Congress has put the District government on notice that blacks and other minorities are not to be made partners in federally supervised private development projects in the city unless they actually invest in the projects.
The message was delivered yesterday during the first meeting this year of the Pennsylvania Avenue Development Corp. (PADC) board of directors. The corporation is the government-owned corporation set up by Congress to supervise the revitalization of the ceremonial route between the White House and the Capitol.
Incorporated into a House-Senate conference report on the corporation's $1.9 million budget, was the statement: "The affirmative action plan adopted by the corporation provides for equity participation only where such equity contribution exists."
Written by Rep. Sidney R. Yates (D-Ill.), chairman of the appropriations subcommittee with budget authority over the corporation, the report "strongly supported" equity "contributions" by minority partners and instructed the corporation to make regular reports about "any pressures being exerted from other units of government urging otherwise."
The concluding statement about pressure from other governmental units was a clear reference to remarks made last fall by Mayor Marion Barry following Washington Post articles reporting that some politically connected black lawyers had received multimillion-dollar ownership interests in downtown projects without making cash investment contributions.
At the time, Barry gave an offhanded endorsement to this practice, saying that blacks should be equity partners in government-controlled private development projects even if they put up no investment cash.
Ownership participation by blacks is an extension of affirmative action policies that already exist in construction contracting, hiring and leasing.
After a public dispute with the mayor over the definition of equity last fall, Washington's largest developer and outgoing president of the Greater Washington Board of Trade, Oliver T. Carr Jr., said that the debate was largely settled two weeks before Christmas during a private meeting between black and white business leaders.
The meeting was held in the Board of Trade chambers. Carr said the black business leaders who attended lawyer Larry C. Williams and bankers Orlando Darden and William Fitzgerald, "agreed to disagree" with the mayor. Carr said there was a consensus that the definition of equity in Washington would be "cash or real services" in return for ownership interest.
Darden, who is president of Community Federal Savings & Loan and a member of the corporation board, said he does not remember any agreement to disagree with the mayor coming out of the meeting.
However, he said the definition of equity arrived at "was the same as it has always been: the investment of cash or in-kind services."
Darden also said that the Board of Trade's board of directors adopted a resolution at a meeting yesterday stating a definition for equity in the same terms.
The corporation is currently supervising two major development projects -- both costing around $100 million where developers will be required to seek out minority partners. The projects are the restoration of the Willard Hotel and the redevelopment of the National Theatre block.
Local attorney James W. Cobb, who sits on the board of Independence Federal Savings and Loan, the largest minority-owned savings and loan institution in the District, has said that he has an agreement with Willard developer Stuart Golding to become a partner in the project.
Golding said yesterday that he has told Cobb that Cobb will have to come up with $1 million in cash in return for 5 percent of the equity in the Willard project. "I told him to come up with the dough and he has never come back to me," said Golding.
Also, because of the controversy over the definition of minority equity participation in D.C., Golding said he is considering seeking out wealthy blacks and women investors from New York to help him raise what he says will be $20 million in equity funds for the $75-million project.
As it stands now, Golding says he has invested $1 million of his own funds on preliminary plans, consultant fees, legal fees and other expenses preparing for the Willard restoration, which may not start until this summer, substantially behind schedule.
On the other corporation project, the restoration of the National Theatre block, developers Quadrangle Development Corp. and Marriott Corp. say they will not begin discussions about minority partners until later this year.
The message from the congressional conferees prompted sharp reaction from Mayor Barry's representative on the corporation board, James Gibson, director of the city's office of planning and development.
Gibson, who chairs the corporation's affirmative action committee, criticized the corporation staff for not referring the congressional budget message to his committee for study and possible comment.
Black members of the corporation board, including former city council chairman Sterling Tucker and Peggy Cooper of the D.C. Arts Commission, were particularly angered by a report that the corporation staff was notified about the conferees report and replied to congressional staff members that the corporation staff members that the corporation has "no problem" with the language of the report.
Tucker, who is now an assistant Secretary of the Department of Housing and Urban Development and HUD's representative on the corporation board said that the staff had preempted the "policy role" of the board.
In other corporation business, the directors were told that a lawsuit filed by downtown developer Carr, asserting his right to be a part of the Willard restoration project, has been tentaively settled.
Carr had argued that because he owned part of the land on which the Willard is to be expanded, he had first right to develop the site in accord with the corporation plan.
Carr and his partners in the land, two members of the Theodore Roosevelt family, will be paid a record $235 per square foot for the land in return for a dismissal of the suit.
And, finally, the corporation board approved the "program" proposal of the United Service Organization (USO), which hopes to build a new world headquarters in the 600 block of Indiana Avenue NW. Among other things, the lobby of the USO center would feature a permanent exhibition of Bob Hope memorabilia from 37 years of USO show tours.
Final approval of the project is still in the future.