The developers who won the coveted Portal site in part because they said they had tenants committed for more than half of the office space have not secured any binding lease agreements for the project.
The District of Columbia urban renewal agency emphasized during its deliberations that it wanted the Portal development to get under way as quickly as possible and not sit idle as have other downtown urban renewal parcels. Banneker Associates, the winning team, told the agency they could start and finish the $335 million project faster than their four competitors because they already had tenants.
Attorney William L. Harris, a member of the Banneker team, said yesterday that team members had not been "precise" with the Redevelopment Land Agency board, "but it was not done as a deception.
"In some of the puffing material we may have said the space had been leased," he said.
In November, in an attempt to win community support, the Banneker group distributed a "Banneker Plaza project fact sheet" to Southwest residents which said "nearly one million square feet in the proposed project have been leased."
In testimony before the RLA board in October developer Theodore R. Lerner, a leading member of the Banneker team, testified: "We have real and bona fide commitments" from the Urban Institute, COMSAT, the American Enterprise Institute and the American Association for the Advancement of Science "for approximately 1.3 million square feet of office space out of the projected 1.8 million square feet for the entire site."
Lerner's lawyer, Evan Novenstein, said yesterday that "commitments" mean "they want to pursue it with us."
The claim of committed tenants plus Banneker's apparent superior financial ability to buy the 10-acre site in six months were two major reasons cited by RLA board members in their selection of that team last week.
Yesterday two of the four board members who voted for the Banneker group said they understood at the time that the buildings had not actually been leased.
City housing director Robert L. Moore said the "lease commitments" played a major role in his decision because Banneker was the only group with "clear letters of intent" from prospective tenants "and that's the best you are going to get until they get the land."
Board member Stephen Klein said he did not believe Banneker had misrepresented its situation. "They were far more specific about their tenants" than other competitors, he said.
Nira Long and the Rev. Ernest Gibson, the other two board members who voted for Banneker, could not be reached for comment.
William Berman of COMSAT, the largest prospective Portal tenant, said yesterday, "We have a gentlemen's agreement that we would neogitate with them Banneker and that we want to occupy that site, but they can't go to court to sue us. We intend to go ahead and work out a deal."
Representatives from the other companies echoed Berman's enthusiasm for the Portal project. All said they intend to move ahead with plans to lease space there.
Several city real estate experts said the leases cannot be negotiated until the developers headed by Lerner and office and apartment builder Melvin Lenkin buy the site at the foot of the 14th Street bridge from the city, arrange their financing and nail down their construction costs. These three ingredients plus a margin for profits will determine how much the Banneker group will charge for the space at the seven office buildings it plans to build on the Portal tract.
Each of the four prospective tenants said that their lease agreements would probably be contingent on their receiving a share in the ownership of their buildings. Such ownership might diminish the holdings of the partners in the Banneker group, including the six minority partners who now own 43.5 percent of the project. That large share of minority ownership was another major selling point for some RLA board members.
During its deliberations, RLA repeatedly asked the Banneker group and the other teams to explain what would happen to the minority holdings if part of the ownership had to be given to a financing institution in exchange for financing.
The Banneker team said since much of the project had been leased a lender would not require part ownership.