Call it the Showdown on Ninth Street.
On one side is Mayor Anthony A. Williams, financial sidekick Nat Gandhi and a development team as stubborn as it is talented. Their seconds include the downtown business crowd, a quartet of developers, Marriott International and a bevy of Wall Street underwriters.
On the other side is D.C. Council President Linda Cropp and the board of the Washington Convention Center, backed by the city's hospitality-industrial complex.
At stake: money, power, institutional prerogative and some of the choicest real estate in Washington.
This showdown has been building ever since the go-ahead was given for a new $850 million convention center at the corner of Ninth Street and Massachusetts Avenue downtown. Never fully resolved, however, were two issues: what to do with the old convention center site a block away, and where to locate a "headquarters hotel" considered essential for luring big conventions.
Now fast forward to the present. The mayor, having gone through an elaborate process to develop a plan and pick a developer (Hines Interests), is ready to break ground at the old convention site for a mixed-use project involving retail, housing, a boutique hotel and a splashy new library, all arrayed around a European-style plaza. At the same time, he has another development team (Tishman Urban Development, Kingdon Gould III and Marriott) lined up to build a 1,473-room convention hotel directly across Ninth Street from the new convention center. This $450 million mega-hotel would be funded in part by refinancing the new convention center's bonds at today's lower interest rates. In time, the rest of the refinancing windfall would go to the city treasury.
Not so fast, says Cropp and the convention center crowd: The Ninth Street site is just too small for the hotel, parking and extra meeting space that the convention center requires. It's also too expensive. Better to put it all at the old convention center site, where the land is "free" because the city already owns it. And, by the way, don't even think about diverting proceeds from a refinancing to the city treasury -- that's money raised through a special hotel and restaurant surtax agreed to only on condition that the money would go to the convention center.
This clash of interests and egos has been going on so long that the parties are now deeply dug in to their positions. And each is armed with reports from consultants who never met a convention center or hotel that they didn't think would be wildly successful.
While they bicker, however, the meter is running. The longer the standoff continues, the more land and construction costs rise and the greater the risk that rising interest rates will close the refinancing window.
My guess is that it will now fall to Mitchell Shear, a leading developer and a swing member of the convention center board, to be the political dealmaker here, backed by a few business community heavyweights.
Gandhi will have to give up his fantasy of diverting a portion of the refinancing windfall to deal with the city's long-standing budget shortfall.
Cropp and the convention center board will have to give up their designs on that "free" land at the old center site (which in truth would be simply another tranche of public subsidy for the new convention center and its allies in the hospitality industry). Instead, the board will have to make do with a somewhat smaller hotel built on the Ninth Street site and folded into the larger convention center refinancing.
And for their part, the mayor and his development team will have to agree to alter their plans for the old convention center site, adding hotel rooms, meeting space and parking for conventioneers that can't be accommodated elsewhere.
What's required here is a bit of humility on the part of people who get so caught up in architectural drawings and pro formas that they forget that economic development rarely happens the way it is planned. For proof, you need only consider the new City Museum across the street from the new convention center, which announced last week it would close its galleries because of lack of public interest.
Steven Pearlstein can be reached at email@example.com.