Third Quarter 1999

D.C. and Holland & Knight: Into the New Millennium

Holland & Knight Newsletter
Dennis M. Horn

If the construction cranes are any indication, the New Millennium has come early to the District of Columbia. A new mayor with new economic development tools, a blue print for regulatory reform and a commitment to sustained economic growth, may make the District the focus of some of the most exciting business opportunities in the mid-Atlantic region.

Holland & Knight has assisted the city in implementing its reforms and also assists its clients who are investing in and doing business with the District of Columbia.

Mayor Anthony Williams, the city's former chief financial officer who lead the District from financial turmoil to financial surplus, has made sustained economic development a top priority for his administration. He has assembled a strong team to facilitate economic development, including Doug Patton, as Deputy Mayor for Planning and Economic Development, Lloyd Jordan at the Department of Consumer and Regulatory Affairs and Andrew Altman at the Office of Planning. In the first six months of his administration Mayor Williams has championed and won a $300-million tax cut for businesses and residents, partnered with Fannie Mae to launch a $500-million housing assistance initiative for District residents, presented a "road show" to demonstrate the opportunities that the District offers to the retail industry and proposed rewriting the District's corporate laws to make the city more friendly to those businesses incorporating within the jurisdiction. The end-game: Mayor Williams wants to establish the District of Columbia as the "heart of the regional economy." In the past year, the District has taken two gigantic steps toward that goal.

Economic Development Tools. Step One is to equip the District with the tools it needs to attract businesses and residents into the District and keep them here. In 1997, Congress granted a $5,000 tax credit to first time homebuyers in the District. That same year, the District Revitalization Act authorized a tax-increment financing (TIF) program to spur retail and housing development in the downtown areas. Under the TIF program, developers can finance projects with bonds that are repaid from the tax revenue generated from the project that the bonds financed. Developers can use TIF bonds to finance single or multi-use commercial and residential projects. To further support businesses, the Council enacted legislation that made it easier for commercial property owners to form business improvement districts in which the property owners "tax" themselves to fund improvements and services that the city cannot deliver. In 1998, the Council also passed legislation creating the National Capital Revitalization Corporation, an independent "super-agency" charged with coordinating the city's economic development initiatives. With $25 million in federal funding, a $50-million commitment from Fannie Mae and a multimillion-dollar property portfolio inherited from the Redevelopment Land Agency, the NCRC will have the resources it needs to begin the process or revitalizing the city. Once President Clinton and Mayor Williams appoint its Board, NCRC will face the challenge of marshalling the city's economic development tools to inject new vitality into the District's marketplace.

Regulatory Reform. The District government was once the poster child for bureaucratic inefficiency. For instance, DCRA was a bureaucratic nightmare that provided an incentive not to do business in the District. Before management reforms were implemented last year, it could take months to obtain even the most routine permits or business licenses. But today, under the leadership of Lloyd Jordan, DCRA is doing considerably better. Under the new building permit processing system, applicants receive timely, one-on-one attention from a rotating stream of engineers who simultaneously review the applicant's paperwork for the variety of issues that may affect the issuance of the permit. Permits that used to take months to obtain can now be obtained in a few days or even a few hours. DCRA operations still have their "kinks." However, even DCRA's harshest critics acknowledge that the building permit processing system has improved significantly. In fact, a recent Peat Marwick study of 25 North American cities found that in the past year the District of Columbia has gone from last to one of the top two cities in processing time on five of seven categories of permits.

What Counts Are Results. The District's economic development and regulatory reform initiatives have already opened the doors for hundreds of new opportunities for new businesses. In the past year, District home sales increased by over 33%, higher than any suburban county in the region and almost three times higher than the national average. More than half of all home purchases in the District are to first-time homebuyers, of an average age of 34 years. This provides retailers with a substantial new base of target consumers in the District.

The District's TIF program, although not fully operational, has inspired a 550,000-square foot retail and entertainment complex, a 550-room hotel expansion and a new 500-room hotel on the District's waterfront. Numerous BIDs have been formed to supplement the services the city offers to businesses. The BIDs have been heralded as changing for the better both the character and personality of the city. Furthermore, while regulatory reform is far from complete, the District has received inquiries from other cities and even from the Senate Indian Affairs Committee about using the District's experience as a model for reforming regulations in other cities and among the Indian nations.

Holland & Knight's Involvement in District Growth

As legal counsel to numerous developers and new business owners "breaking ground" in the District, we have witnessed first hand the excitement that surrounds the city's new commitment to economic growth and regulatory reform. Projects in which Holland & Knight attorneys have been involved include assisting a luxury brand hotel in the evaluation of a joint venture for the development of a high-end time share resort in the District, the development of a 1.5 million square foot planned unit development in the District's southeastern quadrant, and multiple historic preservation/development projects. One of the marquee projects in which Holland & Knight has been actively involved is the Millennium Partners' development of The Residences at the Ritz-Carlton. This $260-million project, which the Washington Post has dubbed "assisted living for the rich," combines urban condominiums with all the amenities of one of the world's most-noted luxury hotels. The Residences at the Ritz-Carlton may be the epitome of the new opportunities that lay within the District's city limits.

As the District continues to evolve into the New Millennium, we continue to support and work with the city. From the start, Holland & Knight attorneys have assisted Mayor Williams as a part of his administration's Transition Team. After assisting the District's Financial Control Board in formulating the plans that became the blue print for the District's current regulatory reform efforts, the Control Board asked Holland & Knight to draft the laws and regulations to implement many of the regulatory reform initiatives. Indeed, as a further part of the regulatory reform effort, Holland & Knight lawyer Rod Woodson was invited by Mayor Williams to chair the District's Alcohol Beverage Control Board. In this capacity, Mr. Woodson is charged with a complete overhaul of the city's alcohol laws and licensing system. Dennis Horn continues to support the Williams' administration by sitting on the Mayor's informal Economic Development Advisory Group.

Holland & Knight's involvement in District transcends governmental involvement. Tanja Castro, a member of the firm's real estate group, is the current president of the District Chapter of the Commercial Real Estate Women, Inc., and a co-Chair of the District of Columbia Building Industry Association's (DCBIA) Taxes and Imposition Committee. Nelson Migdal, the executive partner of Holland & Knight's Washington office, along with Mr. Horn serve as members of DCBIA's Executive Council and Board of Directors, respectively. Mr. Migdal is also a member of the DCRA's Business Advisory Board. Further, dozens of attorneys in the Washington office participate in the community through Holland & Knight's Opening Doors for Children Program. The Opening Doors Program provides mentoring and tutoring to students in Cleveland Elementary School.

The American Bar Association recently recognized Holland & Knight's activities in District affairs. The ABA selected Holland & Knight's construction law group to author the District of Columbia section of its upcoming treatise on Construction Contracting by State and Local Governments.

To help Holland & Knight clients benefit from Holland & Knight's prominence in the District, we recently formally established our D.C. Practice Group. Co-Chaired by Roderic Woodson and Dennis Horn, the D.C. Practice Group consists of approximately 20 attorneys who are dedicated to serving clients with legal needs in the District. The D.C. Practice Group offers the full range of legal services for clients who must deal with the District of Columbia government including: TIF and tax-exempt financing; procurement and procurement disputes; transportation; health care; real estate, zoning and land use; administrative, legislative and litigation counsel; licensing, business formation, and regulatory advice. In short, by marshalling legal resources and personal involvement in District of Columbia affairs, Holland & Knight's D.C. Practice Group offers clients experienced legal counsel to take advantage of the increased business opportunities as the District of Columbia enters its New Millennium.

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