Metro's policy-setting board approved a long-debated plan yesterday for a subway entrance near the Mazza Gallerie shopping plaza on Wisconsin Avenue NW--an agreement viewed by some transit officials as a breakthrough in the agency's attempts to gain millions of dollars in fees from private developers.
Metro officials, faced with mounting deficits, have sought to raise new revenue by charging higher fees to developers whose buildings adjoin subway entrances. Yesterday's agreement was described by Metro officials as the first since the agency embarked on its new scheme.
The agreement approved yesterday requires payments of $737,000 by the owners of the Mazza Gallerie in exchange for permission to build an entrance to the shopping center from the nearby Friendship Heights subway station, which is scheduled to open next year.
Donal O'Connell, an associate investment manager for Prudential Insurance Co., the managing partner of the partnership that owns Mazza Gallerie, said it would be premature to comment on the agreement because it had not yet been reviewed or signed by the plaza's owners.
Metro's new strategy, which was endorsed by the agency's board of directors in a separate vote yesterday after weeks of debate, is aimed at tying its fees to estimates of how much money developers may gain by having subway entrances near their buildings.
A study by Gladstone Associates Inc., a consulting firm, found that area developers would generate $60 million to $75 million in additional earnings if about 150 entrances connecting subway stops to their buildings were built in the next 20 years. Because of the entrances, more customers are expected to visit shops and offices in these buildings.
The study suggested that Metro officials should seek to negotiate fees totaling $30 million to $40 million from developers--about half the additional earnings expected to be gained from building the entrances. Yesterday's agreement appeared in line with this aim. Metro officials estimated the Mazza Gallerie entrance was worth $1.4 million to $1.6 million in increased earnings.
Nevertheless, prospects for similar agreements with developers at other subway stations are uncertain because of objections to the higher fees by some developers and concern among District of Columbia officials that the increased fees might impede their development plans. A recent agreement by D.C. officials for a project near the Metro Center station included no fee for Metro.
The plan for seeking more revenue from developers was adopted as Metro board members debated possible cuts in the agency's proposed $384 million budget for the next fiscal year. Metro officials made public a series of suggestions for reducing bus service to save up to $12 million, but board members said the cuts were unlikely to be considered for some time.