Veterans Home Puts Brakes on Expansion

Market Volatility Cited in Decision

The sagging real estate market has prompted the Armed Forces Retirement Home to freeze an ambitious plan to build housing, a hotel, a supermarket and medical offices on a sprawling portion of its Northwest Washington campus.

Two years ago, the home announced that it had chosen a North Carolina-based developer to oversee the project on 77 acres adjoining Catholic University and Washington Hospital Center.

But retirement home officials, without a public announcement, last fall terminated the relationship with the builder, Crescent Resources LLC, which had planned to begin construction this year.

"Right now, it looks like the value of land and real estate continues to drop, so it would not be in the home's interest to develop," said Timothy Cox, the home's chief operating officer.

Asked when the home plans to build the project, Cox said: "We don't know. We need some stabilization."

The home's decision was a disappointment for the development company, which had "invested a tremendous amount of time, effort and money" in the project's planning, said Bobby Zeillor, Crescent's regional vice president.

"We were willing to sit down and talk about fundamental deal points that had obviously changed with the declining market. The home opted not to do so," he said. "To be shut out is unpleasant and not what we wanted."

Established in 1851, the home has provided accommodations for generations of military veterans, 1,200 of whom live there now. Their average age is 83. The grounds are also the site of the cottage where Abraham Lincoln went for respite and where he wrote the final draft of the Emancipation Proclamation.

As health-care costs have increased in recent years, the home has sought ways to raise revenue. Although it is under the auspices of the Defense Department, the home receives no budgetary appropriation. Instead, Cox said, its funding comes from a trust fund consisting of revenue derived from sources such as residents' fees.

Developing the campus would also raise revenue. Under the plan, which has been approved by the National Capital Planning Commission, the home was to lease the grounds to Crescent, which would have developed the housing, office and retail components. But falling land values affected how much the home could charge Crescent.

"How much they were willing to pay in the way of ground leases was at issue," said Chris Black, a consultant to the home.

The project had provoked resistance among community leaders, who objected to development eating away at open space on the land, which is bordered by North Capitol and Irving streets.

Cliff Valenti, an Advisory Neighborhood Commission member in Park View, which adjoins the home, called the project's delay "excellent news."

"It's historic property and should be left alone," he said. "We feel that the better place for development is along Georgia Avenue."

But D.C. Council member Harry Thomas Jr. (D-Ward 5), whose district includes the site, said the decision will slow the neighborhood's evolution.

"When you abandon the developer in midstream, it leaves a difficult taste," he said. "We had a good partner. That was not a prudent decision. I was very eager to move forward."

Black, who handles public relations for the project, said the home did not intend to keep a "big secret" by refraining from announcing that it had delayed the project.

Rather, she said, the home planned to "announce something when we have something good to say."