Plans Include Spa, Thousands of Homes
By Nancy Trejos and Michael S. Rosenwald
Washington Post Staff Writers
Wednesday, April 26, 2006
Two major Montgomery County developments moved closer to reality yesterday: One would bring luxury living and a high-end spa to North Bethesda and the other, thousands of new homes and businesses to Gaithersburg.
In North Bethesda, a Virginia developer finalized a once-tenuous deal to build the country's second Canyon Ranch Living community. Residents of 434 condominiums there will pay between $900,000 and $5 million to live at a spa with on-site nutritionists and access to top doctors.
Separately, the Montgomery County Council cleared the way for a more traditional mixed-use development that could bring as many as 2,250 homes and 320,000 square feet of offices and shops to Gaithersburg. After hours of heated debate, the council voted 7 to 2 yesterday to give the city permission to annex one of central Montgomery's last few pieces of undeveloped land --the 182-acre Crown Farm -- so a local businessman can build a pedestrian-friendly residential and commercial complex.
Although they have little in common, both projects will leave significant imprints in a county with limited space and a growing population now estimated at 900,000 people. One-third of the county, mostly the northern tier, has been reserved for open space and farmland, leaving little land for development in southern and central Montgomery.
County officials and developers hailed the North Bethesda and Gaithersburg projects as vital to the county's economic development.
"These projects indicate our ability to provide housing options while assuring that schools and transportation infrastructure are built," said council member Steven A. Silverman (D-At Large).
The two deals have faced many hurdles.
The Penrose Group of Tysons Corner, which is developing the North Bethesda project, secured a partnership deal with Canyon Ranch, which calls for the spa company to receive an upfront payment and ongoing management fees to run the development. But the land -- 53 acres at Interstate 270 and Old Georgetown Road -- belongs to the Camalier family, which developed the Rock Spring office park in Bethesda, home to Marriott International.
In July, Canyon Ranch officials told The Post that a deal between Penrose and the Camaliers was near and that they were hopeful it would be closed soon. And then nothing happened.
Months went by without the deal being finalized. What happened, according to a well-placed real estate industry source, is that the deal fell apart. Both sides recently came back to the negotiating table and agreed on a deal. The financial terms were not disclosed.
Inspired by the healthy lifestyle and ritzy offerings of the renowned Canyon Ranch Spas in Arizona and Massachusetts, the $1 billion Canyon Ranch project in North Bethesda will be one of the most unusual in the region.
It will feature two 20-story towers of 434 condominiums, 157 hotel rooms, 87 luxury rental apartments and a 90,000-square-foot wellness center.
Residents and hotel guests will be able to dine at gourmet cafes and design diets with on-site nutritionists.
"Washington, D.C., has become a very affluent market, a real international city," said Kevin Kelly, the president of Canyon Ranch, which opened its first Living community in Miami Beach, Fla., last year. "We like the market, and it's a perfect place for us to be."
At a time when the real estate market is softening, the idea is to persuade some of the region's wealthiest residents to move out of their homes and into a spa that only residents and hotel guests can use. Penrose Group and Canyon Ranch executives said they believe that residents who can afford to spend a million dollars on a home are less likely to be sensitive to a softening real estate market.
The Canyon Ranch Living development will be the anchor of a much larger development on the 53 acres, to be called Rock Spring Centre. Penrose also plans to build 600,000 square feet of top-scale office space, 426 rental apartments and 350,000 square feet of upscale retail outlets and restaurants that will be open to the public.
Penrose officials have cleared most zoning and county development review hurdles.
The Gaithersburg project, meanwhile, has one more to go: It must be approved by the mayor and City Council.
Some residents have opposed the project, saying it would bring school crowding and too much traffic. Located east of Sam Eig Highway, south of Fields Road and west of Omega Drive, Crown Farm's barns and vast fields of grass stand out in what has become a highly developed area with apartment buildings and chain stores.
"As much as we would like to see the farm remain a farm, the reality is that this land is going to be developed in some way," Mayor Sidney A. Katz said.
Yesterday, the County Council agreed to let Gaithersburg annex the farm on the condition that businessman Aris Mardirossian agreed to set aside 12.5 percent of the units as moderately priced homes for lower-income residents and donate $2 million to the county's agricultural preservation program. In exchange, Mardirossian and his partners, who include builder KB Home of Los Angeles, could build as many as 320,000 square feet of offices and retail along with condos, townhouses, single-family homes and high-rises, some as tall as 20 stories.
County Council members Marilyn Praisner (D-Eastern County) and Phil Andrews (D-Gaithersburg-Rockville) said the council had not taken enough time to consider the proposal.
"I think it just moved too fast," Andrews said. "Unlike a bill or piece of legislation that can be reversed, this is a permanent change that will have a permanent effect on the community."
One major point of contention was whether Mardirossian would be forced to buy transferable development rights. The county carved out an agricultural reserve 25 years ago, setting some of the most stringent zoning requirements in the region. To make up for limiting their ability to build on their land, property owners in the reserve were given transferable development rights. They can sell those to developers, who can then use them to build in certain "receiving areas" outside of the reserve.
County officials said that under most circumstances, Mardirossian would have to buy as many as 94 of the rights, which fluctuate in price according to the market but hover around $40,000. A council committee that reviewed the proposal first recommended that Mardirossian put $1 million into the county's agricultural easement program in lieu of buying the rights because Mardirossian was offering to donate 34 acres for a new high school. Yesterday, it doubled that figure.
"I think we've laid out the parameters for a reasonable approach to the annexation," said County Council Member Michael Knapp (D-Upcounty).
Mardirossian said yesterday that he was pleased with the outcome and hoped city officials would give final approval.
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