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Government and People
Testimony of John M. Derrick, Jr.
Hearing on Economic Development in
The District of Columbia
Good morning, Chairman Knollenberg and members of the Committee. I am John Derrick, Chairman of the Greater Washington Board of Trade and Chairman and CEO of PEPCO. Thank you for giving me this opportunity to speak about strengthening economic development in the District of Columbia.
Many things go into making a city attractive to business; setting the policies to achieve the perfect mix is a tough balancing act. The District government must establish and sustain priorities designed to take advantage of its position in this region which has been enjoying record growth; the District must send a positive message of cooperation and partnership with businesses; the District must stabilize its regulatory processes, and most importantly, demonstrate a consistent, predictable performance in providing services.
Elements that can ensure economic development and its consequential benefits include:
A few years ago, the Greater Washington Board of Trade supported three priorities for resolving the District's then fiscal crisis:
Much to the credit of this Mayor and DC Council, along with the federally appointed Control Board, the first and second recommendations have been realized, and progress has begun on the third.
The District does not exist in a void, but rather operates in a community of communities that profoundly affect each other's fortunes. In the global economy, the new economic "city-state" is the region; rivers, state lines and city boundaries are irrelevant to that market. The District's economic future will be defined by how well it can partner with the region in this global competition.
The District is poised to profit from its regional opportunities, but it will require a sustained effort to open regular communications beyond its boundaries, and to profitably tap the growing confidence and optimism that can be felt in D.C. It is clear that the District can now take on a greater role in the region's success in attracting business. Critical to this effort is the full funding of the District's participation in the region's coordinated marketing program called Greater Washington Initiative. Furthermore, the District's advantage in participating with other jurisdictions in the regional marketing enterprise will only be leveraged effectively if full funding for the D.C. Marketing Center is maintained. We urge the Committee to support continued funding for these marketing endeavors.
As the urban core of the region, the District has unique assets and opportunities to avail itself of new economic development strategies. Clearly, how DC readapts its existing and limited land resources is critical. It has an especially unique opportunity to enhance its competitive situation through initiatives such as Brownfields redevelopment, development of Washington's waterfront, and redevelopment of the crown jewel in District real estate: the old convention center site. To maximize such benefits, a coordinated strategy and coordinating entity seems to us to be a critical part of the District's policy. To deal with projects of scale and complexity, the city government created the National Capitol Revitalization Corporation - with support of this Committee, Mr. Chairman, $25 million in initial federal funding was made available. We suggest that NCRC should be fully tasked in its pursuit of those economic development projects consistent with its mission.
We encourage the Committee to ensure that the District's incentives for new and expanding enterprises are fully funded. Mayor Williams recently signed into law smart legislation creating meaningful incentives to assist technology firms to grow in the District of Columbia. We understand that the Mayor's budget provides for $2 million in funding for the incentives provided by the New Economy Transformation Act. We applaud that commitment and respectfully request that this Committee support that funding. Similarly, we have long supported the expansion of Enterprise Zone status to the entire District as an opportunity to create fertile ground for economic growth. We hope that members of the Committee will support such expansion of the Enterprise Zone status throughout the city.
Finally, Mr. Chairman, as the District negotiates the daily tension between regulatory and quality-of-life issues, its economic development strategy must take into account the sensitivity of market forces that are profoundly and immediately affected by the daily decisions made by the District government. By way of illustration, recently several data companies planning major investments in the District were taken by surprise when the District government suddenly issued emergency regulations affecting their site selection process. The story has become well-known. In contrast, Prince William County managed to get building permits for a major data center approved within a two-month time frame. When regulatory processes are upended, or when rules are changed in the middle of the game, the marketplace takes notice, and the loss of commercial and retail opportunities is immeasurable. Just as damaging, but tougher to measure, is the message sent.
Some years ago, the District government formed the Business Regulatory Reform Commission. After hundreds of hours of interviews, hearings and deliberations, the Commission made a broad range of recommendations through which runs a common thread: make business regulation in the District predictable, simple and as competitive as possible.
Some of those recommendations have been implemented. For example, the City has begun to improve the process for obtaining building permits, and the Office of Tax & Revenue has put technology to best use by providing a way for businesses to report and pay payroll and other taxes online.
But, Mr. Chairman, other reforms exist only on paper. The "one-stop" shop at the Department of Consumer and Regulatory Affairs - a service that would particularly benefit small business - has not yet reached its promise.
Implementing the BRRC reforms to make the District's regulatory process transparent, certain, and swift is essential. We urge the Committee to carefully scrutinize the District's level of funding to continue these reforms and to ensure that the District will be committed to compete in the regulatory climate of the region.
While the world now recognizes what an economic powerhouse the Washington region is, few probably recall that the flagship of the region's technology community, AOL-Time Warner, started as a D.C. company. It is an interesting exercise to ponder whether AOL might have expanded in the city. But rather than ponder that question, my reason for raising the point is my sincere belief that the next generation of successful companies is already doing business on U Street and on Columbia Road and in the NOMA section of town. We must ensure that they have every reason to locate and grow in the District. They will stay if they see progress in the areas I have discussed this morning, and if they see the District's strong, fully funded, commitment to work with them.
I thank you again for this opportunity to speak with you about these important issues. I will be happy to answer any questions you may have.
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