In a blow to Prince George’s, Disney backs out of National Harbor


National Harbor already has six hotels and is anchored by the Gaylord National Resort and Convention Center, which has an 18-story glass atrium, 2,000 hotel rooms and 470,000 square feet of meeting space. (Dayna Smith/FOR THE WASHINGTON POST)
November 25, 2011

Walt Disney Co. announced Friday that it had canceled plans to build a 500-room resort hotel at National Harbor, dealing a blow to an ambitious project that is seen as an integral part of the economic future of Prince George’s County.

The Disney brand was expected to catapult National Harbor and Prince George’s to a higher class of national tourist destination. In the Washington region, the harbor is billed as one of the few places people can shop, see a show, host a large business conference and have plenty of affordable options to stay overnight within walking distance.

The loss hits home just as the development, majority-owned by the Peterson Cos., was recovering some positive buzz. It got off to a slow start in 2008, running immediately into a severe economic downturn.

“We are disappointed,” Jon Peterson, senior vice president of the Peterson Cos., said Friday. But he added that “there was always a little bit of uncertainty” over whether Disney would follow through after the company bought the land.

Prince George’s and the Peterson Cos. had ballyhooed Disney’s May 2009 purchase of 11 acres for $11 million as a validation of their vision for the 300-acre site.


The county, which borders the District on the east, is home to many prosperous African Americans and to the Washington Redskins’ FedEx Field. But unlike neighboring Montgomery County and Northern Virginia, it has struggled to draw the big-name national businesses that often contribute to robust tax bases.

That is why National Harbor, in southern Prince George’s, has become so important. If its 8 million square feet of residential, office, retail and hotel space are fully developed, the venture could generate $100 million or more a year in tax revenue, Peterson said.

But the harbor has had mixed success in persuading national retailers to open stores there and has faced some head winds in encouraging families to buy condominium units there. It is not readily accessible by Metro or by car from Northern Virginia and parts of Maryland. With only one-third of the development completed, about $2.2 billion has been spent.

County officials and the Peterson Cos. had staked a lot on the Disney project.

Chairman Milton V. Peterson, who has invested hundreds of millions on National Harbor, wooed Disney for several years and hosted Disney’s chief executive, Robert A. Iger, on a visit to the site.

Disney’s parcel sits on a rise at the top of a tree-lined promenade named American Way. It looks north toward the District and overlooks the National Harbor complex and the Potomac.

The Peterson Cos. is in discussions to repurchase the Disney parcel and reincorporate it into the developer’s long-term strategic plan for National Harbor.

Despite his disappointment at Disney’s pulling out, Peterson said, “We will take this in stride and move on to other opportunities. . . . We have the flexibility to change uses overnight.”

Emphasis on growth

County Executive Rushern L. Baker III (D) has made drawing businesses to Prince George’s his top priority in his first year in office. Baker successfully lobbied the County Council to create a $50 million Economic Development Incentive Fund for his administration to provide lucrative incentives to companies that consider relocating to or opening operations in Prince George’s.

Besides promoting National Harbor, Baker has tried to spur growth around the county’s 15 Metro stations, which have drawn far less development than some Metro stations elsewhere. But one of the most promising prospects fell through over the summer when a long-running effort by Prince George’s failed to lure the headquarters of the U.S. Department of Health and Human Services from Montgomery.

“We are very disappointed with this news,” Baker spokesman Scott Peterson said about the Disney decision. “We expect National Harbor to continue to grow as a regional and national convention and visitor destination. The Baker administration remains committed to aggressively pursuing economic development opportunities at National Harbor and throughout Prince George’s County.”

The county has had some good news of late.

Several stores and restaurants were expected to open before the end of the year at National Harbor, including the House of Jon Lei Atelier, a bridal and special event salon; Scented Organic Artisan Pure, a bath and body boutique; Nando’s Peri-Peri, a restaurant; Dandelion Patch, a stationery store; and ChiDogO’s, a hot-dog restaurant.

More stores and restaurants are scheduled to open at the harbor next year, including Wolfgang Puck Catering and Redeye Grill. By then, about 85 percent of the retail space at the complex will be occupied.

Peterson said National Harbor is breaking ground next year on a 388,000-square-foot Tanger Outlets center. Tanger Outlets is known for housing the likes of J. Crew, Cole Haan and Coach. The Peterson Cos. is also in a joint venture with the Bozzuto Group, a Maryland development company, to build the Esplanade, a 371-unit mixed-use apartment project.

National Harbor already has six hotels and is anchored by the Gaylord National Resort and Convention Center, which has an 18-story glass atrium, 2,000 hotel rooms and 470,000 square feet of meeting space.

Big changes

Disney, which has made significant changes since it bought the land more than two years ago, said National Harbor did not fit in with its current lineup of projects.

Since signing the agreement, Disney bought the global theme park rights to “Avatar,” the hugely successful motion picture directed by James Cameron. It also broke ground this year on its $4.4 billion Shanghai Disney Resort — making a big bet on the Chinese market.

“Given the full slate of expansion currently underway at Walt Disney Parks and Resorts, the timing isn’t right to proceed with another new project of this scale,” Disney spokeswoman Kristin Nolt Wingard said in a statement Friday.

This was not the first time Disney abandoned plans to bring its brand to the Washington region. In the 1990s, the company planned to build a history-themed park, called Disney’s America, on farmland near the Manassas Civil War battlefield. It scrapped the project after several months because of local opposition. Disney’s National Harbor project would not have included a theme park.

Jay Rasulo, former chairman of Walt Disney Parks and Resorts, who is now chief financial officer of Walt Disney Co., said in May 2009 that it was likely that his company would go ahead with the resort. But Rasulo was careful back then to say that the project wasn’t a sure thing.

He said Disney had to weigh “lots of factors in the coming months and the coming years” before deciding to break ground.

Staff writer Ovetta Wiggins contributed to this report.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade.
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