Washington, D.C.

Why D.C.’s Skyline Is a Flock of Cranes

The capital’s economy is so much more than just the federal government. Deputy Mayor Victor Hoskins explains how that happened.

Victor Hoskins, Washington, D.C.'s Deputy Mayor for Planning and Economic Development
National Journal
Amy Sullivan
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Amy Sullivan
Nov. 18, 2013, 4:29 a.m.

This art­icle is part of a weeklong Amer­ica 360 series on Wash­ing­ton. 

In the years of the Great Re­ces­sion, Wash­ing­ton seemed mi­ra­cu­lously im­mune to the eco­nom­ic troubles roil­ing the rest of the coun­try. The na­tion’s cap­it­al weathered high un­em­ploy­ment along with the rest of the coun­try, but sim­ul­tan­eously en­joyed ex­plos­ive eco­nom­ic growth, with sprawl­ing de­vel­op­ments tak­ing off across the city and con­dos rising one after an­oth­er to ac­com­mod­ate the 1,200 new res­id­ents who enter every month. Along the way, it’s also be­come the most pop­u­lar loc­a­tion in the coun­try for mil­len­ni­als, most of whom now come here to do something oth­er than work for the fed­er­al gov­ern­ment.

Na­tion­al Journ­al re­cently sat down with Vic­tor Hoskins, the city’s deputy may­or for plan­ning and eco­nom­ic de­vel­op­ment, to talk about some of the latest pro­jects trans­form­ing D.C.’s eco­nomy, and wheth­er they will be­ne­fit the en­tire city or just the new­comers. Ed­ited ex­cerpts fol­low. 

So many people out­side Wash­ing­ton think that the city’s eco­nomy is ba­sic­ally the fed­er­al gov­ern­ment, peri­od.

Well, we do have 280,000 fed­er­al jobs — that’ll make you tied to the fed­er­al gov­ern­ment! But let me walk through some of our demo­graph­ics. There are 100,000 stu­dents in the Dis­trict of Columbia, and 632,000 people. That tells you something right there. It’s a young city. Just hear­ing that num­ber should push out the idea that this is an older, con­ser­vat­ive, gov­ern­ment city.

The second thing is that there are 2,200 tech­no­logy com­pan­ies in D.C., and ap­prox­im­ately 24,000 tech­no­logy em­ploy­ees in the city. That’s part of the trans­ition, and people are be­gin­ning to no­tice. In Janu­ary of this year, For­bes said that we were the No. 1 tech hot­spot in the coun­try.

And we have 1,200 new res­id­ents com­ing in every month. That is more than any time since the 1950s, when we peaked in pop­u­la­tion. We’re mov­ing for­ward very fast. The cul­tur­al en­vir­on­ment is chan­ging as well. In 1994, when I moved to the re­gion from L.A., there were very few res­taur­ants to eat in, and every­one went to them. Every­one. Now in the Dis­trict of Columbia there are thou­sands of res­taur­ants. Add to that how the arts com­munity has grown. Those kinds of changes have happened so fast — most of them in the last three years.

I can’t keep track of all the new build­ings pop­ping up on every block. What happened?

I’ve been in eco­nom­ic de­vel­op­ment be­fore, I know what a few trans­ac­tions can do. But you need a strategy to trans­form a city. You need some ser­i­ous, sus­tained ef­fort, and you need some fin­an­cial dis­cip­line. May­or [Vin­cent] Gray went about fin­an­cial dis­cip­line — he tightened our budget and now we’re work­ing on our third budget sur­plus. It’s also al­lowed us to build our re­serves. They were $700 mil­lion when the may­or came in­to of­fice; now they’re $1.5 bil­lion. Why is this im­port­ant? It’s im­port­ant be­cause when you bor­row, you want to bor­row at the most com­pet­it­ive rates. We do some bor­row­ing — which is really our in­vest­ing in in­fra­struc­ture — in or­der to cre­ate these eco­nom­ic op­por­tun­it­ies. Since the may­or has been in of­fice, we’ve cut rib­bons on 26 pro­jects, and we have cur­rently 37 un­der con­struc­tion.

I live with­in three blocks of three of them.

I’m sorry! But you are go­ing to do so well when you sell your house. So we have this huge volume. That’s equi­val­ent to about $4.6 bil­lion in total de­vel­op­ment value. We’ve cre­ated over 21,000 jobs through these pro­jects — either con­struc­tion jobs or per­man­ent jobs. It’s really start­ing to pay off sub­stan­tially. If you look at the One City One Hire pro­gram, the may­or wanted to con­nect D.C. res­id­ents with D.C. jobs. We have the De­part­ment of Em­ploy­ment Ser­vices now, they work very closely with us. We con­nect them to the com­pany, and they ba­sic­ally end up be­ing like the pre-HR of­fice. They pre­screen people for qual­i­fic­a­tions, they test them, they make sure they have the writ­ing skills, the cus­tom­er-ser­vice skills. And then they send this pre­screened group to the em­ploy­er.

As a res­ult, 7,600 em­ploy­ees have been hired at over 930 com­pan­ies in the Dis­trict of Columbia. This all star­ted with something very simple, ask­ing busi­nesses: “Would you hire one Dis­trict of Columbia res­id­ent?” As a res­ult, our un­em­ploy­ment rate dropped from 11.2 per­cent when we star­ted down to 8.7 per­cent now. 

All of this really star­ted with City Cen­ter [a re­tail, condo, and of­fice de­vel­op­ment in down­town D.C.]. Everything was flat-dead when the may­or came on. It had been sit­ting around for 12 years, right in the middle of the city. We needed to cre­ate mo­mentum, and that was the best place to be­gin it. They were hav­ing some is­sues, and the may­or asked me to go in and see what I could do in terms of get­ting that thing closed. And in six weeks, they closed it.

What was the is­sue there?

It had to do with our gov­ern­ment struc­ture, and the dif­fi­culty that the Of­fice of Tax­a­tion and Rev­en­ue some­times has in co­ordin­at­ing with the gov­ern­ment that ac­tu­ally op­er­ates here. They are money, rev­en­ue, and treas­ury, but they’re sep­ar­ated from us. Some­times we don’t com­mu­nic­ate. By the way, this wasn’t new. Twelve years of wait­ing — ob­vi­ously, prob­lems had happened be­fore. The key was, how do you un­ravel it? Be­cause I had worked in the pub­lic sec­tor and the private sec­tor, I had skills on both sides of the table, and un­der­stood what the real hic­cup was. And I just fo­cused on that. With­in six weeks, we were break­ing ground on the largest single pro­ject in the his­tory of the city.

Cre­at­ing that mo­mentum was im­port­ant be­cause we were try­ing to cre­ate a con­fid­ence in the private sec­tor that the pub­lic sec­tor was not only ser­i­ous, but that we could ac­tu­ally get these things mov­ing. So when that broke ground, we im­me­di­ately went up the street to O Street Mar­ket and sat down with that de­veloper and said, ‘OK, what are your prob­lems?’ He lis­ted his prob­lems. This time we worked with the of­fice of the chief fin­an­cial of­ficer — this was all about how you struc­ture the fin­an­cing. We man­aged to re­solve that, and as you know, it’s well on its way now.

Now re­mem­ber, that O Street Mar­ket burned down 40 years ago. Shops at the Dakotas — where the new Costco is — that had been sit­ting around for 28 years. We have two Wal-Marts ready to open, and a third un­der con­struc­tion that will de­liv­er next year out at Fort Tot­ten. Now we’ve got this mo­mentum go­ing. 

Do you feel like you’ve reached a tip­ping point, at which you don’t have to make the same kind of pitch to busi­nesses for why they should loc­ate in the city? 

For years, Mary­land and Vir­gin­ia just as­sumed they could pick off D.C. Well, they don’t think that any­more. But that just means we need to fig­ure out the next in­nov­a­tion to stay ahead of them. This year for the first time we went down to South by South­w­est. It was so great be­cause we had 35 area CEOs down there — from little com­pan­ies, as small as 10 guys and gals, to people like Steve Case [the former CEO of AOL] and Mi­chael Chasen, from Black­board. We also did a tech meet-up and 550 people signed up. The may­or was there, Evan Burfield from 1776 was there. 

But go­ing back to the may­or’s ori­gin­al idea of in­vest­ing in the en­tire city and not just the areas that are already af­flu­ent, how do you make the ar­gu­ment to a com­pany to in­vest in a place like Fort Tot­ten, which is a very dif­fer­ent op­por­tun­ity than pitch­ing, say, City Cen­ter?

For us, it’s all about mar­ket. If the mar­ket’s not there, then we have to in­cent more. If the mar­ket is there, then we in­cent less. We try to make all the points about what the mar­ket op­por­tun­ity is, and then let the deal stand on its own. Fort Tot­ten right now is not a hard sell. St. Eliza­beth’s [a de­vel­op­ment on the cam­pus of the old St. Eliza­beth’s hos­pit­al in the south­east Anacos­tia neigh­bor­hood] is still a dif­fi­cult sell.

The first wave of Home­land Se­cur­ity from the Coast Guard just moved in across the street from St. Eliza­beth’s loc­a­tion with 2,600 people. And we’ve built a food and re­tail pa­vil­ion that they could use. The dif­fi­culty is, though, how do you take that de­mand off that cam­pus and get it to come to your cam­pus? We’re do­ing that with pro­gram­ming.

We’re go­ing to have this big fall fest­iv­al this month — there will be giveaways, there’ll be games, hay rides, pump­kins, free cof­fee for adults. That kind of thing. Re­mem­ber, the build­ing has been closed for 30, 40 years or so, and there has been no con­struc­tion on the site in over 100 years. I be­lieve it’s the finest piece of ar­chi­tec­ture in the city right now. And it’s in Ward 8. It’s in a “dif­fi­cult” neigh­bor­hood. It’s in a high un­em­ploy­ment area. You have to make this com­munity feel how spe­cial they are. So at this beau­ti­fully de­signed pa­vil­ion, we’re go­ing to have an ice rink this winter. Every Sat­urday, there will be free ex­er­cise boot camps for people to get in shape. It’s really to draw people there first. 

There’s room in your budget for things like this?

Yeah, we budgeted for all of this. That’s how you do it!

That’s not nor­mally what people think of when they hear eco­nom­ic de­vel­op­ment.

Right. It’s more or­gan­ic than the nor­mal eco­nom­ic de­vel­op­ment. A lot of people, like you said, think of down­town and the City Cen­ter as eco­nom­ic de­vel­op­ment. But part of this is try­ing to fig­ure out what is the or­gan­ic thing that you can grow there. We have a metro sta­tion on site, we have all these em­ploy­ees right around there, we have this food pa­vil­ion. Then add to that the three in­nov­a­tion cen­ters we’re work­ing on there, in­clud­ing one we’re work­ing to fi­nal­ize with Mi­crosoft. It would be their second in­nov­a­tion cen­ter in North Amer­ica — the oth­er is in Red­mond, Wash­ing­ton.

Not so long ago, there was nat­ive Wash­ing­ton and then tran­si­ent Wash­ing­ton made up of people who moved here and planned to leave. Now it feels like there’s ac­tu­ally a pretty big com­munity of people who think of the city as a place they’ve moved to stay.

I try to ex­plain to people how I per­ceive eco­nom­ic de­vel­op­ment. Part of it is an in­tel­lec­tu­al ex­er­cise, but part of it is emo­tion­al. When you are really get­ting trans­form­a­tion, the people get in­volved from a com­munity stand­point. That cul­tur­al part is what’s tak­ing place now. That’s kind of the af­ter­math. It’s when you be­come proud of the thing that you are. That kind of thing is what’s hap­pen­ing in the Dis­trict. That’s when you’ve got the real ma­gic. And that is what will make people want to be here, stay here, and grow here. That’s the eco­nom­ic de­vel­op­ment I’m look­ing for. That’s what it’s build­ing to­ward.

All of a sud­den, your home be­comes a spe­cial place. To me, that is the power­ful part, when people are so happy that they’re in this town. I want every­body who left to wish they’d stayed. Be­cause if they didn’t, it’s get­ting harder for them to get back in.

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