Will Minnesota-Benning Development Ever Get Started?
A handful of projects in Shaw are nearing their one-year anniversaries of "breaking ground" without actually much or any making progress: A Burmese restaurant at 1501 9th Street NW, Shiloh Baptist Church's Victory Village, and CityMarket at O (about which I'll have more to share soon).
But another development across the city passed that mark a while ago. Donatelli Development's mix of housing and retail at the intersection of Minnesota Avenue and Benning Road in Ward 7 started demolition back in May 2010, saying they expected to start construction in the spring of this year.
Here's the timeline of promises: In January, a Donatelli rep told me Minnesota-Benning "is a priority project and will break ground this year." In March, the Post reported that Donatelli was seeking a ten-year property tax abatement worth $1.8 million, on land the city had given them for free. In the D.C. Building Industry Association's August newsletter, principal Chris Donatelli has a short blurb entitled "Minnesota-Benning Coming Soon to Ward 7," saying the project will start construction "towards the end of this year and into the first quarter of 2012."
Meanwhile, next week the Council's Committee on Economic Development will consider a bill that will give the developer another two years to get started. After that, Donatelli confirmed today, he still needs to get that $1.8 million tax abatement past the Council in order to make the financing work.
So, the answer: Maybe. If the Council goes along with Donatelli's bid for more cash, and agrees to extend the lifespan of their claim to the land. Of course, there aren't a whole lot of other good options, so they might just give Donatelli what he wants.
6:54 pm
Lydia, so the City give the land to Mr. Donatelli and then he asks to have real estate taxes abated for 10 years? How much of a development fee does he make on the deal or is the developer - not just him but any developer - enter into an agreement to stand down on fee payments until the District gets its fair payment?
Otherwise, Lydia, aside from being good to your political allies, why should the city do it?
Willie
7:42 pm
Used to hit up City Life shop at this corner. This has always been a raw(l) corner.
7:24 am
If the delay is funding relating I can empathize.
We are looking the worst funding environment in anyones memory.
Even very solid proposals are being denied financing.
DC has been pretty lucky in this regard. In many parts of the country far more projects are being cancelled because banks won't approve the construction loans.
8:52 am
in a strong real estate market B, C, and D locations take a lot longer to get going. It takes that much longer in a weak real estate market.
The other thing that people seem to not acknowledge is how long projects take.
E.g., the Steuart development on the 300 block of H St. NE with the Giant supermarket, which broke ground in July.... that project, you could argue, started in 1998 with BP's proposal for a large gas station at that site, and BP's acquisition of land abutting the Steuart property.
Given community opposition to the gas station, as the real estate market changed post-2000, especially in the face of the Abdo Children's Museum announcement in 2003 (and the opening of the property in 2008!!!!!!!!!!!!!!!!, note the 5 year gestation), the land became more valuable as another use, hence Steuart's buying out of BP and their mixed use building project.
That being said, even that close to Union Station, it is a B location (with a bullet meaning the location is improving, bullet a reference to the Billboard record ranking system). The other locations you reference are not comparable. So it takes longer.
9:03 am
Donatelli is a smart, politically-connected developer. He will get whatever he wants b/c Gray, Fully Loaded, and Alexander are all desperate to claim any sort of development for Ward 7.
10:25 am
The city should conduct another bidding process for the property. The award was granted to this developer who promised he required no subsidy from the city to develop it. Why not go to the market to see what alternatives are out there. Ward 7 needs this project to get underway.
11:52 am
"The market" is already speaking. That's why development isn't happening there or in W7 generally as it's a C, D, or E market. Look at how tough it is in B markets where there are better transit connections.
It should communicate something to you that Donatelli says they need inducements, because over the past 5+ years, Donatelli arguably is one of the city's top 3-4 developers of mixed use multiunit housing in terms of production and in terms of the positive impact on the communities where they've built (U Street, Columbia Heights, Petworth), ESPECIALLY outside of Downtown (DC's "A" market), where they don't operate.
1:43 pm
I gotta agree with Richard on this one. If you look at Donatelli's track record, his projects have had significant catalytic impact in the redevelopment of CH, PW and U. His projects helped to spur (or re-spur) other housing, retail and restaurant development in those parts of town.
I think it goes to show not only the tough economic climate for developers, but also the challenges of developing anything significant in W7. I venture to say that if Donatelli walks form this project, it will be a LOOOONGGGG time before anything gets done there, if ever.
2:04 pm
THe other thing about Donatelli, is that for "modern" developers active in the city, they do quality work. The Ellington building on U Street, the buildings in Columbia Heights, Park Place in Petworth--they are all well done buildings.
In my experience dealing with development pretty closely in the H Street neighborhood, it was pulling teeth (with the exception of Abdo) to get developers to agree to do quality work. Mostly we failed. (I was off the ANC Planning & ZOning committee by the time the Steuart project gestated.)
The reason you want someone like Donatelli to build "the first major project" in W7 is to set a high bar for quality. The other developers willing to take on projects like this (people like Martin Jawer, and I think he had the land first) tend to do really s***** work.
2:21 pm
Donatelli Development turnout to be little more than ghetto hustlers. Claiming no need for city funding and the ability to hit the grown running, but once in they land bank and seek backdoor subsidies. Any quality work done is that the expense of the community they exploit. I don't see see why some are making excuses them. Done of there projects were delivered on time and just about all used backdoor subsidy.
2:42 pm
Richard, are you suggesting that the approach taken by Donatelli and others seeking both "free dirt" and subsidy are okay? Should they, at the very least, be required to pay back some portion of their development fees as land purchase pricing or at least subordinate their fees to a benchmark community benefit?
Willie
2:46 pm
Mr. Jordan:
I used to be in the development business so I hear what you are saying. Answer me this....what project of this size and type HAS been delivered in this town ON TIME in the last 10 years? I would have to rack my brain to think of even one.
As far as the subsidies are concerned....another valid point. But that is the game....don't blame the players. Do you think that ANYONE worth anything would do the Minn. Ave. project without a subsidy? Not being a smartazz...that is a sincere question?
2:55 pm
@MWill:
You were not talking to me but I would like to chime in. Back when the market was booming, the District did have some pretty "interesting" affordability set-aside requirements. Based on where the rents/prices were at the time, that was some real money that they were required to leave on the table (especially in the CH deals) See...I do not know what the Land Disposition Agreement with the District says for the Minn Ave project(although it is public information), but it would be interesting to see.
Heck, DC USA got darn near free land AND a city financed parking garage for a project that was a cash cow from inception. But I am just not that troubled about this when you are trying to get developers to invest in a transtion area. I know that a number of firms responded to the RFP....but I suspect that all of them would have asked for help once they got the deal.
3:26 pm
MWill -- I do agree that community benefits agreements and ideally, "income" for the city need to be part of these land development agreements. But it's not like the profit is massive, especially for initial projects in particular neighborhoods that lag more successful areas. I have written extensively about the need to improve the CBA process in DC.
- http://urbanplacesandspaces.blogspot.com/2008/06/community-benefits-agreements-revised.html
Given the height restriction it's hard to build enough profit into deals in DC to make "profit" and CBA benefits very lucrative for the city, because there aren't enough units to spread the costs over.
Another way to induce residential development would be the Philly way. To generate adaptive reuse projects of "old buildings" and sites into housing conversion, they abated property taxes 100% for 10 years (and probably revenue taxes on the developers, I don't remember the specifics).
I am not saying that's what should be done, just that center city projects tend to need inducements compared to suburban locations, where the land sites tend to be larger and the remediation costs lower.
In DC, the value of these projects to the city is higher than in other cities, because DC captures 100% of the income tax revenue generated by the residents--most other cities do not get income taxes or if they do it's a portion of the state tax. I don't know how to fully cost that type of revenue out, but when you add that revenue stream in to a project, its cost isn't as great overall, looked at from a lifecycle standpoint, even though it seems like it on a project exclusive basis that fails to take into account future income tax revenue, not just future property tax revenue.
11:56 pm
I understand normal delays in getting a project done, but for Donatelli Development its there way of gaming the system. What you are seeing at this site is there business model and it's unethical and immoral what they have been doing. I initially gave them the benefit of the doubt but no longer. They are developers, I kind of expect them to attempt to game the system, the problem I have the protection they have bought at city hall and the neighborhoods. They have cost Columbia Heights and the city millions. They delayed Minnesota Ave. in order to finance there Petworth project which was a pure greed move.
For example they are running a commercial parking garage at Highland Park. Although the city was running a deficit at the DC USA garage they steer business to DD while using the NIF fund to plug the hold at the DC USA garage the at city owes.
It's a pure hustle they are running. It's legal stealing.
12:05 am
If they win the project after project from the city supposedly based no needed a subsidy and then after getting right demanding subsidy to move forward it's a different story. They crossed the line of what is ethical for neighborhood development.
At the NW corner 14th & W, they ID'd that site. CM Graham then directed DCRA and other agencies to go after the owner until they would agree to sell to Donatelli. The owner resisted. Whether the owner was a good or bad guy is not the point as much as using the enforcement power of the city to steer land to a specific developer is just wrong.
8:15 am
There's no demand for that kind of project in W7, which is why the site is languishing. If the real estate crash hadn't happened in 2008, maybe it would be a different story.
Yes, Donatelli leverages their expertise in dealing with govt. owned land and they are better at it than most of their competitors. Likely there is gaming of the system involved by everybody. Still, in better situations, it takes 10+ years to get a project finished (e.g., like DC/USA, but many other projects it's the same, whether or not there is public land involved).
8:22 am
I dunno, Richard, what makes you so sure there's no demand for the Minn-Benn project? It's probably the most prime site in the whole ward, with a metro stop, new government headquarters, shopping center, library, riverfront...I agree that Donatelli's put up quality projects, but that doesn't necessarily mean they're really in a tough enough spot to need this in order to move forward, especially given the high dollar number they're likely to get from the sale of their buildings in Columbia Heights and Petworth.
10:04 am
Richards facts are wrong about Columbia Heights in particular Donatelli Development, as well misuses context the DC of 1999/2000 is different that DC of 200/2011.
First Donatelli as a crony of Fenty/Graham was awarded W7 although the city knew they could not execute at the time. Because at the same time Donatelli was asking for bailout tax abatements and bringing in partners on other deals. When the city awarded them the tax abatements on Highland Park I/II and Park Place instead of leveraging it to move forward on W7(mixed use/mixed income) they chose to leverage it for the Petworth Project now up for sell. Shortly after they were forced to give back the WMATA site near the ball park.
They fleeced the Kenyon Square project by short-cut the affordable units and sticking the condo association with bills. Then used their political connections with Graham to block Columbia Heights streetscape improvements for 3 years and attempted to steal public space.
Creating nice building using unethical practices may be acceptable to some but not me. Especially, when they are basically being given public land and then not honoring commitments. W7 was delayed by choice along with Highland Park II attempting to play the public and the market. The same happened with Highland Park I which was delay when they attempted to play the market and finance the project as condo as the condo market imploded. Misused the the PUD process. Land bank the Phase II and to crush the La Casa project.
Ward 7 would be better off rebidding and/or splitting the project into 2 pieces. Development of these various Donatelli projects was never just about building development but was part of community development. They basically have fleeced the community development resources out of these projects and into their pockets.
2:54 pm
There were not a lot of respondents to the Minn-Benn RFP. There were two, CityInterests, which owns the other three corners (and is developing nearby Parkside), and Donatelli, which came up out of the blue.
12:22 pm
With over 60,000 cars a day passing through Minnesota and Benning Roads, Metro access one half block away, 10,000 bus transfers occurring daily at the intersection, free land and an ever increasing appetite for well priced residential product and better quality retail in the best real etate market in the country I think someone is going to want this site. Rebid it and award it on the strength of the offers. Development is happening in Ward 7 despite the downturn.
1:10 pm
@Togo. Makes sense...but only if the new developer can get the site to market faster than CD and Co.
12:15 pm
This is the problem we have in Ward 7. People are always fussing about how some developer got the land for free and now they want a tax break. blah blah blah. Give them whatever they need to build already and just be quiet. At least they are willing to build there; no one else is. What happened to City Interest and the East of the River Shopping Center???? Nothing. And if ALexander keeps shoving section 8 and low income down our throat there will be no need to build there at all. We need a catalyst and Donatelli is the ONLY one who has stepped up. We have received NO economic development at all. Nothing. Nothing! Just give them the tax break, help them build and get the ball rolling already! With all this bickering are you suprised no one wants to build there?