The District of Columbia urban renewal agency rescinded the right of two of the city's most prominent businessmen yesterday to develop the coveted Metro Center site in the heart of downtown after the developers--Oliver T. Carr and Theodore R. Hagans Jr.--refused to pay the agency's asking price of $51.6 million.
The unprecedented decision by the D.C. Redevelopment Land Agency left the city bereft of a developer for a primary urban renewal project that was to ignite the rebuilding of other parts of downtown east of 15th Street.
The decision also ended eight months of often heated negotiations between the developers and the agency's negotiator, city Housing Director Robert L. Moore, which only two weeks ago appeared close to settlement but then fell apart.
Immediately after the agency's 3-to-0 vote (with two abstentions), Carr said he would file a lawsuit to win back the three parcels north of G Street between 11th and 13th that make up the 3.7 acre Metro Center site.
"We don't have any intention of just walking away," Carr said.
But at an afternoon press conference where Carr representatives repeated their intention to go to court, Hagan demurred saying, "I'm not making any court threats."
Hagans said he was still optimistic that the developers and the city could reach an agreement. "I'm still trying to do do something to clear this up," said Hagans, adding that he intended to talk with Mayor Marion Barry. "I think it was simply a mistake" and the RLA will recognize its mistake, he said.
RLA Chairman Nira Long said after the meeting that she was unsure where the board would look next for a developer. She said they can either readvertise the property or simply ask the three development teams who bid on Metro Center and lost out if they were still interested.
The rejection of the Carr-Hagans team marked the third time that the board has been unable to solidify plans for the site, which, like other RLA-owned properties across the street and at Seventh and G streets, is well behind schedule.
The action also left open Washington relocation plans for the Hecht Co., which had been hoping for some time to leave their present location at Seventh and F streets and move to Metro Center.
Hecht Chairman Edgar Mangiafico said yesterday that store officials were assessing the impact of the board's action. "We have previously indicated that the Hecht Co. finds itself with an unprofitable store downtown," Mangiafico said. "The continued delays and uncertainty therefore is of great concern to us."
The Rev. Ernest R. Gibson, the RLA board member who made yesterday's motion to terminate the Carr-Hagans team's development rights, said he could not understand why the negotiations had broken down after the board members had been assured two weeks earlier by both sides that an agreement could be reached within five days.
The Metro Center site consists of three parcels of land, for which the city had originally asked $61 million, which was later lowered to $54 million. Carr and Hagans initially offered $34.5 million and later raised that to $37 million.
At the agency meeting two weeks ago at which the settlement appeared near, Carr said that the city had agreed to let him abandon plans for the hotel and instead build an office building, which Carr contended would be more economically feasible. In return, Hagans and Carr were expected to raise their offer.
At the point, both sides said that an agreement could be reached within five days.
In subsequent days--and especially yesterday--it became clear that the hotel issue had not been fully resolved and in the end, it was the price of that parcel of land on which the hotel was to be built that blocked an agreement.
Carr said yesterday that Moore had agreed to reduce the land price for two of the parcels, but not for a third.
Moore said yesterday, however, that those reductions had nothing to do with the hotel. He said he agreed to a lower price on one parcel as an incentive for the Hecht Co. to relocate in the project, and to a reduction on a second parcel to prevent a planned new office building from overcrowding the Church of the Epiphany, located at the corner of 13th and G streets. But Moore said the city had never reduced a land price for a hotel.
Last week, Moore sent Carr and Hagans a letter setting a final price of $51.6 million. On Monday, the developers responded by saying that they would agree to that price, but stipulated that the contract should be contingent on a determination by a court of whether the $51.6 million price was too high.
Moore said yesterday he received the response at 4:44 p.m. But "the strident and combative tone of Mr. Carr's letter I believe is an indicator of bad faith negotiations . . . ."