The two buildings, eight miles apart, have little in common. One is the 79-year-old Roosevelt Hotel in Northwest Washington, once one of the District's finest addresses, now vacant after having been a senior citizens complex. The other, across the Anacostia River, is Greater Southeast Community Hospital, a 280-bed facility fighting to stay open.
Yet the fates of the buildings became intertwined this year, part of an intricate financing deal in which the D.C. government used the dilapidated, city-owned Roosevelt as collateral to help secure a $3.1 million loan.
That money then was sent to financially ailing Greater Southeast, part of an $8.5 million city bailout that has kept the privately run hospital on life support while it tries to recover from bankruptcy.
Now, with Greater Southeast facing possible liquidation to satisfy creditors who are owed $70 million, D.C. officials have refused to contribute any more to the facility and encouraged it to accept a buyout offer from an Arizona firm. Mayor Anthony A. Williams (D) isn't willing to do another financing deal for the hospital such as the one involving the Roosevelt.
The Roosevelt-Greater Southeast deal offers a window into the lengths to which city officials went to secure more money for the hospital without dipping into budgets for city programs.
The deal also is the backdrop for the planned redevelopment of the Roosevelt, which must be sold for the city to reclaim the money that was sent to Greater Southeast.
A Philadelphia developer is offering the D.C. financial control board $8.4 million in cash to redevelop the Roosevelt, $2 million above its appraised value. The bid is a reflection of developers' confidence in the District's economic turnaround, particularly in the area near Adams-Morgan, where the building is located.
The financing tale began in July, when D.C. officials were looking for ways to aid the struggling hospital. Williams asked the D.C. Council for permission to transfer four city-owned buildings in Northwest Washington to the presidentially appointed control board, which unlike the city government has the authority to arrange such a deal.
D.C. Council members agreed to the idea but didn't support the mayor's choice of properties: two vacant firehouses, a former women's prison and the Recorder of Deeds Building at 515 D St. NW. At council member Jim Graham's suggestion, the council recommended transferring the Roosevelt to the control board, since the redevelopment of the apartment hotel was imminent.
The control board in turn used the surplus property as collateral for a $3.1 million grant to the city, which then loaned the money to the hospital. The control board now plans to resell the property, keep the $3.1 million it granted the city and give the rest of the profits from the sale to the D.C. government.
"I thought [the financing deal] would move the Roosevelt project along," said Graham (D-Ward 1), who represents the area at 16th and V streets NW that includes the building. The project calls for restoring the 364-unit Roosevelt with condominiums and retail stores.
Terry Lynch, a housing advocate and executive director of the Downtown Cluster of Congregations, said such shifting of property ownership to the control board is reckless policy. Developers may back away from downtown D.C. housing projects, he said, if the properties are tied up in such loans based on political decisions.
"There's got to be a different way of saving Greater Southeast than risking timely redevelopment in D.C.'s neighborhoods," Lynch said.
But control board Executive Director Francis A. Smith and the developer whose bid for the Roosevelt is being considered by the board said the Greater Southeast loan would not hold back the Roosevelt redevelopment plan. With the one finalist bidding $8.3 million and the other bidding $9.2 million, the control board will easily recoup its grant, they said.
The control board is reviewing a recommendation from D.C. housing officials to accept the bid of Amerimar Enterprises of Philadelphia, which is offering $8.3 million in cash for the right to redo the Roosevelt. The other finalist, D.C. developer Georgio Furioso, bid $9.2 million, largely from HUD financing.
Furioso, while stressing he did not want to come off as having a sour-grapes attitude, questioned why housing officials did not favor his higher bid.
Othello Mahone, interim director of the D.C. Department of Housing and Community Development, declined to discuss the bids, although another source familiar with the decision said Amerimar's all-cash offer was compelling. HUD financing often takes several months to obtain and could have slowed the Roosevelt project.
"We took the highest responsible bid," Mahone said.
Staff writer Sandra Fleishman contributed to this report.
CAPTION: The Roosevelt Hotel at 16th and V streets NW is due to live again as a condominium building once a developer buys it from the D.C. control board.