Industry Insight: Neil Albert on DC Development

He may not get microphone time at every press conference or a pair of scissors at every ribbon cutting, but Neil Albert, Washington DC's Deputy Mayor for Planning and Economic Development, keeps busy as the man behind the curtain for development in DC. Despite a schedule kept full by the 10,000 new affordable housing units he has been charged with creating in his first four years, Albert made time to sit with DCMud to discuss the latest RFPs, affordable housing, and why he thinks DC can shed its monumental, federal skin and become an full-fledged international city. 

You went from working with the previous Mayor as Deputy Mayor for Children and Families to the Deputy Mayor for Planning and Economic Development. How did you get into development? 

Albert: I started in finance and headed a nonprofit in New York. I was interested in parlaying that expertise into development on a small scale. I had the opportunity to really get into development when I was Parks director; a large part of what I did was real estate development. We built a number of recreational facilities in the city, including the first LEED-certified facility in DC. I then became Deputy Mayor of Children Youth and Families because that portfolio was one of the ones that needed a little shaking up and focus and energy. The former mayor asked me to do it and I did it for a year. Then I went into the private sector and started a nonprofit working with DC schools in professional development and bricks and mortar actually building new schools. I’ve always had a real estate finance focus throughout my career. When the mayor-elect asked me to join his administration in this role, I thought it was a great opportunity to put what I’ve been doing together. What I do is not just about financial real estate development, but there is a human component to what we do. A major part is the New Communities portfolio, the human capital – HOPE VI-type developments. We’ll be removing a lot of traditional government subsidized housing to create more mixed income housing. Part of that is changing psyche, the mindsets; preparing them to be able to write a red check, go to work every day like everybody else.

Speaking of subsidized housing, the bar for the amount of subsidized housing private developers must provide is being raised from 20-30 percent. On what basis was that decision made? 

Albert: That decision was made before us. When the Anacostia Waterfront Corporation was dissolved, the Council adopted legislation that required the affordable housing component - that’s the majority of what my office works on. By default, it has become standard here. 

How does that play into some of the other new developments the city has issued RFPs for - in which the city asked for 30 percent but is not doing the workforce housing? It’s like the city is focusing on lower income development. 

Albert: The mayor made a real commitment to affordable housing when he was elected and we are committed to building over 10,000 units in the first four years at different AMI levels, so all RFPs have the 30 percent requirement and our language is pretty general because we want to make sure that we achieve affordable housing levels without paying unnecessarily for it. And so what drives affordable housing in mixed-income developments is having market-rate housing that can actually subsidize lower income housing without having to come to the District government for subsidies. We want true diversity in housing. Whether it’s Hill East, Poplar Point, 5th and I, including the affordable component is necessary to have the correct mix. 

These are perhaps not the best times for condo builders. How does that play into the marketability of a project during difficult times? Albert: I don’t know if it makes it more difficult. From our experience, in the last few years, the development community has embraced not necessarily the 30-30-30 mix, but at least the 30 percent affordable component. City Vista is an example, and I think that’s kind of what’s driving that project being sold. It came on line at a time when the condo markets were going in the wrong direction, so having twenty percent of the units as affordable provided some stability. The market on the affordable level was much greater than the market than on market-rate level. The results and feedback from the development community have been positive. Yes, people like to make as much profit as possible, but we have to balance their need for the highest return with the broader city policy and goals for providing affordable housing. 

You referenced City Vista and other projects that have an affordable housing element. Some developers have told us that they are having some difficulty finding qualified people and actually bringing them to the table, that this makes their job more difficult. Have you ever studied that?

Albert: I would say they need to try a little harder. We can do a better job as a government, having a central repository database, which we are working on. I know the city Council actually passed legislation that will require a sort of central registry for those interested in taking advantage of affordable housing projects. In some cases it’s about us doing a better job preparing applicants; it’s a huge education process that needs to go into preparing people for home ownership. You can’t just get up one day and decide to be a home owner. When you buy a condo, pay the fees, have to abide by the rules of the condo board or association - you have to have a down payment, some sort of reserve in case the AC breaks and it’s not the condo association’s responsibility - we can do a better job of preparing those in that income category to take advantage of these opportunities. In that case, yes, people have gone to the table and not closed. 

Where did the 10,000 unit figure come from? 

Albert: The 10,000 number came out of a housing task force in the Williams administration, and then-Councilmember Fenty introduced legislation that set up this Comprehensive Housing Strategy Task Force and they made a recommendation that the city needed to build 55,000 new units of housing over the next ten years to deal with the population increase, special needs housing, etc. And then they broke down some sub categories – 19,000 affordable, and for those affordable units, there were some smaller ranges that included special needs 2,500 units, etc. We wanted to make sure that we could achieve that in a ten year period, so we set a goal of 10,000 in first four years, so with about 2,500 a year we are well on our way to at least funding those projects. We’re not only calling for them, we are providing funding for them through the housing production trust fund and some of the other housing sources available. I am confident that we’re going to make that. 

In terms of your position, you have a huge hand in what happens in terms of development, and development seems very high on Fenty’s list given his appearances at development press conferences. How do you want DC to be perceived from a national standpoint, what are your development goals? 

Albert: We want to truly make a diverse city here, but my opinion is that we have the great opportunity of positioning this city as a great international city on par with Paris and London and Amsterdam. People talk about great cities and I see DC as one of those. We are not on the cusp of that yet, we have a little ways to go, but I think we’ve got the major elements coming together. We have a vibrant downtown, people want to be here, and every vacant office building is being gobbled up by big lobbying firms or law firms or national organizations that need to be near the seat of power. We’ve started to pay attention to our retail. We can now shop in DC, when I came here eight or nine years ago, you couldn’t do that. Now there are good restaurant choices, you have really great options springing up and also good entertainment options. The Washington Post did an article about how DC is no longer a daytime town, it’s becoming a nighttime destination, so you don’t just leave the office canyons and go home to the suburbs, you go to night clubs and restaurants in the central business district. 

What I think will put us on par with some of the mature cities that make a statement both locally and internationally is having kind of the right balance between cultural amenities, which we have a lot of in our museums, but also local cultural amenities like the Spy Museum and Madam Tussaud’s; cultural amenities not just downtown, but also in other neighborhoods. We have lots of theaters and shopping destinations, so that when tourists come, they are not just sleeping in hotels and visiting the Mall, but also getting into the neighborhoods and discovering them. So what I would like us to be known for is raising the bar to be a city on par with a lot of the other international cities. And right now, we kind of lay in the shadow of great U.S. cities, but we are still holding our own. 

How do you see your specific role and interaction with the private development community and with residents of the city - how do you mix the two? 

Albert: I see myself as convener of private sector and the natural community residents who sometimes have needs that complement each other and sometimes oppose each other. In many cases, my role is just to be the arbitrator. Getting the services from the private sector that the residents need, whether it is incentives or bringing offices to neighborhoods so people don’t have to jump into a car to get to work, but can hop one metro stop to another. I really see my role as a convener or facilitator of those communities. I am really concerned about the amount of new jobs we create in the District, I’m happy to say that even while the rest of country is going through a downturn, we are still seeing job growth in DC. Traditionally, you look at the government as the creator of jobs. In the District they still are, but the service industry is also creating new jobs in entertainment, restaurants, retail and the federal government is doing its role by positioning government agencies in the District – the DOT by the ballpark or the ATF building at New York Avenue. They put us in partnership with each other to keep the economy going. Our job is bringing the balance between the haves and the have-nots in DC, so we have the big law and lobby firms and the non-profits and the associations who are squeezed by real estate taxes right now, but that add to the flavor of DC. Instead of them having to relocate to suburbia, we step in and try to provide incentives to keep them here. We are trying to keep a vibrant balance of community within the city. The city has issued a number of development RFPs. When will we see some selections? Albert: 5th and I will be announced soon, and Minnesota- Benning, we are so excited about that project, but we won’t make a selection until August. The developers up for that are City Interest who owns the East River Shopping Center and Parkside, Donatelli Development, and Marshall Heights Community Development Organization which is partnering with Rick Walker who did the Home Depot and Brentwood Shopping Center by the Rhode Island Avenue Metro station. They are all competing for the 600,000 s.f. of developable space. 

And Tenleytown? 

Albert: Tenley is still outstanding; we’ll hopefully have a decision soon. 

Can we ask about MIZ (Mandatory Inclusionary Zoning, requiring most developers to build subsidized units)? Councilmember Graham has been vocal about moving it forward… 

Albert: Yes, the mayor is committed to MIZ, but he wants to do it in a way that doesn’t slow or stop the development of mixed-income housing. My job is to do it right. We are getting comments from a wide cross section of the city including the private sector, affordable housing providers, and advocates. We issued administrative regulations two months ago for comments. We are going to take those comments and reissue a draft of the regulations and put it out for final vetting and hopefully make a decision in the next sixty to ninety days. I also believe that the housing development community will embrace it because I think we’ll do it in a responsible way that’s non-punitive. Then, we’ve been looking across the country to see how this has worked. It’s a mixed bag but it’s going to happen. 

 Finally, developers have told us that they struggle with the amount of information that has to be provided with a PUD and with the amount of time it takes to get approval for projects in DC. What is your response to that? 

Albert: I totally agree. We are working on it; the Office of Planning will be sending suggestions about how to streamline the process in the entire District. The PUD shouldn’t take 18 months anywhere in the world, not to mention the DC area.

Old Convention Center Site, New Designs

Wondering what was going on at the old Convention Center site? We were too, so we asked around. Plans for the Old Washington Convention Center Site Redevelopment continue to move forward in the design phase, as Developer Hines Archstone, along with architects Foster and Partners (of London) and Shalom Baranes Associates square away more details on their 10.2 acre site, bound by New York Avenue and 9th, H, and 11th Streets.

The $850 million office, retail, and housing redevelopment deal is the largest undeveloped property south of Massachusetts Avenue, in what DC's administrators hope will be a thriving, mixed-use, pedestrian-friendly center.

Included in the plans are, at a minimum, 25o,000-s.f. of retail, two office buildings totaling 465,000-s.f., two apartment buildings, two condominium projects, and 1900 parking spaces in underground garages. Each of the Class "A" office buildings will rise 11 stories and offer - uniquely for DC - two levels of retail. The two buildings (see rendering below) will be connected through an enclosed glass bridge at the third story. Each is designed to include double height lobbies with stone walls and floors, and an exterior shaded curtainwall and an atrium on each will face each other.

The residential portion will be divided into two apartment buildings with 455 rental units, and two condo buildings with 215 for-sale units, 20% of which will be affordable housing. Each rental building will be eleven stories high with one level of retail, with a pool on the fifth floor of one. The exterior will be adorned with terra cotta precast panels and a curtain wall system. Residents will apparently have ample terraces and courtyards, with additional landscaping on the roof. Like the offices, the pair of apartment buildings will be joined on the second story with an enclosed pedestrian bridge.

Moving on to the condominiums, at ten and 11 stories in height, architects again envision two full floors of retail, joined on the third story by, yes, an open pedestrian walkway. The building will also feature two floors of retail and elaborate landscaping on the roof, terraces, and courtyards. Two new streets will be created to have the effect of shrinking the blocks and providing better pedestrian access for the retail, and the northwest corner of the parcel will feature most of the 1.5 acres designated as open public space. A central plaza will sit in the middle of the four residential buildings, with fountains and landscaping, connecting to the street with paved pedestrian alleyways.

This past November, the city traded a parcel on the northeast corner of the site to developer Kingdon Gould III for a piece of land close to the new convention center, on the site now planned for the much anticipated Marriott. What Gould will choose to do with this plot of land is still unclear, as is an additional 100,000-s.f. on the site is still controlled by the city, according to Sean Madigan of DC's Office of Planning. Originally, talk of putting in a new central library was on the table, a goal of former Mayor Anthony Williams, although the city is now considering new options: additional retail in the form of an anchor store, another mixed-use development, or an entertainment venue. The city has not ruled out the possibility renting or selling the land to a developer, a decision that will reportedly be made within the next two or three months.

Hines Archstone is hoping to receive the Gold or Platinum rating for LEED certification on the office buildings, while expecting a Silver rating for the residential buildings. The project as a whole was accepted into the LEED Neighborhood Development certification, a pilot program of the U.S. Green Building Council.

"This is a tremendous milestone for the city and the Hines Archstone-Smith team," said William B. Alsup III, senior vice president for Hines Interests. "With the closing of the legal documentation with the City and approval of the schematic design, we will continue to work collaboratively with the city and its agencies to complete the detailed plans and specifications and secure the necessary building permits to enable us to begin construction by this time next year."

"This project is going to be a true city center - our downtown retail anchor - befitting a world-class city," Mayor Adrian Fenty said in a press release recently. "We are creating a place, designed by one of the world's most pre-eminent architects, which will complete the recent transformation of our downtown." Space will be offered to both national and local retailers, with 30% set aside for those with six or fewer stores in the country. Over half of the 2,500 new permanent jobs created are required to be given to qualified DC residents.

Planning has been taking place for over four years at this point. After months of hearing community input, the Deputy Mayor's Office of Planning and Economic Development approved the master plan for the site in October 2006. The District and Hines Archstone closed on their deal in December, which included approval of schematic design, zoning, and financial details, and presented revised designs and plans on January 10. Developers are now putting the final touches on designs, and will begin bidding and permitting by November. They expect to break ground in January 2009, and after the downtown endures a 35 month construction period, we can all look forward to completion in July 2011.


"This long-awaited project will set new precedents and rival the best live, work, shop, and play urban mixed-use developments the nation has seen to-date," gushed Ken Miller, senior vice president of Archstone-Smith. "This development will further the transformation of our Nation's Capital into one of the most thriving, dynamic, and culturally rich cities in America."

Neil Alblert's Stimulus Package for DC Developers

The Office of Planning and Economic Development announced yesterday nearly $9 million in development grants for neighborhood projects through the Neighborhood Investment Fund (NIF), a subsidiary program of OPED. The seed money is being offered to catalyze further development in neighborhoods that need it most.

The District's development booty will be offered offered through two programs: $6.9 million, managed by The Reinvestment Fund, will be offered through NIF's Land Acquisition and Predevelopment Loan Fund, which will help to provide non-profit and Local, Small and Disadvantaged Business Enterprises (LSDBE) with low interest loans for land acquisition and predevelopment purposes. The second program will offer another $2 million, managed by Local Initiatives Support Corp (LISC), through NIF's "Predevelopment Grant and Project Grant Fund" to help finance construction and rehabilitation.

“Our charge is to ensure that every section of our city enjoys real economic development opportunities...We expect qualified organizations will put these funds to work – leveraging our initial investment to create some real community benefits,” said Neil Albert, Deputy Mayor for Planning and Economic Development.

In order to qualify for a grant, a project must be considered eligible in both location and scope. The funds apply to projects that would create either affordable housing, mixed-use development, or community facility projects in 12 NIF target areas, namely: Anacostia, Bellevue, Bloomingdale/Eckington, Brightwood/Upper Georgia Avenue, Brookland/Edgewood, Columbia Heights, Congress Heights, Deanwood Heights, H Street, NE, Logan Circle, Shaw and Washington Highlands neighborhoods.

The deadline to apply for one of these grants ends on July 31, 2008, or until the grant the District gives away all of its money. To get a pice of the pie, check out their website.

Public Land to Go on Endangered List?

Councilmember Harry Thomas will introduce legislation today to overhaul the way the District privatizes its land - part of the debris left from the big bang of September's botched West End redevelopment plan. The official nyet to the District's sale of three parcels of land to Eastbanc Inc., came from the council during a public hearing in early October; now crusading residents, appetites whetted, are pursuing the issue of public land disposition on the whole. Councilmember Carol Schwartz made an attempt in mid-November to garner public interest in the issue by holding a roundtable to flesh out ideas about changing the land disposition process. Now, bringing action to the rhetoric, Councilmember Thomas will present a protection bill for public property to drive the nail further into the coffin of public-private partnerships.

Councilmember Thomas' bill resulted from a draft created by the People's Property Campaign (PPC), a resident-led division of Empower DC. PPC's vanguard effort to compose legislation materialized with the help of myriad supporters: Tenley ANC 3E Special Committee, Save Our Schools, Dupont Circle Citizens Association, Foggy Bottom Association and Benning Library Dynamo to name a few.

The bill lays out prerequisites for public land disposition; "The People's Property Bill would require, before disposing of any public property, a detailed explanation of why it has no other viable public use," according to the Library Renaissance Project - an active member in the campaign to retain property in public hands. In addition, the bill calls for a comprehensive inventory of public properties, a community development plan and a master facilities plan.

"Public property has found its protector. With an open door, an open mind, and decisive action - [Councilmember] Thomas is setting a new standard for responsiveness," said Robin Diener, Director of the Library Renaissance Project.

Council Nixes Funding Plan for Stadium Parking

The DC Council yesterday failed to advance legislation to fund two above-ground (and one underground) parking garages adjacent to the new Nationals ballpark, punting (sports puns being appropriate) the issue out of the Council.  Mayor-in-wait Adrian Fenty had proposed a funding mechanism for the new garages (the city is required to provide 1225 parking spots for the stadium) that would not raise the previously agreed $611 million spending cap for the new stadium – of course, this creative accounting would require $56 million to be taken from non-stadium city funding, a method only a budget director could love. The new owners of the Nationals have proposed less expensive free-standing, above-ground parking, but Mayor Anthony Williams has proposed below-grade parking to allow for mixed-use development above the garage. The Council’s vote - for an emergency declaration to proceed – was 7 for, 6 against, which failed to meet the required supermajority for emergency measures. The worst-case scenario, if all options fail, is for the city to simply pave over the five-acre northern parcel to provide some parking spaces – a solution nobody wants. It is unclear whether the issue will next be taken up by the Council or by the DC Sports and Entertainment Commission.

Washington DC commercial property news

The DC Council Raises Property Transfer Tax

The District Council voted this week to raise the transfer and recordation tax – paid by purchasers and sellers of property, respectively – from 1.1% to 1.45% of the sale price of commercial and residential property, for a total rate of 2.9%. The District, which currently has the highest average transfer tax of the 3 jurisdictions and considered alternatively raising the tax to 1.35% and an amendment by Councilman Barry for as much as 1.5%, will use the revenue to fund various projects, including, without apparent sense of irony, affordable housing initiatives. The legislation, which maintains the 1.1% tax on property sold for less than $400,000, is expected to be signed by the mayor.

DC Lays Out Billion-Dollar Plan for Old Convention Center Site

It took five years of planning and much wringing of hands, but DC officials and developers have finally delivered a master plan for the 10.2 acres of prime real estate where the old Washington Convention Center once stood. This major parcel (bounded by 11th Street to the west, New York Avenue to the north, 9th Street to the east, and H Street to the south) will soon, it is said, be home to nine buildings, containing almost 400,000 square feet of office space, 770 apartments and condominiums, and about 300,000 square feet of retail. In addition, developers envision a $180 million library, and hope to reopen long-closed 10th and I Streets. Two green plazas are also being considered for this land, for hosting concerts and events. Ground is expected to be broken in 2008, with project completion slated for 2011.