In Stadium Deal, Reeves Center Swap Is a Fraction of the Battle
Mayor Vince Gray used his weekly radio address on WNEW yesterday to tout the benefits to the city of the deal to bring a new D.C. United soccer stadium to Buzzard Point. And his focus was on the land swaps that will allow the city to assemble the land for the stadium without incurring huge costs.
"The heart of the deal involves the city leveraging the immense value in property we already own," Gray said. "Unlike other stadium deals, which cost cities hundreds of millions of dollars in construction and debt-servicing costs, our deal is built around land swaps. The key part of the agreement involves providing the Reeves Center property at 14th and U Streets NW to Akridge in exchange for property Akridge owns at the stadium site."
The proposed swap with Akridge makes plenty of sense—the Frank D. Reeves Municipal Center is outdated and much more valuable as real estate than it was in the 1980s, when the office building was built—and could even net the District tens of millions of dollars. But Gray seems to treat the Akridge land as the key piece needed to clear the way for a stadium. In fact, it's only one of four squares of land the city needs to acquire, and it's not the most valuable.
The northwest square on the stadium site is divided into two lots: one owned by Super Salvage, a scrap metal yard, and assessed this year at $7.5 million, and another owned by Washington Kastles owner and investor Mark Ein, assessed this year at $2.2 million. The northeast square is also divided into two lots, both owned by Pepco and valued at a combined $37.7 million. The southeast square is also owned by Pepco; it extends well beyond the stadium site and is valued at $89 million. Since the city would need to acquire just under a third of that square, the relevant value is likely somewhere around $25 million.
The Akridge parcel was assessed this year at $8 million. The other parcels the city needs to acquire total more than $70 million.
Now, independent valuations of the parcels will need to be carried out before any swaps start to occur, but it's clear that the Akridge parcel represents just a fraction of the city's acquisition needs. And the city doesn't have three or four other Reeves Centers it can give up in a deal. I've heard that the city might give Pepco some land to build a new substation or two. But since a principal rationale for the Reeves Center swap is that the city wants to maximize development value at a site with high demand, it's hard to imagine the District giving any truly valuable land to Pepco for a substation, which does basically zero for neighborhood development.
The city is reportedly open to trading away the Metropolitan Police Department's headquarters at 300 Indiana Ave. NW, assessed at just under $65 million this year. But only Pepco's stadium land is worth anywhere near that amount, and the city certainly wouldn't want a power plant by Judiciary Square. Instead, perhaps some sort of three- or four-way trade could be worked out, whereby the city gives that property to, say, Ein, who in turn pays cash to Pepco and Super Salvage, and all three give their Buzzard Point land to the District.* There are a lot of moving parts, but the city will likely have to work out something complex like this, since it's already up against its statutory borrowing limit and therefore can't buy all the land outright. (Unless, of course, we were to raise the debt cap.)
A spokesman for City Administrator Allen Lew, who negotiated the deal for the city, couldn't immediately be reached for comment.
The Akridge-Reeves swap certainly does help the District in its effort to amass the land needed for the stadium. But it's only a small part of the battle.
*Update 1:02 p.m.: A reader points out on Twitter that Washington City Paper reported back in 2008 that Ein had bought an option to develop the Super Salvage land. So it's possible there could be a simple three-way trade involving the District, Pepco, and Ein. I'm expecting to learn more soon from city officials involved in the process.
Map from the Office of the City Administrator; scribbles by Aaron Wiener