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Politics, Rocky Start Cloud Promise of National Harbor

By Ovetta Wiggins and Avis Thomas-Lester
Washington Post Staff Writers
Sunday, April 20, 2008

Prince George's County is about to lay claim to one of the biggest development projects ever to hit the Washington region: 300 acres of residential, retail, dining, office and entertainment space on the banks of the Potomac River.

The $4 billion National Harbor is poised not only to transform Prince George's image but also to become an economic engine projected to create more than 5,000 jobs and $130 million in tax revenue each year for the county and state.

"We have been on the back burner for such a long time," said Hubert "Petey" Greene, president of the county's Black Chamber of Commerce. "Now, we have not only stepped up, we've moved ahead."

Yet as the highly anticipated development begins to open, early stumbles and political quarrels threaten to cloud its success and the county's reputation.

Gaylord National Resort and Convention Center, the cornerstone of National Harbor in Oxon Hill, opened this month to a public relations nightmare -- some hotel guests contracted norovirus and others found mice in their rooms.

More troublesome than those glitches were the glimpses of the county's political culture that emerged. The same week that Gaylord opened, some political leaders accused National Harbor developer Milton V. Peterson of making racially insensitive remarks. The next week, Peterson was forced to withdraw legislation that would have provided liquor licenses for the entire complex after Prince George's lawmakers criticized the lack of local minority-owned businesses involved in the construction of the project. Restaurants and hotels will now have to seek licenses from the county liquor board.

"We don't want to gain a reputation as being anti-business," said Del. Joanne C. Benson (D-Prince George's), expressing concern about fallout from the legislative flap. "You don't wait until the ninth hour to make demands. . . . It's somewhat of an embarrassment to Prince George's County."

The project's debut, coming amid the slowing economy, has some analysts worried. Others question whether local residents, particularly Prince Georgians, will embrace the development.

Peterson, the gregarious Northern Virginia developer behind Fair Lakes in Fairfax and the revitalization of downtown Silver Spring, allows no doubt. He has said that nothing compares to National Harbor.

"If I had to say what personality it has, I'd say it's got the appeal of Marilyn Monroe and the grace and class of Julie Andrews," Peterson told a crowd of real estate agents in 2004.

'Win, Win, Win' for Whom?

Before it was National Harbor, it was PortAmerica, and before that, it was Bay of Americas and Smoot Bay.

For years, developers and county officials agreed to develop the site, only to be thwarted by financing problems and disagreements over what the project should be.

Then, 10 years ago, Steven Peterson drove his father, Milton, to the vacant site. The Peterson Cos. had only one other project in Prince George's, Rivertowne Commons, a strip mall also in Oxon Hill. The elder Peterson liked the site and set about developing it. It wasn't easy.

Peterson experienced a string of starts and stops before striking deals with then-County Executive Wayne K. Curry (D) and later his successor, Jack B. Johnson (D), which allowed the project to go forward.

To make it happen, Johnson and the County Council agreed to make National Harbor a special tax district and issue $160 million in bonds to pay for infrastructure. They also approved a $50 million bond package for a 500-room expansion at Gaylord.

In December 2004, the company broke ground on National Harbor. "Ce-le-brate good times. Come on! Let's celebrate," Peterson sang into a microphone.

Johnson was exuberant, too.

"This will not only change the way people see Prince George's County, it will also change the way people who live in Prince George's County feel about Prince George's," he told the crowd. "For many years, people did not focus on investing in Prince George's County. There was talk about whether this was the right place [to do business], and all of that has changed."

When it is finished in 10 years, National Harbor will be twice the size of downtown Silver Spring and have a bigger footprint than Minnesota's Mall of America, the country's largest shopping center.

Stephanie Rawlings-Blake, president of the Baltimore City Council, said Baltimore experienced a similar phenomenon when it developed its Inner Harbor, turning a rundown waterfront site into a tourism and retail magnet.

"It's hard to envision today a Baltimore that does not have a strong Inner Harbor," Rawlings-Blake said. "The Inner Harbor is basically the origin of all that many know of Baltimore."

Kwasi Holman, president of the county's Economic Development Corp., said he is seeing benefits from National Harbor.

"I'm hearing from companies from Virginia and Montgomery County that had not seriously considered a location in Prince George's until National Harbor," he said. "These are people who only came to Prince George's to take their kids to Six Flags, to see the Redskins or to see the Terps at University of Maryland."

Judy Banks, a Mitchellville resident, concurs. "The county will definitely benefit from the restaurant taxes, the real estate taxes and the commercial taxes the vendors will pay," she said.

Alexandria Mayor William D. Euille (D) has described National Harbor as a "win, win, win for everyone." Water taxis will take some of the development's visitors across the river to his city, and trolleys will carry them around Alexandria.

It's unclear how much the economic downturn and slowed housing market will affect the project. Two restaurants that had signed letters of intent have decided not to come. But the first building of condominiums, which will open this fall, has sold out.

"Big projects like this follow different economic circles," said David W. Edgerley, secretary of the state Department of Business and Economic Development. "One blip in the economy shouldn't cause too much heartburn for this project and others."

Still, some Prince George's residents say they are skeptical. Despite the county's reputation as the wealthiest black jurisdiction in the country, some say they wonder how many county residents will pay $299 a night for a room at Gaylord or $45 for a rib-eye steak dinner at one of the hotel's restaurants.

Critics of National Harbor also express misgivings about the man behind the project. They say Milton Peterson failed to share the wealth with the county's local minority businesses community -- he used local or minority contractors for about 36 percent of the construction work, but few were from Prince George's.

Their concerns were heightened by statements Peterson made to the media. In a report in the Gazette last month, he said: "People in Prince George's are always saying, 'We don't got no classy restaurants. Well, you do now, sweetheart.' "

"It was like a slap in the face," said Linda Smith, a real estate agent who lives in Temple Hills. "We are already stigmatized over here, and that comment gave the impression that there is no intelligent life here."

Peterson declined to be interviewed. He has said he hopes that Prince Georgians will accept National Harbor as their own.

Other political leaders say that he is less to blame than county leaders who agreed to the deal.

Maryland Senate President Thomas V. Mike Miller Jr., a Democrat representing parts of Prince George's and Calvert counties, said he worries that the blame game and other politics will hinder the development.

National Harbor "can be successful if it's allowed to come to fruition," Miller said. "I'm concerned about the roadblocks that have been put up."

Bobby Henry, a lawyer and resident of Woodmore, an upscale neighborhood in Mitchellville, said he thinks some of his neighbors will accept the project, but he said the development was never meant to be solely a local attraction.

"This is probably the nicest convention facility on the East Coast, and by definition that will mean it will draw from outside the county, and that's okay," he said. "We couldn't sustain a project like National Harbor, but the residential and office components were built for the county. Those are the things that will benefit the residents most."

An Investment in Passion

The development appears like a city rising from the ground, tied together by its main thoroughfare, American Way. There are 7.3 million square feet of property, which will include 4,000 hotel rooms, 2,500 homes, 500,000 square feet of office space, 1 million square feet of retail, dining and entertainment space, and 10,000 parking spaces.

Lonnie Moore and Mike Malin, owners of a Los Angeles-based restaurant group, were among the first restaurant representatives to sign on to National Harbor. Peterson had eaten at one of their establishments and liked the food so much he invited them to be part of his project. The two men had never done business east of Atlanta and were unsure of Peterson's vision.

Determined, Peterson sent a private jet to California to pick up Moore and Malin and fly them to Washington to show them the project. "We just fell in love with it," Malin said.

Moore said it was Peterson's passion that persuaded them to open two restaurants at National Harbor, Dolce and Ketchup. "We saw the passion in [Peterson's] eyes," Moore said. "We knew we'd be investing in the project and the passion."

Tammy Press, who lives in Fort Washington about five miles from National Harbor, said her community initially had trouble with Peterson's vision. Residents, particularly older ones, worried about traffic, noise and other quality-of-life issues. Now, with Peterson's little city in the background, concerns have eased, she said.

"I have a neighbor who lives on the water, and he is so excited that he will be able to hop in his boat and go over to National Harbor," Press said.

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