A black-controlled partnership that includes 17 officers and directors of local minority operated financial instituitions was selected yesterday to develop a $143 million hotel, apartment and office building complex near the Gallery Place Metro stop in downtown Washington.
The partner could become owner of the first major black-owned downtown development in the nation's capital if it can get financing and work out other consruction details by next May.
Yesterday's decision by the city's Redevelopment Land Agency climaxed a heated contest by five competing groups seeking rights to develop the last large parcel of city-owned land downtown.
William B. Fetzgerald, president of Independence Federal Savings and Loan Association and a principal in the Winning partnership, Capital Landmark Associates, said yesterday that the group should be able to secure financial backing, even though construction loan rates are now approaching 16 percent Fitzgerald said some potential lenders already have shown an interest in the project.
The RLA's decision places the black-controlled group in a position to own one of the key developments in the eastern section of downtown at a time when builders are vying for parcels of land in the resurging downtown area.
Hoping to guarantee minority participation at all levels, city agencies have required that potential developers have minority partners. That has led to complaints from some white developers that they are being forced to give up shares in the projects to blacks in order to win approval for the projects.
Thirteen of the partners in Capital Landmark Associates are black. They own 56 percent of the project. All 13 are directors of either Independence Federal, Community Federal Savings and Loan Association or the Industrial Bank of Washington. The fourth black-operated financial institution in the city, United National Bank, is expected to help provide financing for the project, but will not be an equity owner, Fitzgerald said.
Melvin and Edward Lenkin of Lenkin & Associates, will actually build the project. They are white and own 33 percent. Four directors of the minority-operated financial institutions who are not black won about 11 percent of the project.
Fitzgerald said yesterday that all of the partners in the project contributed proportionately to the $100,000 cost of developing the proposal. He said the selection of the black-controlled group by the RLA should be an incentive to blacks, who make up 70 percent of Washington's population.
"Obviously, for a group that is primarily minority-controlled . . . to do a project of this magnitude is very significant," Fitzgerald said. "It should serve as a role model and a stimulant and a message that the American dream is possible and that it is possible to participate fully in this system." d
The project would be built across the street from the Hecht Co. store, on the block bounded by Sixth, Seventh, F and G streets NW.
Along with the downtown convention center and a new campus for the University of the District of Columbia, both of which are to be built near Mount Vernon Square, the Gallery Place development is expected to spur new construction eastward toward the heart of downtown and also northward along the riot-scarred Seventh Street corridor.
As proposed by the Fitzgerald group, the Gallery Place development would be a single 13-story limestone or precast concrete building with four levels of underground parking and six levels of hotel rooms and apartments on the top. Plans call for 588 hotel rooms and 252 apartments for the elderly.
The ground floor and first level of the basement would be used for restaurants, coffee shops, entertainment lounges and retail outlets. That level would connect to Metro station.
About one-third of the entire space in the project, 590,000 square feet, would be devoted to offices, which would be located on the first six floors. Fitzgerald said yesterday that the complex probably will not include a major department store. He said Canadian Pacific Ltd. of Montreal already has expressed interest in building the hotel.
Board member Robert L. Moore, the city's housing director, cast the sole vote in opposition to the proposal yesterday. Moore said he thought it was inappropriate to house elderly persons in that area of downtown.
"Downtown is not ready for senior citizens yet. What you need in terms of supportive services are not adequate," Moore said. "That community will be high income. Senior citizens or persons on fixed incomes will not be able to shop there . . . We don't have many social services downtown."
Moore said he will seek a modification of the plans to provide housing for moderate and upper income persons. He said he will oppose housing low income families there. "High-rises don't work for low-income people," Moore said.
Moore also opposed the plan, he said, because its affirmative action program is less specific than those of its competitors. Fitzgerald said yesterday that he thought that apparent problem could be overcome.
"By the very nature of the development team, our actions in this area will be as strong as could possibly be done by anybody, even though we may not have expressed it as clearly as we felt it," Fitzgerald said.
Three members of the five-person board voted for the proposal -- Patricia A. King Joseph F. Hennesy and the Rev. Ernest R. Gibson. The board chairman, Nira Long, did not vote.
The principal competitor to the Fitzgerald proposal was submitted by georgetown developer Herbert Miller of Western Development Corp., who had as minority partners three black laywers who are members of city boards -- Ruby McZier, Leonard McCants and Larry C. Williams.
King, who made the motion to select the Fitzgerald group, said she was swayed in part by the diversity of those involved in the project and the fact that they had been active in the city for many years.
"As local minority people, they started 10 years ago to be concerned with the economic life of the city and with minorities," King said.
In addition to Fitzgerald and James W. Cobb of Independence, each of whom won 8.5 percent of the project, owners include Orlando W. Darden, president of Community Federal, 6 percent, and B. Doyle Mitchell and John Stewart of Industrial Bank, who own five percent each.
Among those owning three percent are physician Francis L. Smith, dentist Howard C. Davis and E. Preston Jenkins of the Independence board. Community Federal board members owning three percent each include former housing and Urban Development assistant secretary Samuel C. Jackson, and Delano E. Lewis, assistant vice president of C&P Telephone Co. and a confidant of Mayor Marion Barry.