D.C. mayor visiting China to tap investors
By Tim Craig,
D.C. Mayor Vincent C. Gray leaves Saturday for a week-long trip to China to try to secure billions of dollars for investment in city development projects, including potential financing of the proposed 37-mile streetcar network.
In his first overseas trip as mayor, Gray (D) is looking to build on what he sees as China’s growing interest in the nation’s capital, as that country’s wealthy investors look to park large amounts of money in U.S. real estate.
Gray, who will be accompanied by some of the District’s biggest names in construction, is counting on Chinese investment to accelerate the redevelopment of the Southwest Waterfront, McMillan Reservoir, the former Walter Reed Hospital campus, the O Street Market and the grounds of St. Elizabeths Hospital in Southeast Washington.
The trip, which includes the opening of the city’s first permanent overseas office, comes as Gray is in talks with Chinese financiers about funding the city’s planned $1.5 billion streetcar network.
“It’s where it’s happening,” Gray said of China. “What China has done internally for itself is pretty phenomenal. . . . And we are a tremendously low-risk investment.”
Gray’s trip comes at a delicate time for the District government, after Kwame R. Brown’s resignation as D.C. Council chairman and in the midst of a continuing federal investigation into the mayor’s 2010 campaign. In recent days, there has been speculation that Gray also could be forced to leave office early because of the federal probe.
But in an interview with The Washington Post on Friday, Gray said there is “no truth” to rumors that he might resign this summer.
“No truth to that, unless something’s going on in my head that I don’t know about,” Gray said. “I came to do certain things, and I am focused on those things.”
The District continues to add an estimated 1,000 residents per month and attract new investment, despite the controversy and scandal in the John A. Wilson Building. But shovel-ready residential and retail projects outstrip available domestic funding, causing developers and D.C. officials to look overseas for an infusion of cash and credit.
Last year, the sovereign wealth fund of Qatar invested more than $700 million to break ground on City Center DC, a downtown neighborhood being created on the site of the former D.C. Convention Center.
On Thursday, Gray toured the project with Qatari officials, including Ambassador Mohamed Bin Abdulla Al-Rumaihi. Gray said Qatari officials also expressed interest in financing a hotel on the site.
Gray said the District’s success in securing a cash deal for the City Center project has helped focus efforts to attract more investment from China, which is experiencing a boom in personal wealth.
“When Qatar decided to invest in City Center, that was really a wake-up call, not just to the District but to large-scale development teams looking to expand their scope in looking for equity,” said Jose Sousa, a spokesman for the deputy mayor for planning and economic development.
Administration officials note that China, unlike Qatar, does not have a state sovereign wealth fund. Instead, the District will try to persuade Chinese banks and individuals to invest more cash in the city.
Officials expect to announce next week that several Chinese entrepreneurs will be investing as much as $40 million in the second phase of the O Street Market, a 1 million-square-foot mixed-use retail and residential project in Shaw. In exchange, the 80 investors will receive EB-5 visas to move to the United States, officials said. Gray said he hopes to persuade more foreign business executives to take advantage of the federal immigration program by investing in the District.
“Worldwide, Washington, D.C., is seen as one of the premier investment locations,” said Richard Lake, a delegation member and president of Roadside Development, which is overseeing the O Street project. “A lot of money is in flight away from risk and looking for safe harbor, and Washington is pretty stable.”
But Gray’s planned meeting with officials from the Export-Import Bank of China could one day prove to have the most far-reaching consequences for the District.
In recent months, Gray and administration officials have had several meetings with officials from the bank in the District about possibly funding the streetcar system.
Gray said that the talks are preliminary but that he senses that the bank might be interested in funding all or part of the project in exchange for collecting ridership profits. Without foreign investment, Gray said, it would take two decades for the District to complete the project, because the city is nearing its debt cap.
“There are a lot of details that would have to be worked out,” Gray said. “But there is certainly interest in the streetcar system.”
When asked about a potential for congressional or public backlash about so much Chinese investment in the District, Gray said, “They are already heavily invested in America.”
“They are not heavily invested in the District of Columbia,” he said. “We are expanding our own horizons here and maybe moving some projects along more quickly.”