Public Hearing Testimony: Local Jobs and Tax Incentive Act of 2015

October 14, 2015

Chairman Evans and members of the Committee, thank you for the opportunity to testify before you today. My name is Kevin Clinton and I am the Chief Operating Officer for the Federal City Council. Established in 1954, the Federal City Council is a non-profit, non-partisan organization comprised of the area’s top business, professional, education and civic leaders dedicated to the improvement of the District of Columbia.  Our trustees serve as trusted partners for civic improvement by working closely with local and federal stakeholders to address the city’s most pressing challenges.

I’m pleased to be here today to testify in support of Bill 21-353, the “Local Jobs and Tax Incentive Act of 2015” which provides an economic incentive to keep the Advisory Board Company (ABC) right here in the District of Columbia, where it was established in 1979.

The deal struck by Mayor Bowser’s team and Mr. Musslewhite’s team at ABC is important as an economic development tool, but also for what it says about the District of Columbia and our ability to retain our largest technology company and a symbol of our economy’s creativity and dynamism.

For too long, the companies that have started here and grown up in the District have left when they’ve reached a certain size. This history has been tracked over time by one of our trustees, Mark Ein. He makes the argument that companies such as MCI, Nextel, FBR and the Corporate Executive Board, that were established here in the District of Columbia, represented a wave of innovation helped change our reputation as a government town.

Unfortunately, when these companies grew from their start-up phase to become mature and successful, with employees who earned higher salaries and contributed more to the DC tax base, they moved out of DC meaning that their employees were less likely to live here and thereby shifting economy energy out of our city.

Much like the 1990s, our economy is at another inflection point. Spending by the federal government is becoming a smaller proportion of our economy and we need to be thinking about how to diversify in ways that will sustain job and economic growth.

I believe that if the District of Columbia were to make an investment in a single company with the potential to help us navigate this shift, a good argument could be made for ABC to be that company.

Operating at the intersection of the health care industry, information technology and consulting services, ABC is squarely in the middle of three growing economic sectors that have great potential of contributing to our economy of the future. With its focus on health care, ABC operates at squarely in the middle of a regulated sector allowing us to leverage of proximity to the federal government to our strategic advantage and help nurture a cluster of talent and firms to advance our health technology ecosystem.

On top of these strategic reasons why ABC is a good investment, the deal itself that is reflected in this bill has many elements that are good for DC and that could serve as a model for future agreements. I would emphasize the following points in particular:

•    The entire financial incentive is contingent on ABC meeting significant hiring goals of 1,000 net new District full time employees. These hires must be incremental to the 865 DC residents already employed by ABC.

•    The tax abatement is time limited and expires after ten years. Unlike many property tax abatements, this is not a permanent subsidy that will require Council new legislation to roll back – its expiration is self-executing.

•    The improvements to ABC’s future home on New York Avenue will add density and vitality near our tech corridor and will catalyze a $670 million plus construction project with 35 percent of tenant improvement jobs going to CBEs.

•    In terms of community benefits, ABC and its employees will enhance their exemplary commitment to the DC community through commitments to train 250 DC residents for careers in healthcare or technology careers, to provide 50 mentors to DCPS schools, to participate in the SYEP, to maintain their internship program, to recruit at UDC and the UDC community college, and to initiate special recruitment efforts for African American and women in DC.

In conclusion, on behalf of the Federal City Council, I am pleased to support this bill. With this agreement with ABC, we are making a statement that the most innovative companies founded right here in DC are staying here.

By approving this legislation, the DC Council will be supporting a home grown company that is our largest tech companies and one of the most innovative growth companies in the country; it will be supporting a company at the nexus of three promising economic sectors; it will be supporting a company hire for hire up to 1,000 District residents to jobs with salaries that average $100,000; and it will be supporting a company whose 3,500 employees all participate in community service with 38,000 hours contributed to date. This bill is a good investment to us and we urge the Committee to approve it.

Thank you for the opportunity to testify. I would be happy to answer any questions you may have.

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