New Development Plan Near NE Metro Forgoes Luxury

Donatelli Development in recent years has constructed mostly luxury condominiums and apartments on sites overlooking Metro stations in Northwest Washington.

But in what city officials say is a reflection of the changing dynamics of the real estate market, the District yesterday chose Donatelli to build nearly 400 units of affordable housing next to a Metro station in Northeast.

Neil Albert, deputy mayor for planning and economic development, said the need for luxury housing in the District is no longer what it was "a few years ago, when there was a greater demand for housing, when housing prices were on a trajectory."

At that time, he said, the parcel where Donatelli plans to build, next to the Minnesota Avenue Metro station, "could have had a larger proportion of market-rate housing."

But Albert said that economic analyses by developers bidding for the site show that the neighborhood "doesn't support market-rate housing." The administration, he said, could have allowed the site to sit fallow until the housing market regains strength. But he said that the development would help a commercial corridor that is now a hodgepodge of strip malls, discount stores, banks and boarded-up storefronts.

"Once we get a project in the ground, it will catalyze other development," Albert said.

The announcement of Donatelli's plans drew criticism from some Ward 7 community leaders who said they would prefer the project to include more luxury housing, which they contend would help the neighborhood draw better restaurants and shops.

"I'm in support of affordable housing so the residents of this community can stay here," said Dennis Chestnut, a neighborhood resident who advocates for eco-friendly development. "But a strong community is centered in mixed-income. The market rate is going to bring the kind of incomes that demand the type of service we haven't had."

Under the deal, the District is giving Donatelli the parcel along Minnesota Avenue, near the corner of Benning Road. The land adjoins the Metro station as well as a vacant site where the District is planning to build a new headquarters for the Department of Employment Services.

Donatelli will build 375 apartments to house families with incomes up to $54,000 a year. Rents will range from $1,100 to $1,400 a month. The project includes 60 market-rate condominiums, which Donatelli said would be priced about $300,000, as well as retail space.

Developer Chris Donatelli said the site's proximity to Metro drew his company to bid on what will be its first mostly affordable housing project. He said the company also was motivated by a credit crunch that has made it difficult to obtain construction loans for market-rate projects.

By contrast, he said, the federal government provides loans for affordable housing.

"This is affordable housing. It's not subject to the swings that you have with market-rate housing," he said. "It is something we can implement in this difficult financing market. It's doable."

Donatelli expects to break ground in 18 months and complete the project in 2011.

Donatelli's partner in the project is Blue Skye Development, which the District last week selected to build affordable and senior citizens' housing in Brightwood.