McDuffie Leads Council in Passing Emergency Legislation to Ensure Financial Feasibility of MLK Gateway Development

Councilmember Kenyan R. McDuffie Leads Council in Passing Emergency Legislation to Ensure Financial Feasibility of MLK Gateway Development

The proposed legislation ensures the financial feasibility of the development by providing an emergency tax abatement and amending the term sheets to allow 1909-1913 Martin Luther King, Jr Avenue, SE to be transferred to a fee simple sale

Washington, DC — Today, Councilmember Kenyan R. McDuffie, Chair of the Committee on Business and Economic Development, led the Council in passing emergency legislation to ensure financial feasibility of the MLK Gateway Development. The MLK Gateway Development team is utilizing new market tax credits as a part of its capital stack, however due to the 35-day federal government shutdown during the end of 2018 the issuance of those credits has been delayed. The delay of the issuance of the tax credits could potentially make the project financially infeasible. The emergency tax abatement would reduce the projects overall budget, closing the gap to ensure the financial feasibility of the project. The MLK Gateway Real Property Tax Abatement Emergency Amendment Act of 2019 [B23-0380] would last for up to 15 years and cannot exceed $3 million.

The Council approved the ‘MLK Gateway Disposition Approval Resolution of 2017,’ which included a term sheet dated August 31, 2017. In the original term sheet, 1909/1913 Martin Luther King, Jr Avenue, SE was going to be transferred to the developer via 99 year ground lease agreement. Since 2017, the development team has acquired additional parcels of land that are adjacent to the District owned property. The expanded land area allows the developer to build a larger project to enhance the positive impact on the neighborhood. However, the property combination cannot take place under the term sheets outlined in 2017 due to the District owned land being transferred via ground lease. The MLK Gateway Term Sheet Amendment Emergency Approval Resolution of 2019 would transfer the property via simple sale. The sale price will be $200,000 which reflects the appraised as-is value of the land.

With passage of this legislation, Councilmember McDuffie stated:

“I would like to note that the Tax Abatement Fiscal Analysis concluded that the abatement is necessary for the financing of the project. I would also like to note that the Executive has committed, in writing, to fund the abatement.

As Chair of the Committee on Business and Economic Development, I want to acknowledge that this emergency abatement is unprecedented, and I believe that abatements should and must proceed through the normal Council process—introduction, hearing, committee markup, and Council vote. As such, I have introduced permanent legislation and commit to having a hearing on this legislation in the fall.”