Won tax incentives to move to the District Real estate firm CoStar has sold its D.C. headquarters building for more than double the price it paid a year ago, when the District lured the company from Bethesda by giving it more than $6 million in tax credits.
CoStar announced Thursday it sold its downtown building at 13th and L streets NW for $101 million to an affiliate of Munich-based GLL Real Estate Partners. The company paid $41.25 million for the property a year ago — but not until the D.C. Council offered a 10-year, $6.1 million discount in property taxes contingent upon CoStar hiring at least 100 D.C. residents.
The company has said it will keep its headquarters location in the District and sign a long-term lease with GLL. Months after moving, it met its tax abatement requirements and reportedly incentivized some of its workers to move to the District.
It is not clear whether CoStar is required to refund the District any money it saved from the deal in the event of a sale.
A spokeswoman for Mayor Vincent Gray, who sponsored the tax abatement legislation as council chairman, did not return requests for comment. CoStar’s spokesman did not immediately know whether any clauses exist in the tax abatement deal.
However, the company’s news release said CoStar could get more discounts.
“CoStar believes it may be eligible for additional incentives such as a five-year elimination of District corporate income tax,” the release said. “CoStar anticipates creating 700 jobs at its D.C. headquarters.”
Those jobs were the District’s primary justification for the tax credits, city leaders said last year.
In Thursday’s news release, CoStar said it knew it was getting a steal on the downtown property when it paid $243 per square foot — one of the lowest prices in more than a decade for a new downtown office building.
CoStar used its own forecasting tools “to accurately predict the bottom of the most recent commercial real estate market cycle” and “strategically time the purchase and sale of the building,” the release said.
The deal between the city and CoStar reportedly was hatched in 2009 while then-Mayor Adrian Fenty and CoStar CEO Andrew Florance sat next to each other on a flight from a convention in Las Vegas. Florance cited excessive real estate taxes as a reason why he wouldn’t move the company from Bethesda. Fenty offered to try to solve the problem.
The following year, Florance gave two donations totaling $4,000 to Fenty’s re-election campaign, according to campaign finance records. After Fenty was defeated in the city primary election last year, CoStar gave $2,000 to Gray’s campaign.
CoStar also gave small donations to Council members Kwame Brown, Mary Cheh, Jim Graham, Tommy Wells and Harry Thomas Jr. in 2010.
