For nearly a year, the District has paid $56,000 a month for unused office space in a deteriorating Southeast Washington shopping center, under a 10-year lease arranged by Yong Yun, a D.C. businessman whose ties to former mayor Marion Barry once were the subject of a federal investigation.
The lease, approved last year by then-Chief Management Officer Camille C. Barnett and the D.C. financial control board, was intended to provide social services offices in the Penn Branch Shopping Center, at Pennsylvania and Branch avenues SE. The lease payments -- eventually totaling nearly $7 million -- were to be covered primarily by federal money aimed at welfare programs.
But then residents of the middle-class neighborhoods nearby protested, saying the offices should be closer to people who need social services. So Barnett's office made plans to put the social services offices elsewhere -- and in the process, left the city responsible for the lease payments on unoccupied space at Penn Branch.
Now Mayor Anthony A. Williams's administration has come up with a plan more palatable to residents, featuring a "mini-town hall" that will include a small police station and a Department of Motor Vehicles office. Those offices are scheduled to open around Thanksgiving.
But as the bill for the Penn Branch project has risen to more than $500,000, it has become something of a symbol for D.C. Council members, who want Congress to restore their authority to review city lease contracts and say they didn't get a chance to review the Penn Branch deal.
Much of the council's authority on such matters was given to the presidentially appointed control board four years ago, under the emergency congressional bill that stemmed from the city's near-bankruptcy -- a crisis fueled, in part, by the inattention of past councils to city contracts.
But this is a more aggressive council, whose members are eager to resume a lead role in city contracting -- and not reluctant to point out that mistakes also can happen when others oversee the contracting process.
"It tears my heart apart when I see my tax dollars just passed away like that," council member Jack Evans (D-Ward 2) said of the Penn Branch deal. "It's outrageous."
Evans and other D.C. officials questioned why the control board and Barnett did not have a backup plan for the Penn Branch office space before agreeing to the lease.
Andrew F. Brimmer, who was chairman of the control board at the time, declined to comment. Barnett, who was ousted from her post this year by Williams, did not return several telephone messages seeking comment.
Several council members also were not happy to learn recently that the Penn Branch lease had been arranged by Yun, an officer with Pennbranch LLC, the city's landlord in the deal.
Yun is the Barry associate who drew federal prosecutors' attention in 1995, when Barry's housekeeper accused the businessman of trying to get her to recant a claim that the mayor's wife, Cora Masters Barry, had diverted campaign funds. The Barrys denied any wrongdoing, and no charges resulted from that investigation.
As part of the investigation, prosecutors also reviewed Yun's financial dealings, including his work as a contractor on Barry's home and a lease he had with the city for an office building Yun owned. That lease began as a 10-year, $6.5 million deal, but under Mayor Sharon Pratt Kelly was amended five times and elevated to a $17.6 million, 20-year deal.
As a result of the probe of Yun's finances, he wound up pleading guilty to using a $172,400 construction loan for personal use. He was ordered to pay the money back over several years, fined another $2,000 and required to do 300 hours of community service.
It's unclear why Barnett chose Yun's Penn Branch project for the more recent contract, or whether she, having been on the job less than a year when the Penn Branch contract was signed last year, knew then that many D.C. officials were wary of doing more business with Yun.
Francis Smith, the control board's new executive director, said board members did not know Yun was involved in the Penn Branch deal when Barnett brought it to them for approval.
Yun's attorney, Charles Thomas, said that his client "would prefer not to comment" on the Penn Branch lease, adding that although Yun no longer is an officer with Pennbranch LLC, he continues to be involved in the project. Thomas said Yun's other contract with the city is running smoothly.
Meanwhile, D.C. officials -- including top aides to Williams -- aren't shy about criticizing the Penn Branch deal endorsed by Barnett and the control board.
"It was just mismanaged from the outset," said Interim City Administrator Norman Dong. "It's pretty stupid for them to enter into a lease like this without doing the proper financial planning and having a ready tenant."
Roscoe Grant, an advisory neighborhood commissioner in Ward 7 who was involved in the debate over whether the Penn Branch site should house social services agencies, said the city is paying the price for putting forward a plan without consulting the community first.
"When the citizens found out what they were doing, the city had to pull back," Grant said. "I still think it's still kind of smelly."
Council member Kevin P. Chavous (D-Ward 7), who represents the area where the Penn Branch center is located and was a mediator during the dispute between Barnett's staff and residents over the social services proposal, said that after all the debate, "I'm not happy with the fact that [the city's leased space] is still vacant."
Like Evans and council members Kathy Patterson (D-Ward 3) and Charlene Drew Jarvis (D-Ward 4), Chavous said the case reflects the need for more council authority to review city leases.
The District's budget for next year, still being hashed out on Capitol Hill, includes language that would give the council and the mayor the authority to break a lease on office space if the city left the space unoccupied for 90 days. Rep. Ernest J. Istook Jr., chairman of the House Appropriations subcommittee on the District, offered the plan after recent reports in The Washington Post that the city had paid $2 million since 1992 to lease two empty buildings in Columbia Heights.
Council members are lukewarm to the plan, fearing it could drive away prospective landlords. They want Congress to give them more upfront authority on city leases, which they say would help avoid money-wasting deals.
"The mayor and council are moving aggressively to make sure that every bit of space that the District leases from private [firms] has agencies in it," Jarvis said. "We are serious about closing the loop."
Staff writer Stephen C. Fehr contributed to this report.