D.C. lawmakers on Tuesday gave final approval to legislation that authorizes more than $26 million in property tax breaks for two companies that intend to move their current District headquarters to new developments in the city: EAB, a research and consulting firm formerly known as the Education Advisory Board, and Chemonics International, Inc., an international development firm. Both employ hundreds of workers and expect to produce new jobs in D.C.
EAB, which was spun off from the Advisory Board Co. in a sale last year, is set to benefit from $21 million in tax breaks over ten years, starting in October 2020. The D.C. Council initially granted the Advisory Board $60 million in tax breaks in 2015 in exchange for the company creating 1,000 new jobs, remaining in the District, and furnishing community benefits such as workforce training and volunteer services. The EAB tax breaks are in proportion to those established in the earlier law, with requirements for community benefits and 350 new jobs in exchange for 35 percent of the original 2015 tax break amount, or up to $2.1 million per year.
Along with the Advisory Board, EAB plans to relocate from its present headquarters in West End to a new building in Mount Vernon Triangle that is still under construction. The firm will have to report data on its new local hires annually to the District before D.C. tax officials certify its performance. The office of the D.C. Chief Financial Officer determined that it could not “opine definitively on whether a $21 million subsidy, or a different level of assistance, is necessary to encourage EAB to remain in the District,” based on EAB’s financial statements.
Meanwhile, Chemonics is poised to receive $5.2 million in tax breaks over eight years, or up to $650,000 per year, beginning in October 2022. It currently has offices in both downtown D.C. and Arlington, Virginia, and plans to relocate to a proposed building in Navy Yard that is still under development. The company is aiming to employ roughly 1,200 workers at the building, of which 500 would be D.C. residents. It would have to report data to the District.
The Chemonics provisions were part of a larger bill that also included the EAB tax breaks. At-Large Councilmember Elissa Silverman sought to strip the Chemonics tax breaks out of the bill through an amendment after scrutinizing the company’s history of hiring practices: The U.S. Labor Department found that the company had discriminated against African-American job candidates in 2011. On Dec. 12, Chemonics leaders insisted at a Council roundtable that the company has since corrected the hiring-software issues it says prevented it from catching the discrimination seven years ago. Chemonics now runs a diversity program too, they said.
Silverman’s amendment failed on a 9–4 vote, but it sparked debate among councilmembers. She said Chemonics’ hiring history was of “great concern” to her and that—regardless of the steps the company took to improve after the discrimination findings—the office of the D.C. Chief Financial Officer had determined that the tax breaks are “not needed to pencil out [the] deal” for the company’s new headquarters. Robert White, another at-large councilmember, said he was convinced that Chemonics was “genuinely trying to turn the page.” “We never want to be in a place where we indicate there’s no possibility of redemption,” White added.
Ward 6 Councilmember Charles Allen, whose ward includes Navy Yard, also spoke against Silverman’s amendment, saying the Chemonics tax breaks would help trigger redevelopment near the waterfront area and attract new residents. At-Large Councilmember David Grosso disagreed with that assessment, arguing that large companies want to locate in the District anyway. “I think we generally need to stop incentivizing these kinds of projects in the city, and let the work we’ve done in the past 25 years show us what it can perform,” Grosso said.
The bill passed 10–3, with Silverman, Grosso, and Ward 8’s Trayon White voting “no.” It now heads to Muriel Bowser, whose administration has supported both sets of tax breaks.
- The Advisory Board Co. stood to benefit from up to $60 million in tax breaks. Now it might not get any. [Washington Business Journal]
- What’s old is new again at 655 New York Ave. NW. We take you inside the massive project. [Washington Business Journal]
- More Office for The Yards: A Look at the Proposed Chemonics Headquarters [UrbanTurf]
- Will D.C. Give Millions in Tax Cuts to a Company With a Record of Racially Discriminatory Hiring Practices? [Washington City Paper]
- Top US government aid partner to pay $500k damages to African American job applicants [The Guardian]