A Nov. 6 Washington Business article incorrectly said that JBG Cos. had entered into a real estate development venture with Phillips Seafood Restaurant and the Zanzibar nightclub. JBG is involved with Brookland Enterprises Inc. in developing a site in Southwest Washington on land occupied by Zanzibar.
Plans for Southwest Waterfront Hit Snag
Monday, November 6, 2006
The elaborate and much-heralded plans to redevelop 47 acres along the District's Southwest waterfront have run into a major hitch: ownership of the land.
The two quasi-public agencies involved in the project, the Anacostia Waterfront Corp. and the National Capital Revitalization Corp., are locked in a disagreement with the District over a deal to transfer the land. The project is also complicated by a competing developer's desire to play a more active role in the project, according to D.C. officials and the developer chosen to do the project.
In September, the Anacostia Waterfront Corp., which is charged with redeveloping the Southwest and Southeast waterfronts, chose a team led by District developer Monty Hoffman to revitalize the Southwest waterfront.
But the NCRC, which owns the 47 acres stretching from the 12th Street Bridge to Fort McNair, is now arguing with the D.C. Council about what it was promised in exchange for transferring the land to the Anacostia group.
Legislation to try to resolve the dispute so development can begin is scheduled to go to the D.C. Council's economic development committee today.
The NCRC says that two years ago the city promised it many incentives, including $25 million in cash, $25 million worth of small parcels of land along Georgia Avenue and other parts of the city, and 25 acres of the McMillan Reservoir near Michigan Avenue and North Capital Street, which it plans to redevelop, among other things.
Technical legal complications, however, stalled the deal, and this fall, D.C. Council member Sharon Ambrose introduced legislation that attempted to move the logjam. According to her offer, in exchange for transferring the land to the Anacostia group, the NCRC would get the McMillan Reservoir property only. The NCRC says it doesn't find her offer acceptable.
"We want to get fair compensation and make sure that the deal is closed with respect to the original legislation," said Anthony C. Freeman, the NCRC's president and chief executive.
The standoff is holding up design plans for the Southwest project. Hoffman and his lead partner, Struever Bros. Eccles & Rouse of Baltimore, intend to turn the land, which contains a hotel, nightclubs, a seafood restaurant and empty parking lots, into a 2-million-square-foot development of housing, shops, restaurants, offices and cultural attractions. Their $800 million plan includes constructing public piers, a waterfront promenade, parks and other maritime attractions.
To further complicate the project, developer JBG Cos. of Chevy Chase, which was among the 17 teams that applied to lead the redevelopment efforts, wants to be a part of the Southwest project, according to city officials.
JBG said it is one of the original partners in the Channel Inn and has entered into a venture with two additional stakeholders -- Phillips Seafood Restaurant and Zanzibar nightclub, giving it control of roughly half the development site. The nightclub, restaurant and hotel all have 99-year ground leases with the NCRC. JBG executives said the plan to redo the Southwest waterfront requires Hoffman and the Anacostia group to negotiate with the existing leaseholders.
D.C. officials and Hoffman said they will negotiate with the existing leaseholders but say there is room for only one master developer.
"This is about creating a place," said Hoffman, founder and chief executive of PN Hoffman. "It's not just about building buildings. To create a place you need one master developer team to conduct that. You can't just carve this up like pumpkin pie. The vision was to create a place and not just a series of independent buildings." JBG's wishes are holding up moving forward on designing plans for the land, according to D.C. officials.
Benjamin R. Jacobs, founder and managing partner of JBG, sees it another way.
"Mr. Hoffman has his view," Jacobs said. "I don't happen to agree with that. We've committed to our property being developed in accordance with the plan. The language [in the request for expressions of interest] requires that the existing leaseholders participate in the planning of the redevelopment and that the development be carried out on a basis mutually acceptable to the AWC, existing leaseholders and the master developer [or developers]. It contemplates that it can be more than one developer."
The Anacostia Waterfront Corp. has offered to pay the leaseholders $20 million to buy them out of their long-term leases. They say they have also offered the possibility for JBG and the current hotel owners to be involved as a partner in the development of one of the proposed new hotels, for Phillips Seafood Restaurant to move into a new space and create a white-tablecloth restaurant and for nightclub Zanzibar to open a jazz club in a smaller spot in the redevelopment project. Jacobs said the group has "made no such offer."
"We need to resolve this," said Adrian Washington, president and chief executive of the Anacostia group. "We want to build a great neighborhood. If we have one developer who wants to build one thing and another who wants to build another, we're going to have a bunch of buildings that don't fit together and it won't be a world-class waterfront."