The District government is giving up plans to construct a new municipal office center at Judiciary Square, because skyrocketing downtown land values have prompted the federal government to triple the price it was asking when the project was approved three years ago.
It is a tale replete with irony, because the District has encouraged the downtown development boom, but now can no longer afford to buy the federally owned Judiciary Square land. The downtown area had been declining for decades, but with the city supporting projects such as the new D.C. Convention Center, the opening of Metro Center and other proposed downtown development, land prices have as much as tripled in the last five years. Some developers even predict that downtown property values will match expensive West End property in a decade.
But the rapid increase in downtown land prices also has outstripped the speed of the cumbersome budgetary process Congress imposes on the District. And the federal government, trying to win top dollar for its land for federal taxpayers, is contributing to the burden of Washington taxpayers.
Construction of the building was to have begun this year on the former site of the Federal Home Loan Bank Board at Third and D streets NW, atop the Judiciary Square Metro Station. Congress approved the expenditure of $41.7 million for the project, but the maximum amount authorized for acquisition of the 1.7 acre site was $8.5 million. The General Services Administration, acting as sales agent for the bank board, is holding out for $13 million, a gap so wide that District and federal officials agree there is no point in further negotiations.
The District is looking for other sites, and the bank board; which has ordered a new appraisal that is likely to result in a still-higher asking price, is contemplating a public auction of the choice parcel. The property is across the street from police headquarters and within easy walking distance of D.C. Superior Court, the Federal Courthouse and the U.S. Department of Labor.
The current price, $13 million, represents a price per square foot of about $180. That is far more than property in that part of town was worth five years ago, but Metro, the start of work on the convention center, the redevelopment of Pennsylvania Avenue and other forces have combined to drive up land values in the entire area bounded by 14th Street NW, Pennsylvania Avenue, North Capitol Street and Massachusetts Avenue.
The city government, in its unending quest for more tax revenue, has promoted the redevelopment of that area, but in the case of the new municipal center it has been caught short by its own success.
"We recognized that land values were going up," said William T. Jones, assistant director of the Department of General Services and engineer for the municipal center project, "But when that $13 million figure came in the whole thing came unglued. This is a very serious problem and we are scrambling to find a new site."
He said his department is scheduled to make recommendations on alternate sites to City Administrator Elijah Rogers by June 1.
According to Jones and other officials, the delay in constructing the new office building cost the District money in several ways. The city must continue renting about 400,000 square feet of space elsewhere at an approximate annual cost of $6 million; the cost of construction on any alternate site is sure to be higher than the $30.2 million currently authorized; and since design work has been completed for the Judiciary Square site, including a foundation that would straddle the Metro tunnel, new plans will have to be drawn.
"If we go to another site, we have to site-adapt for another foundation," Jones said. "We will have to redo the structural design and the foundation plans." The city also would have to go back to the Fine Arts Commission and the National Capital planning commission for review of the new plans, ensuring further delay in the project.
When Congress first approved the new building, in the budget for the 1978 fiscal year, the proposed acquisition cost was $4.5 million. By the time the budget was formally adopted and the city made an official offer, a new appraisal obtained by the bank board resulted in an increase in the asking price, to about $8 million. Last July, Congress approved the new amount and in August City Administrator Rogers formally offered $7.5 million.
According to federal officials, however, asking prices based on appraisals are only good for nine months. Time ran out, they said, while the District was awaiting congressional approval for its new offer. In November GSA, which is acting as sales agent for the bank board, notified the District that the price had gone up to $13 million.
While the District government, which has employes scattered in rented sites all over town, looks for a new site for its office building, the bank board and GSA are looking for a new buyer.
Dale Hawkins, the official of GSA's real property office, said, "We're trying to do our best for Uncle Sam, but we're also concerned about the highest and best use of the property." He said GSA is "discussing" with the bank board the possibility of a public sale or auction.
Sale of the property at auction to private interests would help the District reduce its losses by restoring the property to the tax rolls.