A long-fallow plot amid the hallowed halls of Judiciary Square will be developed privately for $85 million if the District government grants a zoning request by the federal government.
If the District Zoning Commission agrees to give the parcel high-density commercial zoning status, it will be sold by the Federal Home Loan Bank Board to Peter N. G. Schwartz Cos. for an 11-story office complex above the Judiciary Square Metro stop.
But if the bank board's request for zoning is denied, the $12.3 million site, bounded by Third, Fourth, D and E streets NW, probably will continue indefinitely in its current use as a parking lot.
Federal property is not regulated by District ordinances, so the land currently is classified as "unzoned."
This is not the first time that city and federal officials have negotiated the future of the 76,000 square feet located across Indiana Avenue from the Municipal Center, and identified on city maps as Square 532.
The bank board purchased the site in 1968 for its new headquarters, but tried to sell it after deciding to build instead at 17th and G streets NW. In 1977, the District tried to buy the property for its municipal headquarters.
But in the three years that it took for the the two governments to cement a deal, the site's appraised value surged from $4.5 million to $13 million.
The city never quite caught up. It first bid $4.4 million; that price was rejected after a new appraisal valued the site at $8 million. The city asked Congress for a higher appropriation.
By the time Congress approved it and the city made a $7.5 million offer, the land had been appraised again, at $13 million.
The District decided to build the Frank D. Reeves Center of Municipal Affairs at the intersection of 14th and U streets NW, on land already owned by the city's housing office.
As a result, the federal government opened the Judiciary Square site to public bids.
Square 532 generates about $388,000 annually from the rental of a small building and a parking lot, according to William D. Boyer, deputy director of administration for the bank board.
The board took over the sale from the GSA and ordered an appraisal in 1984 that put its value at about $10 million, Boyer said. "There's a big glut of office space in the area," he said, explaining the decrease in appraised value since 1980.
Documents filed by Schwartz with the zoning commission mentioned problems his predecessors in Judiciary Square had in finding tenants. Office buildings completed in the early 1980s in the area have been leased largely by federal agencies.
Judiciary Square was a less desirable site a few years ago, Schwartz said.
"Judiciary Square was not Capitol Hill and not downtown. It was just in between," he said.
But eastward movement of new office buildings and the development of Pennsylvania Avenue have made Judiciary Square an ideal location, Schwartz said.
The Judiciary Square Metro station is on the property, and "that is one of the complexities" of the project, according to Schwartz.
The building foundation will straddle the Metro tunnel, which runs diagonally under Square 532.
The design, by architect Vlastimil Koubek, includes a park and a large canopy over the entrance to the building and to Metro.
The general contractor would be the Hyman Construction Co.
The proposal would provide 600,000 square feet of office space and a 500-car garage.
If the zoning comission, which is planning to review the request on April 17, approves the proposal, construction should start this summer, Schwartz said.
The bank board is hopeful that it will get a positive zoning decision that will move the property from its hands into those of construction crews.
"We think it is in the District's best interest to develop the site," Boyer said.