In 2008, the D.C. government selected Donohoe Development from a crowded field of companies interested in building a hotel on city-owned property at 5th and I streets in Mount Vernon Triangle.

Nearly four years later, the site remains un-built, and Mayor Vincent C. Gray (D) is done waiting. His economic development team informed Donohoe on Feb. 22 that it was cutting ties with the company.

James “Jad” Donohoe IV, director of development for Donohoe, declined to comment.

Donohoe initially promised a 475,000-square-foot project made up of a 261-room Spanish luxury hotel by Meliá Hotels International and a 160-unit apartment building, with housing for artists, and retail space.

But the company made little progress in years of negotiations with the city, according to Jose Sousa, spokesman for Victor Hoskins, deputy mayor for planning and economic development. After Donohoe failed to acquire adjoining properties that could have maximized the project, the city agreed to restructure and downsize the project. But Donohoe never produced detailed architectural or financing plans, according to Sousa, and the District said it plans to re-bid the project later this year.

“We have given the Donohoe team numerous opportunities to meet the requirements set forth for them, and ultimately when they failed to do that, we came to the realization that this team is not capable of meeting the objectives here,” Sousa said.

“We just think it’s time to go in a different direction,” he added.

Since Donohoe’s selection, the neighborhood has become one of the Washington area’s hottest development markets. Two apartment projects are under construction near the site, and a third is planned nearby. A new headquarters for the Association of American Medical Colleges is under construction two blocks east, and a new headquarters for the law firm Arnold & Porter a block east is to break ground this summer.

Bill McLeod, executive director of the Mount Vernon Triangle Community Improvement District, called the split a “big surprise.” In November, District officials and Donohoe met with the community to consider next options. “Everybody around the room pretty much decided it would be better to stick with Donohoe because that would be faster than if they re-bid the whole thing,” McLeod said.

“We’re anxious to have this hotel up and running as soon as possible, so I hope this is an indication that they will be moving quickly,” he added.