Friday, March 19, 2010

Banneker Ventures Questioned on Development Process


Pressure on Mayor Adrian Fenty heated up today as questions increased about the Mayor's developer selection process amid news that WMATA may be backing away from Banneker Ventures as a development partner. Banneker has been awarded numerous projects worth tens of millions of dollars by the Mayor's office despite its perceived lack of development experience.

Today, the WMATA board removed the Banneker project "The Jazz @ Florida Avenue" at 8th and Florida Avenue from the agenda for the real estate committee next Thursday, at which time it would have taken-up a joint development agreement for the WMATA-owned property. Today's move comes after WMATA issued a 120-day extension on the agreement in September 2009. Banneker was chosen for the project in June of 2008, but has not yet started work on the site. More than a year later it announced it would partner with Bank of America and had petitioned for government funds, advances that were to have moved the project forward. The developer had already been pledged a $7m TIF grant from the District.

The move by WMATA likely comes in response to questions raised first by this publication about justification for awarding so many projects to a team with so little apparent experience, then by the CityPaper and Washington Post about the how the relationship between Banneker's founder and D.C. Mayor Adrian Fenty may have affected the selection process. The two men attended Howard University and were in the same fraternity.

In addition to the WMATA site on Florida Avenue, the virtually unknown Banneker has been selected by the District on numerous multi-million dollar projects throughout the city, despite a large roster of construction and development firms available for such projects as private financing for construction was drying up. Banneker's luck began in late 2007 when it was selected by the District to be part of the $700 million Northwest One project. Around the same time, Banneker was named as a master planner on the monstrous Park Morton project (see DC's summary). Despite lack of movement in those two projects, or on its private projects (see more below) it was then selected for a string of projects such as the WMATA site in June of 2008, and by DC for the iconic Strand Theater in July of that year, then in October to head the $33m Deanwood Community Center project. In October of last year the District named Landex Corp, Spectrum Management and the Warrenton Group as developers of Park Morton. The Warrenton Group is run by a former Banneker member that has also had a contentious relationship with the city.

Park Morton raised eyebrows at the Mayor's development process for yet another reason; the District announced just last October that the Mayor had selected its team members for Park Morton in part because that development team said it controlled and would bring the Central Union Mission site into the development plan, increasing its scope. DCMud learned a few days later that the Missions' owners had never agreed to transfer their property to the development team, calling into question the District's selection process and the claims made by the development team to secure the project. Banneker is also being considered for its development offer at Hill East, a massive 50-acre parcel on the Anacostia River. Banneker's publicly-funded projects at the WMATA site, the Strand, Park Morton have yet to break ground.

In a contentious radio interview on the Kojo Nnamdi show following the announcement, Omar Karim, founder and principal at Banneker Ventures, called out the WMATA board for further delaying review of the agreement on the RFP awarded in 2008. In the interview, Karim, who dismissed suggestions that the board had legitimate concerns, argued that WMATA continued to "move the bar" on his project for "political" reasons. The Jazz @ Florida Avenue would theoretically bring 124 apartment units above 20,000 s.f. of ground floor retail and a 61-space parking garage to 3 flea market-sporting lots.

Tom Sherwood, resident analyst at NPR, asked Karim how many contracts he had received prior to Fenty taking office, to which Sherwood ultimately answered his own question with "none." Asked specifically about his experience, Karim answered that he had solid development experience at a large firm prior to starting Banneker, but would not name the firm or elaborate on the experience. As for Banneker's experience, Karim could only cite that his firm held an office building in Silver Spring and an unspecified site in which he "has been in conversations with Safeway about developing." At the time of publication, Safeway was unable to confirm or deny these conversations.

So what about that Silver Spring office building? That would presumably be 814 Thayer Avenue. Banneker purchased the site in May of 2006, submitted plans later in the year, and in July 2007 obtained Montgomery County Planning Board approval of a preliminary plan for a 52-unit residential building, a plan that was reviewed in November of 2007. The next step would be site plan approval, but, to date, the team has not even submitted a site plan to the planning staff for certification. Banneker will need a certified plan before the group can file for any construction permits for the property, making the September 2010 ground breaking date seem, at best, optimistic.

The 5-story Thayer project, designed by Sorg & Associates, would entail construction of a 53-unit condominium, in place of National Association of the Deaf office building. Joshua Sloan, a staff reviewer at the MNCPPC, provided an update on the project, "my understanding is that they want to amend their proposal, but I have not seen anything. I suppose it is "officially still pending." Sloan and his comments are the last stop before Banneker can proceed, a process which "can take a week or a year...depending on the Applicant’s response time to comments."

Banneker's website also boasts the Pattern Shop Lofts on the Waterfront, a project led by Forest City Washington that has not yet broken ground. Banneker registered with the District government as a small, minority-owned business in 2005.

Washington, DC real estate development news

16 comments:

Anonymous said...

Awesome post. Confirms how easy it is to be a developer - just befriend the power brokers of the city and you can make a fortune. Anyone know how much they were paid for the contracts they were awarded?

Anonymous said...

My gripe is that all these projects have been announced, but none of them have broken ground. I live in Shaw and I am anxiously awaiting the new Giant as well as other major projects in my neighborhood. Where are they? They are in the "pipeline" but have been in the pipeline for way too long. Either start, or let someone else start, or don't announce until financing is in place.

Anonymous said...

I agree that Omar is way over his head, but it's not like there have been tons of projects breaking ground in the last few years. Anything approved after 2006 is pretty much on hold awaiting financing, not just Banneker projects. Great job piling on.

Anonymous said...

Piling on??? It seems like tey haven't done ANYTHING! Pretty easy to pile on when your target can'teven get up off the floor due tp their own ineptness...

Anonymous said...

tey = they

UrbanUndeveloped said...

I work for a developer in the City, a legitimate one that pursues publically funded opportunities through legitimate channels- a Request For Proposals. On one of the projects we went after, one that Bannker later was awarded, Karim came to us and essentially tried to shake us down. He promised that we would get the project with his help, he wanted 20% of the developer's fee for his "role". He also hinted that it would be hard to get approval without him. Insulted, we kicked him out of office. Months later, he's the lead developer and our legitimate bid was rejected.
I know this City thrives on these types of "partnerships" but we've never witnessed this level of blatant corruption before. I'm sure the deeper you dig, the more dirt will be uncovered about these guys.

Anonymous said...

For the record, developers don't get paid when they win RFP's to do big development projects. They get the right to acquire the ground and seek approvals to build something. They only get paid down the road, after the project is completed and sold or leased. Winning an RFP gives a developer the right to spend money in hopes of getting paid.

They may have been paid for buiding the community center or doing master planning work, but not simply for winning one of these RFPs.

Anonymous said...

@UrbanUndeveloped,
You tried to win a "legitimate" RFP, Omar did win it, but his win wasn't legitimate? If you had won the RFP, would you have broken ground already? Did you have the financing all sewn up? Part of a developer's job is to win the business, is your 0% better than than the 80% of the fee you'd have if you put him on your team? This is Anonymous from 8:34. I've worked with Omar, and personally don't care for him. Like I said, I think he's over his head, but I don't know what is a shakedown about saying "I'll help get you business if you pay me."

Anonymous said...

Banneker Ventures is a sham, and Omar Karim is a fraud.

I have a similar experience w/ Karim/Banneker as UrbanUndeveloped. I used to work at a real estate development firm in DC; we had 4-5 face-to-face meetings w/ Karim and W. Williams in 2007-2008 about partnering on a large DC RFP. Prior to the first meeting, no one at our company had ever heard of Banneker.

Throughout the process, Karim and Williams displayed their total lack of understanding of commercial real estate finance, entitlements, etc. It quickly became clear that this company's only "asset" is Karim's relationship with Mayor Fenty.

We ultimately decided not to partner with Banneker on the DC RFP. Banneker's team won --- shocker --- and the project has yet to break ground --- even bigger shocker --- multiple years after the award was made.

Karim's understanding of commercial real estate development (i.e. skills/knowledge/experience) is appropriate for a junior-level analyst / project manager role at a large, established firm. The fact that he is running an organization that has been awarded multiple (heavily-contested) RFPs from DC is laughable.

guyindc said...

UrbanUndeveloped: What's unfair about the process is not that some win and some lose, but that in DC there is an official, sanctioned racial bias. You are favored if you are a minority; you get "points" for being small and points for being a minority - not imaginary points, but real points that determine who wins. You DO NOT get a contract with the city if you don't have minority and small points. So in a large, experienced firm (of any racial makeup) vs. a small, minority-owned firm with no experience, the winner is hands-down the minority firm.

Is that fair? No, its a racially biased system run by the people it benefits. So what do large firms have to do to compete? They have to partner with a small minority firm, and pay them a chunk of cash, because they aren't allowed to compete otherwise. The minority firm doesn't have to have the experience, or even run the project, but they get to demand a share of revenue disproportionate to their experience or work. That's unfair, its racist, its undemocratic, and its unconstitutional. Imagine if we gave points to people who had blond hair or jewish last names? The outrage.

That's why the Banneker story is such a farce, and that's why its a big deal. Shame on you for not getting it. And Shame on Fenty, I hope developers remember this in campaign contribution time.

guyindc said...

UrbanUndeveloped: What's unfair about the process is not that some win and some lose, but that in DC there is an official, sanctioned racial bias. You are favored if you are a minority; you get "points" for being small and points for being a minority - not imaginary points, but real points that determine who wins. You DO NOT get a contract with the city if you don't have minority and small points. So in a large, experienced firm (of any racial makeup) vs. a small, minority-owned firm with no experience, the winner is hands-down the minority firm.

Is that fair? No, its a racially biased system run by the people it benefits. So what do large firms have to do to compete? They have to partner with a small minority firm, and pay them a chunk of cash, because they aren't allowed to compete otherwise. The minority firm doesn't have to have the experience, or even run the project, but they get to demand a share of revenue disproportionate to their experience or work. That's unfair, its racist, its undemocratic, and its unconstitutional. Imagine if we gave points to people who had blond hair or jewish last names? The outrage.

That's why the Banneker story is such a farce, and THAT's why its a big deal. Shame on you for not getting it. And Shame on Fenty, I hope developers remember this in campaign contribution time.

Joshua on Mar 23, 2010, 9:21:00 AM said...

A Clarification on Approvals for 814 Thayer Avenue; Silver Spring, MD:
A preliminary plan application was filed on 11/30/06 and a project plan application was filed on 4/18/07. Both of these applications were approved by the Montgomery County Planning Board on 7/26/07. A site plan application was filed on 9/26/07 and was approved by the Board on 5/1/08. A Planning Department staff-level approval of a “certified site plan” is pending and required before the Applicant can obtain a building permit from the Department of Permitting Services.

Anonymous said...

What a debacle. Fenty had so much promise, but has proven to be an old-school patronage politician. The more things change...

Anonymous said...

Banneker Ventures offered almost twice as much as the next highest bidder for the WMATA site on Florida; and, then got the City to give them a TIF to make the deal pencil. In the meantime, the debt/equity financing markets fell out and the deal became too tight even with a TIF.

Anonymous said...

Thank you for bringing this to attention! They are both bums and need to be arrested!

UrbanUndeveloped said...

@ Anonymous Mar 22, 2010 2:44:00 PM


Since the RFP process/results are kept confidential except for whomever the winner is, it's hard to say why we didn't get it. It seems clear why we didn't but it's speculation. And no, he has not broken ground on this project either.

Part of the problem is that if this was really an open and competetive process rather than one that utilizes political connections, some of these well-known developers in the City would not be developers. Karim is a moron and when he opens his mouth, you'll understand why. He makes Fenty look good at times. How is that a guy like this is in "charge" of hundreds of millions of dollars worth of projects in the City- none of which he could have gotten if it really was an open and competetive process.

 

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