West End deals

Image: current West End Library, Washington, DC. It is a two-story district in a district that allows for buildings up to 10 stories high. Image by AgnosticPreacher's Kid, Wikipedia.

(Of course, the title of this blog entry is inspired by the Pet Shop Boys song, "West End Girls.")

Press release from the DC Library Renaissance Project:

Affordable Housing Waiver in West End Leaves Questions Unanswered: Despite Calls for Affordable Housing, Zoning Commission Okays Waiver to EastBanc in West End

On January 13, 2012, the DC Zoning Commission voted to approve a waiver of affordable housing requirements for a luxury condo development in the West End by EastBanc/WDC Partners. The vote came just one week before affordable housing emerged overwhelmingly as the top priority from the Mayor’s One City Summit.

(Image left: proposed new building on the site of the West End Library, as designed by Enrique Norten.)

The Commission’s written decision will not be issued for some weeks, but in public deliberations, commissioners failed to clarify many questions, including ones they raised. Most notably, how can construction of the library and firehouse be considered “amenities” worthy of a waiver of legally required affordable housing, when the cost of construction for these facilities is being paid by taxpayers, not EastBanc?

Other questions remain.

• Why is city land assessed at $30 million being sold for $20 million?
• Why did the city negotiate a per square foot price of $91 when the independent land valuation listed comparables at $150-190 per square foot?
• Why is EastBanc exempted from the initial deed and recordation transfer fees worth $2.1 million?
• Why is the city paying for an interim library and firehouse and for relocation of the Special Operations Police Station? (And, by the way, where is the new location?)
• Why is the city paying for library parking?
• And what about the other developer who competed for the bid under terms that have now been substantially changed?

By far the most resounding question is, “What price would this land fetch on the open market?” Ward Two Councilmember Jack Evans has frequently noted that these parcels are the “last underdeveloped land” in the West End, located between Georgetown and downtown K Street.

“This is some of the most valuable land in the country. Developers don’t need incentives to build here,” said Robin Diener Director of the DC Library Renaissance Project, which opposed the PUD at the recent Commission hearings. ”If the land were simply put up for sale, there would be a bidding war worth untold millions to the District.”

DCLRP also contends that the construction budget for the new library is grossly inflated. In addition, the presence of a library operated at city expense is a significant value to the EastBanc development, but that contribution was not accounted for in this equation despite being raised by the Commission itself.

“Once you consider all the waivers and exemptions and discounts, EastBanc is getting some of the city’s most prime land at what can only be called a fire sale price,” concluded Diener.

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My reaction:

I don't see enough public purpose value received from this project to be worth giving up the publicly owned properties, unless they think that the long term value of replacing the public library--that because it is in a mixed use building that they don't control, it will never be allowed to become decrepit--is worth $20MM.

Monetizing public property in this way should generate extranormal qualitative (policy) and quantitative returns, not just an increase in property tax revenues.

Plus it should be a matter of public policy that whenever new housing is built, it includes affordable housing--especially when it involves city-owned land.

Frankly, I think that at least one of the buildings should be 100% affordable, because it is city land and that's the only way to generate extranormal amounts of affordable housing, in an environment where market rates are increasingly unaffordable.

Ensuring that affordable housing is available in even expensive precincts of communities is a social equity approach that is uncommon if not completely a non-starter in the United States, although it has been an element of housing and equity access planning in Europe, including the UK. Recent cutbacks in this policy in the UK were discussed in this piece from the Washington Post, "London's poor facing squeeze amid housing benefits cuts" from last summer.

The only thing is I don't know what action you would take to void the deal? Sue?

The issue is really twofold, what the PUD/Zoning Commission allowed, but really, how the terms of the deal ultimately became significantly different from how the deal was sold to the public/ community/justified.

The change in the terms of the deal was mentioned in the DCLP press release. This happens in government contracting a lot (especially in bike sharing...), and I do believe that it sets the stage for a legal challenge to a contract award. But making such challenges are expensive, although not uncommon in very large contracts, involving very motivated bidders (such as in the recent successful challenge to the streetcar contract in DC, see "DC cancels proposed streetcar deal" from the Washington Business Journal).

Typically, nonprofit groups and citizens lack the resources to mount these kinds of legal challenges.

And when a deal is this far along in the process, it becomes that much more difficult to challenge as well.