How a luxury housing project in Northeast D.C. turned into an expensive eyesore

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.”

(Gene Thorp and Tobey/The Washington Post/-) - The uncompleted Capitol Hill Oasis development.

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.