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To foster a more widespread revival of retailing in Washington, D.C., the Downtown D.C. Business Improvement District is proposing a novel twist on allocating tax incentives. Using a rating system that would reward the most desirable retailers for locating in target areas, the BID would earmark tax increment financing for tenant improvements.

TIF funds had been used by municipalities in the past to promote development in general — cities issue TIF bonds to fund selected projects, then use the taxes generated by the project to pay back the notes. The innovative part of the plan is a point system that would be used to allocate the funds.

“When you reach a threshold of points, you then qualify for TIF funds, and then based on the number of points over the threshold there is a multiplier effect that determines how many dollars per square foot you get,” says Joe Sternlieb, deputy director of the D.C. Improvement District. Points would be awarded based on such criteria as size of space, uniqueness, expected sales per square foot, an expressive retail facade, use of a second level of space, destination shopping experience and whether co-tenants would want to locate with such a store.

Specifically what, D.C. Improvement wants to do is attract apparel, home furnishing and other general merchandisers downtown. These, in fact, will be the only retailers eligible to receive TIF funds.

The proposal hasn't gone to the City Council for approval yet, but the plan is to issue $30 million of TIF notes, which would be authorized to stimulate at least 250,000 square feet of what the BID calls “anchor, icon retail.”

“This is one of those tools that developers like to have to push deals in targeted areas,” says Matt Klein, president of D.C-based John Akridge Cos., which owns and manages buildings in downtown Washington, D.C. “The concept is terrific.”

Robin Mosle, a consulting partner at Street Works LLC, a White Plains, N.Y. development consulting company, agrees: “Steinlieb's approach is an innovative way to affect change positively.”

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