The deal was straightforward: In exchange for a multimillion-dollar D.C. tax break, a hotel developer in one of Washington’s best-known neighborhoods agreed to hire more than 300 construction workers, all of them city residents.
Yet as work on the Adams Morgan hotel approaches completion, D.C. officials say that the developer has hired just 25 percent of the workers it promised to employ and is in danger of forfeiting the $46 million tax abatement.
The District will make a final assessment of the developer’s hiring performance after The Line hotel opens early next year.
But as of last week, with construction scheduled to be completed by Thanksgiving, the developer has hired 90 city residents, or about 26 percent of the 342 required under legislation enacted three years ago by the D.C. Council, according to city officials.
Construction on the hotel began in March 2015.
“We are not playing on this,” said Courtney Snowden, the city administration’s deputy mayor for Greater Economic Opportunity. “Our expectation is that every developer will meet the negotiated agreement and we will bring our full enforcement to bear.”
Jake Lamstein, the chief development officer for the Sydell Group, the project’s developer, wrote in an email that “we will meet and likely exceed the obligation” required to obtain the tax abatement.
However, Lamstein disputed that the developer’s obligation is to hire 342 city residents for construction jobs. Instead, he contended that the legislation requires the developer to fill 51 percent of the 342 jobs — or 175 positions — with D.C. residents.
“Please know that we are resoundingly committed to meeting this and all the other commitments we made as part of getting this project approved,” Lamstein wrote.
Asked about Lamstein’s contention that his team had to hire only 175 residents, Faith Leach, Snowden’s chief of staff, replied: “We are holding the developer accountable” for 342 positions.
The Sydell Group’s hiring record became an issue after Bryan Weaver, an Adams Morgan neighborhood leader who helped negotiate the jobs agreement, complained to city officials that the developer was nowhere near fulfilling its obligation.
But Weaver also contends that the District government has not monitored the project closely enough. “It’s malfeasance by laziness,” Weaver said. “The community has been failed at every level by this project.”
The 220-room hotel, on Columbia Road at the center of Adams Morgan, is to encompass the stately 1912 building that housed the First Church of Christ, Scientist, as well as a new eight-story building in the rear. The hotel will feature a rooftop patio, indoor pool and two restaurants run by high-profile local chefs.
Community leaders in Adams Morgan, a longtime hub for bars and restaurants, are hoping that the hotel will spur more daytime traffic in the neighborhood, creating demand for other types of businesses to diversify the commercial base.
Six years ago, when the developer was seeking the tax abatement, Weaver was a member of Adams Morgan’s Advisory Neighborhood Commission. He said he was invited to a meeting with then-council member Jim Graham (D-Ward 1) and Brian Friedman, a developer on the project.
Weaver said the men asked him what the community would need to support the tax break. He suggested construction jobs. “I get a call every day from a young guy in the neighborhood looking for a job,” Weaver said.
Initially, the legislation that the D.C. Council passed required that city residents fill 765 construction jobs.
A subsequent amendment reduced the number to 342. The legislation also requires that 51 percent of the “permanent jobs in the hotel” be filled by District residents, with half of those positions taken by residents of Ward 1, which includes Adams Morgan.
Last April, a year after construction began, Weaver, in an email to the developer, contended that the Sydell group was “playing fast and loose” with its obligation to hire city residents to work on the project.
“You guys are not remotely on track,” he wrote. “What gives?”
Steve Harloe, a Sydell Group executive, responded that the developer had hired 32 District residents for construction jobs by that point, and that “we are well positioned to exceed the minimum construction job requirements.”
Weaver also complained to council member Brianne Nadeau (D-Ward 1), who succeeded Graham. At first, Nadeau believed that the developer was complying with the law. But Nadeau then learned from Weaver that she was mistaken, in part because she had reviewed a wrong draft of the legislation.
Nadeau, in an interview, said the confusion resulted from Graham’s office not leaving behind a detailed “transition memo” when he left the council at the end of 2014.
“There’s a developer taking advantage of a transition in government,” she said.“It’s outrageous that the statute is not being properly enforced, but it’s equally outrageous that a developer would seek a $46 million tax abatement and make hardly any effort to fulfill its obligations to our community.”
Lamstein, in an email, said the developer is seeking to meet with District officials “to align tracking and understanding of this obligation.”
“We are not clear where the misalignment in information exists and hope to remedy this at our meeting,” he wrote.