D.C. seeks deal with federal government to get infrastructure improvements for St. Elizabeths site

By Jonathan O'Connell
Monday, August 9, 2010

D.C. Mayor Adrian M. Fenty's economic development team is trying to negotiate a deal with the General Services Administration to leverage a planned headquarters for the Federal Emergency Management Agency headquarters on the east campus of St. Elizabeths Hospital into major structural improvements for the campus.

The question of who will own the FEMA site, however, may become a sticking point.

D.C. owns the 172-acre east campus in Southeast, across the street from the future headquarters of the Department of Homeland Security. City officials hope that a 750,000-square-foot building for FEMA there will help finance new sewers, roads, transit and other infrastructure to help meet their vision of a major mixed-use economic engine in D.C.'s poorest ward. Deputy Mayor Valerie Santos said she wanted to see the east campus "be a catalyst for broader revitalization of the neighborhood and the area."

"Right now the city's priority is making sure that key infrastructure initiatives are in place," she said.

If the city were to lease or sell the property to a private developer, which could then lease it to the federal government, D.C. would collect long-term property taxes and lease payments, which it could also borrow against to finance infrastructure improvements. The GSA has agreed to similar deals in the past; in developing a new 200,000-square-foot FBI facility in Manassas, the GSA agreed to have Prince William County officials sell the property to the Peterson Cos., which then leased the property to the GSA in 2007.

But the federal government has been moving to own, rather than lease, more of its real estate. D.C. Del. Eleanor Holmes Norton (D), through a spokesman's statement, said she expected that the GSA would acquire the site in exchange for in-kind infrastructure upgrades on some other parts of the campus. To fund remaining improvements, Norton, a senior member of the House Transportation and Infrastructure Committee, said she "will assist the District of Columbia in identifying funding sources for infrastructure and other purposes on the east campus."

The lack of property tax revenue has Norton "concerned, but her hands are tied," the statement said, because "the federal government will not build a federally owned building on land it does not own."

GSA officials and Santos declined to say how the deal would be structured. "We're working with our federal partners," Santos said. "It's in everyone's interest to move it forward."

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