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The state of Union Station

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When Nick Smith was a student at Gonzaga College High School in the District, the school allowed students to leave campus at lunch time to go elsewhere to eat. But even though the school’s campus, on Eye Street Northwest, was only a few blocks from Union Station, he rarely remembers going there.

“There just wasn’t much there,” he said. “There was no activity around the station really.”

That was 30 years ago, but for many Washingtonians, that perception remains.

Although interest in rail travel has soared during the past decade as hordes of young professionals returned to inner city neighborhoods, Union Station remains much as it did following renovations in the mid-1980s.

With its ownership and management sliced among more than a dozen federal and local government agencies, the Daniel Burnham-designed landmark remains an important transportation hub for the Northeast and Mid-Atlantic, but one where the growing crowds cram its dated corridors, concourses, stairwells and elevators. Though it is the second-most trafficked train station in the country, it still struggles to attract shoppers beyond those passing through on their way to another destination, whether via Amtrak, commuter rail, Metro, regional bus or taxi.

A new generation of plans — some under way, some still on the drawing board — would upgrade nearly every part of the station and maximize the building’s historic bones for both commuters and out-of-towners.

The plans are accompanied by hundreds of millions of dollars of real estate investment pouring into surrounding neighborhoods, with office towers rapidly climbing in the “NoMa” neighborhood north of Massachusetts Avenue, and H Street Northeast becoming a trendy late-night spot for the 20-something crowd. The District government plans to open a streetcar line that would run along H Street and connect to the station’s northern end.

Betting on the future

Today, Smith is chief investment officer for First Potomac Realty Trust, owner of more than $2 billion of commercial real estate. He and his company are betting big on the neighborhood he once wandered as a teenager.

Until a few years ago, Bethesda-based First Potomac focused on industrial and office properties in the area’s outer suburbs and exurbs, as far south as Virginia Beach. With the revitalization of urban areas, however, it quickly changed its focus, making 23 investments totaling $746.6 million in inner Washington area neighborhoods between 2009 and this past August, when First Potomac and a partner purchased the Greyhound bus station for $46.8 million. It now owns about $250 million worth of real estate within a few blocks of Union Station, including 440 and 500 First St. NW, and 840 First St. NE.

“The draw that we had initially to the neighborhood was the U.S. Capitol. Of course it’s a big employment driver over there,” Smith said. But as Smith and his colleagues looked more closely, they realized that companies looking for space in the area were focused on being close to transit.

“What we found when we were sniffing around, when we were doing more investigation on that neighborhood, is that Union Station is really the hub for all the activities there,” Smith said. “The tenants love it for all the amenities that it has.”

Doug Firstenberg, whose development company, StonebridgeCarras, is one of the biggest developers in NoMa, said that investors new to the area considered Union Station a fundamental strength that would add value regardless of other market conditions. He attracted the headquarters of the Justice Department and a Harris Teeter grocery store to his project, Constitution Square.

“I think for people who were cautious about our vision, I think what they were always thinking was worst case, we’ve always got Union Station,” he said.

Traffic at the station is booming. Amtrak reported 4.9 million boardings there in its 2011 fiscal year, up 6.1 percent from the previous year. The Metro station is the most popular in the system, with an average of 33,697 passenger boardings as of last June. Approximately 70,000 people now pass through every day.

Metro, intercity bus companies and the city, with its streetcar plans, are all working to improve frustrating passenger connections. Hanging over all the short-term changes is a master plan being drawn up by Amtrak for its holdings in the station and the tracks behind it, of which it does not plan to release details for at least a month. In the meantime the rail operator has begun making smaller improvements. It already installed 60 electronic signs showing train arrival and departure information and, in partnership with Union Station Redevelopment, plans a new $1.4 million public address system, a new $400,000 ticket counter and a new $120,000 customer service office.

Multiple stakeholders

Nearly any change at Union Station requires multiple signatures and approvals from either city or federal officials, and reaching consensus can be tricky.

Take Columbus Circle, the traffic plaza outside the station’s front door that is being rebuilt to improve security, better serve car traffic and improve accessibility under the Americans with Disabilities Act.

The Columbus Circle area has at least six stakeholders: Land immediately outside the circle is controlled by Architect of the Capitol, but the row of flag poles along its outer edge are controlled by the National Park Service. Massachusetts Avenue is under the purview of the city’s department of transportation, but the three traffic lanes directly in front of the station are controlled by the Transportation Department and leased to the Union Station Redevelopment Corp., which then subleased the rights to New York-based Ashkenazy Acquisition. Amtrak is contributing to the cost of the new security measures.

David S. Ball, president of Union Station Redevelopment, says the partners work in concert with one another. He points out that the organization, created by Congress in 1981 to preserve and revitalize the station, has board members from Amtrak, the city, the federal government and a private group, the Federal City Council. “As we go forward the next 100 years, we’ve got to make sure that this building that sits on the footstep of the U.S. Capitol, serves as the entry point for the U.S. Capitol,” he said.

Ball has been at the helm since 1994, but it has not been all smooth sailing. Ashkenazy bought the rights to the station’s retail near the peak of the real estate market, in 2007, only to watch as the D.C. Council passed legislation authorizing the city’s chief financial officer to tax privately leased space within federal facilities, adding a more than $1 million tax bill to its lease payments.

In 2010, Ball asked the council to forgo $33.5 million in payments through 2035, but the required legislation failed to win passage. Ball’s group subsequently filed suit against the city — which funded more than a quarter of the 1980s renovations and holds one of five seats on its board. In the meantime, the redevelopment corporation is not paying taxes and owed $6.6 million in taxes, interest and penalties for 2008-2010 period. Ball and Ashkenazy declined to discuss their tax debt or the lawsuit.

But questions about the stewardship of the station are likely to return with a coming audit by the Transportation Department’s Inspector General, required by federal legislation sponsored by the District’s delegate to Congress, Eleanor Holmes Norton (D). “Union Station needs more than an annual financial statement to assure Congress and the public that one of the nation’s most historic and productive facilities is up for the enormous challenges it now faces,” Norton said in a February statement.

Ball said he has not yet been contacted by the inspector general, but knows it’s coming. “Ms. Norton is my congresswoman. I am a resident of Washington, D.C. She has some very strong ideas about what the Union Station progress should be,” he said. “We’re very confident and comfortable with where we are.”

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