of
135 1984, effective June 29, 1984 (D.C. Law 5-93; D.C. Official Code 2-219.01et seq.).
136 (6) First Source Agreement means an agreement with the District governing
137 certain obligations of the Developer pursuant to section 4 of the First Source Act (D.C. Official
138 Code 2-219.03), and Mayor's Order 83-265, dated November 9, 1983, regarding job creation
139 and employment.
140 (7) Hotel has the meaning set forth in Section 199.1ofTitle 14 of the DCMR.
141 (8) Median Family Income has the meaning set forth in section 101(5) of the
142 Inclusionary Zoning Implementation Amendment Act of 2006, effective September 23, 2017
143 (D.C. Law 16-275; D.C. Official Code 6-1041.01(5)).
144 (9) Restaurant means full-service restaurants, including limited-service
145 restaurants, fast food restaurants, and food service providers such as cafes, delicatessens, coffee
146 shops, supermarkets, grocery stores, and cafeterias.
147 (10) Retail means an establishment that is engaged in direct onsite sales of
148 general merchandise goods to consumers.
149 (11) Sports, entertainment, and culture sector means an establishment that is
150 open to the public for entertainment, leisure, or cultural purposes, including bars, entertainment
151 venues, nightlife establishments, theatres, sports, recreation and entertainment venues, art
152 galleries, and cultural institutions..
153 Sec. 3. Rediscover Equitable Central Occupancy Vitality and Encourage Resilient Yield
154 (RECOVERY) Grant Program.
155 (a)(1) Notwithstanding the Grant Administration Act of 2013, effective December 24,
156 1-328.11ef seq.), the Mayor, in the sole Mayor
2013 (D.C. Law 20-61; D.C. Official Code
157 discretion of the Mayor, may issue a two-year grant to an eligible business in accordance with
158 this section and regulations issued pursuant to this section; provided, that:
159 (A) The eligible business is located in:
160 (i) The Downtown Business Improvement District, as defined in
161 section 2-1215.51(b); or
162 (ii) The Golden Triangle Business Improvement District, as
163 defined in section 2-1215.52(b);
164 (B) The eligible business demonstrates, to the satisfaction of the Mayor,
165 that it is opening or expanding inaretail or commercial space that has been vacant at least 6
166 months prior to applying;
167 (C) The eligible business submits a grant application in the form and with
168 the information required by the Mayor; and
169 (D) A grant is equivalent to the sales and use tax paid by the eligible
170 business annually, provided, that at least 20% of the total grant funds disbursed are set aside for
71 one or more eligible businesses that is:
172 (i) Also, or is eligible to be, a resident-owned business and a
173 small business enterprise as those terms are defined, respectively, in section 2302(15) and (16);
174 and
175 (ii)(D) At least 51% owned by a woman or a majority of women;
176 or
177 (1I) Is, o eligible to be, a disadvantaged business
178 enterprise, as that term is defined in section 2302(5).
179 (2) An eligible business awarded a grant pursuant to this section may use the
180 grant funds for activities and costs related to sustaining and growing the business, such as staff
181 costs, capital improvements, marketing, inventory and supplies, and utilities; provided, that no
182 amount of the grant shall be used for executive salaries and bonuses.
183 (b)(1) The Mayor may award a two-year grant to a lessorofproperty that leases to an
184 eligible business located in the central business district; provided, that the lessor shall only
185 qualify after demonstrating to the Mayor, in a form acceptable to the Mayor, rental income
186 limited to the property leased to the eligible business and that the lessor has abated rent payments
187 or otherwise provided a benefit, including a tenant improvement allowance, to the eligible
188 business in an amount equal in value to at least twice the amountofthe grant.
189 (2)(A) If, during the 18 months following receipt of an award pursuant to this
190 subsection, a lessor who receives an award pursuant to this subsection terminates a lease
191 agreement with an eligible business, the lessor shall notify the Mayor of the terminationofthe
192 lease agreement.
193 (B) The lessor shall provide evidence that the termination was with the
194 consentofthe eligible business, in a form determined by the Mayor.
195 (c) The Mayor may award one or more grants to a third-party grant-managing entity for
196 the purpose of administering the program pursuant to this section and making subgrants on
197 behalfof theMayor in accordance with the requirement of this section or regulations issued
198 pursuant to this section.
199 (d) The Mayor, pursuant to section 105ofthe District of Columbia Administrative
200 Procedure Act, approved October 21, 1968 (82 Stat. 1206; D.C. Official Code 2-505), may issue
201 regulations to implement the provisionsofthis section.
202