Watergate Auction Sees No Bids, PB Capital Holds Property

The Watergate Hotel went to the auction block this morning. According to Reuters, with an opening bid at $25 million, no bids were placed and PB Capital Corp. made a credit bid to wipe out all debts on the property for $25 million. This despite the $40 million the bank was owed by Monument Realty, whose financing partner on the project, Lehman brothers, went bankrupt this past fall.

Ten bidders, including hotel chains and developers both US-based and international, registered, having demonstrated their $1.1 million deposit. However, the $25 million opening bid apparently was more than they were willing to bite off. Several developers remain interested in the property, including Monument, which may ultimately work with PB Capital to buy the property back and continue their plan to develop a hotel with some areas zoned for residential use.

Bethesda's 4900 Fairmont Seeks More Delays

Inevitable, probably. Developers of the 4900 Fairmont project in Bethesda's Woodmont Triangle are seeking an 18 month extension in the county's approval process, for the reasons you might suspect, including "the economic downturn and resulting freezing of credit markets" and "the current lack of residential market demand."

The would-be 16-story residential project would have replaced the eateries on the corner, including Indian restaurant Haandi, with 118 units of housing at the corner of Fairmont and Norfolk Avenues. With approval of the application likely, developer 4900 Fairmont, LLC has until January of 2011 to file a site plan with the county. The project was initially approved in December of 2007; the extension request will be formally heard at the county board's July 30th meeting.

Bethesda real estate development news

Watergate Auction Tomorrow: Who Wouldn't Want a Building Adjacent to a Piece of History?

When did it all go wrong for the Watergate? The hotel with arguably some of the best views in the city has a lively history - controversial design, Nixon era break-in, failed condo conversion, and now add bankruptcy. Back in 2007, DCMud reported that Monument Realty was ensnared in a legal battle after selling about a dozen units in its attempted condo conversion. Two years later and facing foreclosure on the remaining $40 million (out of $70 million) owed to lender PB Capital, Monument Realty's Watergate goes to auction at Alex Cooper Auctioneers tomorrow. The sale terms listed on Alex Cooper's website detail a process that will require $1 million up front (the starting bid was not disclosed), so be prepared to show the money to get in the door. Paul Cooper, principal at the auction house, said the response so far has been "tremendous," but that he had “given up speculating” how many bidders might show.Monument was given the standard 30 days notice to pack the linens and move out, or secure funds to prevent foreclosure. But with financial times like these and the bankruptcy of Lehman Brothers, the financing partner on the project, no financing has emerged and the gavel will fall tomorrow at 5301 Wisconsin Ave N.W. at 10:15 AM. So if you want to get a chance at owning a piece of history, bring $1m. Which, you might feel good to know, is less than it would have cost to buy a single unit back in the day. 

Washington DC real estate development news

Industry Insight: Jeff Miller

With the market in a holding pattern and developers in a state of transition, DCMud decided it was time to catch up with someone that has been through the bust-boom cycle of residential development before. We spoke with Jeff Miller, the principal of Prospect Diversified, a veteran of some of the heaviest hitters of local development, JBG, Trammel Crow, and Lowe Enterprises, and a member of the Mt. Vernon Triangle CID. Jeff shared his thoughts on development in the Washington DC area, the regulatory system, and good prospects for future development. 

DCMud: First, tell us about Prospect Diversified.

JM: We are investors in multi-family properties - both value add and ground-up development opportunities. Transactions in that market, however, are sparse. Sellers of property still expect that it’s worth what it was in 2006 during the condo conversion and development boom. Today’s economic and underwriting conditions have eroded values considerably since then, but sellers are having a hard time shaking that historic context. DCMud: Can you detail some of your past firms and projects?

JM: I was with JBG from 2000 to 2005 and with Lowe Enterprises for about a year and a half. Then I joined Trammel Crow from October of 2007 to October of 2008. When I started with JBG they were just starting to focus on residential development in the urban core. They identified six vacant sites, and I'm stressing vacant because there was no displacement of residents required to provide this very significant addition to the housing stock. There were two in the West End/Foggy Bottom, and then 1210 Mass, 13^th and N, 9^th and E which is now a condo called the Artisan, and a site at 6^th and G called the Cosmopolitan. They were all expected to be rental apartments but today only two remains rental – the rest went condo. Many of those deals were done in joint venture with Equity Residential.

DCMud: What's your prediction for how residential development is going to shake out in DC?

JM: On the financing side, many of the larger construction lenders are out of the residential business. Some of the local banks will actually look at these deals, but they’re just not penciling right now because cap rates have risen, rents are flat, and risk capital is demanding higher returns. The condominium development market is dead, so it’s only rental properties that we’re looking at, particularly stabilized buildings in need of repositioning and renovation. We have offers being considered on those kinds of buildings, but, to date, we’ve not closed on anything. We’re looking at areas where there is already a well established and well understood market – partially because the art of financing is the storytelling that goes along with it, these neighborhoods include Columbia Heights, 14^th Street, U Street, and as far east as 9^th Street by Howard University. These are areas that, when the market was growing, you could see residential migration in that direction. Now that the market’s flat, it’s probably where development is going to continue once things improve.

It’s helpful to note that DC has a lot of unusual characteristics - the entitlement process, layered on top of the historic review process, layered on top of a tenants’ rights process. I think having sense of all these elements and knowing the players helps in specializing in the DC market.

DCMud: As a developer, what is your greatest frustration of building within DC's rules?

JM: Mandatory inclusionary zoning is legislation that requires, in many newly constructed buildings, that a portion of the units to be affordable. The City gives the developer some additional density to offset the additional cost for this requirement, but the affordable housing they’re asking for is not really workforce housing. It’s housing for folks at the lower end of the income spectrum and the rents are accordingly low. But sometimes giving a builder more density is not always a plus because he might have to change to a more expensive construction type, and because the city has certain height restrictions, sometimes the envelope in which you’re building can’t actually take more density. Given the huge economic burden of the affordable housing and at the legislated income levels, the extra density rarely provides a dollar for dollar offset for the requirement.

DCMud: But some would say it is worth the trade-off.

JM: Affordable housing is going to be an important goal for any urban municipality. But it needs to be balanced against the unintended consequences. The total number of affordable units the legislation might actually produce is tiny when compared to the existing affordable housing stock in the city. But the impediment to production of market rate housing, due to the legislation’s material impact to a project’s economics, means fewer income tax-paying, urban consumers that DC so desperately needs to remain vital.

Everyone thinks that developers are making money hand over fist and we’re not. We’re making risk-adjusted returns for the capital invested with us, and right now, we can’t even make those returns because of the current economic conditions. That means it’s going to take that much longer for the urban renewal to continue. We’ve done a pretty good job as a real estate business community – on the commercial, retail and residential sides – in taking areas of the city that were underutilized, and without displacing anyone, bringing jobs and residents to these neighborhoods. The Mount Vernon Triangle is just one example.

DCMud: Speaking of the Mount Vernon Triangle, you serve on the board of the area's Community Improvement District. You've worked on some prominent projects in the neighborhood, but what is the CID up to these days and what is the outlook for the MVT?

JM: CityVista is the biggest one that one I’ve worked on – 650 units, 100,000 square feet of retail with a 55,000 square foot Safeway in it. The Safeway is doing very well and, as Chairman of the Mount Vernon Triangle CID…I follow closely what’s going on there. The CID has played a crucial role in helping bring additional services and attention to this area that only a few years back was mostly a series of parking lots. The CID is focused now on providing safety and beautification services to the area, and with the help of several grants we’ve been able to upgrade the landscaping in the Triangle. As more development delivers in the Triangle, the CID will be able to provide a growing set of services.

I was involved in the development of a building for JBG called 555 Mass and, when I moved to Lowe Enterprises, I went to work right around the corner on CityVista, so I’ve been involved with the neigborhood’s revitalization for nearly ten years. CityVista has done remarkably well considering the climate we’re in right now. I understand that the lease up of the rental apartments has been brisk. The condos sold well out of the box in 2006 and then hit the headwinds, but, even so, it’s been the fastest selling project in DC.

DCMud: Of all the three jurisdictions included under the umbrella of the “the metro area,” which one do you think holds the most promise as the market begins to rebound?

JM: I really like Arlington. I can’t think of another well-established and semi-urban place that is as open-minded and thoughtful while also understanding the economic drivers of our business. They’re pro-growth and smart growth. The way they’ve been able to create density around every Metro stop is something that DC hasn’t really gotten its arms around yet. In Arlington, it’s a well-understood entitlement process and you know you’re going to have a guaranteed market…Anything along that Metro line is golden.

But, the District is good because there is no entitlement process if you are building according to the existing zoning. If you have no historic issues to deal with, you can essentially apply for a permit and start building. You don’t have anyone telling you what exterior stone to pick and commenting on architectural details like rooflines and window styles, as is the case in the remaining surrounding jurisdictions. Quality buildings begin with quality design by architects, not community activists, city planners, and elected officials. DCMud: With the market shutting down, there are a lot of developers that are no longer affiliated with a large firm. What's it like going out on your own, and what would you recommend to others? JM: I think our business is in a transition...when I first got into real estate in the early 90’s the majority of the players were smaller, entrepreneurial groups capitalized with third party joint venture partners. It transitioned to fund-based and institutional capital closer in form to investment bank or private equity funds. That transition sucked some of the excitement and entrepreneurial benefit from the development process that drew so many of us to the business in the first place and replaced it with hyper-reporting, organizational charts, and group-think decision-making. Speaking for myself only, I wanted to return to the very basics of our business – identifying opportunities, selling the dream to investors, executing a plan, and harvesting returns. To the extent I am pursuing that goal I feel extremely gratified, but as I said earlier, this is a tough market to start any kind of venture.

Washington DC commercial real estate news

Marriott Opens Hotel in Chevy Chase

Marriott opened a new Courtyard hotel this week in Chevy Chase Maryland, furthering Marriott's domination of the local hotel market. The 226 room hotel, at 5520 Wisconsin Avenue, is two blocks north of the Friendship Heights Metro near the DC border. Developers began a $35m rehab of the old Holiday Inn Hotel just last summer, with architects / designers OPX stripping the rectangular tower down to its shell, making structural repairs and rebuilding within a year.

The new Marriott Courtyard is designed to meet the Gold LEED standard set by the U.S. Green Building Council, using low-VOC materials, solar-powered trash compactor, a reflective roof, and HVAC systems that don't use ozone-depleting refrigerants. Very cool. In addition, "100 percent of its energy" will be provided from wind power through the use of renewable energy credits by purchasing energy through an alternative provider, which in turn sources energy from an assortment of wind farms. Michael Ward, VP of Development at Grosvenor, said the hoteliers expect the alternative energy to cost the hotel an estimated $6,000 per year in increased charges.

Designed as one of Marriott's "refreshing business" concepts, the hotel replaces the traditional check-in desk with "welcome podiums" (an inn-convenience?) and business-oriented lobby. The hotel was purchased in 2004 by Grosvenor Americas, managed by Bethesda-based Hospitality Partners, and operated by the Courtyard, a sub-brand of Marriott.

The original hotel was built in 1970; the new Marriott comes online at a propitious moment, with the opening of Wisconsin Place, a large mixed-use project, now beginning to open for business.

Chevy Chase real estate development news

District Opens West End to Development

The District government unveiled its request to real estate developers today in a bid to redevelop three District-owned sites in the West End. The three sites, relics of a recent era when much of the downtown neighborhood was low-rise or vacant, are now anomalies amidst new, higher density condominium projects like 22 West, the Ritz-Carlton, and Columbia Residences. The RFP issued this morning calls for development proposals to redevelop the West End Library, fire station, and special operations police unit, all of which must continue in operation in some capacity, with the police unit likely being relocated. The RFP was released on Friday. The District is seeking "creative proposals," due by October 2nd, with broad latitude to develop an overall plan, while (nudge nudge) taking into consideration neighbor's overall vision for the neighborhood - a plan that foresees safe, lively streets with a local retail center, and more vibrant Washington Circle, revamped to be more of a meeting place. 

Non-negotiable items for the 51,000 s.f. of land include replacement of the library, which must remain "in the immediate vicinity," and while respondents are not required to adhere to the plan's main wish list, plans that don't will require "community stakeholder" buy in. Highlights of the RFP's wish list include "livelier streets," sub-surface parking, workforce housing, "activity generators" like move theaters, "green demonstration" buildings, incubators, and outdoor meeting spaces. Preference will be given to plans that "maximize the development envelope." A heavy presence of "disadvantaged" businesses is, of course, assumed, and the land is available either for sale or lease. The Mayor's office issued a press release at the short ceremony and cited "a unique opportunity to leverage to value of this land to not only build additional housing and neighborhood-serving retail, but to build critical first-class community facilities and significantly minimize the cost for our residents." Each of the two-story buildings is more than 40 years old and outdated for the services they should provide, according to the Mayor. The city expects to begin reviewing offers in the fall. Redevelopment of the library site, like that of many of the District's libraries, has been contentious and slower than anticipated. The District started the process in the summer of 2007, when the Council passed legislation that would facilitate development by way of sale to Eastbanc Development, which developed the Ritz Carlton hotel and condo, but local opposition to the non-competitive process halted the sale. Many of the opponents sought a plan for the site before transfer to a private owner, community groups have since held planning meetings to give design and use recommendations. 

Washington DC retail and real estate development news

Columbia Pike to Secede from VDOT in Arlington Plan

Arlington County is making a bid to control a 3.5 mile stretch of Columbia Pike now owned and maintained by the Virginia Department of Transportation (VDOT). The proposal would give Arlington County control of the right-of-way from the Arlington-Fairfax County Line to Joyce Street. A press release from the County sites that Arlington is already absorbing most of the cost, and that VDOT is basically standing in the way of progress. Ouch.

The progress Arlington is looking for is the new streetcar line (streetcars are the new blog...everyone's got one). Barbara Favola, the County Board Chairman, said taking control, "will make it easier for Arlington to ensure the transformation of Columbia Pike from a suburban highway to an urban, pedestrian focused and transit-oriented main street." The county will pay for maintenance and other expenses ranging from $180,000 to $450,000. A small price to pay for a progressive County, tired of review processes and applying for design exceptions from VDOT, which often led to project delays. Over the past 10 years, the County has spent about $12 million on capital projects along the Pike with another $9.5m slotted for the future.

Joan Morris, VDOT Public Affairs representative for Northern Virginia, told DCMud that "this was a first" but that the County's plan had been in the works for a while and VDOT had been kept abreast throughout. The project ultimately has to get approval from the Commonwealth Transportation Board, a 17-member board appointed by the governor to oversee VDOT. The board meets monthly and the Columbia Pike issue should go before it in the fall, either October or November, and barring unforeseen complications, the exchange should take place in January.

District Seeks West End Development

On Thursday, Washington DC Mayor Adrian Fenty will release an RFP intended to develop three West End sites. The Mayor will hold a press conference at 10am to announce the that three large parcels - now the site of a fire station, library and special operations police unit - will be offered for development. Details of the Request for Proposals have yet to be released, but the District seems willing to leave open the possibility of one developer for the three sites, or separate developers. It is not yet clear what uses, if any, the District will require of the developers, and whether the developers will be required to keep services on site or be permitted to relocate the services. According to Feras Sleiman, a spokesman with the Office of the Deputy Mayor for Planning and Economic Development, the most important criteria will be that each of the services be maintained "with no interruption." At least one site, the special operations division for White House detail, seems irrelevant to services for West End residents. A press conference will be held on Thursday at 10:30am at the library.

Washington DC retail and commercial real estate news

Park Place Opens atop Georgia Avenue Metro

Park Place, perhaps Georgia Avenue's most momentous new development, was celebrated in a ribbon-cutting ceremony today. The new apartment building, a $71 million, 200,000 square-foot housing and retail project atop the Georgia Avenue-Petworth Metro station, was built by Donatelli Development. Donatelli teamed with DC-based Gragg & Associates to work on the project, a 161-unit residential with 17,000 s.f. of ground floor retail. Mayor Fenty issued a press release and said the opening of Park Place meant that "economic development on Georgia Avenue has finally arrived." Amen. Though construction is still incomplete, the development will soon add 156 rental apartments and 5 rental town homes. The building will offer 20% of the space as affordable housing, something the community has long desired, according to Fenty. Residents will also have access to 187 underground parking spaces in addition to the Metro. The ribbon cutting ceremony took place on the landscaped roof, which boasts views of the National Cathedral, Capitol Dome, and National Monument. 

The retail space will be divided into 8 bays and the occupants will include a cafe, two sit-down restaurants and potentially a wine store. Local businesses from the U-Street area (familiar with Donatelli's project there) are considering coming to the area to build their second or third DC-location in the Georgia Avenue/Petworth Community, according to the developer. Funding for the project came from several sources including $15 million from Canyon Johnson Urban Funds (a partnership with Magic Johnson), $55 million Citibank and $2 million of Gragg's and Donatelli's own coffers "because of the financing state." Donatelli was awarded the low-income supporting contract without govt. subsidy by the Office of the Deputy Mayor for Planning and Economic Development through a competitive process in 2004, and construction began in 2006. The project was originally intended as a for-sale condominium, but the meltdown in condo prices in Petworth forced the conversion to for-rent units. Chris Donatelli has had a busy few weeks, just last week we reported on his planned development adjacent to the Benning Road Metro. Donatelli, which also revitalized Columbia Heights, is building another, smaller apartment building across the street from Park Place.

Washington DC retail for lease and commercial property news

DC Passes Convention Center Hotel Bill

The District Council today passed legislation that authorizes and helps finance a new convention center hotel. The bill provides for District financing of nearly 40% of the costs of the Marriott Marquis Hotel, which government and civic leaders have sought for years to provide services to support the city's investment in the convention center. The project has been on-again off-again for several years, with builder Quadrangle Development Corporation reducing the one-time size of the project and negotiating with the District, which by one recent plan would have funded the entire project in order to help kick start the neighborhood and use of adjacent Washington Convention Center. Council members have been motivated to alleviate the Center's obvious Achille's heal - its dearth of hotels in the immediate vicinity - while distancing themselves from the cost of the project. Councilmember Kwame Brown (at-large) said in a press release that though today's legislation was "not ideal," the overall result was positive. "We went from a 100 percent publicly financed hotel to a deal that requires the developer to fund the majority of the costs." The mayor is expected to sign the legislation, which could get construction going as early as this fall. Development of the four-star hotel is expected to cost more than $500 million.

Washington DC retail and commercial real estate news

Smart-Bike: DDOT's Transportation Plan

At a recent Zoning Commission hearing for the (much sought) Marriott convention center hotel, as the quid for the hotel's exceptions to zoning regulations, DC's Department of Transportation (DDOT) asked the developer to install a Smartbike station with a pretty $70,000 price tag. When you're already dropping $500 million on a project, one might reason $70,000 is but a speed bump on the road to development. But Conference Center Associates I, LLC, the developers, proffered alternative proposals, i.e. trees and green space, considering the lack of bicycle lanes and the unlikelihood that future occupants would opt for pedals over cars. Only one commissioner pressed the group about Smartbikes, but it raised the question of how Smartbikes fit into the larger development plan, and whether Smartbikes were now an integrated part of the District's transportation plan.

But according to DDOT Transportation Planner, Jim Sebastian, there is no written DDOT policy on Smartbikes, which came onto the scene in DC in 2008 and now has 10 locations throughout the city and over 120 bikes. Rather, Smartbikes are now just another negotiating chip the city can use to meet "transportation goals inherent in the PUD process." Similarly, DDOT requested Zipcars, which the developer agreed to. These improvements come in exchange for exceptions to sundry zoning regulations.

When DCMud raised the developer's concerns about the lack of bicycle lanes and demand in the project area, Sebastian's response was that the building projects often take years to complete and that by that time there might be more access and demand in the area. In the past 7 years, DDOT has added 37 miles of bike lanes and that's only going to increase. Maybe so, but how does DDOT determine which project would be good locations for new Smartbike stations? According to Sebastian, DDOT reviews several criteria including: population density, employment density,retail density, proximity to public transportation, bike-to-work statistics, and proximity to existing Smartbike stations.

What about that $70,000 pricetag? Sebastian was uncertain of the actual cost of individual stations (including installation and maintenance), largely because DDOT funded the first 10 stations through an advertising deal with ClearChannel, which built the new bus shelters, maintains them and uses them for ads. The ad revenue (or at least an undisclosed percentage of it) initially paid for 10 stations in the downtown area. ClearChannel runs the Smartbikes under the direction of DDOT. While DDOT continues to negotiate with ClearChannel over 90 potential additional bike locations throughout the city, they are also trying to place some of the cost on developers. Uncertain of the exact number, Sebastian estimated that DDOT has mulled adding the stations at a dozen or so projects, but only a few have made it as far as the Zoning Commission. Lots of carrots and sticks going around these days.

LEED Platinum Office Building Opened in Chinatown Today

The redevelopment of Chinatown continues with the opening of a 12-story LEED Platinum certified office building today. The building, at 700 6th Street, NW, appropriately named "700 SIX", features the largest green roof on a private sector building in Washington DC and boasts Capitol Dome views. Mayor Adrian Fenty and Deputy Mayor for Planning and Economic Development Valerie Santos joined the Akridge development team in cutting the ribbon on the $150 million project, one of a mere handful of projects in the city to obtain such a high LEED certification.

Matt Klein, President of Akridge, boasted that "over 90% of the construction and demolition debris was recycled" and that "the building would consume 40% less water than a typical Washington building." The environmental standards set by the project continue a trend for new developments in the city.

700 SIX features 300,487 s.f. of retail space (7,001 SF on ground floor for retail or office and 10,400 SF of concourse-level retail space). According to Mary Margaret Plumridge, Director of Marketing & Communications for Akridge, the space is currently 1/3 leased by the law firm of Cadwalader, Wickersham & Taft. The other 2/3 is up for grabs, though Plumridge indicated that they were currently working with a restaurant group to find a good fit for the ground level, which runs directly next to the G-Street cut through between the Verizon center and the movie theater complex.

The website for 700 SIX describes the glass bridges and metal walls as "virtually free standing with upper-floor windows on all four sides." HOK Architecture, the project architect, is familiar to DC residents as the designer of the new Washington Nationals stadium, and slightly less so for its design of the new office buildings at 88 K Street, SE.

H Street Transit Developments, Don't Stop Believin'

H Street, NE has been coming into its own over the past few years. With a dozen or so new bars and restaurants and the Atlas District, the area surprises those who remember the H Street of 10 years ago - but for one constant: the utter lack of metro accessibility. Residents can see signs of progress on the line, but continue to wonder about the reality of service. The DC government has made several promises to improve transportation there, including rail, and have already bought the trains. So trains will be running any day, right?

In January 2008, Mayor Adrian Fenty and Councilman Tommy Wells celebrated the groundbreaking on the Benning Road/H Street Great Streets Project, and plans were set in motion to develop an at-grade street car connection between H Street NE and Benning Road. The Great Streets title means the area will receive money for streetscape improvements in addition to transit lines. But Shannon Yadsko, an urban planner at Parsons Brinckerhoff, opines that even if residents see rails going into the ground, "service is probably at least 5 years away." Yadsko says that though she is not connected to the project, she foresees a slew of obstacles including, "DC's ban on overhead wires (which streetcars need to run, generally)" as well as competition with other DC projects for increasingly limited financing. One such project is a similar street car line, in Anacostia, which Yadsko notes is "probably a higher profile project." When DC committed to the project, they purchased the street cars for both the Anacostia and and H Street. You might say they got the whole "if you build it, they will come" thing backwards. According to a WTOP article from last April, the DC streetcars are still chilling out in the Czech Republic. Slightly different from the ambulance loan to the Carribean, but equally odd. Better just hail a cab.

Washington DC commercial property news

Zoning Considers Long-Awaited Plan for Michigan Ave and Iriving St NE

If all goes well, Marriott will team with a developer to replace a parking lot with a 314 room hotel at the intersection of Irving St. and Michigan Avenue, NE, adding a gym or grocery store, fixing the dearth of retail nearby, and adding much-needed services and improving the look of the intersection. That's the developer's pitch, anyway. This and adjacent parcels, boxed in by Catholic University, Veterans Affairs Medical Center, Washington Hospital Center, and Trinity University, have long gotten the notice of developers for its large stable workforce and lack of services and housing.

Local partner H Street Community Development Corporation and planners from WDG Architecture and Mariani Architects met before the Board of Zoning Adjustment last night to consider Conference Center Associates I, LLC's consolidated PUD for Parcel 121/31 in Brookland. The developers are seeking to change the unzoned property to a C-3-A zone. The project also includes a commitment from Marriott International.

Phase 1 of the proposed two-stage PUD consists of a 314 room suite hotel and conference center as well as a four-story above-grade structure with 20,000 sq. ft. of retail space at- and below-ground, and approximately 400 parking spaces on the upper levels.

While the zoning commission raised points on traffic flow (planned left turn access to retail from eastbound Michigan Avenue - an issue raised by DDOT in a report submitted to the zoning commission), and the likelihood of successful retail on the below-grade site, comments were overall positive.

Commissioner Peter May noted the problems with duality of the street as both a parkway and retail center, it "feels high speed." His comments highlighted concerns raised by several Commissioners over allowing left turns from eastbound Michigan Avenue. DDOT's representative indicated that the agency had initially sought to restrict access from Michigan Avenue and felt they offered a "reasonable compromise" with their "right-in, right-out" traffic plan. DDOT conceded that a left turn on streets he compared to an "interstate freeway" were "not completely impossible," but the safer option was the right-in, right-out traffic pattern supported by signage and potentially an island at the entrance.

Retail Concerns
Commissioner Konrad Schlater said about the project that he knew "it had been on the drawing board for a long, long time" but that with Marriott as a partner it had a "high likelihood of success." Schlater proceeded to express the commission's skepticism that a grocery store would be willing to accept sub-grade space. The Ward 5 ANC has been supportive of the project largely because of the need for retail in the area. Robert Reinders, of Marriott International, said a small grocery (like Trader Joes) "makes sense," but there could be no guarantees. Sean Stadler of WDG Architecture acknowledged that, "getting a retail tenant is sometimes challenging these days." Uh, yeah, we've read that somewhere before. Another option for the space would be a Health Club, something the nearby Washington Hospital Center favors because, according to Reinders, they currently have no on-site facilities for their more than 14,000 employees.

Local ANC members Ronnie Edwards, Commissioner for ANC5C-11, and Anita Bonds, Commissioner for ANC5C-01, both praised the project team for their work with the community, specifically the ANCs. And as part of the love-thy-neighbor quid pro quo, Marriott will provide "community benefits," in the form of meeting space for Ward 5 ANC throughout the year. (Note to other developers: pay attention here)

The marching orders were given to continue a dialogue with DDOT on the traffic concerns, to find a more physically appealing design for the parking garage, develop an alternative layout for the hotel's pent house suite because of concerns over the height, and to resolve issues raised by a report on the current trees on the property.

The next Zoning Commission hearing on this project is scheduled for July 27.

Renderings provided by WDG Architecture

DC Council Ponders Major Land Disposition

The DC Council hosted a roundtable Wednesday evening to thoughtfully ponder Disposition Approval Resolutions of 5 major developments planned across the city and give residents a chance to air concerns. Officially held to determine whether the city-held land was "surplus" - in lay terms, unneeded and salable - and whether or not selling them would benefit the city and the surrounding community in real terms (jobs, quality of life, etc.). Below is an abbreviated (luckily for you) roundup of the evenings discussions:

1. Minnesota-Benning Phase 2 Redevelopment: As previously reported Donatelli Development and Blue Skye Development won the bid to develop low-income housing and retail space adjacent to the Minnesota Avenue metro station. Panel members described the property as blighted, vacant and underused. Cheryl Cort of the Coalition for Smarter Growth disagreed with statements that the space was underutilized and also argued for a public easement and right of way, requesting that a segment of the property not be developed in case of future transportation demands. Councilmember Kwame Brown (at-large) described development as a way to "bring the city together."

2. New Communities Northwest One: By far the most contentious property of the evening was the site of the former Temple Courts Apartments. Arguments against the land, now used as a parking lot as developers work through the tangles of DC government, included ANC Commissioner Keith Silver's, who submitted a thesis-sized objection, and community members' claims that during Phase1 the developer failed to meet hiring standards requiring that 51% of jobs be given to DC residents. Chris Smith, Jr., Chairman and CEO of William C. Smith & Company, who disclaimed involvement in Phase1, promised to make good on employment promises in Phase2. But some Council members wagged fingers at Smith for having failed to interact directly with local ANCs while assuring community members of Smith's strong standing in the development community. The only change was the decision to build each of 5 buildings in separate phases to improve financing; i.e. former residents will have a long wait until they can return to their new homes.

3. Strand Theatre- It was a big night for Ward 7, with 3 of the 5 projects coming to the ward. The panel, including developers and community members, voiced overwhelming support for the Strand Theatre revitalization and redevelopment project. Council members asked the necessary questions to afford political cover, but there was little contention over the project.

4. Eastern Avenue Property - We previously wrote about ODMPED's call for plans to redevelop properties located at 400-414 Eastern Avenue, NE and the 6100 block of Dix Street NE. The selected plan will offer 56 affordable for sale units - all be 3-bedroom townhouses, something the community supports enthusiastically. Mary Cheeks, a Ward 7 resident, stepped up to opine that "this property has sat vacant for too long...it is time to move forward..." Council members were particularly impressed by the approximately $3.5 million dollar investment that would yield so much housing. Councilman Brown remarked on the millions of dollars being discussed among the projects and remarked over the efficient use of city resources, "I like that," he said. Enough said.

5. Fourth/Sixth and E. Street, S.W.: We reported on the intial appointment of Potomac Investment Properties, City Partners and Adams Investment Group, to redevelop land currently occupied by a fire station and a parking lot. A 9-story building will replace that former fire stationa and house a cafe and work site for DC Central Kitchen, and possibly even a stationery store, wine store and coffee shop. The property is currently planned as a 99-year lease, largely due to the presence of the district's fire station. Council member Tommy Wells (Ward 6), concerned about financing, advised John Holmes of Adams Investment Group that the "stakes are raised" on the project. To paraphrase, "don't screw this up."

Jazzed about Florida Avenue

You've got to appreciate DC's Shaw residents. The small northwest neighborhood has seen more development projects announced - and sit idle - than any other, leaving residents in a cycling state of hope and apathy as the neighborhood talks about big plans with little effect. One such disappointment was the flea market-sporting WMATA site at 8th and Florida Avenue, awarded to a developer more than a year ago, only to sit out the ensuing financial crisis. But thanks to city and federal dollars, and a restructured partnership, that may finally change.

Banneker Ventures has announced a new partnership with Bank of America (BOA) to develop the former WMATA site into three new "affordable" apartment buildings. Banneker can now go forward with The Jazz @ Florida Avenue, designed by Silver Spring-based Torti Gallas, turning 3 separate lots into 124 apartment units above 20,000 s.f. of ground floor retail and a 61-space parking garage, all straddling WMATA's metro tunnel below. The developers have already applied for, and been granted, Tax Increment Financing (TIF) in the form of a $7m promissory note from the District. And with the District's recent receipt of $33m in stimulus money for housing, the developer has petitioned the District government to receive a portion of those funds. As a result, the apartments will be entirely below-market, open to a mix of income ranges, with the cheapest one-bedroom units to rent out at $768. Developers hope to deliver the project in late 2011.

The long path to development began in May of 2007 when the WMATA Board of Directors issued an RFP for developers to build on the site. The Board did not make its final selection, however, until June of 2008, selecting a team that included Banneker and Metropolis Development. But the latest announcement drops Metropolis from the picture in place of BOA. In addition, the formerly tiny project footprint now includes two adjacent parcels on 9th Street recently acquired by the development team. Bozzuto will serve as the general contractor for the project.

Area Housing Projects Look to Affordable Housing for Salvation

As reported last month, DHCD recently received $33.7 million in stimulus funds for the development of affordable housing in the District. According to DHCD spokesman Angelita Colon-Francia, the distribution of the federal money is currently under review, pending the evaluation of 21 projects currently seeking Federal Low Income Housing Tax Credits from the agency. In a release by the District government, it is clear that a number of recent developers are hoping that money will find its way to their projects. The list includes several developments presumably slowed by declines in the real estate market, including NDC's The Heights on Georgia Avenue, Matthews Memorial Terrace and Banneker Venture's Florida Avenue WMATA site project, which have all applied for stimulus money for affordable housing creation in their projects. Comments on applicants are due to DHCD by July 16th.

But fear not, federal-dollar-seeking developers, DCHD will submit another application for round two of American Recovery and Reinvestment Act funding on July 17th. To date, the Department of Housing and Urban Development has awarded the District $94.5m of the $10 billion it has distributed nationwide in funding as a result of the American Recovery and Reinvestment Act of 2009. Funding will be applied to foreclosure prevention, homelessness prevention, "community development", affordable housing, and lead hazard prevention.

DHCD Opens Affordable Housing Center

Mayor Adrian Fenty today officiated the opening of the Department of Housing and Community Development’s new Housing Resource Center. As a real world counterpart to DCHD’s recently launched online housing database, DCHousingSearch.org, the first-floor addition to the agency’s Anacostia Gateway headquarters offers District residents an array of services to ensure easy access to affordable housing.

The new Resource Center, located at the at the prominent intersection of Martin Luther King, Jr. Boulevard and Good Hope Road, SE, was made possible through a $300,000 contribution from Fannie Mae – which, along with the US Department of Housing and Urban Development, will provide literature on their own affordable housing initiatives in the metropolitan area. "All the time when I’m in and out of the neighborhoods of DC, people ask about jobs…They’re excited about school reform and they also want to know where they can go to find housing – specifically affordable housing,” said Fenty.

K Street Think Tank Seeks PUD Approval for New Scott Circle HQ

Representatives of Jones Lang LaSalle and Hickok Hickok Cole Architects will head before the National Capital Planning Commission again this Thursday to discuss their Second Stage PUD application for a new Center for Strategic and International Studies (CSIS) headquarters on one of the last empty lots in DC's Golden Triangle.

The influential DC think tank purchased the commercial parking lot at 1616 Rhode Island Avenue, NW - formerly the site of a Gramercy Inn just off of Scott Circle - from Gould Properties in 2007 with the intent of constructing a new 130,000 square foot HQ to replace their aging K Street office space. Though CSIS has had to pursue $100 million plus of revenue bond funding from the District to fund the project, their purchase did come with one positive upshot. Gould had previously secured Stage I PUD approval for the site, leaving the CSIS' designated development team free to move on the project's design phase.

Since that time, Hickok's initial designs have taken a minor shave - resulting in the loss of 16,000 square feet worth of floor area and 12 of the original 90 parking spaces. At the same time, it has gained a green roof (in the hopes of achieving a LEED silver certification) and will still top out at 9-stories. CSIS' original timeline remains in place for a 2012/2013 completion. The project previously won approval from the DC Zoning Commission just last week.

With their new glass-faced HQ up and running, the former K Street defense industry influence peddlers will neighbor another prominent non-profit of a decidedly more liberal bent, the Human Rights Campaign - which should make for interesting, inside-the-Beltway bedfellows at the local Starbucks.

Downtown BID: State of the Downtown

The Downtown Business Improvement District (BID) issued their 2008 State of Downtown report this week and found that - for an imploded real estate market - things aren't so bad. The BID, which represents the downtown core of Washington DC from Union Station to the White House below Massachusetts Avenue, reports a general trend of rising job rates, more residents, and fuller commercial buildings.

Among the statistics compiled for the report are the creation of 3,800 jobs during 2007 and 2008; 250 new residents during 2008, for a total 7,600; a "record year" for downtown hotels, which boasted a 75% occupancy rate; and a Class A commercial vacancy rate of only 9.6%. Though no new buildings have broken ground since the financial crisis began in September of 2008, commercial projects already under construction are expected to drag down both occupancy and lease rates.

A growth in both daily Metro ridership (108,000 on weekdays, 41,000 on weekends) and tourist attendance (10.1m visitors, give or take a few) helped fuel a rise in "destination restaurants" from 113 to 122.