MoCo's Largest Residential Building is Capped

Montgomery County's tallest residential tower is now in North Bethesda, a 24-story highrise across from the White Flint Mall that earned the distinction just yesterday. The JBG Companies capped the residential portion of the North Bethesda Market on Thursday with the pouring of concrete on the top floor. In addition to the 187-unit tower just off Rockville Pike, North Bethesda Market will feature a new 6-story, 210-unit apartment building and 200,000 square feet of on-site retail space, including Whole Foods (expected to open next summer / fall) and L.A. Fitness, the only retailers to sign up, to date. All the buildings will face an interior courtyard raised above street level. All of the 397 units, about 15% of which will be affordable, are intended to be rental apartments, according to JBG. Despite yesterday's milestone, future residents will have to wait another year to enjoy its "upgraded amenities," if the developer's construction assumptions are correct. JBG says amenities for the new building include a swimming pool, fitness center, billiards lounge, Wii, theater room, and an "exquisitely manicured rooftop courtyard with stunning panoramic views." Completion of the project will also extend Executive Avenue to Rockville Pike. 

HKS Architects was responsible for the design of the overall project. Mike Nicolaus, Managing Director of the DC office of HKS, said the project has been in the works since 2004, highlighting the complexity of zoning approval on the busy corridor. Nicolaus said height was important because the county was looking for a 'gateway' to North Bethesda from the south. "That was part of the rationale for approving something of this height; an important part of the approval process." Regarding the future of the area, Nicolaus thinks Rockville Pike will be much like the Rosslyn-Ballston corridor in density and texture. "Someday soon that that entire neighborhood is going to be very dense." HKS has designed numerous large scale projects in the area, including Waterview in Rosslyn and Gallery Place in DC's Chinatown. Torti Gallas performed initial site designs, Clark Construction is the project's general contractor. The project, then in the planning stage, was recognized in 2005 by the Washington Smart Growth Alliance. JBG is one of the largest real estate developers in the DC area.

North Bethesda commercial real estate news

Southwest IM Pei Apartment Sold at Foreclosure

The View from SW waterfront is slightly less auspicious now for Fairfield Residential. A source familiar with the project has confirmed that The View, designed by IM Pei in the '60's and purchased by Fairfield in 2003, has been sold at foreclosure to Titex Marina View, LLC, an Atlanta, GA based LLC and subsidiary of Titex Real Estate Advisors of Delaware. According to SWDCBlog, in a late night, covert lit drop (notes slipped under residents' doors), Fairfield notified current residents of the ownership change and assured tenants they could continue to rent, for now.

Fairfield purchased The View, located at 1100 6th Street SW, and the adjacent parking lots neighboring the Southwest Waterfront project, and hired Esocoff and Associates to redesign the aged building as a mixture of new construction and interior renovations on the two landmarked forty-six year-old I.M. Pei towers. Another residential tower (see rendering below) was to have replaced the surface parking, but that never quite got off the ground and the parking lots are still going strong.

Fairfield modified its PUD in late 2008 because the south tower of the project had initially been planned as a condo, but market forces required financing as rental apartments. At the time, Graham Brock of Fairfield discussed the limitations of the financial system and how they had affected the project. Brock said the "existing residents in the Pei towers wanted the option of home ownership, but then we struggled to find ways to finance that building and get those residents to qualify for loans. The market changed and the deal we had come up with wasn't as strong anymore." It would appear even the rental option was not strong enough to sustain Fairfield's hold on Pei's work. In retrospect, maybe condos, now scarcer, would have been the better option.

Beginning in mid-April 2008, Marina View Trustee LLC and Marina View Towers LLC (co-grantors of the property with Fairfield) refinanced their $14.5 million loan with Wachovia Mutlifamily Capital, Inc. The next day, Wachovia signed over its Deed of Trust with Marina View Towers for the sum of $10 to Fannie Mae, and with it the first lien of the Deed of Trust. On July 14th of this year, Fannie Mae signed over the Deed of Trust to Tritex Marina View. On July 28, Tritex designated substitute trustees from the law firm Lerch, Early & Brewer, Chtd. Tritex has been involved in a series of large real estate transactions over the past few years, taking advantage of a commercial market that is weak, and getting weaker.

DC v. Federal Tax Credits

A follow up on our recent post about the $8,000 tax credit that will soon expire, and its possible termination, extension, or even expansion: Washington DC real estate shoppers already have a tax credit available to them, a $5,000 credit, also courtesy of the federal government. While the DC-only credit is smaller, there are some advantages to the smaller credit that a buyer should consider.

While the $8,000 credit is available only to purchasers who did not own a principal residence in the three years prior, the DC credit excludes only those buyers that owned a principal residence during the prior year, and only in DC. And the DC credit requires no repayment, even if the residence is sold within three years of purchase, unlike the $8,000 credit. For a full breakdown, see the chart below

$8,000 Credit	$5,000 DC Credit	$15,000 credit (proposed)
Anywhere in U.S.	Only in D.C.	Anywhere in U.S.
Purchased principal residence by 11/30/09	Purchased principal residence in 2009 (subject to annual renewal)	Purchased within 1 year of bill’s passage.
Did not own a principal residence during preceding 3 years	Did not own a DC principal residence in D.C. during preceding year	Other: Divisible into 2 years
Ineligible if modified AGI is $95,000 or greater ($170,000 if MFJ). Phase out begins at $75,000 ($150,000 MFJ)	Ineligible if modified AGI $90,000 or greater ($130,000 MFJ). Phase out begins at $70,000 ($110,000 MFJ)
Cannot claim if claimed D.C. First-Time Homebuyer Credit in any prior year	Cannot claim if eligible for First-Time Homebuyer Credit or if previously claimed the D.C. First-Time Homebuyer Credit	Cannot claim with any other homebuyer credit
Repayment required if the residence is sold within 36 months	No repayment	Repayment if residence is sold within 24 months

Columbia Pike Construction Commences

With big changes ever promised for Columbia Pike, evidence of actual progress is worthy of comment, especially when that progress is on schedule. Such is the case of Penrose Square. The only remnant of the former tenants at 2405 and 2501 Columbia Pike is the sad Giant Food sign surrounded by trailers, fences and barbed wire, but the project is on track for its scheduled delivery of late 2011.

Back in March, Foulger-Pratt Contracting won the $79 million construction contract for the building, and construction is now underway; Heffner Architects of Alexandria, Virginia have designed the project. There is little else new on the nearby strip, but Arlington continues to see the slow transformation of Columbia Pike with future plans for a street car with a stop at Penrose.

Carbon Thompson and B.M. Smith Associates will complete Penrose Square as a mixed-use development to include 325 rental apartments, 97,000 s.f. of retail space, and three levels of below-grade parking. Included in the retail space is a rebuilt, 57,000 s.f. Giant supermarket, with the residential units built above. The developers have also donated a parcel of land in front of the development for a new town square for pikers, also called Penrose Square, though right now it's all just one big hole.

The property is bordered by Columbia Pike to the south, Adams Street to the east, 9th Street to the North. Despite the new density, the height will remain low; 6 to 7 stories along Columbia Pike tapering to 3 1/2 stories along 9th Street.

DC Opens Ballpark Pier to Water Taxi

The District of Columbia announced today that it is ready to open water taxi service to the ballpark. The small Anacostia River pier, part of Diamond Teague Park, is adjacent to the Nationals ballpark, and will accommodate water taxi service to Maryland and Virginia, though not to other points within DC. At least not for now.


According to the District, six charter companies will operate up to a dozen different vessels, ranging in capacity up to 149 passengers, that will operate between the new pier, National Harbor, and Old Town, Alexandria. Service will be made available for all Nationals home games and "special events." But don't go queuing up for taxi service just yet, because its not available. While the pier is "open," that applies only to charter services that choose to operate. While the District-owned pier is technically available for taxi service, potentially to Georgetown and Southwest, operators that choose to establish service have not yet begun regular service, though individuals associated with the project expect that will happen for next year's games.

The surrounding park is not nearly complete, and isn't expected to be substantially complete until well after baseball season, leaving the District's announcement, following a canceled press conference, seeming in haste. The District government paid $8.5m for the new piers, the pier will be administered by the operators of the Gangplank Marina in Southwest DC.

The District government is also building a second pier at the same location, for "environmental education" and for smaller boats, which are expected to offer ecotourism up the Anacostia River.

DC Property Tax Auction: All Inventory Must Go!

Washington DC's tax sale is on. Well, almost. Registration for the District's tax sale auction for property in tax arrears begins on Monday, August 31, and ends September 4th, so don't delay - act now - to get your next house on the cheap. The auction of delinquent properties will take place starting Wednesday, September 9th, and continue until all properties delinquent as of October 1, 2008, have been sold.

Property with less than $1,000 in back taxes may be put on the block to a willing bidder. So is this the place to pick up the home you thought you couldn't afford? Not really, says David Kanstoroom, a title attorney with North American Title. Because the District provides a statutory right of redemption (an American value, you know) for auctioned properties, wayward owners may pay the back taxes, penalties and interest, and in so doing reclaim the property. "A high rate of these properties - 90 plus percent - are ultimately redeemed by the original owner" says Kanstoroom. According to Andrew Schechter of M and M Search Service, a title search abstractor and auctioneer, the point of the auction is often not to obtain title to a property, but to invest in a distressed property and collect interest from the previous homeowner.

Auction participants, who technically purchase the lien on the property, not the actual title, are entitled by DC law to earn 1.5% interest, per month, on the tax lien amount, to the homeowner that wants to redeem the property. Investors are therefore bidding on the amount of the tax lien, plus whatever surplus they determine the investment will justify.

Schechter notes that 4 months after the tax sale, investors can begin charging homeowners for actual title search costs, and 6 months after the tax sale they can begin charging "reasonable" attorneys' fees, a point at which the real money may kick in. Because the process is judicial, rather than administrative, the length of time to process the sale is determined by the court, but a case cannot be opened until 6 months after the tax sale.

Homeowners will still have to contend with penalties by the District, and any other outstanding liens, but according to Schechter, the District's intent is not to make tax sales an easy route to home purchasing. While it may be easier in Maryland, where the homeowner conducts the same type of transaction directly with the state, rather than a private investor, Schechter says the message from the DC government is simple: Don't attend the auction to pick up the home, go for the high interest accrued on the delinquent taxes. If its ownership you're looking for, you'll just have to go about it the old-fashioned way and search online.

The sale will be held at 941 North Capital Street, 4th floor.

Streamlined Bus Terminal at Union Station?

Congress is mulling big changes for Union Station including a new intercity bus terminal, improved rail passenger access and reduced congestion via two new concourses, proposed reinforcement of the H St bridge, altered and additional metro entrances and the renovation and expansion of the north station entrance. During a July Congressional hearing, lawmakers urged project officials to create a master plan so the Members could seek funding from their Congressional colleagues. The project could move forward with as soon as this fall.

The plans seek to streamline Union Station's role as a transportation hub with an intercity bus terminal. The current Greyhound Bus station is separate from Union Station, requiring passengers to walk outdoors for several minutes through a less-than-ideal area in terms of safety and accessibility; Greyhound has recently pursued moving into the train station. The bus terminal may be home to other bus lines including Bolt Bus and DC2NY among others. In addition to the connected bus terminal, two new metro entrances may be incorporated in the redesign.

Initially, the Union Station Redevelopment Corporation (USRC) would not allow buses to use the station as a hub. But after several letters from House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) and Subcommittee Chair Eleanor Holmes Norton (D-DC), the USRC and Greyhound began cooperating and testified before the Committee in 2008. This most recent hearing was meant to update Congress and expedite the process.

Chip Akridge, Chairman of Akridge Development, which purchased the air rights of Union Station's train lines in 2006, called the plan a "vast improvement for intercity bus passengers" because it offers a safer and more direct transfer. The developer plans to build the gargantuan 3 million-s.f. Burnham Place, named after Union Station's architect, which will extend north of Union station, past the Hopscotch Bridge on H Street, and house a 400-room hotel, residential towers and first-class office and retail space. Akridge requested $40 million for a new bus terminal and two new metro entrances. The metro access points would be at 1st St NE below the H St overpass, with a connecting walkway to the existing metro ticketing area, and at H St. NE, directly adjacent to the planned terminal. In a statement, David S. Ball, President of the USRC, said the group will be able to move forward with plans pending a study of the physical limitations of the existing parking deck, which has been suggested as a location for the bus terminal. The 42,000 s.f. of space, a portion of the total 140,000 s.f. current parking deck, is being evaluated for the cost of delivery of utilities as well as its structural carrying capacity. The study will help determine the cost of building the terminal, allowing the involved parties to make end user, design, construction, financing and scheduling decisions as early as this fall.

According to Ball, the engineering firm has promised delivery of their evaluation of the parking deck this week. Ball also indicated that the current plans and numbers are very fluid; the actual amount of space devoted to the bus terminal may change pending the report.

Capitol Quarter's LEED Silver Townhomes Open Next Week

Next Wednesday, Washington DC officials and developers will celebrate the first occupancies of the Capitol Quarter community of new market-rate townhomes, affordable workforce homes, and public rental apartments in the Capitol Riverfront Neighborhood. The 208 townhomes along 7 city blocks are walking distance from the Navy Yard, Capitol South and Eastern Market Metro stations. The townhomes achieved Silver LEED for Homes certification and together make up the nation's largest "LEED for Homes" community.

The construction, which began in mid-2008, proceeded in two Phases, the first covering four blocks, the second covering the remaining three blocks. Phase I should be completed in May of 2010 according to Jennifer Hebert, Director of Marketing for EYA. This first phase consists of 77 market-rate townhouses, 36 work force homes, 39 public housing rentals, and 8 Housing Choice Voucher (HCV) units. Only the market-rate and workforce homes are LEED for Homes certified. For Phase I, 53 of the 77 market-rate townhomes are sold (22 are settled), all 36 workforce homes are sold (7 are settled), and Hebert indicated the District of Columbia Housing Authority (DCHA) has been filling the rental units as quickly as they can be built. Phase II will begin after Phase I is complete and EYA expects Phase II to finish some time in 2012.

DCHA, DC Mayor Adrian M. Fenty, and EYA will attend the ribbon cutting ceremony scheduled for Wednesday, August 26 at 10:00 AM to celebrate the first occupancies in the neighborhood. Capitol Quarter was developed through a public/private partnership among the US Department of Housing and Urban Development, DCHA, the District of Columbia government, Forest City, Urban Atlantic and EYA. According to Michael Kelly, DCHA Executive Director, DCHA and EYA have committed over 40% of labor contracts for the construction work to local and small businesses.

The two, three and four bedroom units were designed by Lessard Group. Each home has ENERGY STAR appliances and other green amenities, such as high-efficiency cooling units and low flow plumbing fixtures. The market-rate townhomes range from $635k to the mid-$700s. The workforce homes were sold in two releases; the first ranged between $295k and $350k and the second ranged from $350k to $450k. Finally, the rental unit rates are set by DCHA, but generally ask the occupants to pay 30% of their income towards rent.

Tax Credit: Buy Now! Or Wait...

Fence-sitters beware: The $8,000 first-time home-buyer tax credit is about to expire, leaving one of the nation's best giveaways (unless you're a GM union worker, or banking exec, or car salesman) near its end. The tax credit, signed in February, was one of President Obama's initiatives to jolt the economy, and provides an $8,000 credit back - not just a deduction - regardless of the amount of taxes owed, leaving the purchase of a home a huge, legal income tax refuge (see your accountant for details). But the tax credit expires November 30, 2009. Assuming a typical 30 day settlement on the purchase of a new property, buyers have only until October 30th to have a real estate contract in hand. So, assuming you are a first-time homebuyer that makes less than $75,000 ($150,000 for couples), run, don't walk, to your local agent, and begin finding the right home today for the season's best tax dodge. Unless you're a gambler, that is. The income tax credit has been politically popular, and several bills moving through Congress aim to extend the deadline - or even increase it. One such bill, S. 1230, sponsored by Senator Johnny Isakson (R-GA), would replace the current credit with a $15,000 credit, not restricted by income or to first-time home-buyers. "The problem is in the move-up market, not the first-time home-buyer market" explains Isakson's Deputy Press Secretary Marie Gordon. Hence the extension and expansion. Isakson's bill has 14 Republican and 2 Democratic cosponsors, and was only narrowly defeated (47-50) in a recent floor vote. Gordon says the bill will come up again, and feels optimistic that the concept is gaining support. The NAR and NAHB have both enthusiastically supported it - no surprise there - and are working toward its passage. But will it pass? Congress might just be too engrossed in health care to make it happen any time soon, or find the budget numbers so staggeringly lopsided that they cannot afford it, leaving passive buyers wishing they had acted sooner. Then again, it might pay to wait.

Alexandria Workforce Housing Opens Sales Today

Developer EYA will hold a grand opening today for Alexandria Crossing, its workforce housing project in Alexandria, Virginia. These new homes will be priced from $300,000 to $365,000, and will include as much as $20,000 in purchase assistance subsidies from the City of Alexandria's Moderate Income Homeownership Program. Employees of the city and its public school system are eligible for an additional $10,000 in assistance from the city.

Applicants must live or work in Alexandria, and qualify as a first-time homebuyer with an income of less than $71,900 (for an individual) and less than $102,700 for a family of 4. The project is located between Mt. Vernon Avenue and W. Glebe Road - in the words of the developer, "walking distance to countless restaurants and shops."
The 18 new townhouses being offered are part of 102 units of new and converted housing that EYA is building at the site.

Office Condos Beat the Trend in NoMa

It has been almost 20 months since J Street Development and equity-partner Westbrook Real Estate Partners broke ground at 111 K St, NE, one of the city's first office condos, but the NoMa building is approaching the finish line. As pictured below, the low-energy glass curtainwall side is now complete through the 4th floor, thanks to Clark Construction. According to Colleen Scott, the project Senior Construction Manager at J Street, the developer should finish construction this year.

The 11-story, 90,000 s.f. office condominium building, designed by Gensler Architecture Worldwide, offers a quick escape from DC - just a block away from Union Station. The idea of office condos - sold as shells - will catch the ears of residential developers accustomed to spending a third of their time on selection and installation of finishes, nevermind post-settlement warranty issues. Or calls from cranky homeowners. Or replacing barely-knicked wood floors. Or arguing over color selections made two years before. Oh yeah, anyhow, Scott says the units are selling between $550 to $650 per s.f., which compares favorably to the normal range of new condos. The 111 K St building is the only new office condo project in D.C. at present.

Currently five of the eleven floors have sold, tenants include the Sierra Club, the YWCA, and the National Association of Student Personnel Administrators, non-profits all. Scott suggests one of the reasons for non-profit interest is the availability of bond-financing for these tax exempt organizations at a time when regular mortgages are difficult to obtain.

The builder will not attempt LEED certification. Though Scott was quick to point out that their Gensler architects are LEED accredited and have included many "notable green elements" including a green roof, bicycle storage and shower facility (for bike commuters, so yes, that gives you green points) and landscaping that does not require watering.

DC Officially Gets its Convention Center Hotel

Washington DC Mayor Adrian Fenty will hold a very public ceremony this evening to officially ink the legislation that will kick-start, finally, the District's Convention Center Hotel. In a 5:30pm ceremony, the Mayor will sign the New Convention Center Hotel Amendments Act of 2009, granting authority to spend $182m in TIF funds and $35m in bonds to go toward the construction, operation, and maintenance of an 1160-room, 14-story hotel opposite the lonely Convention Center. Technically, the bill amends the Washington Convention Center Authority Act of 1994 to further fund the Washington Convention and Sports Authority (WCSA), which will own the hotel, and instructs the WCSA to contract Quadrangle Development to get it built, and with Marriott to operate the new hotel. The Act authorizes Tax Increment Financing (TIF) and the issuance of bonds, to fund up to $206m in construction and operational costs. The remainder will be paid for by private developers. Funds derived from bonds and TIFs will go solely toward hotel expenses, and not into DC's General Fund. The District government has actively conspired to get the new beds as a rebuttal to National Harbor, which hosts a larger convention center and five, count 'em, five hotels surrounding it. Not to mention that a nice river runs by it. But back to DC, where the massive hotel will serve the convention center, and ensure the success of the convention center. Of course, it was the convention center itself that was supposed defibrillate the moribund Shaw neighborhood and spark development of the area, expectations that many of the convention center's original backers feel have not been met. Officials have maintained that construction could start as early as October, with about a three-year time frame for completion. Plans for the hotel went through many iterations before today, beginning with an even more ambitious plan that would have stretched the hotel over L Street and onto the next block for more than 1400 rooms. The city had also pursued a public-financed option that would have committed the Authority to picking up the $530,000,000 tab in full. The current version incorporates the historic American Federation of Labor Building (pictured) into the Marriott, which will otherwise overtake a swath of surface parking lots. The hotel will become the third largest in DC, and fourth largest in the region. The largest, at 2000 rooms, remains the Gaylord, at National Harbor.

Washington DC retail and commercial real estate news

Alexandria's Eisenhower Project Close to Approval

After over four years of jumping through bureaucratic hoops, Lane Development, LLC's sizeable four-tower, mixed-use project in the Eisenhower Avenue section of Alexandria, Virginia, is nearing the home stretch for city approval. After giving initial approval June 13th, Alexandria government planning staff lauded the architecture and landscape design destined for the intersection of Mill Road and Eisenhower Avenue, saying the project has the makings of a "landmark building" for Alexandria. Now comes the largely administrative process of final site plan review, when developers incorporate requested changes into their plan and resubmit it to the Planning Commission and City Council for the final word.

One of the conditions for final approval requires the developer to work with the City and the Alexandria Redevelopment and Housing Authority (ARHA) to consider providing 16 public housing replacement units, rather than the proposed affordable units. Additionally, Lane will have to create a Transportation Management Plan (TMP) fund, based on the goal of reducing single-occupancy vehicles by 45%. The TMP translates into a built-in fee per unit and is meant to act as a disincentive for driving; if the building occupants are able to reduce single-occupancy vehicles by more than 45%, the fee will be reduced. The idea behind the TMP is to encourage the use of public transportation, given the proximity of the Metro station.

The entire development is being designed by James Wright of Lee Harris Pomeroy Architects. The buildings will weigh in at 22 stories and 19 stories for the residential towers, and at 15 stories and 13 stories for the office towers, the combination of which will include a 515-space parking garage, 5,700 square feet of ground floor retail and 485 residential units. Not small beans for a DC area project.

Construction dates depend on how quickly (or not) Lane works to push through their final site plan. According to Natalie Sun, an Urban Planner for the City of Alexandria, even with final site plan approval, if there is no "substantial construction" the new approval would not expire until June 13, 2012. Which may, just possibly, allow enough time for the commercial and residential markets to correct.

Inclusionary Zoning: DC's Mandatory Subsidized Housing Rules Kick In

The District's controversial new "inclusionary zoning" rules come into effect this week; rules that come with a raft of new regulations, a hefty price tag, an outsourcing of social services from the government to a private industry, and a potential to drag down land values that are already plummeting. That, anyway, is the fear many land developers feel about the District's new inclusionary zoning rules. Beginning August 14th, Washington DC's lengthy new rules begin applying to housing providers, requiring subsidized housing in new projects of 10 or more units, and laying out a regime for building, tracking, verifying, and regulating housing going forward. While the legislation - the Mandatory Inclusionary Zoning, or "IZ", to some - has some exemptions by neighborhoods, zoning code, and building type, it is expected that most new apartments and condos will be required to offer moderate and low income housing going forward. DCMud provides the following summary for how the new rules will apply: 

Property Type: The new rules require that new buildings (or groups of homes) with 10 or more units, or existing buildings of 10 or more units that are increased in size by 50%, provide 8 to 10% of new units as affordable (or up to 75% of the bonus density, whichever is greater), depending on construction type and zoning district. Exemptions exist for student housing, hotels, and embassy housing. 

Beneficiaries: Inclusionary units will be set aside in all buildings that fall under the mandate of the new regs, for "moderate-income households" - applicants making up to 80% of the Area Median Income (AMI). In some zoning districts, 50% of those inclusionary units will be reserved for "low-income households," or applicants making less than 50% of AMI. Current income levels, based on HUD's figures, mean that a family of 1 would have to make $35,950 or less to qualify for the 50% AMI rule, and $57,500 for the 80% qualification. A family of 4 would have to make no more than $51,350 and $82,150, respectively.

Where: The MIZ rules were intended to apply in most of the District, with exemptions for low-density neighborhoods for which additional density would be out of character, according to the District's zoning map, i.e. zone R-2 through R-5-D, C-1, through C-3-C, CR, SP, and W-1 through W-3. Because developers receive a 20% density bonus for complying with the regulations, historic sections where added density would be inappropriate are excluded, including portions of downtown, Dupont, Georgetown, Anacostia, Southeast Federal Center, and Eigth Street (SE) Overlay. 

What: Builders must provide units of comparable size, unit mix, "exterior design," "finish," "materials," and "interior amenities," while still allowing for "less expensive materials" in affordable units. Inclusionary units must be in the same building, unless a special exemption for off-site construction is given. 

How to find them: Owners of subsidized units will be required to notify the Department of Housing and Community Development (DHCD), which will keep a database and, for each new housing unit, make a determination of the appropriate sale or rent price, and conduct lotteries in the event of over-enrollment for new housing. Purchasers of subsidized condominiums will be required to continually verify their resident status, but will not have to re-qualify for income. Washington DC residents will have some priority over non-DC residents, but the latter will qualify. The DC government has issued a preliminary website for guidance, and will help potential occupants search online for available units. The regulation of the new regime will be administered by the Department of Consumer and Regulatory Affairs and the DHCD. And while the regs may trigger fears of additional bureaucracy within the DC government, according to Sean Madigan, spokesman for ODMPED, the new system is intended to use existing facilities to govern the process without adding a new layer of staff. Madigan says the rules will have a "phased introduction" that will be put into place over the next few months as plans gel into administerial mechanisms. The new rules have been a long time coming, having been debated for years when finally adopted by the Zoning Commission on May 18, 2006. The DC City Council codified the rules in the same year in legislation that required the Mayor's office to issue new rules on the subject. But amidst drooping development prospects, those rules were not issued until May 14, 2009, to the consternation of affordable housing advocates and the relief of housing providers. Under the codifying legislation, those rules would take effect 90 days after publication.

Washington DC commercial real estate news

Georgia Avenue School Demolished for Mixed-Use Project

Government officials chose the hottest day of the year to begin demolishing another public school, this one on Georgia Avenue. The 36-year-old Bruce Monroe Elementary School and recreation center, at 3012 Georgia Avenue, NW, was closed this June to make way for a mixed-use project including, most likely, an updated school, and yet another feather in the cap of Georgia Avenue.

According to ODMPED Communications Director Sean Madigan, the Mayor's office will issue an RFP "in the next few weeks" to select a developer to turn the 119,000-s.f. site into what "could include new housing and retail on the site as well as a new school." DC Public Schools’ Office of Public Facilities Management has been tasked with overseeing the school's development, while ODMPED and the DC Department of Small & Local Business Development share the responsibility of seeking a partner for the project’s mixed-use component.

The task of knocking down the existing school falls on General Contractor EEC of DC, which handled asbestos and PCB abatement, and The Berg Corporation, which will handle actual demolition. According to a source from Berg, 95% of the material (by weight) on the site will be recylced, a large portion of which is brick that will be ground and used for structural backfill. Demolition is expected to take about 10 weeks; the Mayor's office had initially predicted the school would be ready for the fall of 2011, but says that now seems unlikely.

Several shootings on the site in 2007 prompted Mayor Fenty to undertake additional neighborhood improvements and evaluate the state of the school. Most of Bruce Monroe’s former student body and staff have been removed into Park View Elementary at 3560 Warder Street, which will in turn close once Bruce Monroe is ready.

Washington DC real estate development

Manna Plans 24 New Condos in Anacostia

On August 17th, the DC Department of Housing and Community Development (DHCD) will hold a public hearing on the disposition of the six townhouses on W Street, SE in Anacostia. Barring the unexpected, the properties will transfer to non-profit Manna, Inc, which offered $200,400 following the Solicitation for Offers DHCD issued in July of 2008. Manna's plans, designed by an in-house team, preserve the architectural integrity of the exterior walls, but execute a gut rehab of the interior. The end result will be 24 two-bedroom, two-bath for-sale units. The units will be approximately 900 s.f. each; four will be "accessible." A quarter of the units will be made available to households earning 60% or less of the area median income (AMI), the remaining 16 units will be available for households earning 61-80% AMI. Manna expects to begin construction in the first quarter of 2010. The project will be executed in two phases, and George Rothman, Manna President and CEO, estimated completion 12 to 18 months after the start of construction.

Washington DC commercial real estate news

Arbor Place: A Pulse Detected

Abdo Development's Arbor Place project, an unusually large outer New York Avenue project which received initial approval in February 2007, is back on the boards. At a hearing before Washington DC's Zoning Commission on July 30, 2009, Abdo asked for consolidated approval of a Planned Unit Development (PUD) and related zoning map amendment from C-M-1 to CR Zone district for the same land. In a move that clearly reflects the financing constraints many developers are facing, Abdo has significantly downsized the planned development and is working with DC to subsidize the first phase of construction (at least). The new Arbor Place is a planned mixed-use community on the colossal 17-acre triangle bordering New York Avenue, Bladensburg Road, and Montana Avenue, NE, (click on map, above) a section of real estate now dominated by warehouses and dilapidated commercial buildings. 

The site counts the opposite National Arboretum as an advantage, but sits on a challenged stretch of New York Avenue sometimes referred to impolitely as "the Devil's bowling alley" for its lengthy sameness, segregated by the CSX lines that run adjacent. The project will also include three new internal roads. The original PUD called for approximately 3,500 residential units, 148,120 sf of retail for lease, 4,294 parking spaces, one acre of open space and an overall floor area ratio (FAR) of 4.98. The drastically smaller new plan offers approximately 1,400 residential units, 1,254 parking spaces, 69,883 sf of retail for lease, 2.71 acres of open space and a less dense FAR of 2.46. In Commission filings, the developers admit "the new application reflects changes to market conditions." Most notably, the new filing changes the subsidized portion of the project from a mere 8% of units to 70% of units. About 25% of those units will now be available to residents at 80% AMI (Area Median Income) or below, and another third would be available to low-income households earning 60% AMI or less, and in some cases 50% AMI or less. The remaining 30% would be market rate. In their pre-hearing submission, the applicants, which still includes New York City-based Broadway Development, claim the "affordable housing component is the PUD's most significant project amenity and public benefit," a fact which underscores the removal of several project amenities, such as expansion of a local recreational facility and on-site health club. 

The affordable housing provision is now the subject of substantial negotiations over workforce housing programs between Abdo and the Office of the Deputy Mayor for Planning and Economic Development (DPMED). The developers will "utilize a combination of direct subsidy and tax incentives to finance and construct the initial phases" of Arbor Place. These financing programs determine the distribution of affordable units in the PUD. Phase I, set to begin approximately two years after PUD approval, will start with two buildings that run along New York Ave. and part of Montana Ave. Every unit in Phase I will be available only to households at or below 60% AMI. Phase II's five buildings run along Montana Ave, New York Ave, part of Bladensburg Rd. and new internal roads. This phase provides 20% of units at 50% AMI and the remaining at market-rate, which the developer intends to price at a level generally affordable to an 80% AMI level. Phase III's three buildings run along Montana Ave and Bladensburg Rd and will be entirely market-rate, which the developer anticipates will generally priced equivalent to workforce housing. The developers expect Phase III to be ready 15 years from the Zoning Commission Order.

Arboretum Neighborhood Association President, Bleik Pickett, submitted a letter to the Commission expressing overall support, but with several key concerns. The original PUD had included a commitment to support and expand the local recreation center, and plans for a health club as one of the retail facilities. Neither offer exists in the new PUD application and residents are concerned about the influx of people without the necessary neighborhood resources to handle it. The letter mentioned that Abdo had expressed interest in a public-private partnership to provide resources for the community, and which it wanted reinstated. 

The Architect and Master Planner for the project is Maurice Walters; Torti Gallas and Jyh-Mei Lee, AIA (Abdo's in-house architect) are project architects. Additionally, Shalom Baranes Architects and Bradley Site Design are the landscape architects. The watercolor renderings were done by ArchiBIM, Inc. The Zoning Commission approved the consolidated PUD application and the Zoning amendments, and has now submitted its recommendation to the National Capitol Planning Commission (NCPC) for review. The NCPC will review the application and send a report back to the Zoning Commission. A final hearing before the Zoning Commission is scheduled for September 14th. Barring any bureaucratic hi-jinx, the application would then be approved. The guidelines for PUDs mandate that the developer has up to two year after approval to apply for a construction permit and an additional year after that to begin construction. If the two year or three year deadlines are not met, the PUD becomes void. The original PUD application is now void, due to the alterations and the above described time lapse. Assuming the Zoning Commission approves the new PUD application on September 14th, 2009, Abdo will have two years from that date to apply for a construction permit and an additional year to begin construction.

Washington DC retail and commercial real estate news

Lincoln Theatre - The Development Show Must Not Go On

A planned sale and development of vacant lots at the Lincoln Theatre now appears to have gotten its curtain call. In a plot that would have bolstered finances for the struggling theater and added desired commercial development to the U Street neighborhood, the District had hoped to sell the vacant lots to developers. According to inside sources, those plans have now been shelved.

In April 2008, Mayor Adrian Fenty announced a Request for Proposals (RFP) for the district-owned property abutting the U Street theater, with a September, 2008 application deadline for the "Lincoln Lots." According to sources in the office of the Deputy Mayor for Planning and Economic Development (DMPED), no developer was selected and the RFP has been pulled for "economic concerns." The DMPED's office will not comment on when the RFP was pulled, how many offers were received, or any explanation for dropping the plans. Other city officials seemed unaware of the Lincoln's status; spokesmen for the Lincoln refused to comment (unless a hang-up is a comment) for this story.

At least part of the impetus for development was the theater's shaky financing, which required annual payments from the District and led to a cash infusion from the District in 2007 to prevent it's imminent closing. Proceeds from development were to seed the theater with extra cash to keep it operational.

The two parcels on V Street total 11,788 s.f. of space in a neighborhood bursting with new and planned development. At the time the RFP was released, the Mayor suggested a hotel or office would be an ideal development to share parking with the theater and provide "flexible event space, including a restaurant-quality kitchen, which would be managed by the theater management." The new structure was meant to help solidify "the Lincoln [Theatre] in the regional cultural market."

**UPDATE 08/10/09** The Office of the Deputy Mayor for Planning and Economic Development sent DCMud the following statement as a follow-up to our post:

The District remains firmly committed to the success of the historic Lincoln Theatre. The U Street Theatre Foundation Board, its Executive Director, and overall team have made significant improvements in the operations of the theatre. Theatre management has formed strategic partnerships with a variety of cultural groups to further enliven the U Street corridor and to make the institution an anchor for the broader community. The District’s issuance of the Solicitation was to intended to provide supplemental support of the theater’s operations. The District’s decision to terminate negotiations with the potential development team last year was made to ensure the public interest in being able to produce that supplemental support. It is anticipated that a Solicitation will be issued for those same properties once the current economic climate changes.

Mount Vernon Triangle Waits for All that Jazz

The Arts at 5th and I will keep Mount Vernon residents waiting for just a bit longer. Donohoe Companies won the right to develop the promised high-end hotel, retail outlets and jazz club in September of 2008, but the District has been negotiating the terms of the land lease for the project with Donohoe. According to Memphis Holland, a Partner at co-developer Holland Development, the group hopes to have a resolution to their negotiations by the end of next month.

Assuming the land disposition is approved by the City Council, the developers can then begin the planning process. Planning will take at least 12 months and construction would not begin until an unspecified time thereafter. The group is not expecting any zoning issues at this time, but in this business, you never know.

The 475,000-square foot development will center around a new 260-room ME Hotel from luxury Spanish hotelier, Melia, and also include a bicycle retailer, hardware store, book store/café and new outlet for the Zenith Art Gallery. One update to the original plan is that the Boisdale Jazz club will likely not be in the hotel, but rather at a location down the street at 5th and K, which Donohoe is negotiating terms for, leaving the in-house space for another restaurant. The building at 5th and K falls under the confines of the Historic Preservation Review Board so the structure would be preserved and renovated for the club and restaurant.

According to Holland, the developers have been in constant communication with the community and once they have approval from the City Council will re-engage the local ANC and the downtown neighborhood association. Zenith Art Gallery recently closed its physical location and is functioning from an online gallery. According to Judith Keyserling of Zenith, the gallery founder anticipates that the new space is still several years off.

It is unclear when the plans for the remainder of the 5th street project will fall into place. For now we know that the hotel, restaurants and retail are in the works, but the music won't be heard for a few more years.

Outdoor Market Coming to Silver Spring

Silver Spring will soon have its own Eastern-Market-style street market, the Fenton Street Market. With two inaugural weekends this fall (September 12th and October 3rd) the market will be open every Saturday, beginning Spring of 2010. The Market owes its existence largely to Hannah McCann, a Silver Spring resident of 12 years who saw the empty lot on the busy corner of Fenton St. and Silver Spring Avenue and thought it was “a shame that nothing happens there." After a few phone calls she had a "Yes" from the property owners and eventually worked with Montgomery County to figure out the rest.
Development of downtown Silver Spring has meant new energy and new businesses, making it hard for some to compete. Ergo, McCann says there is concern that "some of the smaller businesses will be priced out by the new business.” Her plan for the market is to bring unique vendors to the area with the hope of encouraging new small businesses to move into Silver Spring to accent those currently serving the community.
McCann hopes to have a mix of crafts, art, antiques and services, like a Henna artist and an orchid seller who teaches repotting, but has been working with the founders of the Eastern Market and is following their advice to be open-minded about the type of vendors. Timed to correspond with the nearby farmer's market, Fenton Street Market could become a natural next step in a Silver Spring Saturday afternoon.

McCann said she is trying to take care of licenses and insurance and to keep booth space inexpensive. Both 10 x 10 and 10 x 20 booths are available and range from $15 to $25 a day. And really, where else can you rent space at that price this side of Kabul.

The market's hours for the public are 9 AM to 2 PM. Free parking is available in public lots across Fenton Street. Vendors should plan to arrive at 7 AM.