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Looks like the skeptics were right: At the current rate, the developer of a luxury hotel in Adams Morgan expected to open in the coming months is “highly unlikely” to meet local hiring requirements necessary for a $46 million tax break originally approved in 2010, the D.C. agency in charge of tracking compliance has determined.
“Based on the current trend of reported hours and at this late stage of the project, it is highly unlikely that the contractor, Sydell Group, will meet the requirements mandated by the Line Hotel Tax Abatement legislation,” reads an Oct. 28 memo from Deborah Carroll, the director of the Department of Employment Services, to the mayor’s office. “Further, it is questionable whether 342 District residents will be employed on the project.”
She wrote that the New York-based Sydell Group has hired a paltry 29 percent of the District residents it had agreed to employ for construction jobs on The Line, which will contain over 200 rooms. Of more than 181,000 total hours worked on the site since January 2015, just 52,000 were performed by D.C. residents. Among other provisions, a law amended by the D.C. Council in 2013 requires that 51 percent of all the project’s construction work hours be performed by District residents, 342 of whom must be hired. According to DOES, as of Friday there was “a shortfall of 189” D.C. laborers on the future hotel, anticipated to open Jan. 29.
“The Bowser administration is committed to holding developers’ feet to the fire when tax dollars and jobs for District residents are on the line,” Deputy Mayor for Greater Economic Opportunity Courtney Snowden says in a statement. “We continue to monitor this project closely, and we remain focused on ensuring that the Sydell Group and other developments follow through on the commitments made to District residents.”
As of September, the developer was only about a quarter of the way toward meeting the provisions contained in the law. Since then, it’s held a couple of job fairs for D.C. residents, in part organized by Ward 1 Councilmember Brianne Nadeau‘s office. But some, including Adams Morgan resident and former neighborhood commissioner Bryan Weaver, who helped negotiate the tax abatement, expressed doubt that Sydell could hire up to speed by the project’s completion. “Unless they extend construction for another year, I don’t see how they do it,” he said.
City Paper has contacted Sydell and Nadeau for comment and will update this post if we hear back. In October, hospitality union Unite Here Local 25 launched a digital campaign to put pressure on the developer.
If the District pulls the tax break from Sydell, it would be a largely unprecedented move that would almost surely affect the Line’s short-term profitability. Then again, the agreement governing the abatement, structured over 20 years, was itself rare among tax incentives the District has offered to developers. It contains explicit safeguards for taxpayer money, including that the majority of the hotel’s long-term employees will also be District residents, and that 51 percent of those will be Ward 1 residents. (The law mandates a local workforce training program as well.)
D.C.’s Office of the Chief Financial Officer has said it will evaluate whether to give the developer the $46 million tax break after Sydell “provides certification that all the conditions in the [abatement] legislation have been met.”
This post has been updated with comment from Snowden.