Yesterday, CFO Nat Gandhi sent the Mayor a letter apprising him of the situation. The details, if you're into these kinds of things: In order to finance the project, the city floated $43.5 million in tax increment financing bonds. Paying that off requires the construction of a hotel, but at this point, getting the money and completing the designs for the hotel will take at least another 15 months.

"Due to this lag in the commencement of the hotel construction and the uncertainty surrounding the completion of a full hotel deal, the District would need to set aside $1 million in the financial plan annually to cover the potential shortfall in tax revenue available for debt service, beginning in FY 2015," Gandhi writes. "The funds would be required in the event that the hotel is not completed and the projected hotel tax increment is not available to support debt service on the proposed November TIF bond issuance."

Roadside's Armond Spikell says that the city's just being cautious. They do, in fact, have a signed deal for a hotel with not one but two major backers. "It's a cover-themselves letter," he says. "You know, 'we warned you, there's risk.' Is it a significant risk? No."

Spikell has only thinly veiled impatience for how complicated the process has been with the city. "Twenty-five percent of the bond proceeds go to pay teams and teams of lawyers that are on top of lawyers," he said, while praising the Deputy Mayor for Planning and Economic Development for "moving things a lot faster than they moved before."

There's still another big hurdle for one piece of the project, though. To construct the 80 units of senior affordable housing, Roadside had been counting on a $7.5 million loan from the city's Housing Production Trust Fund—which, you may recall, is pretty much empty until deed recordation taxes pick up again. So they're looking at other sources, like low income housing tax credits, to finance the project and begin construction on schedule. There's a strong incentive to do so: Besides the cost of restarting construction later, the city will exact financial penalties for breaking deadlines (which might have been useful for some other projects I could name).

This week's Dupont Current has more details on the CityMarket at O project, which just received $1 million from D.C. Council emergency legislation.  The funds will be used to pay architectural, engineering and other pre-development costs (with a groundbreaking expected in summer 2010).

The city previously offered to assist with those costs by funneling money from a hike in downtown meter fees. But, according to the story, "mayoral aids refused to release the money until the meter fees were actually collected. The Evans emergency bill was crafted to correct that."

In addition to the emergency legislation's $1 million, the CityMarket at O developers will also receive $1.5 million that was originally intended for the Howard Theatre. And developers are hoping to get more money from the Department of Housing and Urban Development (HUD).

The CityMarket at O Street is a huge mixed-use project that will include more than 600 residential units, 87,000-square-feet of retail, and a colossal new Giant Food Store, partially inside the old market building at the corner of 7th and O Streets. At least this is the description that's recorded on Roadside Development's website. It's possible the group's made adjustments. The plan has been sitting up there for a while. 

Last fall, I wrote about the CityMarket project. Since then, I'd heard developers were struggling to find funding.

The project seems crucial to the continued rejuvenation of Shaw. There's no great supermarket in the area—nothing like the new Safeway in Mt. Vernon Square, the Harris Teeter in Adams Morgan, and the Giant up in Columbia Heights. The current O Street Market shell is an eyesore. And the parking lot at the site is just an empty, underused space. 

The D.C. Council clearly recognized the importance of the project and yesterday agreed to fork over $1 million to Roadside Development to help with financing, according to the Washington Examiner.  It's not surprising that Roadside could get politicians to do its bidding, considering how the group's thrown around money in the past. But in this case, I certainly think the project is worthy of support. Here's what the Examiner reported:

Ward 2 Councilman Jack Evans introduced the emergency resolution, which authorizes Mayor Adrian Fenty to grant $1 million, from any available source, to Roadside Development to get the project at Seventh and O streets Northwest moving. The grant was originally tied to revenues derived from parking meter rate increases. But Fenty and the council are bickering over how to spend the revenue, leaving O Street hanging, Evans said.

 This project seems