Washington developer Oliver T. Carr Jr. has won a three-year battle to wrest control of the renovation of the historic Willard Hotel from Stuart S. Golding, the Florida businessman who was granted exclusive rights to the project in 1978 but then failed to obtain the necessary financing.
Threatened with the loss of a lease agreement with the Pennsylvania Avenue Development Corporation (PADC) to refurbish the massive hotel unless he found a financial backer by Dec. 1, Golding reluctantly turned to Carr, his longtime competitor, for help in salvaging the $90-million project.
Carr has pledged to obtain financing for the project through the Equitable Life Assurance Society of the United States in return for a major say in revising the plans for the hotel and adjoining commercial property on the northwest corner of Pennsylvania Avenue and 14th Street NW, according to a source close to the negotiations.
A member of the PADC, who asked that he not be identified, said there was little doubt that Carr would be calling the shots from now on. "He who pays the piper calls the tune," the official said.
The agreement, if approved by PADC directors when they meet Wednesday, would solidify Carr's position as Washington's premier commercial developer and give him control of a hotel project that has been described as the "crown jewel" of redevelopment efforts along Pennsylvania Avenue, between the White House and the Capitol.
After the city's riots in 1968, Carr stood his ground while other developers fled to the Maryland and Virginia suburbs. Since then, he has cut a lucrative swath of "post-modern" office buildings, retail stores and condominium apartments stretching from Georgetown east to Foggy Bottom and West End, along Pennylvania Avenue and M Street and on to 12th and G streets NW, near the Metro Center subway stop.
And now Carr is single-handedly bridging the older section of downtown Washington east of 15th Street with the newer section to the west with completion of the Willard project as well as an office and retail complex on the block just north of the Willard anchored by Garfinckel's department store near 15th and G streets.
Max N. Berry, a lawyer and chairman of the PADC, and two other board members confirmed late last week that Carr and Golding's partnership, the Willard Corporation, would jointly present a new, "financially viable" plan for redeveloping the hotel and adjacent property at Wednesday's meeting.
Carr and Golding, a major Florida shopping center developer, held preliminary talks with members of a PADC subcommittee about 10 days ago, according to Thomas F. Murphy, a board member.
"The two of them Golding and Carr sat down like they were bosom buddies," said Murphy, chairman of the Masonry Industry Committee. "We were so pleased to see somebody with money."
James O. Gibson, the D.C. government's planning director and a member of the PADC, said, "The prospects are rising" that Carr will assume a major role in the Willard project, adding that, "I anticipate there will be some dramatics on that score" at Wednesday's meeting.
Under the new plan being worked out, the old Willard will be renovated to a luxury hotel and shops, and a new office building will be erected next door. The exterior of the office building will mirror the Willard's beaux arts architecture, complete with cornices, turrets and porticos. The New York architectural firm of Hardy, Holzman and Pfeiffer, which did the original plans for Golding and his partner, the Fairmont Hotel Corp. of San Francisco, will be retained to do the new design.
Carr has insisted all along that the hotel project couldn't pay for itself unless commercial office space were added to supplement the project's revenues. As one of nine developers to bid on the project in 1978, Carr at that time proposed to erect a contemporary office building between the Willard and the Hotel Washington, which is located nearby at 15th Street and Pennsylvania Avenue. But PADC board members were wary of turning Pennsylvania Avenue into another K Street, with rows of office buildings that were brimming with workers during the day but nearly deserted at night. One PADC member distainfully dismissed Carr's proposal as "another IBM card building."
But Golding's plan for 600 luxury hotel rooms, a retail mall and an open court was thwarted by near record high interest rates of about 20 percent and widespread reluctance among private and institutional investors to buy into a project that lacked high-rent office space. Golding waited until April 1980 to sign his lease with the PADC, about 15 months later than expected. And then he missed a series of deadlines, set by the increasingly impatient PADC, for arranging long-term financing.
"It's hard to get a loan on a hotel that big, and lenders shied away from it," said Kenneth Golding, son of Stuart Golding and manager of his father's business affairs in Washington. "They like a mixed use on a site."
Stuart Golding apparently came close to negotiating a financial package with Connecticut General Life Insurance Co. last spring, according to one source, but Golding pulled out after concluding Connecticut General's terms were too stiff. Connecticut General's district manager was not available for comment late last week.
Carr, meanwhile, did what he could to foil Golding's plans. For example, Carr this year helped to block Golding's attempt to obtain a $20 million federal Urban Development Action Grant to partly finance the project. Earlier, Carr went to court to try to stop PADC from seizing a parcel of land he owned on the Willard block that Golding needed to carry out his plans. Although the courts ruled against Carr, he succeeded in adding to Golding's problems.
"What annoys the hell out of me is Carr is trying to block this thing," Golding told a reporter last May. "I haven't gotten the support where I should . . . on this."
When Golding admitted to the PADC on June 10 that he and his partners still hadn't arranged even partial financing of the proposed renovation, the quasi-public corporation gave Golding until Dec. 7 to come up with the money. With his back to the wall, Golding reluctantly turned to Carr for help.
A source familiar with Carr's activities said last week that the project "was in trouble without a new team" and that Golding "didn't have much time left."
The source characterized the agreement as a marriage of convenience, with Carr able to deliver the crucial financing and Golding holding the lease. Equitable Life Assurance Society, the company expected to finance the newly constituted project, has backed many of Carr's previous ventures, including International Square at 1850 K St. NW.
Robert Blakeman, Equitable Life's Washington area division manager, declined to say whether his company had become involved in the Willard project. Carr and his associates failed to return repeated phone calls from The Washington Post.
Gibson, the city's planning director, said Carr's apparent relative ease in arranging financing for a major project "speaks to the strength of the local developer."
"Carr has major, diverse investments in Washington," Gibson said. "He has an excellent track record . . . . He has credibility with financial sources."