Whole Foods deal for Southeast D.C. falls apart

D.C. developer William C. Smith & Co. says it is no longer seeking an $8 million tax abatement for development plans in Southeast Washington, likely defeating the company’s efforts to lure Whole Foods there.

Chris Smith, chief executive of the company, in February proposed building a 39,000-square-foot Whole Foods at 800 New Jersey Ave. SE as part of a building that would include 375 apartments. Smith said luring Whole Foods would require an $8 million tax abatement over 10 years to make the project financially viable.

Proponents had hoped the popular grocer might inject new life into a neighborhood where dozens of development plans have stalled after the recent economic collapse.

But in the two months since the announcement, no member of the D.C. Council submitted a bill requesting the abatement, and the company acknowledged last week that it had withdrawn its request for the project, located in the Capitol Riverfront neighborhood, near the Nationals ballpark. As the landowner, William C. Smith would have been the direct beneficiary of a tax break and would have used the savings to pay for improvements it said Whole Foods had requested.

“We are no longer seeking a tax abatement for that property,” said Carol Chatham, spokeswoman for William C. Smith.

A spokeswoman for Whole Foods Market, Defausha Hampton, issued a statement distancing the company from Smith’s plans. “Whole Foods Market was not involved in any tax break or lease agreement negotiations with William C. Smith & Co.,” she wrote. She said company representatives meet regularly with developers and that “many factors are considered for new sites as we want to ensure that we’ll be providing potential shoppers with great access to a quality shopping experience.”

The grocer could still open a store in Southeast. Sources familiar with discussions between the developer and the grocer, who spoke on the condition of anonymity because they were not authorized by the companies to discuss the proceedings, said that Whole Foods was irked at publicity of the negotiations but was fielding entreaties from other developers.

Michael Stevens, executive director of the Capitol Riverfront Business Improvement District, said The Washington Post’s coverage of the deal had damaged the chances of it happening. The neighborhood, which runs between the Southeast Freeway and the Anacostia River from South Capitol Street to 14th Street SE, has added hundreds of residents in recent years but doesn’t currently have a grocery store.

“I used to know that Whole Foods wanted to be in the neighborhood,” Stevens said. “After that article, I don’t know anymore.”

Other developers with land in the area could be in a position to capi­tal­ize on Whole Foods’ interest. Madison Marquette, for instance, a D.C.-based firm that specializes in retail development, purchased a former trolley barn known as the Blue Castle on Eighth Street SE in 2008. Since the purchase, the company has repositioned the building as the Navy Yard Car Barn at Barracks Row and marketed it to large retailers. Officials from the company did not return calls regarding Whole Foods.

Whether or not Whole Foods comes to the neighborhood, Capitol Riverfront has a grocer on the way via the Yards, a 42-acre project along the Anacostia River, south of the William C. Smith site, where developers from Forest City Washington say they plan to open a full-service grocery store.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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