{"id":357,"date":"2019-06-29T20:06:48","date_gmt":"2019-06-29T20:06:48","guid":{"rendered":"http:\/\/www.dcfeedback.com\/archives\/?p=357"},"modified":"2019-06-30T04:22:20","modified_gmt":"2019-06-30T04:22:20","slug":"william-jordan-analysis-the-debacle-at-fifth-and-eye-why-the-lot-is-still-vacant","status":"publish","type":"post","link":"http:\/\/www.dcfeedback.com\/archives\/357\/","title":{"rendered":"William Jordan Analysis: The debacle at Fifth and Eye: Why the lot is still vacant"},"content":{"rendered":"

This was originally posted to the Adams Morgan Listserv on April 4, 2019, as message #50844, groups.yahoo.com\/neo\/groups\/AdamsMorgan\/conversations\/messages\/50844<\/a><\/p>\n

The article below presents DMPED’s Fifth and Eye project almost as an exception to the rule when it comes to major development in this, but it is more the norm. You could almost replace Fifth & Eye, with the Wharf or Hill East and get pretty much the same story. When city officials and the smart growth crew lament appeals to PUDs and NIMBYies as the cause of development delays, they are not being fully honest. They are using appeals as scapegoats. These deal collapse time and time again of their own weight. Because planners and development officials push deals beyond what the market can bear, which look to the city for bailout. The bailout and pre-bailout resources is what CM Evan’s was offering in this now infamous business proposals.<\/p>\n

When the Mayor talks about building 36,000 housing units by 2025 she means doing more deals such as this one. Pushing a failed model and approach, at least when it come to residents and their neighborhoods. However for developers and their subsidy providers in city government this is booming business.<\/p>\n

William
\n The debacle at Fifth and Eye: Why the lot is still vacant <www.bizjournals.com\/washington\/news\/2019\/04\/04\/the-debacle-at-fifth-and-eye-why-the-lot-is-still.html?ana=e_mc_prem&mkt_tok=eyJpIjoiTlROaU5UQmhaR0kwWkdWbCIsInQiOiJsYVc4TnNGa0xmajBmczJ6eXBVUkJScnJ6W…<\/a>><\/p>\n

By Rebecca Cooper <www.bizjournals.com\/washington\/bio\/15671\/Rebecca+Cooper<\/a>> \u2013 Senior Staff Reporter, Washington Business Journal
\nApr 4, 2019, 10:09am EDT
\nThais Austin <www.bizjournals.com\/washington\/search\/results?q=Thais%20Austin<\/a>> vividly remembers hearing about the promise of the District-owned site at Fifth and Eye streets NW in 2006, when she bought her condo on Massachusetts Avenue in Mount Vernon Triangle.<\/p>\n

\u201cPart of the sales pitch moving in was that that particular lot, which we all knew was owned by the city, was going to be a gateway to the community,\u201d said the longtime neighborhood resident and real estate agent. \u201cIt was going to make a statement.\u201d<\/p>\n

Thirteen years and two failed city solicitations later, Austin still lives across the street from an empty lot. For a while, it was a haven for drug dealers and other nefarious activity, she says. When the city fenced it off, the offenders just stood outside the fence.<\/p>\n

She\u2019s seen many ideas come and go. There was the 2006 proposal for a House of Blues music venue from the public-private National Capital Revitalization Corp.<\/p>\n

Then the 2008 solicitation that brought a host of mixed-use proposals, including one with a Melia hotel and a jazz lounge, another for two Starwood hotels and another for an 80-room hotel and 85 live-work apartments for artists.<\/p>\n

And then there was the 2014 solicitation, awarded to Peebles Corp., which originally planned to put an SLS hotel with 198 rooms and 59 condominiums there.
\nOn March 25, Peebles pulled out of its contract with the District to develop the half-acre site on the edge of downtown D.C.<\/p>\n

\u201cThe fact that D.C.\u2019s planning and economic development office could not move forward on a development after 13 years is shameful,\u201d Austin said. \u201cWhen they chose Peebles, they promised it would be speedy, and they wouldn\u2019t have financing issues. It has been nothing but not speedy. And the city has wrapped up on all these other negotiations for all these other goals, none of which benefited this community.\u201d
\nCrashing down
\nThe termination followed a lawsuit filed against Peebles by its certified business enterprise partner, The Walker Group, and came just a week before the developer and the city were set to finally close on the disposition of the land by the April 1 deadline.<\/p>\n

The city had not made any official statements about the future of the project, and it\u2019s unclear whether it could be resurrected or is truly dead.<\/p>\n

This story pieces together the history of the troubled site, based on city documents, court filings and emails between Peebles and city officials obtained through Freedom of Information Act requests.<\/p>\n

It all began in 2014, when Peebles and Walker beat out eight other bidders in the second solicitation.<\/p>\n

But it wasn\u2019t long before the project faced its first big hurdle: Peebles had to change course on 61 units of affordable housing it promised to build at 2100 Martin Luther King Jr. Ave. SE when neighbors and the Historic Preservation Review Board balked at the prospect, saying the proposed seven-story building shouldn\u2019t abut a lower-profile, residential neighborhood.<\/p>\n

The number of units was cut to 31, and Peebles agreed to build the other units elsewhere or pay a fine.<\/p>\n

But the number of affordable units slated for MLK was later decreased to 21 after Peebles failed to secure enough subsidies from the D.C. Department of Housing and Community Development to build a 31-unit building, according to Donahue Peebles III <www.bizjournals.com\/washington\/search\/results?q=Donahue%20Peebles%20III<\/a>>, director of development for D.C. and son of the company\u2019s founder, Donahue Peebles Jr. <www.bizjournals.com\/washington\/search\/results?q=Donahue%20Peebles%20Jr<\/a>.><\/p>\n

Eventually, a second affordable housing site came into play at 17 Mississippi Ave. SE, one expected to support 41 units. Peebles says it is still pursuing the development there, despite the termination of the Fifth and Eye contract.<\/p>\n

Peebles \u2014 a developer founded in D.C. that now also has offices in New York and Miami \u2014 and the city missed the original December 2016 deadline to close their deal, and the D.C. Council issued a two-year extension, establishing December 2018 as the new deadline. As that neared, Peebles notified the city it had to delay the closing because its financing had fallen through.<\/p>\n

Emails between Peebles Corp. and the Office of the Deputy Mayor for Planning and Economic Development show the company providing the financing, Fortress Investment Group <www.bizjournals.com\/profile\/company\/org_ch_228c25e4d92e3ea228f5625e45c9c04d<\/a>>, was in the advanced stages of due diligence. At the time, the younger Peebles said the financier pulled out because it wasn\u2019t on board with a union deal for hotel workers.<\/p>\n

The D.C. Council had no choice but to extend the deadline for closing the deal until April 1.
\n\u201cThis corner has a long and storied history of inaction,\u201d said Councilman Charles Allen, D-Ward 6, at the time. \u201cWe\u2019re all on the same page. I\u2019m agreeing to the 90-day extension, but in my mind, that\u2019s it.\u201d
\nCBE woes<\/p>\n

As the April 1 closing date neared, Peebles said it had lined up financing, though it declined to publicly disclose the partner and fully expected to make the April 1 deadline. What was apparently still at issue was its operating agreement with its certified business enterprise partner, Walker Group. CBE partners are required by D.C. law on projects involving the city to boost opportunities for minority, small and disadvantaged businesses.<\/p>\n

Although Walker was identified as the CBE partner when the city announced that the Peebles team had won the solicitation, Walker accused Peebles of trying to replace it in January.
\nThe deal with the city required Walker to earn 20 percent of the developer fees and hold a 20 percent stake in the developer entity. The CBE agreement required Walker to contribute financially to the $155 million project in addition to its sweat equity. Walker\u2019s contribution would have been at least $2 million.<\/p>\n

An attorney for Walker said in D.C. Superior Court on March 27 that Principal Skip Walker <www.bizjournals.com\/washington\/search\/results?q=Skip%20Walker<\/a>> had mortgaged his house and lined up investments from professional athletes to cover his share. One of those athletes was local NFL player Vernon Davis, according to sports agent Kal Ross.<\/p>\n

Peebles said it requested to replace Walker Group with another CBE, one owned by the younger Peebles and registered with the city as a CBE in 2018, because Walker was unable to perform. Walker said it was never notified of any issues with its performance.<\/p>\n

An email to DMPED from Peebles\u2019 attorney, Debra Yogodzinski of Rogers Yogodzinski LLP, suggests that the two were in good standing as recently as Aug. 3, when she wrote that Walker \u201chas been substantively involved in all aspects of the Project since its inception.\u201d<\/p>\n

District officials, meanwhile, indicate they heard nothing of the dispute between Peebles and Walker until the closing was imminent. Peebles says the city was notified by February that the company wanted to switch out the CBE partner.
\nTension mounts<\/p>\n

Deputy Mayor Brian Kenner <www.bizjournals.com\/washington\/search\/results?q=Brian%20Kenner<\/a>> has been largely mum since the Fifth and Eye project started to implode in mid-March. After Walker sued Peebles and the city March 19, Kenner said only that his office was \u201cdisappointed that this matter had come to a lawsuit.\u201d Privately, he was trying to bring the parties together to resolve the issues and make the closing happen \u2014 to no avail.<\/p>\n

After Peebles terminated the contract March 25, Kenner declined to comment because the District was also named a defendant in the Walker suit, saying only: \u201cThe District has completed all requirements to go to closing..\u201d The city has since been dropped from the suit.<\/p>\n

But the emails obtained through the Freedom of Information Act show DMPED getting increasingly frustrated with Peebles during the past year as they worked to close the deal \u2014 first by September, then by December.<\/p>\n

After requesting updates on multiple items needed to close, Sarosh Olpadwala <www.bizjournals.com\/washington\/search\/results?q=Sarosh%20Olpadwala<\/a>>, DMPED\u2019s director of real estate, wrote to Peebles in August: \u201cI encourage you to share DMPED\u2019s sense of urgency and responsibility in completing the items necessary to start your project. This is your project, literally, you are the developer. You, not DMPED, should be the taskmaster.\u201d<\/p>\n

Two days later, after Peebles III responded that certain permits had not yet been applied for, Olpadwala fired back in a missive time-stamped 3:25 a.m.<\/p>\n

\u201cIt is like pulling teeth getting any information of value here,\u201d he wrote. \u201cThis is ridiculous. I\u2019m not asking because I got nothing else to do at 3 a.m. than check-in on you. I am asking because this stuff is not getting done without us involved. Believe you me, I wish that were not the case.\u201d<\/p>\n

In response, Peebles argued this week that DMPED also caused delays, saying the city took months to respond to its redraft of the land disposition and development agreement, which it sent in January 2018. Emails show Peebles\u2019 attorney followed up to see where the draft stood multiple times in the spring of 2018. The agreement was not finalized until October.<\/p>\n

\u201cWe didn\u2019t receive a response on that agreement until June,\u201d said Peebles III. \u201cWith that delay, we were significantly behind the eight ball with a number of the deliverables as it related to financing and closing of the project, because they were predicated on execution of the LDDA.\u201d<\/p>\n

Peebles also told DMPED in August that it planned to designate an unrelated nonprofit as the managing partner of the LLC slated to build the affordable units at 17 Mississippi Ave. SE. Olpadwala said Peebles itself had to build the affordable development units, or ADUs.<\/p>\n

\u201cPeebles cannot transfer the responsibility to complete the remaining ADUs to another entity,\u201d Olpadwala wrote. \u201cThe obligation to provide the remaining ADUs is a commitment from Peebles to the District, it is non-transferable.\u201d<\/p>\n

The parties also disagreed in 2017 over how much penalty Peebles would pay if it did not build the affordable units in Ward 8; DMPED proposed $500,000 per unbuilt unit, while Peebles requested $150,000 to $200,000 per unit. They ultimately settled on $200,000 per unit.<\/p>\n

The sides also went back and forth on Peebles\u2019 promise to spend up to $5 million to renovate Milian Park and Seaton Park in the Mount Vernon Triangle neighborhood. Peebles asked for the renovation of the parks to be removed as a condition of the city finding Peebles had met all the requirements put forth in the land disposition agreement. The District agreed.<\/p>\n

The new agreement specified no timing or required total monetary investment in the parks if Peebles did the renovation project itself. If the developer asked a third party to oversee the renovation of the parks, Peebles was required to provide $1.25 million to that entity, half of it before a certificate of occupancy for the hotel was issued and the remainder one year after the CO.
\nCursed?
\nPeebles is the second developer picked to remake the property at 901 Fifth St. NW in the past decade. Donohoe Cos., which won the initial competition in 2008, couldn\u2019t bring the project to fruition in the wake of the financial crisis.<\/p>\n

Bethesda-based Donohoe won the initial bid with promises of a Melia Hotel and a jazz lounge and restaurant from Boisdale, a London chain. The project, designed by Shalom Baranes, also included multifamily and a food market and was expected to span the entire east side of Fifth between Eye and K, with Donohoe promising to acquire neighboring parcels.<\/p>\n

Donohoe reduced expectations in 2011, limiting the scope of the project to just the city parcel and two small ones next door. The vision included two hotels for a total of 350 rooms. Gone was the Melia brand. The retail plan was unclear.<\/p>\n

But the project stagnated, with no word on progress for nearly two years. DMPED also kept quiet until one day in April 2013, when it issued the RFP that led to Peebles\u2019 involvement and the proposed SLS hotel.<\/p>\n

\u201cAt this point, I\u2019m less concerned about who did or didn\u2019t do what, who is or is not to blame, and more focused on seeing that site be put into productive use as quickly as possible,\u201d said Kenyattah Robinson <www.bizjournals.com\/washington\/search\/results?q=Kenyattah%20Robinson<\/a>>, CEO of the Mount Vernon Triangle Community Improvement District.<\/p>\n

\u201cIt\u2019s a key gateway into our community. I\u2019m not so sure that the next concept necessarily needs to be the site\u2019s highest and best use. I mean it would be great if the two goals correlated. But it\u2019s not like we need a catalyst anymore.\u201d<\/p>\n

Austin, the resident who bought her condo in 2006 with high hopes for Mount Vernon Triangle, would like to see the city choose the preferred option of the Advisory Neighborhood Commission \u2014 which it didn\u2019t do with the Peebles selection.
\nTo Austin, it is starting to feel like the property is cursed.
\n\u201cWe keep seeing other city projects land and actually happen,\u201d she said. \u201cSo what\u2019s the problem with this particular thing?\u201d
\nBy Rebecca Cooper <www.bizjournals.com\/washington\/bio\/15671\/Rebecca+Cooper<\/a>> \u2013 Senior Staff Reporter, Washington Business Journal
\nApr 4, 2019, 10:09am EDT<\/p>\n","protected":false},"excerpt":{"rendered":"

This was originally posted to the Adams Morgan Listserv on April 4, 2019, as message #50844, groups.yahoo.com\/neo\/groups\/AdamsMorgan\/conversations\/messages\/50844 The article below presents DMPED’s Fifth and Eye project almost as an exception to the rule when it comes to major development in this, but it is more the norm. You could almost replace Fifth & Eye, with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-357","post","type-post","status-publish","format-standard","hentry","category-housingarchive"],"_links":{"self":[{"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/posts\/357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/comments?post=357"}],"version-history":[{"count":0,"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/posts\/357\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/media?parent=357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/categories?post=357"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.dcfeedback.com\/archives\/wp-json\/wp\/v2\/tags?post=357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}