The developer of the popular D.C. foodie destination Union Market is pushing city officials to fund $90 million in street and infrastructure improvements to support plans it and other developers have to add apartments, office space, hotels, a movie theater and other amenities.
Edens, based in South Carolina, opened Union Market in Northeast D.C. in 2012. Featuring mostly local vendors selling gelato, olive oil, oysters and other specialties, it is an upscale retail presence in the warehouse district between Florida and New York avenues. It draws big crowds, particularly on weekends.
In the past couple of years Edens has been working to expand its vision by buying more industrial properties in the neighborhood and submitting plans to the city for new shopping and apartments.
[Related: Two years in, Union Market thrives]
Other landowners have begun fashioning ambitious plans for the area as well, including Gallaudet University, which owns land adjacent to Union Market and has partnered with Chevy Chase developer JBG Cos. on a project to better integrate its campus with its surroundings.
The future plans are contingent, however, on basic improvements to the neighborhood’s water pipes, sewer systems, electrical connections and street scapes, according to Steve Boyle, Edens managing director.
Boyle said he is leading a coalition of developers who want to see improvements in the 45-acre area, spanning from New York Avenue, to Florida Avenue and Sixth Street NE. Because his company started building first, he said it was the first to identify problems like water pipes dating from the 1800s.
“We were the ones that were sort of ahead of it all, and as we got deeper and deeper into the development we found out that we had to run a new water line…it was almost $700,000 to do that. That’s when we thought holy [cow] what else is under there? And we realized it was going to be a big issue,” he said.
After a request from Edens and other property owners, D.C. economic development officials under former mayor Vincent C. Gray (D) agreed to pay for a study of infrastructure needs in the area. Boyle said the resulting study suggested the need for $135.5 million in infrastructure, helping support an area that could ultimately produce 8 million square feet of development, 20,000 jobs and $139 million in annual corporate, property and income tax revenue.
Economic development officials under D.C. Mayor Muriel E. Bowser (D) said they could not locate the study. Brian Kenner, D.C. deputy mayor for planning and economic development, said that he had not seen it and had not met with Edens about the project but said that “having Union Market pop-up in that area has been fantastic.”
“It really has anchored that area for a few years now and there obviously will be a point at which others will build off of it. It’s helped to brand the area, and from an economic development perspective it’s been important,” Kenner said.
Bowser did not include money for Union Market in her most recent budget proposal but members of the D.C. Council, led by Kenyan R. McDuffie (D-Ward 5), inserted budget language asking that she seek borrowing authority for money needed to support “a vibrant mix of uses, transit-oriented development and a connected network of public realm improvements” in the area.
The budget, which the D.C. Council passed Wednesday, does not suggest a dollar figure but Edens and city officials familiar with the discussions said the request is for $90 million spread over three years. D.C. would provide the funding by way of tax-increment financing, in which it borrows money against anticipated tax revenues that the development is expected to produce.
That amount would constitute one of the largest economic development subsidy requests in recent years. A new D.C. United stadium, planned for Buzzard Point in Southwest, is slated to receive at least $150 million in direct investment and an additional $43 million in forgone tax revenue.
D.C. has successfully used tax-increment financing to help build Gallery Place, the Mandarin Oriental hotel and other projects but employed the funding strategy so much that it has run up against a cap on borrowing that limits what the city can provide in subsidies to the United stadium and other projects.
Borrowing $90 million for Union Market could strap the city’s ability to pay for other priorities. Edens, by contrast, received a $1.5 billion infusion from investors including private equity giant Blackstone Group a year-and-a-half ago.
Kenner said he wasn’t sure whether the administration would back the proposal:
“If there are ways that we can be helpful I’m fine with talking about that, but does it have to be infrastructure? I don’t know.”
Staff writer Aaron C. Davis contributed.
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz