November 20, 2001

Cities Online: Urban Development and the Internet

Part 5: Washington, D.C.

Introduction

Washington, D.C., is in some ways the latecomer among the five cities studied when it comes to adapting to the Internet, but that does not mean that citizens and government officials have not been aggressive in pursuing Internet opportunities.  The city is actively trying to promote dot-com development downtown through networks of entrepreneurs who are linked to venture capitalists.  And as in several of the other cities, planners are trying to develop a hip, artsy downtown district that will serve as a magnet for young people with dot-com business ideas.  The area is known as NoMa, for an area north of Massachusetts Avenue near Union Station.  City government is also moving to provide financial incentives for dot-com and other technology companies locating in the District of Columbia.

At the community level, the city boasts a large number of projects devoted to bringing Internet and computer access to low-income people.  Several have received funding from the U.S. Department of Commerce’s Technology Opportunities Program; others have foundation funding.  Some focus on job training while others are more broadly educational.  The city government has not been active in funding community Internet projects, but the Metropolitan Washington Council of Governments has a “Digital Divide Task Force” whose objective is to catalog existing computer and Internet literacy projects and explore where gaps exist. 

Washington’s case is unique in that is a distinct governmental unit surrounded by suburban Maryland and Virginia, both of which are affluent centers of vibrant New Economy business activity.  This section concentrates solely on the District. 

The Internet and the Community

Like most of the cities studied, Washington has a variety of initiatives designed to make the Internet available to low-income people.  These initiatives have different focuses.  One is devoted mainly to job training, another to integrating the Internet into a charter school for troubled kids, and another to bringing the Internet into the homes of residents of low-income housing.

a.                  See Forever Foundation

In Washington’s Shaw neighborhood, the See Forever Foundation has established the Maya Angelou Public Charter School as a way to reach at-risk kids who have not been well served by the public school system.  Technology plays a large role in the curriculum; the school has about 50 computers on site and 20 in a central lab that serves as a classroom.  The school is also trying to serve the Shaw community by introducing the Internet to nonprofits and senior citizens in the neighborhood. 

The school serves approximately 80 students, most of whom have had trouble with the law.  Many had dropped out of school.  About 20 percent live at the school, and school days are long—from 9 a.m. to 8 p.m.  In addition to providing students essential course work, the school also offers practical exposure to real-world employment.  At the school’s “Student Tech Center,” students teach parents and siblings computer and Internet skills and engage in graphic design projects for neighborhood clients.  Students are paid for teaching and receive evaluations of their work. 

The location and design of the building that houses the school are important parts of its mission.  Originally started as an after-school tutoring program, See Forever for a while operated in a public school building.  It needed its own facility to operate as a charter school, so See Forever chose to renovate a building in the Shaw neighborhood, long known as a center of the District’s drug trade.  Maya Angelou Co-Principal David Domenici wanted to renovate a building that students and neighborhood residents could have pride in; he also wanted to create a “technology storefront” feel, so people in the neighborhood would avail themselves of the technology classes offered. 

Initially, Shaw residents disliked the prospect of a school that served kids who had had run-ins with the law.  However, students and school staff have reached out to the community, and there has been steady growth in attendance at computer classes and use of the school’s computers by residents. This has done much to improve the school’s reception.

In a more systematic fashion, the school is developing ShawNet, a wide-area network and Web-hosting site for area small businesses and nonprofits.  The project will cost $900,000, with $395,000 coming from the U.S. Department of Commerce’s Technology Opportunities Program.  The project puts students’ skills to practical use as they perform a service for the nonprofits.  This initiative has had a slow start. Nonprofits’ resources are thinly spread, and Internet access is limited.  But in the three years supported by the TOP grant, See Forever hopes to get 50 nonprofits on the Web and 50 small businesses as well. 

The other goal of the grant is to encourage Internet access among senior citizens through the “Back Pack Technology Program,” in which Maya Angelou students will take laptop computers to seniors and provide Internet training.  Over the longer term, students will help interested seniors buy home computers and set up Internet access.  

b.                  Byte Back

Byte Back is a Washington, D.C., nonprofit with a small paid staff, many volunteers, and a presence in numerous-community based organizations. It offers two types of training to District residents.  The first is basic computer and Internet literacy. As of spring 2001, Byte Back courses were available at nine sites throughout the city, ranging from Byte Back headquarters near Catholic University to a family center in a housing project, several churches, a Boys and Girls club, and a Catholic Charities facility.  Classes are usually limited to about 10 people, and students pay nominal fees–$10 for introductory courses and $25 for more advanced ones such as Power Point or HTML. In spring 2001, 560 students were participating in 70 courses and more than 2,000 people had passed through one of these classes since Byte Back was founded.

The second type of training is a yearlong program for what Byte Back calls its “interns,” designed to give them the advanced training necessary to gain employment in the information technology industry.  Interns “test in” to the program based on pre-existing computer aptitude or on skills gained in basic Byte Back courses.  They commit 30 hours a week to the program: ten hours of class time, ten hours of homework, and ten hours of service, which can include technical support or teaching.  Interns, of whom there are 40 at a time, also attend bi-monthly community meetings.

Volunteers serve as another pillar of Byte Back’s organizational approach.  Through word of mouth and postings in church bulletins, Byte Back has a corps of computer and Internet professionals who teach Byte Back classes to walk-ins or interns.  This gives interns valuable contacts to professionals whose companies may be hiring.

Like many organizations that provide computer and Internet training to low-income people, Byte Back has to cope with high demand for its services, which in turn means rapid organizational growth.  Interns whose primary interest lies in computer programming have to deal with administrative issues as more people sign up for courses.  Byte Back hopes that its model can be replicated in other cities; if so, similar organizations will have to handle growth effectively. 

c.                  Edgewood Terrace’s EdgeNet

Northeast Washington’s Edgewood Terrace housing development represents an ambitious and well-publicized effort to transform once run-down apartment units into a vibrant and wired community.  The Community Preservation Development Corporation (CPDC) purchased the low-income public housing development in 1993 from the U.S. Department of Housing and Urban Development.  CPDC set out to create a community with on-site amenities such as after school programs for kids, adult education classes, and Internet access.  The innovative part of the plan was to provide Internet access in residents’ apartments along with a portal and intranet known as EdgeNet.  To date, CPDC’s overall  plans have unfolded well, although in-home Internet access has hit some technical snags.

Edgewood Terrace has 884 apartments on a 16-acre site, and its courtyard once housed an open-air narcotics market.  After redevelopment, Edgewood Terrace has become a mixed-income community with an average annual household income of $35,000.  Early in planning, CPDC saw Edgewood as an opportunity to use computer technology to improve the community.  Since the units were to be completely refurbished, CPDC decided to wire the buildings and apartments with high-speed communications infrastructure—T-1 lines into buildings and fiber-optic cables to each floor.  A project such as this takes time.  CPDC will begin in the summer of 2001 the refurbishment of the final 200 units of Edgewood.  This means that 592 apartments will have been retrofitted with broadband connections. However, due to technical problems, only 140 units have Internet terminals. 

When Edgewood reopened in 1995, CPDC immediately started offering computer training to residents.  By 1998, Edgewood’s learning center had opened, offering more classes and Internet access.  Today, about 150 adults per year pass through the learning center’s 16-week training programs in computing and Internet skills.  The course’s objectives are to prepare students for entry-level jobs in areas such as Web page design.  The results appear to be good; because of vocational assessments of applicants for the classes, students admitted have strong aptitudes for the courses.  Job retention rates are high; approximately three-quarters of the students are working at the same job six months after starting.  And not all students are Edgewood residents; today, about 90 percent of students in the workforce training programs come from the neighborhood surrounding Edgewood.

Edgewood also has extensive computer and Internet programs for kids aimed at helping them perform better in school.  CPDC is opening a new “experiential learning center” in the summer of 2001 for kids and families, and there are plans for an “Edgewood News” program to be produced by students and Web cast on EdgeNet.  The learning center will also have a cyber café

The path to home Internet access has been rocky at times. Any Edgewood resident is eligible for a terminal as long as he or she pays a $24 fee for admittance to the Edgewood technology advisory board (ETAB) and undergoes a 45-minute orientation session.  The ETAB was established to give residents a strong voice with CPDC management about the program. About 18 months ago, in-home Internet access became a reality for about 30 Edgewood residents—the development’s “beta” testers.  However, seven months after the 30 residents were wired, the network started experiencing frequent crashes.  CPDC spent money to solve the problems, but during the process the entire ETAB board resigned (many were later persuaded to return).  Progress was set back, but rollout of terminals in homes continues.  As of late Spring 2001, 140 of 592 units have Internet access and CPDC’s goal is to have terminals in 400 units by the end of the summer. 

The ambitious scope of Edgewood Terrace, along with its presence in the nation’s capital, has made it a focal point for publicity.  Many politicians have visited Edgewood and many technology companies have showcased their technology there, to the benefit of the community.  For six months, Microsoft ran a commercial that identified Edgewood by name, showing residents using computers and Microsoft software.  The attention Edgewood has attracted has, on balance, been a good thing for the community, but it has also been something of a distraction to CPDC management.  Now the surge of publicity has run its course, CPDC management seems to be heaving a sigh of relief. 

As with other community access projects profiled in this report, Edgewood has benefited from a TOP grant from the U.S. Department of Commerce.  The $500,000 grant was used to purchase much of the technical infrastructure for the project, such as the new server and switches.  The CPDC also received grants from HUD’s Neighborhood Networks program.  Edgewood has received limited support from District government, mostly in grants from D.C.’s Department of Employment Services for work-force training programs.  With only one quarter of current residents having Internet access in the home, it is too early to assess the Internet’s impact on the community.  But CPDC’s investments in improving Edgewood has made the community a much better place to live. 

One part of CPDC’s approach that seems worthy of emulation is the ETAB.  This gives residents a voice in how CPDC’s technology plans will unfold and, as evidenced by the protest over the network’s technical problems, the ETAB is a focal point for community dialog.  The resignations from the ETAB obviously signaled great dissatisfaction over CPDC’s management of the network, but as a forum for protest it gave the community a chance to participate in addressing the problems.

The Internet and Washington’s Economy

The economic prospects for the District of Columbia and its surroundings are very bright.  Fortune magazine rates the District and its suburbs as one of America’s top five large cities in which to do business, and the software and Internet start-ups in Virginia and the biotechnology industry in Maryland have added to the area’s tech reputation.  Inside the District, a solid though limited network of Internet start-ups has developed.  The Federal government dominates D.C.’s business climate, and this brings stability to the city’s economy.  However, the District’s reputation as a government town has not helped entrepreneurship.  A recent study of regional economies rated the D.C. area high in most New Economy areas, but fairly low—31 out of 50—when it came to the entrepreneurial environment.  Many of the New Economy initiatives are aimed at addressing the city’s weaknesses relative to its suburbs.

a.                  North of Massachusetts Avenue (NoMa)

The District of Columbia’s NoMa project is in an ambitious initiative that is trying to bring to life a barren section of downtown Washington by using the arts and new media companies for redevelopment.  The initial impetus for NoMa was a grant from the D.C. Housing Authority to the Cultural Development Corporation to study the possibility of an arts district in the city.  The goal is to make the District more attractive to artists, in hopes that NoMa will become a new hub of residential and commercial activity.  In April 2001, the Cultural Development Corporation (CuDC) released its report: “The NoMa Development Strategy: Integrating Arts, Technology, Neighborhood Quality, and Economic Development in the District of Columbia.”8

The NoMa area already has considerable development momentum, as the CuDC report notes, but the CuDC argues that a coordinated planning process is likely to have greater payoffs.  In particular, the report says a public planning process will place greater emphasis than purely private development on integrating culture and arts into the neighborhood.  A public planning process would also attend to the public realm—the sidewalks, streets, and open spaces that, along with cultural life, add up to the amenities that are important to urban economic revitalization.  The report sets forth fundamental principles for NoMa development, including these:

  • Future economic development will rely on attractive urban neighborhoods that integrate workplaces, the arts, and housing;
  • NoMa development should respect and build on existing residential patterns, i.e., it should leverage existing historic neighborhoods such as Shaw and Mount Vernon;
  • Arts and technology in NoMa should be integrated to harness the area’s creative energy in a way that makes it attractive to new media companies;
  • Public resources should be used to build on the incomplete vision of Pierre L’Enfant’s original urban design in the NoMa area.
  • The District’s ownership of land in NoMa should be leveraged as a way to shape development.

In the short term, the CuDC report suggests that the city move ahead with new housing units in the Mount Vernon Square area of NoMa, which is also adjacent to the District’s new convention center, now under construction.  The centerpiece of that effort is a three-acre site that once housed the National Wax Museum.  The District followed up by asking developers to consider a mixed apartment-retail complex to attract new residents to the area.  In all, the city hopes that as many as 1,000 residential units will come online in the next few years, along with other amenities such as high-end supermarkets.  In encouraging the development of an urban residential neighborhood, the District asks developers to build some affordable housing, offer first-floor retail in apartment buildings, and plan for affordable units in which artists could live and work. 

Another key to NoMa development is attracting anchor business tenants to make the area a hotbed of new media development.  One step in that direction is a new headquarters building for XM Satellite Radio, Inc. in the NoMa area.  XM will provide digital radio signals in the continental United States on a subscription basis; it is expected that the service will be available in mid-2001.  The area’s employment picture will also be helped by the decision of the Bureau of Alcohol, Tobacco, and Firearms to build a new headquarters building in the NoMa district.  One sticking point is public transportation; there is no Metro station in the area.  Although one is planned, it will be years before it is operational.

The long time horizon for NoMa, especially with the downturn in the dot-com economy, is the project’s biggest challenge.  The NoMa district is also competing with telehotels for real estate.  As noted, NoMa is planned for an area of downtown Washington that is largely abandoned, but also close to the city’s railroad terminal, Union Station.  This, along with the presence of empty warehouses, makes it attractive for the development of telehotels.  As is the case in Portland, the city has been struggling with the demand for telehotels and the desire to create a livable downtown area.  There have been several proposals to convert abandoned warehouses into telehotels, and city officials fear these will occupy prime space before NoMa can get a strong foothold.  The lifelessness and noise associated with telehotels might make the area unattractive to businesses and residents. 

To cope with this challenge, the city temporarily suspended telehotel applications in the District, a move that proved controversial. The three-month freeze did not dampen telehotel development, however, and by December 2000 the District had approved four telehotel applications.  By April, the largest of these, proposed by Level 3 Communications, was shelved.  The reason was not D.C. regulations, but tight capital markets.

b.                  The Digital Capital Alliance

The city has also tried to nurture networking among technology entrepreneurs in Washington and to make sure D.C. city government is responsive to the needs of Internet start-ups.  The Digital Capital Alliance (DCA) is an advisory panel established by Mayor Anthony Williams to address how the District can best manage the development of technology infrastructure for the city and how the District can effectively market the city as an attractive place for Internet companies to do business. 

Elliot Frutkin, head of D.C.’s Doceus, Inc., an e-business Internet firm, says the Digital Capital Alliance has three main goals.  The first is to serve as a forum where executives of D.C.-based Internet firms can discuss common problems they face in doing business in the city.  The DCA also gives D.C. Internet executives a vehicle through which to educate Internet executives from around the area about the virtues of doing business in the city.  Finally, the alliance has helped educate city policymakers about what types of incentives to offer to attract Internet companies to the District.  (This initiative is discussed in detail below.)

The driving force behind the DCA strategy is what Frutkin calls a “people over wires” approach to economic development–making the city an attractive place for technology entrepreneurs.  He believes the freeze on telehotels was appropriate because it signaled that the city wanted to develop a desirable location for tech entrepreneurs in NoMa, even if that meant taking an action that might be interpreted as dampening infrastructure development.

Related to the DCA’s networking efforts is a technology accelerator that has been started by a D.C. lobbying firm to provide a home for Internet start-ups oriented toward e-government.  The technology accelerator is called DC VentureNet, is funded by the Carmen Group, and is billed as the country’s first effort to stimulate the growth of firms focused on the business-to-government e-commerce market.  The Carmen Group will provide $1.5 million in financing and services to firms, as well as $3 million to renovate a building in downtown Washington to provide space for emerging firms.  Like NoMa, the fruits of DC VentureNet are not likely to be ripe for some years.  However, it believes that the expertise of its managing director, former Indianapolis Mayor Stephen Goldsmith, will lend it cachet.  Goldsmith has a reputation as a government reformer, and his eye for effective government service delivery will, it is hoped, enable him to identify sound e-government business ideas.

c.                  The New Economy Transformation Act

To complement the placed-based strategy (NoMa) and the networking initiative (the Digital Capital Alliance), D.C. city government has recognized—especially in light of the burgeoning tech industry in the suburbs—that it must act affirmatively to get businesses to locate in its borders.  The “New Economy Transformation Act” offers these incentives.  The Act has three thrusts: a) workforce development, which provides franchise tax credits for employees’ wage, training, and moving expenses; b) affordable facilities, which provides security deposit relief and other services to help companies obtain office space in the District, and; c) targeted tax relief in specific areas, such as property, franchise, and sales taxes.  To be eligible for the incentives, a qualifying firm must derive at least 51 percent of its gross revenues from defined high-tech fields, such as Internet-related services, data processing, biotechnology, or advanced hardware or software development.  The District has also set aside $2 million in the 2001 budget for facilities assistance. 

The Act became law in April 2001, but its effective date was retroactive to January 1.  A public education campaign is become the next step; D.C. Mayor Anthony Williams has met with the Digital Capital Alliance since the act’s passage to urge it to spread the word to other high-tech firms about the legislation.  Williams has asked DCA companies to consider how to use a site being vacated by St. Elizabeth, a mental hospital that is closing, and work to get D.C.’s “mom and pop” neighborhood stores online. 

The presence of this legislation underscores how the District of Columbia is in competition with its suburban neighbors—especially northern Virginia—when it comes to New Economy business development.  According to a study conducted by DC Agenda, technology employment accounts for 11 percent of all jobs throughout the Washington metropolitan area, but just 1 percent in the District itself (DC Agenda, p. 4).  Nearly all (99 percent) of the District’s technology employment is concentrated in software and telecommunications services, whereas the region overall has a mix of engineering and technology manufacturing.  The heavily service-oriented nature of the District’s technology base is also reflected in the size of D.C. technology firms.  On average, D.C. tech firms tend to be smaller than their counterparts in the suburbs; 62 percent of D.C. tech firms have fewer than ten employees versus 48 percent in Virginia.

The DC Agenda report also finds that technology firms in the District are loyal to their location; more than three-quarters say they plan to remain in Washington.  But like tech firms across the country, D.C. technology firms complain about a lack of office space and skilled workers are problems. Given this concern, it is understandable that the New Economy Transformation Act emphasizes lease assistance, tax credits that lower the cost of hiring workers, and workforce training.9

Given the dot-com slowdown, though, the act’s effectiveness is in question. The shut-down of dot-coms has softened office rents in Northern Virginia, which partially undercuts the act’s rationale, as it was based on the prediction that scarce and expensive suburban office real estate would drive firms to the District. A number of ingredients are there for the District, but whether they come together to start a virtuous cycle of technology-driven development remains to be seen.

The Internet and Social Capital in the District

In the District of Columbia, the community technology initiatives tend to have a mix of content creation and Internet access as priorities, while the nascent New Economy development programs are devoted mainly to altering foot traffic.  Specifically, the economic development initiatives seek to divert foot traffic of Internet entrepreneurs from the suburbs to the District. 

In the community, Edgewood Terrace and Byte Back both emphasize access and job training as ways to encourage people to take advantage of the Internet’s potential to improve people’s economic prospects.  Edgewood Terrace has been aided by federal grants, while Byte Back uses grants from individuals and foundations for support.  In both cases, the initiatives have used the Internet to inject additional energy into their communities.  The See Forever Foundation’s charter school offers access and training to students, but also tries to shape the outside community through its computer backpack program to wire seniors and its outreach to neighborhood nonprofits.  With the effort to wire neighborhood nonprofits, See Forever’s program also has the potential to shape community Internet content in the District.  It is worth noting, however, that these initiatives do not receive financial support from the District’s government. 

In economic development, the city is providing incentives to lure companies downtown, but perhaps more important, the District is also providing a place where entrepreneurs can do business (NoMa) and a forum where ideas can be exchanged (the Digital Capital Alliance).  D.C. Mayor Williams seems to have done a good job in gaining support from the dot-coms that have survived and that participate in the DCA.  This commitment should be beneficial to NoMa, although the overall health of the dot-com sector and the economy will have a greater affect on NoMa’s development than a group of entrepreneurs.  Most of all, long-term commitment by the District government and business leaders will be needed for NoMa and the New Economy Transformation Act to pay off.  The District is competing with suburban Virginia and Maryland for high-tech businesses, and making headway will be difficult.

The sustainability of the community and economic development initiatives is the challenge facing the District.  The current downturn in the Internet economy could actually be good news for NoMa.  Expectations of a quickly burgeoning technology district cannot be met, but only those technology entrepreneurs committed to NoMa are likely to stay with the process developing the area.  Meeting the demand for Internet access in low-income communities will be an ongoing challenge for the projects mentioned here, and securing funds for upgrading and maintaining equipment will also pressure project directors.

  1. Available at the Cultural Development Corporation’s Web site, www.culturaldc.org.
  2. One program to expand the pool of skilled workers in the District is the Technology High School at the site of the McKinley Tech High School; it is scheduled to open in 2002.