Gray asks council to approve D.C. United soccer stadium deal


File: Chris Korb #22 of D.C. United and Corey Ashe #26 of Houston Dynamo go after the ball during the first half at RFK Stadium on May 21, 2014 in Washington, D.C. Mayor Vincent Gray has sent a plan for a new D.C. United soccer stadium to the city council. (Rob Carr/Getty Images)

Mayor Vincent C. Gray on Friday asked the D.C. Council to approve a complex series of land deals that would allow the city to gain control of an expanse of land a few blocks from Nationals Park for a major league soccer stadium.

D.C. United would pay about $140 million for the construction of the stadium. D.C. taxpayers would fund about $120 million to buy the land on Buzzard Point and pay for improvements to the site. The deal announced Friday also includes $40 million in tax breaks to lower D.C. United’s cost of operating the stadium for the first decade.

In any year, the deal would stand as a defining achievement for a big-city mayor, but with about seven months remaining in a lame-duck term, persuading a majority of the council to support the plan could take every ounce of political capital that Gray (D) still has. It may not be enough.

District residents and the council still are torn over taxpayer subsidies for Nationals Park and Verizon Center. In addition, the soccer deal ultimately would allow private developers to convert the Frank D. Reeves Municipal Center, home to hundreds of city jobs, into luxury housing. That cuts to the core of concerns about the city’s growing economic disparity, and Muriel Bowser, who beat Gray in the race for the Democratic mayoral nomination, already has come out against it.

The developer Akridge owns land at Buzzard Point that the city needs to build the stadium. To persuade Akridge to sell that land, Gray agreed to sell the block-long Reeves Center at 14th and U streets NW for $55.6 million. That’s less than half of its most recent assessment and $17 million below a new estimate by the city’s independent chief financial officer.

City Administrator Allen Y. Lew said the price assumed the building, built in the 1980s as part of a U Street revitalization, would be demolished. The price is a measure of the land’s usable value, Lew said. Three appraisers — one from the city, one from Akridge and another chosen by the two — agreed on the price, officials said.

Gray’s team hopes the council will hold an initial vote in favor of the stadium plan and land deals before adjourning for summer recess in July. If that timeline slips at all, however, the stadium deal would come up for a first vote in the fall — in the thick of the mayoral race between two sitting council members: Bowser (D-Ward 4) and David A. Catania (I-At Large).

At the heart of the deal reached Friday, the District would agree to buy several properties on Buzzard Point in exchange for cash and property elsewhere. Before some final details of the deal were even committed to writing, Gray sent authorizing legislation to the council.

In a statement, Gray called the deal “a major step forward for economic development” in the city.

“The new soccer stadium will be the connector between developing areas around our baseball stadium and the new Wharf development along our Southwest Waterfront,” he said.

Lew, who previously oversaw construction of the Walter E. Washington Convention Center and Nationals Park, said that after countless of hours of negotiations, he got what he believed was the fairest deal for the city.

“We’re treating this as not just an economic development,” Lew said. “We’ll be taking in taxes from the old Reeves site that never paid taxes, and we’ll be able to generate more job opportunities and business opportunities there and elsewhere.”

As Gray and Lew see it, the stadium complex will boost revitalization in the area around Nationals Park and the South Capitol Street Bridge, which the city is rebuilding. In place of the Reeves Center, the U Street corridor will gain a major new mixed-use property, and the city employees now there will move to a new building in Anacostia that could generate spin-off development in an area with the city’s worst unemployment rate.

The deal values two acres of stadium land owned by Akridge at $21.1 million. The company would pay the balance of the $55.6 million price to acquire the Reeves site.

Lew agreed to a similar trade with Pepco, which also owns Buzzard Point land. Under a combination cash and land deal, Pepco would acquire a city-owned lot near the Walker-Jones Education Campus off North Capitol Street that is currently a community garden. The city would get a decommissioned Pepco facility on Buzzard Point.

The final part of the deal involved the acquisition of properties owned by businessman Mark Ein and owners of Super Salvage, an employee-owned, 62-year-old scrap yard.

Lew declined to disclose the terms of the deals for those properties, saying they were still being finalized.

Ein and Super Salvage President Steve Middelthon issued a statement saying, “We agreed to take a significant discount from the price of the property that was just sold across the street in order to get this stadium built if that is what the residents and taxpayers of Washington decide they want.”

Gray also requested approval from the council to use eminent domain, should it become necessary.

Most council members said they would wait to comment until they get the full details on Tuesday. Council member Jim Graham (D-Ward 1), however, immediately criticized the valuation of the Reeves Center as “ridiculous.”

“That’s not what properties go for on U Street,” he said.

For the current year, the city property is assessed at $128.5 million. The Office of the Chief Financial Officer estimated recently that the building was worth around $73 million, but a 2011 CFO report found it could be worth as much as $186 million.

Graham and Bowser also expressed concerns about the loss of municipal offices that are a symbol of the city’s role in the civil rights struggle. The Reeves Center was one of the first major new buildings built after the 1968 riots.

Graham said he feared a loss of hundreds of daytime employees and thousands of visitors to city offices there could make the area more of a bedroom neighborhood.

Bowser was highly critical of the land-swap during her successful bid for the Democratic nomination. She said she would rather see capital improvement dollars go to schools than to a soccer stadium.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.
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