The Barry administration announced yesterday that it had signed a multimillion-dollar lease with a developer and close associate of the mayor's for office space in the H Street corridor, triggering criticism from D.C. Council members who threatened to try to kill the agreement.
The government also announced that it had signed a $14.3 million contract to buy fuel oil from Tri-Continental Industries Inc., a longtime supplier. The deal would cost $500,000 more than if the city bought the oil under a cooperative purchasing program run by the Metropolitan Washington Council of Governments, according to city documents.
The two deals were among 14 contracts that D.C. Mayor Marion Barry said he intends to submit to the council for review, to comply with recent emergency legislation requiring the mayor to obtain council approval for any contract or lease worth more than $1 million.
The legislation was strongly backed by Mayor-Elect Sharon Pratt Dixon and council members who expressed concern that Barry might use the final months of his term to reward political allies and friends with valuable contracts and land deals.
The lease, worth roughly $1.7 million annually for 20 years, is with a partnership headed by developer R. Donahue Peebles, a close associate of Barry's and a former chairman of the city board that hears property assessment appeals.
The mayor's Commission on Budget and Financial Priorities, headed by Alice M. Rivlin, said in a recent report that the D.C. government's activities are spread out in too many locations and that too much of the city's office space is leased.
The commission recommended that the city reduce leased space by two-thirds as leases expire.
Council member Betty Ann Kane (D-At Large), chairman of the Government Operations Committee and author of the emergency legislation, said last night that the batch of contracts submitted by Barry indicates that the council was justified in seeking the emergency powers.
"This is the first time the council will have an opportunity to do anything but complain," Kane said.
She said there is "no justification" for the new fuel oil contract, which is an extension of a contract awarded to Tri-Continental a year ago. Tri-Continental, which obtained its contract through a D.C. program that sets aside about a third of the city's contracts for certified minority-owned firms, also was awarded a $3.5 million contract to provide lime to the city.
Council members frequently have complained about the contract, and as part of the budget approved this year, they reduced the authorization for fuel oil buying and said the savings could be achieved by using the COG cooperative buying program.
"They shouldn't be spending all that extra money when they could get it for so much cheaper," Kane said.
Barry has defended the contract as a means of steering business to a minority firm.
Barry and Raymond A. Lambert, director of the city's Department of Administrative Services, defended both contracts at a news conference yesterday and said the city would be getting a bargain with both deals.
Barry described the council's emergency legislation as unduly burdensome and said it would not save the city money. The council is scheduled to consider permanent legislation Tuesday to require the mayor to submit all contracts and leases worth more than $1 million for review. Dixon is opposed to the permanent legislation.
"I'm the guardian of the public treasury," Barry said, dismissing concerns expressed by Dixon transition team officials. "The process is fair. It does not allow for circumvention."
Among the other contracts announced yesterday was a $9.2 million agreement to operate the J.B. Johnson Nursing Center. The contract goes to the current operator of the center, Urban Shelters & Health Care Systems Inc., which is headed by Roy Littlejohn, a longtime Barry friend and political ally.
Barry described the lease with Peebles as a "sweet deal" for the city. Under the proposal, the property at 642 H Street NE will be renovated during the next year and will become the new headquarters of the city's Department of Human Services.
Barry said the Peebles lease is less expensive than the lease DHS has at its current headquarters at 801 North Capitol St. Lambert said the city will pay $17.82 a square foot for the new building, which has 98,000 square feet of floor space.
Barry also noted that under the terms of the new lease, the city will assume ownership of the building after 20 years. Previous long-term lease agreements allowed developers to retain ownership of the buildings. Barry said the lease "is going to save the government money."
Peebles was unavailable for comment yesterday.
During the news conference, Barry also announced that he was preparing to submit to the council a five-year space and leasing plan for city agencies. The plan should have been submitted to the council last spring, according to Kane, who frequently has complained that the city has entered into expensive lease deals without a coherent strategy for handling its office needs.
Council Chairman-Elect John A. Wilson said yesterday that he will oppose the Peebles lease on the grounds that there is no pressing need to go ahead with the proposal.
"We ought to let the new mayor decide all that -- whether we need more space," said Wilson, a Ward 2 council member. "It won't be built in the next six months, so we can wait."
Under the emergency legislation, the lease agreement cannot take effect unless the council approves it. The fuel contract will take effect unless the council acts to block it.