Housing Complex

Zoned Out: The Anatomy of an Arts Overlay Disaster

The Uptown Arts Overlay. (Brooke Hatfield)

The Uptown Arts Overlay. (Brooke Hatfield)

Aman Ayoubi thought he was golden. One year and half a million dollars into retrofitting a long-empty building at 14th and U streets for a new restaurant and nightclub, he had a 15-year lease and two liquor licenses in the bag. Permit-wise, he figured the hard part was over.

He was wrong. On April 5, the Department of Consumer and Regulatory Affairs (DCRA) abruptly stopped issuing the all-important certificate of occupancy to any new business planning to serve food or alcohol along the 14th or U Street corridors.

“It’s a very big, big, big problem,” Ayoubi, who also owns the existing Local 16 restaurant on U Street, told Housing Complex. “The investors are not going to put one more penny into this until we have something in writing that says we are safe.”

Ayoubi does have some recourse. He can apply for a special zoning exception, but that could take four to six months. Meanwhile, the restaurateur—who is also constructing another new boîte a few blocks south—is paying a combined $45,000 in rent for two buildings bringing in no revenue, plus legal fees.

“On top of everything else, the D.C. government threw this on us,” Ayoubi says. “I hope it gets resolved soon, before we all go bankrupt.”

The fallout from DCRA’s sudden freeze on the occupancy permits has been dramatic, icing projects already underway, spooking would-be investors, and sending elected leaders into a tizzy. It also reopened old wounds in the body politic.

When Housing Complex first reported DCRA’s shocking announcement online two weeks ago, a flurry of heated comments ensued. Neighborhood blogs exploded with indignation. Fingers were pointed in all directions, some directed at this reporter’s portrayal of the situation. One critic even threatened legal action. Participants in this regulatory brouhaha could be almost evenly divided between two camps: Those who want to see more bars and restaurants on U Street, and those who think there are too many already.

The mantra that hangs in the air in all of these conversations has to do with the long-time D.C. denizen’s bête noire: Adams Morgan. As in, “We don’t want to become another Adams Morgan.”

On the flip side, no one wants to become another Cleveland Park, either, with its frumpy retail shops and empty storefronts. And the issue facing U Street and 14th Street is exactly the same problem Cleveland Park has been wrangling with for the past 10 years—namely, regulations limiting food and drink. “Restaurants can’t open in Cleveland Park, and instead you’re getting tanning salons,” grumbled former Board of Zoning Adjustment chair Ruthanne Miller at a panel discussion last week. “Is that what the neighborhood wants?”

Since 1989, 14th Street NW from N Street to Florida and U Street between 15th Street and Georgia Avenue has been nestled beneath an “arts overlay,” a set of regulations designed to foster a diverse mix of cultural institutions. Cleveland Park has similar regulations. The rules include a 25 percent cap on the linear street frontage taken up by “eating and drinking establishments,” with the intention of leaving room for theaters, galleries, and other arts-related uses.

For nearly 20 years, however, DCRA never even took the measurements, and no one was denied a license on the grounds of violating the cap.

In late 2008, that all changed: JBG Companies came to local Advisory Neighborhood Commissions with a proposal to build a new mixed-use development at 14th and S streets. If it put restaurants in the ground floor, the cap would likely be reached, forcing the company to get a special exception for its project from the Board of Zoning Adjustment.

Suddenly, people realized that the arts overlay could start to stifle all business in the corridor rather than simply limit bars and restaurants to leave space for local artists. So in June 2009, area resident and economist Andrea Doughty spearheaded a task force to figure out how the zoning ought to be modified. After eight public meetings with a broad swath of businesses, residents, and local government officials, the task force found that more bars and restaurants actually help artsy institutions like the Source Theatre survive. Moreover, most places to eat and drink in the area often double as exhibition spaces, blurring the line between arts and recreation. The task force’s report, endorsed by three ANCs and a host of neighborhood organizations, recommended that the 25 percent cap be raised to 50 percent as soon as possible.

But, in order for the zoning commission to lift the cap, DCRA would eventually have to do a street frontage inventory. The process started earlier this year. Local leaders fully anticipated the survey would reveal the 25 percent threshold had already been reached. But few expected the zoning administrator to put a cork in new permits entirely.

“Everybody was a little caught off guard by how quickly it turned into a ruling,” says Scott Pomeroy, a former chair of the U Street Neighborhood Association. “There had been no push for the enforcement, with the realization that it really wasn’t going to achieve anything that people wanted it to.”

To explain DCRA’s abrupt decision, many point to the efforts of three persons—specifically, ANC Commissioners Ramon Estrada and Peter Raia and Phyllis Klein of the Dupont Circle Citizens Association—each known for their outspoken opposition to new liquor licenses. On March 11, all three met with Fred Moosally, director of the district’s Alcoholic Beverage Regulation Administration, about completing the frontage inventory. (Estrada did not respond to calls for comment, but Raia and Klein both confirmed the meeting took place. Klein had just this statement: “The community’s shared objectives are to responsibly preserve, develop, and promote 14th and U Street’s neighborhoods.”) Moosally then turned to Zoning Administrator Matt Le Grant, who shortly completed the inventory and issued a freeze on new permits.

For Raia, advocating for enforcement of the cap was about curbing the growth of new bars in his single-member district, which covers U Street between 9th and 14th streets—the most concentrated area of bars and restaurants in the whole overlay. “It’ll slow down liquor licenses, but it won’t slow down small businesses,” he says (Raia supports the ability of projects already in the works, like Ayoubi's, to open on schedule). “Even when I talk to licensees, they even feel there’s enough restaurants and bars. They can’t make enough money, because there’s too many of them.”

The local MidCity Business Association, however, warned that the decision could miscast the area as anti-business.

Politicians were quick to respond. Councilmember Jack Evans threw his weight behind boosting the cap. So did the Fenty administration: DCRA Director Linda Argo reassured businesses that the rule would be eased, and the Office of Planning recommended that the Zoning Commission take emergency action to change the limit.

In the meantime, local businesses have been scrambling to find out whether their ventures can move forward or not.

Last week, DCRA released a spreadsheet of its decisive inventory. Some operators filed their applications just in time to make the cut. “I could have been burned,” says Mark Kuller, whose Spanish-inspired Estadio at 1520 14th St. NW will proceed as planned. “I don’t think anyone was particularly worried until this note came out.“

Others weren’t so lucky. Grillfish owner David Winer scotched a project when enforcement of the cap was announced. BlackSalt operator Jeff Black, too, was strongly considering opening a location on 14th Street until the news dropped. He’s now shifted his sights to Capitol Hill.

Restaurateur Ian Hilton, meanwhile, isn’t sure what will happen with his planned gastropub, the Brixton, located at 901 U Street NW. “I don’t know,” Hilton says. “It would be great if you could tell me.” CP

  • Sir Spicious

    I think that's it's been known for a while that the Overlay was hard against the cap. Don't blame the City because you gambled that they wouldn't enforce their regs. Sometimes when you play with fire you get burned.

  • Anonymous

    It is still questionable if the limit has actually been hit or not. There are some obvious errors in the data that was released by DCRA that will surely be challenged by someone that has already invested ten's of thousands of dollars trying to open a business. These challenges might lower the frontage numbers below the cap. DCRA also did not provide a detailed listing of all the properties and their linear footage that made up the block totals, another potential source of challenges.

    That DCRA felt compelled to make such an important ruling and then to announce it to only select individuals as they did, based upon poorly verified data, is the real issue here. How much of this outcome was driven by the meeting w/ABRA and DCRA and Peter Raia, Ramon Estrada, and Phyllis Klein, pushing for an ABC moratorium and willing to use anything to get their way.

    Then add in that Raia has been meeting for months with business owners like Ian Hilton with approved licenses that were not on the list released by DCRA, who are now stuck in the middle of this questionable decision. Seems rather suspicious that he was pushing for this enforcement while negotiating with these businesses. I doubt that he told any of them about their meeting w/ABRA and DCRA and their goals.

    This all could have been handled far better.

  • http://christina.raia@me.com Christina

    Anonymous - I can guarantee you that I know Peter Raia better than you do. Please do not speculate here about his meetings with Ian Hilton or other business owners. The press is also overstating his involvement in this. He is always happy to discuss openly - feel free to introduce yourself at the next ANC meeting and raise your suspicions with him directly.

  • Lydia DePillis

    Anonymous,

    I should also clarify--and have re-inserted a sentence to this effect which was cut from a previous draft, clearly an oversight on my part--that Raia supports the ability of Hilton and Ayoubi to open on schedule, and was dismayed that they did not make it into the inventory.

    Best,

    Lydia

  • Anonymous

    Christina, since you know him so well, what was/is Raia's involvement as he was in the meeting with ABRA and DCRA when they were asking for an accounting and enforcement of the overlay restriction and had the opportunity to address the questions of what the outcomes would be if/when the enforced occurred and would have been able to discuss which properties would be included and under what conditions.

    Why were Hilton and Ayoubi not included? Being in support of their inclusion now, does not make up for not being aware of what would happen when the overlay was enforced as they were pushing to see happen at that meeting.

    “It’ll slow down liquor licenses, but it won’t slow down small businesses,” he says (Raia supports the ability of projects already in the works, like Ayoubi’s, to open on schedule). “Even when I talk to licensees, they even feel there’s enough restaurants and bars. They can’t make enough money, because there’s too many of them.”

    Small businesses benefit from having neighbors with customers, not empty buildings and this decision has slowed down progress on several of those vacant properties. Landlords are going to wait out this process for the next few months or longer rather than committing to long term leases. This is not good for small businesses

    Also, if you are a restaurant on U Street that is not making money, then you need to look at how you run your business. The customers are there in droves, particularly with the crowds the Lincoln is drawing right now, or you are in one of the dead areas that are negatively impacted by this ruling.

    I don't believe Raia's conclusions are based on facts or real experience, and if his involvement in this was limited, my question is why is he not more involved and aware of what was going to occur?

  • Sally

    Lydia:

    You're still getting basic facts wrong.

    #1 - Ruthanne Miller is a very nice, smart lady. However, she was never the city's zoning administrator; she was on the BZA. There's a big difference. And if you're going to be writing about zoning issues, then you need to take a starter course in who's who in the world of zoning: Zoning Administrator, Office of Zoning, Zoning Commission, Board of Zoning Adjustments, Office of Planning, etc. Take a look at David Alpert's blog: he had a very nice tutorial on who's who and what they do.

    #2 - As you pat yourself on the back for your "scoop", you leave out the fact that your first story was so heavily re-written to correct basic factual errors, remove hearsay, and tone down the hysteria (with barely any disclosure to your readers), that the current version bears little resemblance to the original version posted on the website.

    #3 - DCRA's Argo never "reassured businesses that the rule would be eased." If you read the email that's been posted in its entirety on other websites, all she said was that Planning was going to recommend to the Zoning Commission that the 25% cap be increased as an emergency text amendment to the overlay. That's hardly a promise that the mandatory zoning regulations will be "eased." Only the Zoning Commission has that authority; we'll find out next week if they will use it or not.

    Anonymous:

    If you go to GreaterGreaterWashington, DCist, Prince of Petworth, the MidCity Business Association and (I think) 14 & You, you'll find DCRA's inventory as a spreadsheet. They gave block-by-block measurements of the linear feet of each block and how many linear feet were taken up by bars/restaurants, including the name of each bar/restaurant.

    If you want to challenge their math, go ahead. But you can't say they didn't put all the info out there for the public and businesses to review.

    Finally: Overlays suck. They set in stone how things were 20 years ago, with very little updating to reflect modern reality. The Zoning Commission really needs to do a thorough analysis of ALL the overlay zones to see if they still make sense. Otherwise, as each overlay zone hits its cap, everyone's going to be doing the same scramble. We saw it with Cleveland Park, then the Newark-Macomb overlay, and now with the Arts overlay.

    The public - and businesses especially - need to know what the current status of each overlay is. It's kinda ridiculous for businesses to be told to do their own due dilligence when the city has failed to regularly count and disclose the status of each of the overlay zones and how close each is to its mandatory cap.

  • Lydia DePillis

    Sally,

    Thankyou for pointing out the BZA Chair vs. Zoning Administrator confusion. It has been corrected.

    Regarding Director Argo's email, the relevant section reads:

    "Also, it is very important to note that the Office of Planning is finalizing recommendations to the Zoning Commission to increase the 25% cap on eating and drinking establishments, as well as how the cap is calculated. These proposed amendments will be submitted to the Zoning
    Commission by April 26, 2010."

    Office of Planning director Harriet Tregoning was also quite confident: "We agreed with the [residents] but we had to document the current status for the zoning commission," she told the Examiner. "We've been working on the issue and we expect to have a text amendment by July."

    I did not say that DCRA had the authority to ease the rule, but I do believe that businesses would be reassured to know that the Office of Planning was taking swift action to recommend that the Zoning Commission do so.

    Best,

    Lydia

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  • Anonymous

    Sally,

    What was not released by DCRA was an accounting of which properties made up the total linear footage by block face, not just block. This was done for eateries that make up the 25% via square identification, but not for the rest of the areas that they are compared against. This is important in verifying these totals, as well as projecting what the real impacts of the change to 50% on a localized level will be.

    "The public – and businesses especially – need to know what the current status of each overlay is. It’s kinda ridiculous for businesses to be told to do their own due dilligence when the city has failed to regularly count and disclose the status of each of the overlay zones and how close each is to its mandatory cap." I couldn't agree with you more, however we musn't stay in limbo or in a position that wastes time and resources in the wrong arena having to go through the special exception process.

    The type of obvious error I mentioned is that DCRA has Utopia and Coppi's both at 34' frontage. Utopia is double the size of Coppi's. Did they include the Simply Home retail space as part of Coppis? There are other similar errors throughout the report.

    The Zoning administrator rushed a ruling based upon the pressure to limit abc licenses that resulted from this meeting and now the community, other agencies, and parts of the government are being forced to cope with implementing a whole new process, that everyone agrees is not the right one for this situation.

    This situation was managed poorly and was driven by selfish motivations that did not care what the negative side effects of trying to use this overlay to address abc issues might be.

  • Sally

    Lydia -

    Thanks for the response.

    But is it now City Paper policy that when original postings are corrected, no strikethrough is made in the posting showing what errors have been corrected?

  • Sally

    @Anonymous -

    You clearly know this thing very well. If there are inaccuracies in the spreadsheet, send a tweet to the DCRA guy. He's super responsive.

    And I agree with you - this was handled badly by the city. Had they regularly released the cap information for the overlay zones, there wouldn't be a need for a "sudden" denial of new bar/restaurant licenses. Maybe now the zoning commissioners will tkae a more comprehensive look at the overlays in general to see if they're still needed or if they need significant updating.

  • Dan

    Analysis based on factual information would help. Or, at least, factual information. Your errors and poor reporting only add to the ongoing confusion surrounding these issues.

  • Sally

    Thank you, Dan. "Decisive inventory"? Check the facts, please.

  • Carmen

    Please don't vilify Peter Raia (and others). Raia is solidly principled and fair-minded. And he represents approximately 2000 voters. These commissioners work tirelessly on behalf of their constituents.

    The article would have us feel sorry for businessmen who were aware of the overlay (are they City Paper advertisers?).

  • Peter Raia 1B02

    Good day to all. Let’s try to set the record straight for those that have genuine questions. It is factually untrue to say that I object to liquor licenses (critics, please review the minutes of our meetings completely, not just the bullets). Let me give a few examples of how I have supported these businesses. When I started as ANC one of the first things I motioned for and supported was extended hours for licensees for inaugural week. Many ANC’s throughout the city did not allow their businesses this opportunity.

    I have advocated for all restaurants and bars to be treated equally, in some cases by granting full hours to establishments that were unduly restricted. I’ve encouraged others to move to soft closings, and others to be open earlier for breakfast and lunch. In my first 16 months, I have helped or am currently helping at least 9 establishments get new licenses (e.g., Dickson Wine Bar, Little Ethiopia, Café Society, Brixton Pub, U Street Music Hall, Gori Café, Masa 14, etc.), and I have supported others with changes to their licenses (e.g., DC-9, Marvin, Almaz, Ulah Bistro, U street Café etc).

    I have also advocated for licensees to enter into voluntary agreements with residents, to ensure that the needs of residents here – not just businesses – are met. Please do not confuse my advocacy of voluntary agreements with “opposition” to liquor licenses.

    Sadly, people I respect in this community are stating that DCRA’s decision will open the age for more clubs, or that it sends out bad signals to businesses looking to come here. These claims are unsubstantiated, and, in my opinion, fear-mongering to protect personal interests. Those voices claim to represent businesses in my SMD, but the truth is they represent only a fraction of the businesses here, not the majority. DC is always looking for great business to come to the district and I am always looking for smart growth in the area. But there are over 60 liquor licenses in my SMD alone. It’s time to start spreading some of that out, and to invite in a larger range of businesses like Pulp, Vastu, Muleh, Paul So’s Art Galleries,Dekka, Cork Market, Palace 5 – the home-grown businesses that we are so proud of.

    If there is ever any doubt about my position on any topic, please talk to me about in person instead of resorting to mud-slinging on blogs. Please come to our ANC meetings the first Thursday of every month at the Reeves center and we can talk. I always look forward to the dialogue and learning more about what the local residents and businesses want and need.

  • Kris

    Thanks, Peter. Don't worry - the "many" turf bullies, who try to discredit you and others, can't. Your good work for residents and businesses is exemplar.

  • “Me”

    LOL why is many quoted? Just "asking." Do you work for Metro? I think I recognize your handwriting on the middle sign here:

    http://unsuckdcmetro.blogspot.com/2010/04/metro-unveils-confuse-tourist.html

  • Anonymous

    Commissioner Raia,

    You talk about your achievements, your record and then all you do is point fingers at others: "Sadly, people I respect in this community are stating that DCRA’s decision will open the age for more clubs, or that it sends out bad signals to businesses looking to come here. These claims are unsubstantiated, and, in my opinion, fear-mongering to protect personal interests. Those voices claim to represent businesses in my SMD, but the truth is they represent only a fraction of the businesses here, not the majority"

    Thankfully yesterday, those voices that you say only represent personal interests and a small fraction of the businesses also represented the Midcity Business Association, ANC 2F, Councilmember Evans, Councilmemer Graham, Office of Planning and the Zoning Commission, who all thought it was important enough move the recommendations and then to raise the cap to 30% as an emergency.

    However, what you never talk about is the meeting that is the subject of the post that was held with ABRA and Phyliss Klein, Ramon Estrada, and yourself, and what you wanted to see as a result of the meeting other than the enforcement of the 25% limit as an artificial ABC moratorium as in “Even when I talk to licensees, they even feel there’s enough restaurants and bars. They can’t make enough money, because there’s too many of them.”

  • anonymous 2

    Finger pointing at Raia is ridiculous. 100 persons are fighting the expansion of a favorite eat/drink spot on 14th. Having the right mix of clubs, bars, restaurants makes the community 'smart' for businesses and residents.

  • Anonymous

    Anonymous 2,

    What does 100 people protesting an outdoor rooftop deck expansion of Masa 14, have to do with this dialogue about the purpose of the meeting he and Phyllis Klein, and Ramon Estrada had with ABRA about the overlay enforcement.

    Two very different subjects.

  • anonymous 2

    100 people from both sides of 14th Street seem to care about the expanding eat drink places there. Raia represents them. We should hear from some of the 100 about the issues. Apparently,an agreement couldn't be reached, so a protest hearing is scheduled.

  • “Many”

    Keep things on point? How dare you. Hey who is on the ABC Board man I am upset at something one of them said once oh yeah and I don't like the prices at this place on 14th and their tables stick out into the sidewalk too far and this one time at band camp...

    I swear if half of local DC activists were forced to have a brain transplant this city wouldn't be recognizable for all the s**t we'd get done within 60 days.

  • Robert

    Andrew Kline is the attorney for Masa 14.

  • “many”

    Conrad Bain starred on Different Strokes.

  • Mango

    Fenty doesn’t care about what you want for your own neighborhood. He’ll change the regs to prove it. To give his cronies what they want. $$$ hungry; $$$ talks. So what if the ‘hood is ruined, as long as $$$ are rollin in.

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