The District's urban renewal agency agreed yesterday to sell the potentially lucrative Metro Center sites to two leading developers at a reduced price, thus removing the last major hurdle to the start of the long-delayed $350 million project in the heart of downtown.
The 4-to-0 vote by the Redevelopment Land Agency board of directors came after the developers agreed to select minority businesses to perform 25 percent of all work connected with the project until the year 2000. Tuesday, the RLA board delayed action on the sale because of concerns about the project's affirmative action plan.
Yesterday's action ended the city's 10-year effort to sell Metro Center, which city officials had designated as the centerpiece of redevelopment efforts in Washington's down-at-the-heels shopping area east of 15th Street NW.
But even the final vote was marked by dissension, with some board members indicating that they believed city officials had been overly generous to developers Oliver T. Carr and Theodore R. Hagans in order to resolve a land price dispute that had stalemated the project for much of the time since the developers were selected in 1978.
Carr, the city's leading developer, agreed to file reports on the affirmative action program for the next 20 years, but complained of "over-regulation."
"I think the process for approving projects is far too onerous, and it is important that the District realize that they are in competition with surrounding jurisdictions," Carr said after the vote.
The sales agreement calls for the developers to buy the land over the next four years, paying roughly $14.5 million in cash when the purchases are made and $14.5 million in notes repayable over the next 30 years at interest rates favorable to the developers.
Last year, Carr and Hagans had offered to pay $37 million in one lump sum for the sites along G Street NW between 11th and 13th streets, which sit atop one of the city's busiest subway stations. At the time, the city was demanding $51.6 million.
The agreement also calls for the city to share in the profits from the project, which will net an additional $22 million. But the city may receive none of its share until the year 2008, when inflation will have reduced the value of the money to the equivalent of $2.9 million in today's values, according to a consultant's study.
RLA board member Judy Jenkins tried unsuccessfully to get the city more money, and to get that money earlier, by reducing the developers' guaranteed profit from a 15 percent return on their investment to 10 percent.
But board members Nira H. Long, Stephen Klein and the Rev. Ernest Gibson voted against Jenkins' proposal. They argued that the agreed-on terms were necessary to guarantee that a Hecht Co. department store would be built in the project, and to finally get the development under way.
"It may not be the best deal, but it is not a sham deal," RLA board chairman Long said after yesterday's vote. "It's a fair deal and necessary, given the environment of the court and Hecht's."
Carr and Hagans took the city to court last year after the two sides deadlocked over a land price for Metro Center. The urging of a D.C. Superior Court judge that the dispute be settled out of court, along with the Hecht Co.'s threats to close its store at 7th and F streets NW and leave town if it couldn't get quick approval to move into a new store, resulted in the agreement.
The new Hecht's, the first phase of Metro Center, is expected to open two years after construction begins in November.
The plan was negotiated by James O. Gibson, then city planning director, and later modified by Ivanhoe Donaldson, deputy mayor for economic development.
The Metro Center development team also includes former banker Orlando Darden, attorney Ruby McZier and Senate aide Carolyn Jordan, who have a right to organize groups of minority investors who could buy up to 20 percent of Carr's 70 percent share. Hagans, a black developer, owns 30 percent of the Metro Center development.