Shops at Dakota Crossing and Costco to Start Now, Open Next Year

It's official. The District and the developers of the Shops at Dakota Crossing - a forthcoming 42-acre big-box retail destination revolving around Costco - have struck a deal.

On Friday, the development team, facilitated by a $46.5-million construction loan, acquired the Fort Lincoln land from the District. In turn, the District pledged a final $17 million in tax increment financing (TIF) subsidies. The site is now ready for construction to begin on the 430,000-s.f. mall, capping a portion of the city's urban renewal retail redevelopment vision for Fort Lincoln that dates back to the '70s.

Joint developers Trammel Crow Companies, Fort Lincoln New Town Corporation (FLNTC), and CSG Urban Partners (a CBE partner) will commence site work immediately ("any day now" sources say) to prepare for a formal ground breaking - likely in January or February - under general contractor Harvey Cleary.

The approximately $60-million project, with urban planning/architecture by Bignell Watkins Hasser, was also on hold pending environmental approvals, secured about a month ago says Cel Bernardino, VP of Development and Construction for FLNTC. Bernadino adds that despite skeptical press of late, the project still has the interest of several big retailers, and that the loss of Target, which is halting expansion nationwide, is not fatal. In addition to Dakota Crossing, Target at one time was also considering - but abandoned - both Georgetown Park and Skyland.

All incoming retailers will benefit from the $17 million in TIF subsidies from the District, which has supported the development as a neighborhood improvement initiative. Developers expect Costco to be open for business in less than a year - next November - just in time for large-scale, back-your-truck-up holiday shopping.

As for the rest , the Washington City Paper pointed out earlier this fall that it appears that the development is moving forward essentially on spec, after Shoppers Food Warehouse (and pharmacy) and Target pulled out of the site. But Bernardino says that although that lease has not been signed, Shoppers, along with plenty of others, did not back away and continue to eye the site, but that Costco is driving the project. "Costco has always been the big dog."

In all, the plan allows for 26 tenants in 13 buildings at the Shops, but as of now, only 182,060 of the 430,000 s.f. has been claimed by tenants: 154,000 s.f. by Costco and 28,060 s.f. by Marshalls. After Costco's building is delivered late next year, the rest of the development will continue to rise and retailers are expected to be able to settle into spaces by mid-2013.

CBRE has been responsible for leasing retail space at the Shops' site, which the company is marketing as "a strategic location on New York Avenue/Route 50... [with] easy access to an impressive 100,000 vehicles per day." Of these vehicle passersby, 2,500 will be able to swoop into a parking spot at the Shops.

Bounded by New York Avenue NE, South Dakota Avenue and 33rd Place, the location was hotly debated because the site is currently a forested area with wetlands that filter waste and prevent flooding. In order to move forward, the developers agreed to incorporate a new wetland into the site, with the design reviewed and approved by the US Army Corps of Engineers, the EPA, and the District Dept. of the Environment.

Additionally, in April of 2010, the District committed $3 million toward an effort to construct stormwater management ponds that will support the entire 360-acre Fort Lincoln redevelopment area, which includes the $80-million residential portion, The Villages at Dakota Crossing, with 334 townhomes and condominiums. The first of three phases will be underway soon, development of the site (roads, etc.) has already begun. Ryan Homes expects the first phase - construction of 63 townhomes and 11 townhome condominums (2 condos contained in each, for a total of 22 condos) to begin to deliver in 2012. Sales have begun, and already 15 condos have sold.

In the decades since developers of the Shops have been trying to gain ground, players have come and gone, and then come back again. Before Trammel Crow was involved, it was The Peterson Companies, and before The Peterson Companies there was Federal Realty Investment Trust and Trammell Crow. When Peterson Companies bowed out in 2007, Trammell Crow Companies stepped back in.

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Costco Tantalizing DC's Gateway

Twenty years in the making, and plans to develop Washington DC's first Costco at Dakota Crossing are still trudging along. The stage set is a remote patch of forested land in the Fort Lincoln neighborhood, better recognized as the land opposite the Washington Times on Route 50. The players are likely to be Costco and Target, potentially Shoppers Food Warehouse and Staples, even Walmart was once in the lineup. The director is Fort Lincoln New Town Corporation, which brought in Peterson Companies to develop retail as part of a mixed-use, suburban-style shopping center with housing, offices, retail and acres of parking lots. When Peterson bowed out in 2007, Trammell Crow Companies stepped in to oversee its stock and store - big box power centers. All that is missing is the financing and wetland remediation plan approval from the city. And, of course, final commitment from at least one of the big retailers.

The site seems a developer's dream: 42 empty, contiguous acres, flanking one of DC's main migratory routes. Because it is situated in the residential Fort Lincoln neighborhood and nearby industrial uses are mostly defunct, residents pine for a major retail center somewhere, anywhere, in their quadrant. The plan shows 430,000 s.f. of retail served by 2500 surface parking spaces, connected to a 362-acre housing development planned across the street - The Village at Dakota Crossing, with 537 townhouses, 30 affordable workforce units, 500 more parking spaces and a pedestrian-friendly layout with wide sidewalks, tot-lots and community spaces. The land is a stone's throw away from the National Arboretum and within a 5-minute walk of the Anacostia River But development has hit two main obstacles. The first is getting retailers to commit to a large project in a suburban setting, which tests current financing models, although Costco has signed a non-binding Letter of Intent to occupy the property. The other is the dated nature of the plans: 20 years ago, paving over a large, unused plot in the city to build a regional shopping center would have easily passed city government hurdles, whatever the environmental or historic implications. But the contentious, yet sought-after site is now entirely forested and home to wetlands, filtering nearby industrial waste and acting as a natural barrier against flooding. "Our plans call for creating new, high quality wetlands near the retail center as mitigation for taking away the existing wetlands, which have been documented as very low quality, marginally functioning wetlands. 

 These plans are currently being reviewed by the U.S. Army Corps of Engineers and the EPA, and will be reviewed by D.C. DOE once the federal regulators finish," said Cel Bernardino of Fort Lincoln New Town Corp. He also noted that the current plan "envisions a model 'green' shopping center with cisterns, green roofs, green walls, and other LID (Low Impact Development) measures." Costco has been eying this site for the past ten years. Target and Shoppers do not lag far behind in enthusiasm. They might all benefit from TIF (tax increment financing) subsidies from the District, which has supported the development as a neighborhood improvement initiative. Costco alone expects $15 million in TIF financing. But the District must mediate between the environment, small business owners who have fought the behemoth onslaught of all-in-one-for-a-portion-of-the-price big boxes, and competing revitalization projects throughout the city. "The Office of Planning has worked very closely with the development team to ensure the project is green and pedestrian friendly," reported Victoria Leonard, Director of Policy and Strategic Communications in the office of Ward 5 Councilmember Harry Thomas, Jr. The District likes it so much it plans on paying $3 million upfront to build retention ponds to offset the 3000 new parking spaces. The funding would come out of the D.C. libraries capital budget, an initiative spearheaded by Council Member Thomas, who noted that "the Shops at Dakota Crossing have been in the books for a decade" back in April of 2009. The funds are being transferred from a Ward 7 libraries project, which should begin to see repayment in 2011. Ward 5 library services will remain unaffected.

According to data on the Deputy Mayor's website, Dakota Crossing envisions that residents would walk to the shops from the Villages, suspending disbelief that shoppers at Costco and Target could buy anything that could be carried by hand. An additional wrinkle is that HUD approved an Urban Renewal version of the Fort Lincoln Redevelopment Plan in 1972; amended in 1990, the plan requires 3000 units of housing, 2463 units more than Fort Lincoln New Town's current proposal. Cel Bernardino recounted the various phases of housing that have already been built under the 1970s Urban Renewal Plan for the Dakota Crossing site. About 1370 residential units, including condos and rentals were built at Fort Lincoln New Town during the 1980’s and 1990’s, with most of the rental units built for senior citizens. The 127-unit Wesley House seniors apartments opened early last summer, and 209 "Dakota Crossing" town homes were completed last month. "We have two additional planned residential developments (town homes and condos) that construction hasn’t started on yet – the 334-unit 'Village at Dakota Crossing' across from the shopping center, and the 50-unit 'City Homes' development at the corner of Bladensburg Road and Eastern Ave." Robert King, Commissioner on ANC 5A12 (Advisory Neighborhood Commission), has been involved in planning Dakota Crossing since the 1970's. He's seen developers come and go, and has remained a reliable supporter of the plan, representing the leading voice of the commission he heads: "The project is finally on track. Some of the first residential units to break ground will be dedicated to firefighters and school teachers, and I am happy about that. The neighborhood is bracing itself for the development of Costco, which is expected to bring jobs, but also increase traffic." He believes the 1970's plan calling for 3000 units of housing was too ambitious and needed to be scaled back in a neighborhood of just 4000. "There is a significant retirement community in Fort Lincoln, and I am concerned about access to the retail site." Mr. King said he has been trying to organize a bus service to transport seniors across Fort Lincoln Dr. and 33rd Place. Although a contender for a Dakota Crossing spot a few years ago, Walmart is out. The city refuses to provide subsidies to the union-shunning employer. Nevertheless, word on the street is that Walmart may yet settle into the neighborhood, but now on triangular site bounded by New York Ave., Blandensburg Road and Montana Ave., the site of the Abdo project that fell apart earlier this year. From a traffic perspective, the development of two big box retail sites in such proximity could produce a tangle at what is already a busy thoroughfare. In an area that lacks Metrorail, the arrival of the big boxers and all the parking infrastructure that comes with them does not foreshadow a favorable future for TODs (transit oriented developments). The architects of the proposed retail development at Dakota Crossing, Bignell Watkins Hasser, with offices in Annapolis, MD and Vienna, VA, have built several local retail centers at both the neighborhood and regional scales. The big box retailers would create what is estimated at 800 new jobs by establishing what developers hope becomes a regional destination, capturing incoming and outgoing DC traffic at the entrance of the Baltimore-Washington corridor. "I want everybody to know from here to Timbuktu that Fort Lincoln is getting ready to complete plans for Costco. We want to make sure we can tap into every dollar for the city and create as many construction and other jobs as possible" said King, who echoed concerns about the wetlands and retention ponds on the new development site. Area residents seem enthused. "I think its hard to argue against development in one of the last development holdouts in DC" said Hans Posey, who moved to the neighborhood recently. "Its a very established neighborhood, but everybody, everybody, in the neighborhood is gunning for something bigger, something more than the kind of stores that are there now." Cel Bernardino estimates an August 2011 groundbreaking for the retail part of the development. "I’d say Spring 2011 would be the soonest we are likely to break ground on the shopping center. We have 'solid' commitments from our anchor tenants. No leases signed yet." The current site plan/design for the shopping center received concept design approval from NCPC on June 3, 2010. 

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