Three small businesses in Washington’s L’Enfant Plaza have filed suit against the U.S. Department of Housing and Urban Development (HUD) and HUD Secretary Scott Turner, seeking to block the agency’s relocation of its headquarters to Alexandria, Virginia.

The lawsuit argues the move violates federal law requiring Cabinet-level agencies to remain in the nation’s capital and contends HUD failed to follow proper administrative procedures before relocating thousands of employees outside the District of Columbia.

Businesses Say Revenue Has Already Declined

The plaintiffs—two restaurants and a party-supply business located near HUD’s longtime headquarters—say they have already experienced a sharp decline in business as federal employees have relocated.

According to court filings, Brown Bag, a fast-casual restaurant serving the neighborhood for more than a decade, reported its revenue during April and May fell approximately 20% compared with the same period last year.

The businesses argue that losing thousands of daily federal workers threatens their long-term viability and could permanently reshape the local economy surrounding L’Enfant Plaza.

A Move Years in the Making

HUD announced plans to relocate its headquarters in 2025, selecting the former National Science Foundation headquarters in Alexandria, Virginia, as its new home.

Most of the agency’s approximately 3,000 headquarters employees completed the move earlier this year.

Federal officials have argued the relocation will reduce long-term operating expenses while replacing the aging Robert C. Weaver Federal Building, which has served as HUD headquarters since 1968.

Cost Savings at the Center of the Debate

HUD estimates the Weaver Building would require more than $609 million in repairs to remain operational and says relocating the department will ultimately save taxpayers hundreds of millions of dollars.

The lawsuit disputes those figures, arguing the government’s repair estimates significantly exceed previous projections and questioning whether the relocation delivers the savings officials have promised.

Court filings also point to relocation expenses totaling nearly $70 million, including costs associated with moving the National Science Foundation from the Alexandria campus.

Congressional and Union Scrutiny Continues

The relocation remains under review by the Government Accountability Office (GAO) following requests from several members of Congress.

Meanwhile, AFGE Local 476, the union representing approximately 2,500 HUD headquarters employees, has opposed the move, arguing Congress never authorized the relocation and raising concerns about employee working conditions at the new facility.

Employees have reported early technology and infrastructure challenges following the transition, while union surveys found a large majority opposed leaving Washington.

Broader Impact on Downtown Washington

Beyond the legal issues, the case highlights the broader economic impact major federal relocations can have on surrounding businesses.

Restaurants, coffee shops, retailers and service providers throughout downtown Washington depend heavily on daily traffic generated by federal workers. The departure of a major Cabinet agency removes thousands of customers from the neighborhood, adding to challenges already facing downtown commercial districts as office occupancy continues to evolve.

The plaintiffs are asking the court to halt the relocation and require HUD to maintain its headquarters in Washington while the legal challenge proceeds.

The outcome could influence future efforts to relocate other federal agencies outside the District of Columbia.

JBizNews Desk | Washington
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