The Pennsylvania Avenue Development Corporation took a dramatic turn yesterday in its seven-year effort to renew downtown Washington by permitting the city's premier developer to assume control of the long-delayed Willard Hotel renovation project, and by acknowledging that harsh economic realities preclude building low-income housing in the area.
With a collective sigh of relief, board members of PADC, the federal agency charged with directing renovation of America's main street, voted unanimously to allow Oliver T. Carr Jr. to become a managing partner in the Willard project. The board also decided to reduce the number of hotel rooms in the project from 600 to 350 and to build instead an adjoining 225,000-square-foot office building.
In return, Carr has pledged to arrange to finance the project through the Equitable Life Assurance Society of the United States by December and to have the project completed by early 1984.
Renovation of the Willard, located at 14th Street and Pennsylvania Avenue NW, was considered the crown jewel of the agency's plans to renew the avenue between the White House and the Capitol. For three years, the project had been delayed because of financing difficulties encountered by its originally designated developer, Stuart S. Golding.
Since December 1978, when Golding was chosen to develop the project, Carr has contended that Golding's plan for rehabilitating the historic hotel and using the land around it was not financially feasible because it devoted too much space to hotel rooms.
Carr insisted that the project could not pay for itself unless commercial space were added to supplement the hotel's revenues, and yesterday, the PADC board effectively agreed.
There were also indications yesterday that the board might have to bow to economic realities affecting its orginal plans for a "unique and model intown living environment" downtown, complete with housing for all income groups.
The agency's 1974 redevelopment proposed construction of 1,500 housing units, including 250 for low- and moderate-income families, east of the FBI Building; 475,000 square feet of office space and 325,000 square feet of stores and shops.
But yesterday, the PADC received an interim report from its staff and consultants confirming what many planners and developers have suspected for quite some time -- that soaring land costs and high interest rates dictate the construction of mostly high-priced office buildings, retail stores and luxury condominium apartment buidlings.
The report recommended that plans for office space construction in the area be more than tripled -- to 1.65 million square feet -- and that residential construction be confined to high- and mid-rise buildings containing high-priced efficiencies and one-bedroom apartments. The plan for 250 units for low- and moderate-income families was dropped.
"Given current market conditions, the PADC eastern sector is not a competitive site for rental housing," the report stated. "The (sector) remains a competitive site for smaller-sized condominium housing units in high- or mid-rise buildings . . . "
The report also suggests that the PADC reduce its commitment to help private developers assemble parcels of land. Under the newly proposed approach, for instance, the PADC would spend less than half of the $60 million it originally earmarked to acquire land for housing north of Market Square.
The agency did not adopt the recommendations and will not vote on them until public hearings are held, but some initial opinions were voiced yesterday.
Max N. Berry, a lawyer and chairman of the PADC, said yesterday that the revised plan's emphasis on office construction merely reflected "an economic reality."
W. Anderson Barnes, the agency's executive director, added that, "We now have a meaningful blue print for mixed use."
However, John Wiebenson, a member of the Metropolitan Washington Planning and Housing Association, told the PADC that its target for housing construction was too low and urged that it retain units for low-income families.
"The earlier plan called for 15 percent of the units to be subsidized for low- and moderate-income people," he said. "We believe this should not be dropped from the plan, but rather should be made a minimum goal."
The PADC meeting was dominated by the joint appearance of Carr and Golding, once bitter rivals who yesterday gave the appearance of being loving friends.
"I feel I'm associating with a splendid group," said Carr, describing his new partnership with Golding and the Fairmont Hotel Corp. of San Francisco.
Last May, Golding accused Carr of "trying to block this thing" through lawsuits and by blocking a federal grant that would have helped the project. But yesterday, a serene Golding insisted after the meeting that, "We have never had any persistent feelings that Mr. Carr was trying to jeopardize me or the project."
Under the latest plan, the old Willard will be renovated to a luxury hotel and shops, and a new office building will be erected next door. The exterior of the office building will mirror the Willard's beaux arts architecture.
The New York architecural firm of Hardy, Holzman and Pfeiffer, which did the original plans, will be retained to do the new design.