Deal May Clear Way for Long-Delayed Walter E. Washington Convention Center Hotel

By Lisa Rein
Washington Post Staff Writer
Sunday, August 2, 2009

The D.C. Council's final sign-off last week on a deal to build a 1,160-room Marriott Marquis across from the Walter E. Washington Convention Center could jump-start a project cursed by a decade of squabbles over its location and who would pay for it.

Construction of the $550 million hotel is on track to begin in October, the developer and convention center officials said. It's a public-private project that supporters said they hope will boost the city's effort to draw more visitors to Washington and improve the fortunes of Shaw, the historic black neighborhood where a long-planned renaissance has stalled.

The hotel, promised when the District broke ground on the convention center in 1998, will stretch more than 1 million square feet at Ninth Street and Massachusetts Avenue NW. It will rise 14 stories, a mix of modern glass and steel and brick dating to 1916 in a design that incorporates the old headquarters of the American Federation of Labor, a landmark building on the otherwise vacant property.

After years of delays, prolonged recently by the credit crunch, the Marquis will be built with $206 million in public money and $331 million in private financing, a rare investment in the damaged real estate market. Officials said they expect the hotel to open in late 2013, with vast blocks of rooms reserved for convention-goers.

The building, the third hotel in Marriott's highest-end chain, represents a huge engineering challenge. Construction crews will dig 110 feet below ground to build two levels and 1,000 spaces for parking, 100,000 square feet of ballroom and meeting space to add to the convention center capacity. They'll also create a tunnel for convention-goers to get between their rooms and meetings without having to cross the street.

The hotel's construction is expected to remove a problem that has hurt the city's tourism business since the convention center opened in 2003. Bookings have fallen short as large conventions, finding no rooms at the facility's front door, turned to other cities or to National Harbor in Prince George's County, where Gaylord built a 2,000-room hotel.

The developers promise the hip hotel long desired by many Shaw residents, who hope the combination of a convention center and hotel can spark the revival they've dreamed of for two decades in their enclave, plagued by vacant and drab 1970s urban renewal buildings.

"Our goal is not simply to build a hotel but to build a convention center district," said Norman Jenkins, president of Capstone Development, which is developing the site and securing private financing with Quadrangle Development. "We want things to get cool and hip around there, to have a real urban feel."

With street-level retail space for souvenir and coffee shops, white-cloth restaurants and a bar, the hotel is designed to create pedestrian traffic on Ninth Street, the neighborhood's retail spine. Although scattered businesses have opened in the area, including the headquarters for Independence Bank and an upscale garden center this month, far more boarded-up and vacant rowhouses and barred windows define the stretch of seven blocks between Massachusetts and Rhode Island avenues NW. The convention center has been slow to rent retail space, and Enterprise Rent-A-Car left a year ago.

The pioneers who've stayed say they are desperate for foot traffic. "The biggest thing for us is all those boarded-up buildings," said Tom Power, chef and owner of Corduroy, a high-end restaurant that opened in a rowhouse on Ninth Street NW last year and quickly soared high on the list of foodie destinations. Some diners who've gushed over dinner on food blogs made clear they were put off by the neighborhood.

"If it's 1,100 people over there, it'll make the street more vibrant, even if we get nothing from them," Power said.

A few doors down, Jeff Harrison, owner of Modern Liquors, says he's optimistic: "I'm figuring that when they don't want to drink a $6 beer in the mini-bar, they'll buy a six-pack from me."

But Alem Abebe, owner of First Cup Cafe on Ninth Street, said he worries that his brand of American-Ethiopian steak and cheese sandwiches and spicy breakfast burritos won't appeal to convention-goers.

"I hear Starbucks and breakfast places will open inside there," he said. "It's going to take away all the business. And business now, I cannot say it's beautiful."

There is a lot on the drawing board in Shaw. Condos, apartments, offices, retail space -- all in pedestrian-friendly mixed-use complexes designed to make the area walkable and safe. The 96-year old Howard Theatre at Seventh and T streets NW is set to be rehabilitated, as will another historic site, the crumbling O Street Market built in 1881. Next to it, the run-down Giant is scheduled to be torn down and replaced with the city's biggest Giant, at 71,000 square feet. A new housing and office project called Broadcast Center One is planned for 7th and S streets, with a headquarters for Radio One and TV One.

But those projects aren't likely to go up anytime soon, even with the hotel underway. Private developers still can't get construction loans, and the hotel won't guarantee faster financing, developers say. It will be at least 42 months before the Marriott hosts its first convention-goers, owing to a slower construction schedule required by the complex excavation -- a year longer than construction of many office buildings.

An early draft had the hotel opening this year. But by the time the developers had secured a $134 million city subsidy in 2007 that would be repaid with tax revenue from the hotel, financing costs were rising as credit markets took their first dives. The developers asked for more public money and eventually got it. But the moment for other planned projects had passed. Even the decision this month by Shiloh Baptist Church to put two vacant buildings that are neighborhood eyesores on the market and use the proceeds to rehab its other properties might be a victim of bad timing, since the properties' value has fallen.

"The [construction] world right now is shut down," said Douglas Jemal, a District developer with several parcels on Seventh and Ninth streets NW. "The hotel certainly beats having nothing there. But we just have to tough it out."

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