D.C. Mayor Vincent C. Gray (D) and Council Chairman Kwame R. Brown (D), the city’s top two elected officials, have added provisions worth millions in economic development assistance to Ward 7 — their home ward — in the city budget the council passed Tuesday.
Brown added provisions that earmarked $6.5 million in development financing for the ward, including an $800,000 grant to the developer of an affordable-housing project already underway.
Brown said he was following through on a commitment to bring amenities to neighborhoods east of the Anacostia River. “This is a priority. I made it a priority, and that’s why you see it in the budget,” Brown said. A second, final vote on the budget by the council is expected June 5.
Gray proposed language that would allow his administration to deliver grants to the long-stalled Skyland development, at Alabama Avenue and Good Hope Road SE, not far from Gray’s Ward 7 home.
The legislation does not specify how much could go to Skyland as the city moves to wrap up long-standing eminent domain litigation concerning the site. Jose Sousa, a spokesman for the city’s economic development office, said the money could be used to relocate current tenants and prepare the land for development.
Plans include 325,000 square feet of retail space and 468 units of mixed-income housing. After a full-court lobbying press, Gray won an informal commitment from Wal-Mart to put a store there.
Brown’s proposals include $5 million in subsidies to bring shopping to the portion of Pennsylvania Avenue SE between the river and the District line — a corridor that passes through affluent residential neighborhoods but has long suffered from a dearth of commerce. Also, a $700,000 grant would finance “interior tenant improvement assistance” for a sit-down restaurant at the Penn Branch shopping center, at Pennsylvania and Branch avenues SE.
Less specific is language authorizing a $800,000 grant for “a mixed use development located in Ward 7 including 100% affordable housing units supporting former Lincoln Heights residents.” Brown confirmed that the development is The Nannie Helen at 4800, a 70-unit project on city land on Nannie Helen Burroughs Avenue NE.
When the project broke ground in February, officials touted city subsidies of $6.4 million toward expected construction costs of $19 million. Foundation work is underway.
Anthony Wash, who won a competitive bidding process to build affordable housing there, said he considers the grant a “reimbursement” for using his own resources to cover a $1 million-plus gap in the construction financing.
Wash said it is “unheard of” for a developer to put up that kind of equity in an all-affordable housing project. In a neighborhood that is one of the city’s poorest, he said, “it takes an enormous amount of subsidy in order to get things done.”
Brown defended the grant, noting that it was “really pennies” compared with city help for projects downtown and in other up-and-coming neighborhoods.
“This is an area of the city that’s been forgotten for 30 years,” he said, noting that the council had previously moved to give additional help to developers whose plans were well underway. In 2011, for instance, it approved extending a tax abatement on a 185-unit apartment building on 14th Street NW, costing the city nearly $10 million. The building was sold months later for $104 million.
Wash, who also owns an electrical contracting firm, said he’s “still suffering from the consequences” of covering the financing gap. “We tapped all our lines of credit. We’re kind of crippled right now,” he said. “Usually we go after $2 to $3 million projects. We can’t go after those projects right now. We’ve had to lay people off.”
The owners of the Penn Branch shopping center, ICG Properties, have planned a remake of the property since buying it in 2005 and say they are nearly ready to begin work.
ICG principal Stylianos C. Christofides said the firm applied May 1 for construction permits to overhaul the center’s 1960s-era facade, redesign the parking lots, replace escalators, and build a restaurant and a coffee shop.
Christofides said that he hadn’t asked Brown for a grant but that the money would broaden the pool of restaurant operators willing to consider the site. “It all comes down to financial terms, and this grant makes it much more palatable,” he said.
ICG has experience with top-shelf restaurants, having leased space at 16th and K streets downtown to P.J. Clarke’s. Penn Branch isn’t two blocks from the White House, but nearly 50,000 cars pass the site daily — an important metric for retailers — and the median household income in the area hovers at $75,000.
At Brown’s request, the owners of Ben’s Chili Bowl toured the site, and Christofides hopes there will be interest at a Las Vegas convention next week — where Brown and Gray are also heading to drum up interest in city projects.
“Everything is coming together,” Christofides said. “And everything the council and the mayor’s office has done to support the project we appreciate very much.”