Just south of Crystal City, a Charlotte-based developer is taking a huge parcel of land that was once a railroad yard and turning it into a $2 billion complex of housing, retail stores and office space.

Crescent Resources LLC, a subsidiary of Duke Energy Corp., is taking the lead on the Potomac Yard project, 300 acres that straddle the Arlington County border and the city of Alexandria. It paid Commonwealth Atlantic Properties Inc. $125 million for the land in March 2001 and has since been working to clean up the contaminated soil, get approvals to build, and install sewer and water lines and streets.

The site was a switching yard for the Richmond, Fredericksburg & Potomac Railroad from the 1830s until the early 1990s. Crescent's project, when completed over as many as 15 years, will contain two 600-room hotels; a 25-acre park; several thousand townhouses, condos and single-family homes; 4.7 million square feet of office; and 235,000 square feet of shops and restaurants. In May, the U.S. Environmental Protection Agency signed a 10-year lease for two office buildings at Potomac Yard.

The following is a question-and-answer session with Daniel B. Kohlhepp, regional vice president of the mid-Atlantic region for Crescent Resources.

QWhy did you want to buy the property?

ACrescent Resources wanted to enter the Washington market. We wanted to go to a new, higher level of development. We've done suburban office parks in North and South Carolina, Georgia, Arizona and Texas. But this is a whole new level in terms of the size, the dollar amount and the attention.

What have you done to get the site ready to build on it?

The most important thing we had to do was get the site plans approved for development in both Arlington and Alexandria.

How difficult was it in dealing with two different jurisdictions?

It's been cruel and unusual punishment. Everything is called a different name in each municipality. In Alexandria, for example, they called our project plans a coordinated development district; Arlington called the same thing a PDSP -- a phased developed site plan.

Another thing was Alexandria said we need a special-use permit for the site; Arlington called the same paperwork a 4.1 approval. We were trying to get the same approvals but they call everything different.

It was a growth experience. I would get the two jurisdictions confused all the time. They both start with an A.

What has been the hardest part of the project?

We are building on land that has no infrastructure, so we've had to put all of that in in the last year. The existing sewer and water lines in Alexandria were at their capacity. We spent $13 million on equipment, materials, and a 50-man labor team to build a 1.8 mile stretch of sewer line to run through Old Town Alexandria.

How did you do it?

We had to use a technique called micro-tunneling. It's really unusual. It's typically used to build in rivers and on interstates, not in urban settings like this.

How does the technology work?

This is really amazing stuff, because instead of tearing up the street level with a backhoe, you use these shafts and you can go down, underground, with these old historic townhouses on both sides, and drill.

We built 26 vertical shafts above the street on every corner. The shafts went down 30 feet. It looks like a big storm drain pipe.

Then this micro-tunneling machine goes around in circles down there. It's 30 inches in diameter and it's got a drill head on the end of it. You hook a 10-foot section of pipe to it, pull it through with a hydraulic jack and add another piece of pipe. That's how we actually drill from street corner to street corner.

You go right under all the existing utilities. The coolest part is that the drill is down there and it is run by remote control. There's a guy standing in an air-conditioned office running it. He's looking at it on a TV monitor with a laser guiding the drill from shaft to shaft. If we had to try to open up a deep trench to get our lines down, we would have been digging up the entire city.

Did you run into any challenges with the micro-drilling project?

We had to work around a historic cemetery on Payne Street in Alexandria. That was interesting. We had to dig shafts by hand to make sure there were no graves . . . there. There was nothing underneath but untouched sand. We even had archeologists on hand, but we didn't find any bones.

How did it feel to finish the sewer line project?

We got an award from Trenchless Technology magazine (based in Peninsula, Ohio) for "New Installation Project of the Year." And we made a video to send in to the History Channel because now that it's all done all you can see is the manhole covers and you have no idea the work we had to do underneath.

I think it's interesting, but it's hard to even get my own family to look at it.

Closings

The General Services Administration, the federal government's real estate arm, renewed its lease for 157,000 square feet at 5600 Columbia Pike in Falls Church. The space houses the Defense Information Systems Agency of the Defense Department.

CB Richard Ellis Group Inc. represented the building's owner, REIT Management and Research.

Dana Hedgpeth writes about commercial real estate and economic development. She can be reached at hedgpethd@washpost.com.

Crescent Resources is developing the Potomac Yards site, shown here in 1990, when railroad still ran through it.The Environmental Protection Agency has taken space in Potomac Yards and plans to occupy the entire south tower and three floors in the north tower.