How a luxury housing project in Northeast D.C. turned into an expensive eyesore
By Paul Schwartzman,
The builders had a vision of outsize luxury in a Northeast Washington neighborhood known for modest homes: a row of 10 townhouses, each with four floors, five bedrooms and an elevator transporting their owners up and down.
It was 2005, the days of the dizzying housing boom, and the builders were sure that buyers would pay more than $1 million to live and work in a place they christened “Capitol Hill Oasis.”
Did it matter that the oasis was more than two miles east of the U.S. Capitol?
Did it matter that the townhouses were modular and trucked in from Pennsylvania?
Seven years later, the townhouses at 12th Street near Florida Avenue NE are vacant — those that have been completed, that is. The property otherwise is defined by boarded-up windows, a concrete foundation where the developers planned 16 condominiums, an ungainly mountain of rubble and a chain-link fence topped by coils of razor wire.
Estelle Chambliss’s eyes narrowed as she considered the view from her screen door, across the street from what she refers to as the “catastrophe.” She’s lost track of how long it has been since she saw a construction worker.
“Butt-ugly,” said the 68-year-old retired seamstress. “They should finish it or tear it down.”
What has transpired across from her home is an extreme version of what has occurred on a smattering of streets in recent years as the economy and sometimes more intangible factors have conspired to wreak havoc on developers.
Near Nationals Park, for example, a long-planned hotel remains nothing more than a foundation. Across the street, where another builder promised luxury living and dining, the empty lot has been turned into an outdoor market. On Florida Avenue NE, eight blocks from the Capitol Hill Oasis, a sign in a long-vacant lot reads: “Pretty Soon, You Won’t Recognize this Place . . . Promise.”
The developer of Capitol Hill Oasis, Gloria B. Herndon, said she and her husband conceived of their project as a way to “give back to our community.” They envisioned townhomes that could be used as residences or offices or both.
Before Capitol Hill Oasis, Herndon, a former State Department diplomat and insurance brokerage owner, and her husband, Brent, an engineer, had completed a similar project on 15th Street SE. The couple, who live in Rockville, also had renovated half a dozen homes in St. Louis, she said.
Capitol Hill Oasis failed, she said, because of events beyond their control, including a fire on a neighboring property that led to more than a year of construction delays. Their bank foreclosed on the property last year.
“We were trying to develop the area to make it a showpiece in that part of the District,” Herndon said.
Referring to the bank that foreclosed on the property, she said, “They have virtually stolen the project.” An African American, Herndon said she believes that “racism and sexism” drove the bank to foreclose.
Told of her comment, Boris Orcev, president of the Washington division of Premier Bank, said: “Oh, my God, they didn’t have the money. They didn’t have the know-how.
“They totally mismanaged the project. This was very poorly done,” he said. “I never wanted to take back the property. I just wanted the loan paid off.”
The bank, he said, has lost $8.5 million. Herndon’s insurance brokerage, GB Herndon & Associates, which owned the property, has filed for bankruptcy.
Anatomy of an eyesore
When they embarked on Capitol Hill Oasis, the Herndons were part of a wave of investors moving into the neighborhoods around the H Street NE corridor. Jim Abdo, the developer, sold luxury condos on H Street, including one to former D.C. mayor Anthony A. Williams. Joe Englert, the nightlife impresario, opened a string of bars that have helped make the street a late-night destination.
But the area had a history of crime, vestiges of which still percolated. Rayful Edmond III, a notorious drug dealer, used the neighborhood as his base until his arrest in 1989. In the summer of 2008, a spasm of violent crime in the neighborhood of Trinidad, across Florida Avenue from the Herndons’ development, prompted D.C. police to impose checkpoints.
By then, the Herndons had broken ground on Capitol Hill Oasis, having obtained a nearly $8 million construction loan from Adams National Bank. Four buyers placed deposits, Gloria Herndon said, including Noreen Wilson, who described herself during a brief telephone interview as the developer’s social acquaintance. Wilson, a consultant who was enmeshed in the scandal involving former congressman William J. Jefferson (D-La.), said she put down $50,000 for a townhouse, half of which she said she has gotten back.
“I was working in D.C. and spending a fortune on hotels, and I thought I was better off having a unit there,” Wilson explained. “The whole neighborhood was transitioning over. It was improving.”
But the project soon faltered. The developer’s first major setback, Herndon said, was when workers discovered two oil tanks buried underground. Then, while workers excavated the foundation for the condo building, the wall of a neighboring tire company collapsed. The owner of Jimmy’s Tire, founded in 1925, hired a contractor to repair the wall — work that resulted in a massive fire that destroyed the business.
As a result of the fire, Herndon said, and the debris that fell on their project, construction was delayed for more than a year, which forced the developers to seek a series of extensions on paying their construction loan. Meanwhile, the housing boom had ended and the national recession had begun.
The Herndons had yet to build the 16 condos. Eight of the 10 townhouses were up but drawing less-than-glowing reviews on real estate Web sites from neighborhood architecture critics.
“PAINFULLY UGLY,” one commenter wrote. “I hope the developers lose their shorts.”
“Truly bizarre,” wrote another.
Premier Bank, which took over the bank that had given the Herndons their loan, foreclosed on the property last year.
A new beginning
Every day, neighbors walk past, many wondering what has become of Capitol Hill Oasis. The billboard behind the chain-link fence still promises a “private elevator,” parking and “gourmet kitchens.” But the site is silent, except for the occasional sound of a rock crashing through a window, 10 of which are now boarded up.
“Look at what it’s done to the neighborhood,” Steve Robertson, 56, a D.C. Corrections officer who lives several blocks away, said one afternoon. “It’s going to sit there? They knock down whatever. They do whatever they want. What about the people who live around here?”
George Neurauter, a federal patent examiner who paid $600,000 last year for a rowhouse around the corner, has a perfect view of the pit and rubble whenever he steps through the French doors to his balcony. “It’s not something you want to go on the porch with a cup of coffee and look at,” he said.
Premier Bank, Orcev said, is obtaining building permits to finish the project. A new team of contractors, he said, will have to redo some of the work already completed because “the craftsmanship is terrible.” Their to-do list, he said, includes repairing leaking roofs and cracked walls and rebuilding the foundation for the condos because “it was not properly installed.”
The bank, he said, does not expect to make a profit.
“At this point,” he said, “we just want to recover what we can.” Once they get the construction permits, he said, “I can promise you it will be done in six months and people will be happy.”
Herndon, for her part, accused the bank of “trying to pass the buck.”
“We did everything we were supposed to do and everything we could do,” she said. “They tried to kill me, but I’m still alive.”
“I make money,” Herndon said. “Money doesn’t make me.”