BUSINESS INFORMATION CENTER Evidence of the District government's commitment to the business community for a stronger partnership was the Mayor's activation last January of our Business Information Center. The Center averages 70 calls per month with requests from businesses large and small from developers to neighborhood Mom and Pop stores for information and/or technical assistance. The thrust of this service is to assist business development by cutting red tape and by counseling businesses to start-ups, expansions, relocations, et cetera. From the ever increasing workload for this service, we must conclude that it too indirectly is responsible for increased jobs and taxes. OFFICE OF MOTION PICTURE AND TELEVISION DEVELOPMENT The Office of Motion Picture and Television Development is as well structured in OBED. It is also a significant producer of revenue. During the last quarter of 1979, film production companies spent approximately $1 million in Washington. This unit has succeeded in persuading visiting film crews to billet in the city and utilize its services, thus greatly increasing the revenues realized by the city from their productions. Moreover, the existence of an office which cuts red tape and facilitates film production will ensure that the District is a center for film and television production. NEIGHBORHOOD REVITALIZATION PROGRAM This office, along with our Department of Housing and Community Development, is also engaged in a Neighborhood Revitalization Program which has targeted those areas of greatest need: The H Street; 14th Street; the Howard University Gateway Corridor; the Wheeler Road, S.E. area; and the Upper Shaw 7th Street Corridor. Mr. Chairman, I could go deeper into that, if you like later. Mr. DIXON. Fine. Mr. NICHOLAS. The thrust of this coordination is to provide an appropriate mix of area housing and supportive commercial entities. DHCD will address housing development and this office will address related business development, the commercial strips, et cetera. LIGHT INDUSTRIAL DEVELOPMENT In addition, we have targeted the New York Avenue Corridor for our light industrial concentrations. Our principal effort is to retain and attract businesses, such as printing and publishing, food wholesaling, auto/truck repair, and other service industries. Please note that we have no intention of attracting so-called "smoke stack" industries to the Capital of this Nation. Another area I might address is the downtown retail core, the downtown retail area. The District is constructing the new Washington Convention Center. The spinoff development from that is considered to be, well, positive. PROMOTING TOURISM Another major OBED effort is to staff the Mayor's Committee to Promote Washington, D.C., whose purpose is to encourage tourism in the District and improve the image of the city. Tourism is the city's second largest employer, and tourism-related businesses, such as hotels and restaurants, employ mainly District residents, approximately 85 percent. By coordinating the myriad of tourism-related efforts in the city, the District can maximize the effectiveness of tourism promotion and capture more of the tourist revenue for the city. COMPLETE FEDERAL FUNDING OF OFFICE The Office of Business and Economic Development is now entirely Federally funded from Community Development Block Grant moneys and Economic Development Administration (EDA) grants. The lack of appropriated funding for OBED makes it extremely difficult for the city to operate its economic development program as effectively as possible. DECLINE IN FEDERAL GRANT FUNDING The Community Development Block Grant funds have declined from $42 million in fiscal year 1975 to $24 million in fiscal year 1981, rendering it impractical to keep on funding OBED from that source. The uncertainty of OBED's financial support will also mitigate against continuing to attract top-flight talent to the office. More importantly, however, economic development is a legitimate public function commonly funded by local moneys in cities throughout the country. The District deserves the same opportunities as Los Angeles, Cleveland, or any other city to mount the best campaign possible to increase local revenues and provide employment opportunities for city residents. Thank you, Mr. Chairman. ATTRACTING MOTION PICTURE INDUSTRY Mr. DIXON. It seems that one of your functions would be to try to attract some of the movie industry out of Los Angeles and encourage them to shoot more on location. Mr. NICHOLAS. One of the underlying thrusts of the motion picture groups we have is to make it easier to shoot on location in the District of Columbia. SMOKE STACK INDUSTRY Mr. DIXON. Well, I have got to ask you what is this "smoke stack" industry? Are these industries that give off a lot of pollutants? Mr. NICHOLAS. Yes; the kinds of light industries we want are the kind that are normal for a city of this type. Those whose service market is the city, such as laundries, wholesale food services, printing and publishing, which are the largest service industries. HELPING TO REMOVE DISINCENTIVES Mr. DIXON. I notice that you mentioned some of the disincentives to the establishment of businesses here, and my question to you is, what could the Office of Business and Economic Development do about the Workers' Compensation Program; and about labor costs or the cost of land compared to Maryland and Virginia, or the higher business taxes that Maryland or Virginia have as it relates to registration? Mr. NICHOLAS. Mr. Chairman, we have already started working on most of those, especially the first one, Workers' Compensation. In the normal course of our work, we actually go out and contact businesses, large and small, and early on we have got the reaction that Workers' Compensation and the rest of those were the major disincentives. They didn't have major market or legislative problems. This office communicates what it hears to the relevant city Council people and our superiors in the executive. Workers' compensation is the major, always the number one major negative from most of the business community. The executive and the legislative branches of the District Government are presently working on remedial action on that. DISTINGUISHING SERVICES FROM CHAMBER OF COMMERCE Mr. DIXON. How would you distinguish in this community your services from an aggressive Chamber of Commerce? Mr. NICHOLAS. All businesses in most municipalities have to deal with the government for licensing, for assistance, et cetera. Historically, there has not been that partnership with the District Government and the entire business community. There are 17,000 to 20,000 businesses. Our first thrust would relate to the kind of day to day development where the District can help. General broader promotions are left to the Chambers of Commerce. Most of the complaints that come into our Business Information Center that I mentioned earlier have to do with cutting redtape. That is government red tape and one of the main purposes of this office was to establish an administrative entity where all this kind of action could be concentrated so we could be more responsive to the business community. EXAMPLES OF BUSINESSES BROUGHT INTO CITY Mr. DIXON. Can you give me some examples other than the ones you cite in your testimony of some successes you have had in the kinds of programs that you have? I realize it is probably very hard to measure. Give me some concrete examples of an industry or a particular business that the office has brought here or is clearing up some red tape on an ongoing manner for certain kinds of industry? Mr. NICHOLAS. You are asking for examples that can be measured? Mr. DIXON. Right, and I realize- Mr. NICHOLAS. Mr. Chairman, the problem is the loss of light industries, and all types of businesses to the neighborhood areas or beyond because of the bad climate here. You may be familiar with the Georgetown Waterfront major development that they are working on. Mr. DIXON. Yes, I am. Mr. NICHOLAS. There exists in that area a light industrial firm called Super Concrete, an employer of some 113 employees, and a considerable tax contributor. When they came to us they were faced with the high possibility of having to move into the suburbs. We were able to relocate them within the city to save those jobs. Mr. DIXON. Yes. Mr. NICHOLAS. That is an example of last year. Related to that, we have received from the Commerce Department, an EDA grant, and set aside some $20 million to be drawn down on by the District's Development Program, business development programs in fiscal year 1980, public works, the broad scope. Now, the kinds of projects that we will submit to draw down on that money will be projects which we can measure directly to the greater part, indirectly to the lesser part, increase permanent jobs and increase taxes. Mr. DIXON. Mr. Pursell has raised the issue here in committee about long-term planning in the city and I share that view. LONG-RANGE PLANNING Are you developing long-term programs for the kinds of businesses that you would like to attract, including how you would go about doing that? Is there any long-term planning involved in your office? Mr. NICHOLAS. Right; the Mayor's overall Economic Development Advisory Committee is addressing that. Our office is actively engaged with the Greater Washington Board of Trade which addresses a longer term scope. I don't think they have testified yet, but the Office of Planning and Development and my office impact on the economic component of the comprehensive plan which is long term. NEIGHBORHOOD REVITALIZATION PROGRAM Mr. DIXON. You say in your testimony you might expand on the neighborhood revitalization programs which the Department of Housing and Community Development is also engaged in. You are involved in those revitalization programs? Mr. NICHOLAS. Yes. To give an example, our approach to that, I mentioned the H Street Corridor; our approach to that corridor addresses housing and the business strip as well. The Housing Department takes care of the housing revitalization and my office takes care of the business strip, making sure that the businesses in there that we package and develop are those that are appropriate to the marketing of the housing in the entire corridor. That is the approach we are taking for those five major neighborhood revitalizations. Mr. DIXON. I don't think I have any other questions. FRIDAY, MARCH 28, 1980. OFFICE OF PERSONNEL WITNESSES JOSE GUTIERREZ, ACTING DIRECTOR JULES B. LLOYD, CHIEF LEGAL COUNSEL JAMES O. MORAN, ACTING ASSOCIATE DIRECTOR FOR COMPENSATION AND POLICY SYLVIA MUNDY, ASSOCIATE DIRECTOR, POLICY AND MANAGEMENT |