Incentives, investment dollars headed for R.I. Avenue

By Ovetta Wiggins
Washington Post Staff Writer
Sunday, April 4, 2010

City officials have dubbed the three-mile stretch of Rhode Island Avenue in Northeast Washington the "Diamond of the District," but it's a diamond in the rough: an area where it is easier to come across a tire shop or a used auto parts center than it is to find a sit-down restaurant or a place to purchase a fancy pair of shoes.

Now, officials, community leaders and residents are hoping that a small, mixed-used project at the Rhode Island Avenue-Brentwood Metrorail station will be the vehicle to transform the corridor between Third Street and Eastern Avenue from a strip filled with vacant properties and warehouses to a vibrant destination where people can shop, live, work and play.

The District recently closed a financing deal with Urban Atlantic of Bethesda and A&R Development of Baltimore, a development team that will bring 274 apartments and 70,000 square feet of retail space to the Rhode Island Avenue-Brentwood Station area. Construction, which will shut down the Metro station's parking lot April 30, will begin in the next several weeks. The 8.5-acre project is scheduled to be completed by fall 2011.

"This project will be an anchor for the Rhode Island Avenue neighborhood . . . and it's part of the overall economic plan for the corridor," said Valerie Santos, deputy mayor for planning and economic development.

A draft report released in January that surveyed 248 residents in neighborhoods abutting Rhode Island Avenue NE found that most rated the corridor poor or very poor for its physical appearance, the variety of goods and services it offers, and its sense of neighborhood identity.

"There are no sit-down restaurants, and we are excited about the opportunity to have that potentially on Rhode Island Avenue," said William Shelton, an Advisory Neighborhood Commission member in Ward 5. "Rhode Island Avenue has long been forgotten by a lot of people. We hope that along with Home Depot and Giant, that this will shine a light on Rhode Island Avenue and spur more interest in bringing small- and medium-sized retail folks into the area."

Linda Davis, president of Urban Atlantic, said she could not comment on which retailers will be at the location. She has letters of intent, but no deals have been finalized. Ten percent of the retail space will be set aside for local business owners, a request the residents made, Davis said.

The project is nine years in the making.

Developers ran into trouble in 2003, during negotiations with Metro over parking and land. The developers wanted to build a garage that would reduce Metro parking spaces from 387 to 215.

Steven Goldin, director of real estate for Metro, said the agency ultimately settled on the 215-car garage. Metro customers will be able to use the project's private garages.

"It's emblematic of what we want to work on here," Goldin said of other transit-oriented projects working out shared parking agreements. "It allows the developer to spend less on parking. Instead of spending it on parking, we can capture that for the agency by charging more for the land."

While the developer and Metro settled on a ground lease, the city helped move the project forward by agreeing to provide financing through a $7.2 million payment in lieu of taxes to the developers.

Santos said Rhode Island Avenue NE is part of the city's Great Streets program, an effort that targets underinvested roads for development by offering public money to leverage private investment. The $7.2 million is part of a $200 million plan to invest in new mixed-use projects and storefront, transportation, streetscape and transit improvements along nine corridors, including Minnesota Avenue NE/SE, Martin Luther King Jr. Avenue SE and Benning Road NE.

Davis said the city financing will pay for the Metro garage. The developer is also receiving additional financing from a traditional federal loan backed by the Department of Housing and Urban Development. Urban Atlantic is also in a federal new markets program that provides a tax credit for investments in distressed communities. Davis would not provide specific details about the federal financing.

Davis said the development will have a "Main Street kind of feel, with lush trees, similar to Shirlington in Virginia. . . . We'd just like to bring Class-A-level retail there. We want to be a catalyst for the rest of the avenue to be developed."

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