Deal Would Swap Land for Hotel Site
Friday, January 27, 2006
Developer Kingdon Gould III agreed yesterday to a land swap that would clear the way for construction of a long-planned hotel next to the Washington Convention Center at Mt. Vernon Square.
D.C. and tourism officials have been eager to put a 1,500-room hotel -- which would be the District's largest -- at Massachusetts Avenue and 9th Street NW. But Gould, whose family built a fortune on real estate, refused in almost four years of negotiations to sell his land.
Yesterday, he signed a deal that would give the city control of the 1 1/2 acres -- most of which is now a parking lot -- in exchange for property of similar size on the site of the old convention center, barely two blocks away. A large mixed-use project is planned for that land. Details of the deal remain to be worked out and approved by the D.C. Council.
"I'm satisfied with the deal, and it's time to get this deal done," Gould said yesterday. "I think the city is really ready to build the hotel, so our choice is to be at loggerheads and tell them to go pound sand or work out something that's satisfactory to us, and I guess it's satisfactory to them."
The District had taken another important step toward putting together land for the hotel when it agreed in August to pay $30.5 million for a 90-year-old building and small lot abutting Gould's land, owned by the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry. But Gould's property was crucial to providing enough space to build the hotel and more meeting and ballroom space for the convention center.
"Before we wanted to put the hotel [on 9th Street], but we didn't have all of the pieces together," said D.C. developer Jim Abdo, who is on the convention center authority's board of directors and helped negotiate with Gould. "Now enough of the pieces have come together. That's a big step.
"It's been a long, tedious process," Abdo said of the negotiations. "But it feels good to have it in place."
Tourism officials had asked District Administrator Robert C. Bobb to help broker the deal with Gould, who is widely known as a tough negotiator. The tourism executives think they are losing millions of dollars worth of business because of the lack of a big hotel. Convention groups have told the city that they want one, large convention center hotel instead of spreading attendees among several hotels. At one point, some tourism officials urged city officials to threaten Gould with taking the property through eminent domain.
"This is an important step because Kingdon sits where the hotel is scheduled to be built," Bobb said yesterday. "We were able to work out an arrangement where we're trading one parcel for another. It clears one of the major hurdles for the real estate needs of building the hotel."
He said the negotiations were not easy.
"It was very difficult negotiations and there were many sticking points," Bobb said. He would not elaborate because the deal still must be approved by the D.C. Council.
The hotel financing also requires council approval.
The District had long planned to use publicly financed bonds to build the hotel. But after months of wrangling in the council over using public money to build a stadium for the Washington Nationals, there was little support for another large, publicly financed project such as the hotel.
Late last year, Marriott International Inc. of Bethesda and partner RLJ Development LLC, which is owned by Black Entertainment Television founder Robert L. Johnson, told the city that they were willing to pay about $350 million of the estimated $500 million cost of building the hotel.
The rest of the money for the hotel and the additional meeting and ballroom space for the convention center -- which would be built underneath the hotel -- is expected to come from tax-increment financing. That type of financing repays debt from the tax revenue that a project generates.
If approved, construction of the hotel would probably begin in 2007 and take several years.