Washington's urban renewal agency gave final approval yesterday to a package of financing concessions for the Gallery Place redevelopment project, clearing the way for work to begin on the only major downtown redevelopment effort controlled by minority partners.
The Redevelopment Land Agency yesterday also took back the development rights to the second largest city-owned commercial site on H Street NE because the designated developers had failed after nearly seven years to obtain the needed financing for the project.
RLA had earlier delayed action on a staff recommendation to relieve Farragut Partners, a Cleveland-based group, of its rights to the H Street parcel. But the board voted quickly yesterday to reclaim the development rights after Robert Jeffers, the developers' attorney, said he had "no progress to report" on the group's efforts to obtain financing.
The action marked the second time in two weeks that RLA has taken back city-owned land along H Street, where government plans for commercial redevelopment have been bogged down since the street was destroyed in the 1968 riots.
On the Gallery Place site, RLA had agreed to a $17 million price for the 2.8 acres of land nearly four years ago. But the project, controlled by most of the directors of the city's two black-owned financial institutions, failed to move forward because of difficulties obtaining financing.
City officials view the project, which consists of a $96.8 million office and hotel complex, as key to the redevelopment of the eastern end of the old downtown. In June an agreement was reached allowing the developers to spread out payments for the city-owned land instead of being forced to pay the total land price before construction.
The RLA unanimously approved that agreement yesterday. After the vote, RLA chairman Nira Long wished the Gallery Place group good luck and added jokingly, "we hope we never see you here again."
"This shows that the city is willing to work with developers to achieve a clear public policy the long-awaited redevelopment of downtown ," added RLA member Stephen Klein. "It is a very creative effort by the administration."
William B. Fitzgerald, president of Independence Federal Savings and Loan and head of the development group, formally titled Capital Landmark Associates, could not be reached for comment yesterday.
Under the agreement with the city, Capital Landmark Associates, which also includes longtime developer Melvin Lenkin and architect Vlastimil Koubek, must begin construction by April 1 of next year of the hotel that will occupy the western half of the square located between Sixth, Seventh, F and G streets NW.
The financial arrangement approved yesterday provides for the developers to pay the city $2.4 million at settlement, which should occur in about three months. An additional $7.4 million, plus interest, must be paid to the city over the next 15 years, with the first payment not due until 1985.
The RLA also agreed, because of the current glut of downtown office space, to let the developers delay for up to three years construction of the office building planned for the eastern half of the Gallery Place site. Capital Landmark Associates must pay the city $7.4 million plus interest when the office building construction begins.
City officials, the developers and Metro still must put the final touches on an agreement for the reconstruction of the subway entrance at the northwest corner of the site. The city will pay Metro $500,000 to buy the entranceway, then deed it over to the developers so the group will own the entire square block, officials said.