Officials of the Barry administration will be asked today to explain to the D.C. Council their discussions with developer Jeffrey N. Cohen, who is negotiating a no-bid, 20-year lease to build a city office building.
Cohen, a friend and adviser to Mayor Marion Barry, confirmed that he hopes to build a seven- or eight-story building for about $75 million on the old Thompson's Dairy property in the Shaw neighborhood of Northwest Washington.
Betty Ann Kane (D-At Large), chairwoman of the council's Government Operations Committee, will hold a hearing this afternoon on the proposed lease as well as a separate lease proposal involving another developer. She said she would question Raymond A. Lambert, director of the Department of Administrative Services, which is negotiating the leases.
"The city is trying to lease everything in sight before the mayor self-destructs," Kane said. "Some of them may be good deals, but out of context it's hard to see that."
Cohen said the lease proposal may be his key to avoiding bankruptcy.
Cohen's financial problems have worsened in the past year. He has hired a bankruptcy lawyer and met with creditors to plead for more time. A foreclosure sale on his $2 million house in Northwest is scheduled for Monday. A federal tax lien has been placed on his company. He has agreed to sell his summer home on Nantucket, and he has parted with his forest-green Jaguar.
Cohen said he is awaiting a letter from the city outlining terms of an agreement. He has told creditors that he expects the lease to allow him to remain in business.
"Basically, he said this was his only hope to save his name," said a lawyer who attended a meeting May 16 of unsecured creditors and who asked not to be identified. "It wasn't a gold mine, but it would see him through."
D.C. Council members said they were unaware of the city's negotiations with Cohen until they were disclosed yesterday in The Washington Post.
Cohen said the proposed agreement is highly favorable to the city. At the end of 20 years, the city would be able to buy the building for $1.
Cohen said rent payments for the 20 years would total $150 million, but much of that might go to another developer. Cohen said he and the city have agreed that a co-developer is necessary and could take over the project. Cohen said a co-developer has not yet been agreed upon. For his efforts, Cohen said, he would receive compensation for his costs on the property and a profit yet to be determined.
Cohen said the mayor has had no involvement in the discussions, which began in November. He said the proposal was solicited by the Administrative Services Department.
Janice Brown-Glasgow, a spokeswoman for Administrative Services, disagreed, calling Cohen's proposal "unsolicited."
The property is bounded by 11th, 12th, U and V streets. Cohen said the building would contain 320,000 square feet of city office space and 128,000 square feet of commercial space.
Brown-Glasgow said she could not say which city offices would be moved to the Cohen building. The proposal would need approval from the mayor, and council approval would be required for expenditure of any money for lease payments.
The Thompson's Dairy property is part of the area designated by Cohen and the city for the Samuel C. Jackson Plaza, Cohen's proposed $250 million housing and commercial development, which has become bogged down amid financial difficulties and bickering between him and his community partners.
Cohen, 41, was an early supporter and fund-raiser for the mayor and is a godfather to Barry's son, Christopher, 9.
Cohen said last year that he faced increasing cash-flow problems, particularly on the Shaw deal, for which he owes the city about $12 million.
He and his wife have four mortgages on their house with a pool in Cleveland Park. A foreclosure sale on the home is scheduled for Monday, according to property records.
Cohen said his creditors are cooperating with him. One banker who attended the May 16 creditors' meeting described it as positive and said he believed Cohen would be able to work out his problems. However, other creditors expressed less hope.
Cohen is in default on a $5.5 million loan to the Washington Mortgage Group, a $152,929 mortgage held by Independence Federal Savings Bank, an unsecured note for $350,000 from Dominion Bank of Washington, and an unsecured note for $171,776 from Peoples Bank of Charles Town (W.Va.), according to property records and attorneys.
Staff researcher Bridget Roeber contributed to this report.