Building Slowdown Turns Grand Visions Into Vapor

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Slowed Development Frustrates Communities

The economic boom of recent years launched development across the region. But much of that promise is faltering under an economic slowdown.

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Monument had planned to complete several hundred apartments and a hotel by the end of 2009. But construction crews are working only on an underground parking garage, while the developer searches for financing for the buildings. "Could it be completed by the end of 2010? Yes," said Russell Hines, a Monument executive, while acknowledging that "it could be longer."

Three blocks east on M Street SE, William C. Smith & Co. put up a red, white and blue billboard announcing that an office building, Federal Gateway II, would be completed in 2008. But unable to sign a major tenant, the developer is using the land as a parking lot, a decision that threatens to defer more than just construction on a single street corner.

The project's anticipated tax revenue was slated to help the District finance $24 million worth of sewers and sidewalks nearby, infrastructure needed to serve 500 homes and revive several now-barren blocks once occupied by a public housing complex.

"If the infrastructure isn't there, you can't build the town homes," said Larry Dwyer, the District Housing Authority's projects manager. Crews were to begin excavating for that phase of the development in mid-2009, Dwyer said, but "if this market doesn't correct itself, it could easily be delayed."

The Rhode Island Avenue Metro station in Northeast is at the center of another area the District has long cited as ripe for investment. A developer, Urban Atlantic, was negotiating a loan with Citibank to build 274 apartments, but the bank abruptly withdrew in recent weeks. The developer's quest for a new lender has met with a "very tentative reception," said Harry Sewell, executive director of the District of Columbia Housing Finance Agency, which is assisting with the project. Sewell estimates a delay of at least six months.

Two stops north on the Red line, residents of Fort Totten, a working- and middle-class neighborhood on the Maryland border, were thrilled when a developer swept in with talk of condominiums and rentals, a supermarket, shops and restaurants. Lowe Enterprises even took residents on a bus trip to Pentagon City and Bethesda to show them what their neighborhood could become.

Now, Lowe executives talk of affordable housing. The chances of a supermarket seem more remote. Meanwhile, two plots of land in the middle of the community sit lifeless, surrounded by a chain-link fence.

"They've created an eyesore," said Willie Jenkins, a retired bus driver, standing outside a KFC, among the neighborhood's only restaurants. "Where's the economic development they promised?"

Local governments have sought ways to keep projects moving. Montgomery County officials might allow builders to defer paying construction permit fees up front. In Fairfax County, an epicenter of new construction in recent years, officials for the first time are considering granting a subsidy to a developer, this one for $40 million to a project in Merrifield.

The Fenty administration, in at least two cases, has agreed to issue bonds to help finance infrastructure at the start of a project. The timing is intended to help developers attract lenders. District officials are also considering tax abatements to spur residential construction and leasing in such areas as around the ballpark and in NoMa.

For decades a neighborhood of warehouses and light industry, NoMa is promoted by civic leaders as a future extension of downtown Washington. A total of 29 projects have been slated for the area, which comprises 35 blocks extending from Massachusetts Avenue NE and Union Station to just north of New York Avenue. In recent months, National Public Radio and the U.S. Justice Department have announced plans to move to the neighborhood. Five office buildings have been completed, and five more are under construction. Two hotels are also being built.

But developers are slowing down. MRP Realty, for one, is delaying two office buildings that are part of its Washington Gateway project, at New York and Florida avenues. At least two residential projects, which include nearly 1,000 apartments, are also behind schedule.

Khalil Ghannam, 45, opened Pound Coffee in April because he expected thousands of office workers and residents to move to NoMa. From his cafe window, he can see the bare ground where Washington Gateway is to rise.

Ghannam has patience, but he is not sure how much. "If I had a nickel for every time someone tells me I'll be wealthy, I'd be wealthy," he said. "Having the vision and the hope is one thing. Paying your bills is another."

Staff researcher Julie Tate and newsroom intranet editor Jacqueline Dupree contributed to this report.