DC should tie tax breaks to union pay for construction workers, report says

The District is too quick to give tax breaks to developers without negotiating better pay for workers on projects like the multibillion-dollar Wharf, a new report from the DC Fiscal Policy Institute argues.

The 21-page report — “High-Road Development: Building Prosperity for Workers and the District” — criticizes city lawmakers for not making developers hire unionized workers, citing high-profile examples The Wharf and a new project at Union Market. The Wharf plans to begin construction on a second phase that will double its footprint along the Southwest waterfront. The $300 million in public subsidies became a flashpoint during the Ward 6 DC Council primary campaign, with incumbent Charles Allen defending the project as a jobs creator.

If construction workers at The Wharf were unionized, each employee’s annual pay would be about $11,100 higher, according to the DC Fiscal Policy Institute, a left-leaning think tank. Union Market, a mixed-use project comprising about 8 million square feet, won $82 million in subsidies from the DC Council. In turn, developers have said the project just off Florida Avenue NE will mean 20,000 jobs for the city, according to the report.

“Lax job creation reporting standards make this promise hard to track,” the DC Fiscal Policy Institute’s Brittany Alston wrote in the report, released Monday.

As the District’s building boom accelerates in Southwest and beyond, recent fears over displacement have energized activists to challenge projects in court and oppose the disposition of public sites for private projects. The DC Fiscal Policy Institute said the city does not effectively “hold subsidized developers accountable” after giving them tax breaks and other public subsidies on projects.

“The District cannot afford to continue to settle for low-wage jobs in growing industries,” the report said. “As the DC economy has expanded, income inequality has worsened.”

The alternative would be “high-road” development, whereby the city would push developers to offer better wages and benefits, the institute said. That means developers signing onto project labor agreements with unions.

“When DC government invests in private projects, it can require developers and businesses to enter into agreements with unions to ensure quality work and timely delivery,” the report said.

On projects it approves, “the Zoning Commission does not aggressively seek to maximize key public benefits like affordable housing or job quality,” the report said. For planned unit development projects that come before the Zoning Commission, developers are required to offer public benefits to the community in exchange for exemptions from zoning or density rules. But the existing definition of public benefits is vague, and thus the requirement is “currently ineffective in ensuring developers provide high-quality employment to DC residents.”

One recommendation from the report is that developers be required to file updates on job creation for five years after receiving subsidies greater than $300,000. If developers fall short of the terms of their subsidy, there should be a requirement that allows the District to “recapture the entire value or portion of the awarded economic development subsidy.”