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  The Economics of Hope


Think ahead 30 or 40 or 50 years, when the MCI Center has become as much of a dinosaur as the aging US Airways Arena is now. What becomes of a building so many people fought over, worked on, dreamed about?

Turns out there are already plans.

Abe Pollin doesn't own the land the arena sits on; that belongs to the city's Redevelopment Land Authority. Pollin is leasing the site for 30 years. His company -- or whoever then owns the building -- has the right to renew the lease for two more 10-year terms after that.

When the lease ends, the building and the land will belong to the city. What happens then is carefully laid out in a 20-page Memorandum of Agreement, which, among other things, addresses the concerns of preservationists who argued that closing a block of G Street to build the sports palace corrupted the historic L'Enfant plan for the layout of the city's streets.

Every two years after the city gets the building, "the Mayor must evaluate whether the Arena has outlived its useful life as a beneficial public facility," the agreement says. And when the building no longer meets that test, the city has three years to open the street again -- by demolishing the arena.

By Maryann Haggerty
Sunday, November 30, 1997; Page W35
The Washington Post Magazine

Sidney Mickelson's small store at 707-709 G St. NW has been in his family since the 1930s. First it was a picture-framing shop owned by his parents; in the 1940s and 1950s it flourished as the neighborhood evolved into what Mickelson fondly describes as "the Connecticut Avenue" of its day; and in the decades since, it has managed to stay in business as both a framing shop and an art gallery while store after store closed and the neighborhood steadily declined.

Now comes the newest chapter: optimism that the MCI Center will cause the neighborhood around Mickelson's Gallery to flourish once again.

"To have 20,000 people even once a week within a block of us is just astronomical," Mickelson, 73, says. "I don't think the people going in there will necessarily be our clients, but don't forget, there are no $10 seats in there."

And so goes the hope that the trickle-down effects of the MCI Center will revitalize a block, a neighborhood, a moribund downtown. Mickelson isn't alone in his optimism. Listen to developer Douglas Jemal, who owns several blocks of property near the arena:

"I think that building is probably more significant than the White House as a structure in this city," he says, insisting he isn't engaging in a developer's hyperbole. "That building is single-handedly going to revitalize downtown and give us, finally, an entertainment district in downtown Washington."

Will it, though?

The economic impacts of sports facilities have been much studied, particularly in light of the millions of dollars that governments seem willing to spend to subsidize them. The academic consensus is that new arenas and stadiums do little to pump up a region's economy -- but such facilities can have a visible impact on the neighborhoods around them, particularly in cities where patrons can easily walk for a meal or a drink. In downtown Phoenix, there has been a 77 percent increase in taxable revenue at hotels, restaurants, bars and retail shops since the America West Arena opened in 1992, according to Margaret Mullen, executive director of the Downtown Phoenix Partnership. And in Denver, where Coors Field opened in 1995, baseball fans crowd the new and trendy bars of lower downtown -- a neighborhood known as LoDo -- before and after every game.

That's why the D.C. business establishment so actively boosted the arena, and why, since construction began on the arena two years ago, the first signs of rejuvenation have shown up in the form of several new restaurants such as the Rock sports bar on Sixth Street, the District ChopHouse & Brewery on Seventh Street, Cafe Atlantico on Eighth Street, and, more recently, in the form of uniformed sidewalk sweepers who have been on patrol since the beginning of November.

The sweepers work not for the city, but for what's called a business improvement district, or BID, which is an organization formed by business owners and landlords who are taxing themselves to make their neighborhood cleaner and safer than the city government has been able to do.

There are hundreds of city BIDs across the country, and Washington business leaders have long talked of forming some here. But the arena was the impetus. "We're not doing this only for the arena, but it's like we're going to welcome the new kid, the big kid," says Richard Bradley, executive director of the BID. "When 20,000 people come, we want them to come into an area that's a lot more special than it's seen as now."

As for the restaurants, plenty of people expect the expansion to continue. For instance, Jemal, the District ChopHouse's landlord, is renovating a row of 19th-century town houses across Seventh Street from the arena. He's searching for two or three food-and-entertainment-type tenants. And Metro recently picked developers for a shopping-eating-parking complex, with housing units, on a lot just 30 feet from the arena's north wall.

But tempering the optimism is the reality that a few neighborhood businesses have closed recently, including an expensive beauty salon and a gourmet convenience market. The long-established restaurants of Chinatown have yet to collect steady spillover from the new restaurants, and mere optimism alone won't guarantee that the big, vacant buildings surrounding the arena will get makeovers anytime soon.

For instance, when fans exit the expanded Metro station at Seventh and F streets, one of the first things they will see is the boarded-up hulk of the old Hecht's department store. The Equitable Life Assurance Society, the big insurance firm that owns the building, a neighboring parking lot and some other adjoining empty buildings, has plans to develop a new office complex, with apartments, retail and arts uses. But the District's office market has been soft throughout the '90s. Without a lead office tenant, Equitable won't start work.

Still, from Equitable's point of view, the arena is a better neighbor than the vacant lot that was there, says Christopher Reutershan, a development consultant to the company. And the expected new restaurants will make the neighborhood more attractive to office tenants, who have long shunned it as the far, scary edge of downtown.

"An arena is not going to generate in and of itself a demand for office space, but there are still a number of office projects that are going to start within the next year," Reutershan says, which is another way of saying that he has hope, too -- that his will be one of them.

Maryann Haggerty is a Post Financial reporter.

© Copyright 1997 The Washington Post Company

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