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White House Scraps D.C. Trade Center

The long-planned International Cultural and Trade Center, designed as a downtown home for federal agencies involved in trade and attaches representing U.S. trading partners, was scrapped yesterday by the Bush administration.

Construction will continue at the Pennsylvania Avenue and 14th Street NW site, federal officials said yesterday, but the 11-acre structure will be used to house other agencies, not those related to trade.

The decision follows a dour report, produced Friday by the Arthur Andersen accounting firm, which supports concerns raised 10 days ago by the General Services Administration about the economic viability of the proposed 500,000-square-foot centerpiece of the $656 million Federal Triangle construction project.

It also comes months after the administration angered local officials by announcing plans to move the Environmental Protection Agency there. The EPA has no connection to the building's stated purpose.

The GSA said Jan. 15 that revenue expected to be generated by leasing office and museum space was overstated by the center's development task force, and that the center could lose as much as $22.2 million in 1998 alone.

The Andersen report did not specify revenue losses, but supported the GSA conclusion that the downturn in the rental market meant that "it was not probable that the center would be self-sufficient," as required by law.

The Andersen report, requested by the GSA, was completed in less than a week and did not review the long-term viability of the center, according to the accounting firm.

"The White House does not see any choice but to not proceed with the International Cultural and Trade Center," said Kathryn Gaddy, GSA spokeswoman. She cited "the tight federal budget, potential costs {of} as much as $200 million over the next five years and concerns" expressed by trade center commission members.

Gaddy said the GSA and Office of Management and Budget will be reviewing alternatives for the building. No changes will be made to the exterior of the building, designed by the internationally renowned firm of Pei Cobb Freed & Partners, but the interior will be altered to suit the needs of its tenants, she said.

City Administrator Robert L. Mallett said last night that he discussed the White House decision with Mayor Sharon Pratt Kelly. He said the mayor was "very disappointed," but that Kelly said she would depend on Del. Eleanor Holmes Norton (D-D.C.) to appeal to Congress to pass a bill that would require the trade center plans to go ahead as planned.

Norton said last night that the move by the administration "doesn't end it for us." She said she does not believe the administration can unilaterally scrap the center. "All the administration can do is recommend the change to Congress," she said.

Norton said it would be shortsighted to require the center to be self-sustaining within one or two years, and said it would be vital to determine whether the building can pay for itself in the long term.

The trade center, in the works for more than 10 years, originally was touted as a way to increase the country's international competitiveness by creating a kind of one-stop shopping place for international trade.

Its future, however, had been in doubt for more than a month, since the chairman of the task force in charge of the trade center resigned, accusing the Bush administration of undermining the project.

Donald A. Brown, a prominent Washington area developer, resigned Dec. 17 after sending a letter to President Bush in which he said the administration was being "irrational, unproductive and destructive" in planning to put the EPA in the building.

White House spokesman Sean Welsh said yesterday that the decision was "not a unilateral decision by the White House," but one that went through the "normal process and review by the appropriate agencies."

The Andersen report said its conclusion was based on declining rents in the city, "very tentative" commitments for private contributions and the inability to determine whether the trade center would generate higher rental rates than comparable office space.

The Andersen report was requested after a GSA analysis determined that the trade center would face a deficit of $10.1 million in 1998 and $9.6 million in 1999, based on optimistic projections, or $22.2 million in 1998 and $21.8 million in 1999, based on more conservative estimates.

The GSA's analysis sharply contrasted with figures produced by the commission overseeing the trade center.

The commission found the center would post a $1.9 million deficit in fiscal 1999.