The John A. Wilson Building. Photo by Darrow Montgomery.

After much debate, the D.C. Council on Tuesday unanimously approved the final piece of legislation that makes up the District’s $17.5 billion budget. The Budget Support Act makes changes to the law that are necessary to implement the spending the Council approved last week in the Local Budget Act.

In their final meeting before the Council’s summer recess, lawmakers got into it about a 35-year, $140 million plan meant to spur affordable housing development downtown, a fee waiver for public utilities, contracting approval at the D.C. Housing Authority, and whether or not the legislature should wade into an active lawsuit over the McMillan Sand Filtration Site development.

Office space to housing incentive rejected

Ward 2 Councilmemer Brooke Pinto championed a measure that would have created a 35-year, $140 million tax break for developers who convert office space downtown and in the Golden Triangle neighborhood to residential housing.

Pinto pitched the abatement as a partial solution to two problems: about 17 million square feet of vacant office space and a dearth of affordable housing in the areas.

The abatement program would have required developers to designate at least 20 percent of housing units as affordable—a ration that many members said was too low. This program defined “affordable” as households earning on average 80 percent of the median family income, and not more than 100 percent of MFI. MFI in D.C. for a family of four is $129,000.

The abatement program would not have started until fiscal year 2025, Pinto said, because developers needed time to come up with plans.

At-Large Councilmember Elissa Silverman called the abatement’s inclusion in the budget legislation a “sneaky move” and accused Pinto of using “budget tricks.” It wasn’t included in the initial version of the bill the Council approved in July. And the “trick,” according to Silverman, was that most of the cost to the District occurs beyond the four-year financial plan. She successfully pitched an amendment to defeat it.

Chairman Phil Mendelson bristled at Silverman’s characterizations. He said the abatement appears in the same sized font and on the same memo as other changes to the revised BSA. Mendelson praised Pinto’s efforts as a good approach to increasing affordable housing in areas where there isn’t much.

A 2019 study found that converting office space to affordable housing is not the best use of the District’s time and money in most cases. Several councilmembers wrestled with what they believe is a good idea in theory, but had issues with the number of affordable units (20 percent) and level of affordability (80 to 100 percent MFI). Lawmakers also expressed trepidation that the abatement had not received thorough public vetting.

Loose Lips will note that the Council passed an income tax hike last month as part of the budget process, despite a similar process argument from opponents.

“A lot of you are saying you support the idea, but for some reason aren’t supporting actually doing it,” Pinto said.

Ward 5 Councilmember Kenyan McDuffie promised to hold a hearing on a standalone tax abatement bill.

McMillan Sand Filtration Site demo can proceed despite pending legal case

At-Large Councilmember Robert White tried and failed to remove a section of the BSA that sidesteps a pending legal case in front of the D.C. Court of Appeals.

A panel of appeals judges bared any demolition on the long delayed McMillan development project in early 2020. The cursed project has faced several legal challenges over the years. The current issue is whether the development team that includes Trammell Crow, EYA and Jair Lynch Real Estate Partners has the capacity to finish the project.

The BSA allows demolition to move forward despite the court’s injunction.

“I simply think we should not use our authority as a policy making body to put our thumb on the scale and dictate outcomes in particular litigation when court has indicated it intends to weigh in on statutes we already passed,” White said. “That is not a position we want to be in every time a politically sensitive project gets held up by a dispute under D.C. law.”

His argument didn’t garner enough support. The amendment failed 5-8.

D.C. Housing Authority board of commissioners contract approval authority remains in tact

Another amendment from Silverman reversed an effort from At-Large Councilmember Anita Bonds to increase the dollar amount that requires approval from the D.C. Housing Authority board of commissioners.

DCHA is an independent agency that owns and operates D.C.’s public housing stock. It’s overseen by an 11-member board.

Bonds wanted to raise the contract threshold from $250,000 to $500,000. She and Mendelson argued that the approval requirement is hampering interim executive director Brenda Donald‘s ability to spend money on needed maintenance and repairs to public housing.

Silverman won that battle 8-5.

“The issue is with the institution of the housing authority and the role the commission plays in governing the housing authority,” Silverman said, questioning whether the lower threshold is actually slowing down maintenance work.

The initial version of her amendment took a swipe at mayoral influence over the board. It would have required a super majority vote of the DCHA board for proposals to demolish or redevelop public housing. The board often votes 6-5 and splits between mayoral appointees and non-mayoral appointees.

The mayor nominates five members to the 11-member board, and her deputy mayor for planning and economic development, John Falcicchio, sits as an ex-officio member. Falcicchio is also Mayor Muriel Bowser‘s chief of staff.

“My concern is right now our most vital agency is an arm of [the deputy mayor for planning an economic development’s office] and is involved in a redevelopment deals that I don’t think are in the interest of people who live in public housing,” she said.

But Silverman cut that portion of her amendment after Ward 3 Councilmember Mary Cheh and others expressed unease.

Utilities will still pay inconvenience fee

At the beginning of the day, McDuffie appeared willing to carry water for regulated utilities such as Pepco and Washington Gas. During the Council’s pre-meeting breakfast huddle, the Ward 5 rep pitched an amendment that would waive “inconvenience fees” assessed for taking up public space for longer than 30 days.

By the late afternoon, McDuffie could likely tell that he didn’t have enough votes and pulled the measure.

But first he explained his rationale: For the past decade, the District Department of Transportation had not hit utilities with the fine applied to other entities whose work uses public space for longer than the legal limit—until recently. DDOT’s sudden change, coupled with the fact that the fees would eventually be passed onto ratepayers (the regulated utilities are guaranteed a rate of return) weighed in favor of a carve out for the utilities.

McDuffie also argued that the utilities often take on large scale projects that are anticipated to take more than 30 days to complete. Those projects have “direct benefit to D.C. residents and ratepayers,” McDuffie said.

Still, councilmembers balked at the special treatment. Cheh, for example, noted that the carve out doesn’t include solar projects.

“How does this work?” Cheh asked during the breakfast meeting. “Does Pepco call up somebody? Send emails to the chairman? How does this work that we have a special arrangement for the utilities that aren’t carried through for others?”

Mendelson said the utilities approached him about the fee waiver as well, but he declined to include it in the BSA because of potential changes to funds allocated in the budget, which isn’t allowed in the BSA.

Another notable provision in the BSA increased D.C.’s match of the federal low income tax credit. The program gives low-income workers a break on taxes based on their income and number of children. Ward 6 Councilmember Charles Allen‘s amendment to the BSA increased the local match to 70 percent next year, 85 percent in 2026, and 100 percent by 2027. Residents who qualify will receive monthly payments. Families with kids can receive $300-$500 a month when the law goes into full effect.

The Council is on recess through September. Its next scheduled legislative meeting is Oct. 5.