Wednesday, August 29, 2012

EastBanc's West End Project Encounters More Legal Hurdles



The redevelopment of West End's library and fire station--that long running saga--has hit another speed bump. EastBanc-W.D.C. Partners LLC, the development team, had spoken optimistically about breaking ground in 2012, but it looks like a lawsuit filed by a library watchdog group will push that back until March 2013 at the earliest.

It's been a long road. The development team--which consists of EastBanc, The Warrenton Group, Dantes Partners, and L.S. Caldwell & Associates--was granted the project in 2007, then lost it due to community outcry that there hadn't been a fair bidding process. In 2010, they won a competitive bid, beating out one other competitor, and since then have held some 70-odd meetings (by their own count) to keep the community abreast of plans. 

The project has always been a complicated one. It includes two separate parcels: one, Square 37, sits at the corner of 24th and L streets and includes the low-rise, funky West End Library, as well as a police operations facility and a parking lot; the other is Square 50 at 2225 M Street and and includes the West End fire station. EastBanc won the project by promising to rebuild the library and fire station; in return, the city gave the developers the land, then valued at $20 million, for free.

And therein lies the problem. The DC Library Renaissance Project, an organization founded by Ralph Nader to improve the city's library system, claims that EastBanc is dodging the affordable housing requirements that exist under the city's newish inclusionary zoning policy by calling the library and firehouse "amenities."

"We don't understand why [the library and firehouse] would count on the balance sheet of the PUD process for the developer," explained Robin Diener, director of the DC Library Renaissance Project. "The city is selling the land to EastBanc. They're not giving money, they're giving new facilities as payment." As a result, says Diener, the developers should still provide a certain percentage of affordable housing in each square as required under inclusionary zoning.

But the DC Zoning Commission agrees with EastBanc. This spring, the commission granted the developer's application for a map amendment for Square 37. And in June, when the DC Library Renaissance Project applied for a reconsideration of that decision, the Zoning Commission denied their effort, writing, "The enhanced level of service that will result from the construction of the new library and fire station so clearly will enhance the neighborhood that they set a benchmark in excellence for any future requests for Inclusionary Zoning waivers through the PUD process."

In response, the library advocates filed a notice last week in the DC Court of Appeals that they intend to appeal the Zoning Commission's decision, not an idle threat since the group has been at least partially successful in stopping the project since at least 2006.

"We're certain there's no merit, but we'll file a brief arguing that no, the Zoning Commission didn't make mistakes in its decision," said Joe Sternlieb, EastBanc's vice president for real estate acquisitions, in response to questions about the suit. "It can take up to a year, and can cost developers up to $1 million to defend. It's really a nuisance suit."  When will the issue be resolved? "The courts will decide," said Sternlieb. "Hopefully before March."

Despite the threat hanging over its head, EastBanc is moving forward. Sternlieb said that the Square 37 project has gathered all the necessary approvals, including from the Commission on Fine Arts, and the firehouse is almost there. The company is currently working out construction documents and getting financing in place, and Sternlieb is hopeful that they could still break ground in March 2013.

The project, which is being designed by TEN Arquitectos, WDG Architecture and Lemay Erickson Willcox Architects, hasn't changed substantially since 2010 (though TEN hasn't bothered to add the project to its website). Square 37 will become a 10-story building with a library and roughly 7,000 square feet of ground floor retail that faces 23rd Street--including a coffee shop on the corner, adjacent to the library--plus 164 market rate units above. That section does not include any affordable housing.




But the fire station portion does; in fact, all 61 rental units will be priced at 60 percent of the area median income. Some of those units are created under the inclusionary zoning policy, but EastBanc said it couldn't afford to make the entire building affordable without assistance, and so the District kicked in an extra $7 million to go the final distance.

Robin Diener and her colleagues aren't happy about that. Given that the two sites comprise some of the most valuable land in the District, they believe the initial development deal should have been structured so that the city made, rather than spent, money on it.

But neighborhood groups, including the West End Library Friends, Foggy Bottom Association, and the ANC covering the region, overwhelming support the project. 



Washington D.C. real estate development news

20 comments:

JJ said...

Get it built already.

Rebecca Coder said...

Amanda,

Thanks for the story. One clarification is that Advisory Neighborhood Commission 2A representing the West End and Foggy Bottom absolutely supports this project. Please see the ANC website at www.anc2a.org for our resolution and testimony.

Thanks,

Rebecca

Rebecca Coder said...

Amanda,

One other clarification, please see the ANC meeting minutes of January, 2012 related to all the community groups who supported this project which include: ANC 2A, Foggy Bottom Association, West End Citizens Association, West End Friends, And West End Library Friends.

Thanks,

Rebecca

Anonymous said...

I would love to see EastBanc going after the stupid DC Library Renaissance Project and bankrupt each of them personally. These people are no nuisance, they are evil. The new library might have already been there and the new beautiful streetscape might have been there too.

Anonymous said...

Wow,that's an ugly building. I can't imagine how many water leaks this thing will have.

7r3y3r said...

In a fair/equitable system: a purchaser buys a parcel at fair market value. If the city wants something in return, a firehouse or library for instance, the city pays FMV for that to be included. Then construction occurs according to code and regulations.

If a city is having a hard time inducing development, it can make deals with a developer to exempt them from certain rules, such as lowering the number of affordable units, so that the deal is more economically beneficial to the developer.

There absolutely no reason to need to induce development in the West End. That land is extremely valuable and highly sought. Admittedly, it's not worth its FMV if the developer has to take up real estate with a firehouse and library. So the city paid $20M for those to be included. But EastBanc is saying that the $20M isn't enough to make it economically viable so they need more incentive, in this case lowering the required number of affordable units.

People complaint about taxes and waste of government resources, but when the private sector is effectively ripping the taxpayer off for their own benefit we blame the city or a citizen group for standing up and demanding a fair deal. Yeah, that makes total sense.

Anonymous said...

"Get it built already."

The cry of someone who doesn't give one flying flip about the rising costs of living in this city, nor whether the DC taxpayer is getting his or her money's worth on this deal. Far from being a 'nuisance suit' as the Eastbanc rep suggests, this suit actually has merit.

Anonymous said...

OMG. Just build them! I am sick of the obstructionists who block so many great projects in this city. These two projects will be HUGE assets to the West End. I agree that affordable housing is important, even vital, and one of these projects will be providing affordable units. But the city also desperately needs innovative architecture, which can bring life to urban neighborhoods. It's worth it in this case for the city to subsidize two such large and important buildings.

Anonymous said...

This obstructionism is so baseless that I'm forced to wonder what is the real agenda. A personal grudge against Anthony Lanier/Eastbanc? Someone's views will be blocked by the development? It's time to strike back at these uber-NIMBYs. Reporters, check it out, it's your job!!

And for those who are all about the city getting its money's worth, keep in mind: Every delay costs money. The development's value sinks each time obstructionists strike. At some point, the developer is forced to renegotiate the deal, and that means less money to D.C. Or, to be more precise, the money that would have gone to D.C. instead winds up in the pockets of lawyers.

Real Library Supporter said...

The so-called "Library Renaissance Project" is as much a vanity project as the last 2 presidential campaigns of its founder, Ralph Nader, and about as destructive. Instead of supporting the DC Public Library, they find a nit to pick on every new library, and then try to find a local group they can dupe into fronting for them, so they can protest and make the process more difficult and costly. So far, they have needlessly cost the Library considerably more than a million dollars in frivolous suits or protests over the Mt. Pleasant Library,Benning, Bellevue and now, the West End. (See Ms. Diener's exchanges with Councilmember Wells in her testimony at the DCPL oversight hearing). According to the DCPL website, the new Bellevue and the Francis Gregory Libraries each cost $13.5 million to design and build, and the sites were considerably less complex than the West End. So, add to the more than $13.5million price tag for the library, the cost of a brand new fire station, and it's clear that Eastbanc had to pay considerably more than $20 million to construct these new facilities. On top of that, they are constructing 61 units of housing for those at 60% of the area median income -- more than they were required to do, and for a lower income level (inclusionary zoning would have permitted units up to 80% of the AMI).

With respect to the city using its land to provide for capital improvements, this is a smart fiscal move; the District needs to update its facilities, but has a cap on the amount of capital it can spend for that purpose. So it takes grossly underutilized land, gets a beautiful new library, fire station, affordable housing and luxury housing -- all for land that was valued at $20 million and a $7 million affordable housing subsidy? What a bargain for the taxpayers!

And now the Library Renaissance Project, having lost at 2 bites of the apple protesting the West End project, is going to waste more of the taxpayers' money on another frivolous law suit? Outrageous!

(I am not an employee of either the Library or Eastbanc -- just a really annoyed citizen)

Anonymous said...

"...when the private sector is effectively ripping the taxpayer off..."

Yup. Sure smells like it.

In November 2010, our DC Chief Financial Officer's rep. testified to City Council that the transfer of the library, Police special operations and the fire station properties decreases city assets by at least $30 million dollars.

Current DC property tax records show the total value of the properties to be approximately $34-36 million.

Unlike all the other new libraries around town, the West End won't be a stand alone building. It's a non-descript box on the ground floor of Eastbanc's gargantuan--350,000 sq ft--residential project.

Every surface would have to be gold-plated to come remotely close to the grossly inflated claims that it will cost nearly $10 million to “build” this unremarkable space.

Rebecca Coder said...

It is unfair for Ralph Nader's group to take comments by CFO Ghandi out of context.

The cost for a new fire station is estimated at $18 million; the cost for a new library is estimated at $10 to $15 million.

The West End real estate values are far different in value from downtown DC and stabilized office properties given our zoning and the comprehensive plan. And to use assessments which are based on 2007 pre-market downturns also makes zero sense.

Add to that the developer risk of taking on such a project and it is not difficult to understand how the city and EastBanc got to where they got.

I look forward to supporting EastBanc with this project.

Best,

Rebecca

Rebecca Coder (ANC 2A-02 - West End)

Anonymous said...

"Wow,that's an ugly building."

BIG and ugly! Kind of ironic... luxury container housing in the West End.

http://besttopdesign.com/architecture/container-house-condominio-p-in-cagliari-by-cc04studio/

"I can't imagine how many water leaks this thing will have."

That's gonna be the least of the maintenance problems with this oddity.

Long Time West End Resident said...

The Library Renaissance Project has lost its way.

LRP was established to highlight the terrible state of the District's libraries. It is now peopled by MERCENARIES that hold neighborhoods hostage with their baseless suits, appeals, and undermining tactics. They are paid by an individual who does not live in the District nor does Mr. Nader pay taxes here.

Unlike the volunteer civic groups that live in the West End, pay taxes in the District and have worked very hard to bring a new library and fire station to the West End (our ANC2A, the West End Library Friends, the Foggy Bottom Association, the West End Friends, and the West End Citizens Association), LRP has no membership or Board, no by-laws, no open meetings, no minutes and no accountability. . . AND THESE PEOPLE THINK THEY HAVE THE RIGHT TO SPEAK FOR OUR NEIGHBORHOOD?!!!

The Library Renaissance Project has a self-serving agenda. The reality is that these projects represent the best chance for my neighborhood to have a new library and fire station which this community so desperately needs.

The Library Renaissance Project needs to stand down and this "watchdog" needs to be put down---they do not speak for the community and their actions should not be tolerated.



Anonymous said...

From the CFO's Real Property Database:

West End Fire Station
2225 M ST NW - Sq. 0050 Lot 0822
Proposed New Value(2013):
$20,807,550

West End Library
1101-1111 24TH ST NW - Sq. 0037 Lot 0836
Proposed New Value (2013):
$8,970,920

MPD Special Operations
2301 L ST NW
Sq. 0037 Lot 0837
Proposed New Value (2013):
$9,916,530

$39,695,000 = total 2013 value of public land being transferred to private ownership

Figures don't lie, but liars do figure.






Anonymous said...

I second the applause for a building that starts to push the design boundaries here in the District. As an architect, I agree that the form does come with a risk for water leakage in the future, but that goes for any flat roof. Not everyone is going to like the design, but compared to most of the standard box buildings in the city, at least this has some character.

Cheryl Cort on Sep 21, 2012, 11:24:00 AM said...

Note that the funding for the affordable housing above the Fire station is not yet secured. The administration has proposed it, but hasnt gotten it through DC Council. It's critical that we do. The planned affordable housing at this site (far more than what IZ offers), will give low income DC residents a chance to live in a highly desirable neighborhood.

Erin said...

Oh yes Cheryl, by all means lets spend taxpayer money so that the poorest people can live in the most expensive neighborhoods in the city, that's equitable and a great use of public money. I can't afford to live there, despite paying plenty in taxes, and now I have to subsidize others who for a host of reasons can afford it even less than me. What a gross reallocation of money that benefits a small few.

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