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The Deal That Sealed National Harbor
Partnership Between Developer, Pr. George's Leader Brought Project to Life

By Jackie Spinner
Washington Post Staff Writer
Friday, April 25, 2008

The deal that led to the making of National Harbor happened not over a handshake, but a stare.

As Wayne K. Curry recalled, there were two men in the room, he and Milton V. Peterson. They were the perfect pair: Curry, a flamboyant lawyer and the first black elected county executive in Prince George's County, and Peterson, an ambitious Northern Virginia developer.

During that meeting in the early 1990s, Curry and Peterson were discussing public financing for National Harbor when they got into a verbal battle. They sent their aides out of the room and then just stared at each other.

"The development definitely stopped for a minute while we looked at each other," Curry said recently over lunch. In the end, Curry threw his support behind Peterson's project. The men reached an understanding: If the project was going to be built, it would take a partnership, a little give and take.

Today, as Peterson and county officials -- although not Curry -- will celebrate the grand opening of the first phase of the $4 billion National Harbor in Oxon Hill, it's clear that the public-private partnership was key to developing a prime piece of real estate that had languished for decades.

"The story can only be told if you talk about the public investment put on the table," said Jeffrey A. Finkle, president and chief executive of the Washington-based International Economic Development Council.

The county offered key concessions under Curry and his successor, Jack B. Johnson, issuing $160 million in bonds for roads and sewers and allowing for a less rigorous review process to speed things along. Peterson invested $380 million and borrowed $450 million for the project. He also agreed to use minority or local contractors for a large share of the construction work.

"Certainly, the private-public partnership was pretty crucial," said Chris Hanessian, chief operating officer for the mixed-use University Town Center in Hyattsville. "Even more crucial was [Peterson's] deep pockets. He had a lot of money, and patient money. And times have changed in Prince George's over the last five years. It has become economically feasible to build a project like this."

The Right Time, People and Place

The evolution of National Harbor is as much about timing and Peterson's passion for the project as it as about the partnership between his Fairfax-based company and Prince George's.

"We're putting something fabulous on the river that says it's special," Peterson told The Washington Post last year. "It's going to be POW! It's going to be explosive! We're going to change Washington."

Before Peterson, other developers had grand visions for the 300-acre site. The land has water access and is near Washington and Old Town Alexandria.

The history of the site, once an Indian burial ground, made the land even richer. About 300 years ago, it was part of a huge land grant from Lord Baltimore, the founder of Maryland, to John Addison, an early settler and head of a prominent family that built large homes on the site known as Oxon Hill.

In contemporary times, a local construction company mined the land for gravel. Developers envisioned a military museum, a 52-story tower, a virtual arcade in buildings designed like the Parthenon and a seaside-type resort.

But nothing happened as the years went by, with politicians and bureaucrats failing to sign on to the bold ventures that would require public money and a strong economy. The timing was never right -- until now.

Peterson declined to comment for this report. He has sought to play down recent disputes between him and the county in advance of the years of development that lie ahead.

But interviews with local officials and others show that Peterson was able to avoid some of the roadblocks his predecessors experienced by making deals with the county.

The partnership got going in 2004, when Peterson entered a 10-year agreement with Prince George's over county bonds. Peterson agreed to spend $350,000 a year to help community groups. The county spent millions in bond money for roads and sewers to accommodate National Harbor, and Peterson is waiting for the County Council to approve $35 million in bonds to pay for aesthetic features. If the bonds are approved, the county would levy an additional 5 percent tax on hotels at National Harbor to pay off the bonds.

Getting residents and the politicians who represent them to go along with the project was ultimately the most significant achievement, which included resolving lawsuits brought by county residents and environmentalists who objected to the size of the development and the noise and traffic it could bring.

M.H. Jim Estepp, a former council member, said that when Peterson presented his plans for the project to the council, he knew Prince George's was about to get the "signature project" it needed to spur economic development.

But Estepp said opposition came from the very start and from every direction.

"There were people who thought it was too massive, people who didn't want to disturb the tranquility of the shoreline," he said. "And then there were even people from Northern Virginia who came over, complaining that we were going to be disturbing their view from across the Potomac."

To speed the project, Prince George's leaders put National Harbor on the fast track through the permitting process and helped persuade Congress to waive its environmental oversight. Federal officials also helped to secure a coveted interchange off the Capital Beltway and Interstate 295, which was added as part of the Woodrow Wilson Bridge construction.

The public-private agreement was a partnership that was carried out at the right time by the right people in the right place.

"The time was ripe," said Peter Morici, a business professor at the University of Maryland and former chief economist at the U.S. Trade Commission. "The time has been ripe for a long time."

Even so, Peterson and county officials have been tripped up by disagreements that led the developer to pull his request for a liquor license governing all restaurants and hotels. Recently, some county officials and residents accused Peterson of not hiring enough local and minority contractors for the project, although 36 percent of those he hired met that criteria, 6 percent more than the goal set by Curry in early negotiations. But few of the minority contractors were from Prince George's.

Peterson has complained of a dearth of local contractors in a county that is coming into its own.

Curry and Peterson are no longer close, and the former county executive will not attend the ribbon-cutting ceremony and black-tie gala today for the Gaylord National Resort and Convention Center, which opened this month.

Although the hotel twinkles with lights that shine on the Potomac at night, National Harbor is not a sure thing.

The economic downturn could slow Peterson's efforts to fill the retail and commercial spaces that will be built over the next decade.

"You have some buildings going up," said Finkle, with the International Economic Development Council. "You have some buildings completed. But it's too early to deem it a success."

Staff writer Ovetta Wiggins contributed to this report.

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