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Question of the Day
Mr. Wilmot just happens to be on both sides of the deal.
In 1990, after suing the city for a deal gone bad, Mr. Bennett and former Washington Redskin Brig Owens received a 99-year ground lease on the property as part of a settlement. The lease called for development of a prevocational school, and a zoning application called for construction of three office buildings and a day care center/nursery school/tutoring center.
Zoning records show that a “Minority Educational Foundation” was to be funded with $2 million “not later than two years after the ground lease commencement.” The foundation was to be headed by a board that included Mr. Bennett, Mr. Owens and Mr. Wilmot, the records state.
Under the ground lease, Mr. Bennett and his partners gained exclusive development rights. In return, they would pay the District $250,000a year for the first two years, $10 million on the second anniversary of the lease date, and $2 million annually from years three through 10.
Annual rent would increase to $2.5 million in years 11 through 20, and to $3.1 million in years 21 through 30, the lease states.
The District would never see buildings go up, nor payments close to what the lease called for. Rather, in 1993, the Bennett Group, with approval of the D.C. government, began subleasing the property to the U.S. Government Printing Office as a parking lot for the GPO’s 475 employees, according to the agency.
In 1995, in a lease amendment retroactive to 1993, the District reduced rent to $15,000 per month until the Bennett Group began construction of the buildings it had promised. Thereafter, annual rent would increase to $2 million for the next 20 years, the amendment states.
In 1999, a lease memorandum specified that the $10 million lump-sum payment would not be due until 2018.
A second lease amendment in 2007 required the Bennett Group to acquire building permits and break ground on a building by Dec. 31, 2010, or face financial penalties. By then, the Bennett Group had steadily increased the GPO’s monthly rent for years, according to the GPO, which put the current rent at $56,000 a month.
According to the deputy mayor's office, the District since 1990 has collected about $5.5 million in ground rent and a “possessory interest tax” enacted in 2000 as a means of raising revenue on otherwise tax-exempt commercial property.
But, according to the GPO, the Bennett Group has received more than $5 million in parking lot rent since 2001 — breaking even before factoring in eight years of tax-free rent from the 1990s. Land records also show that the Bennett Group borrowed $1.5 million against the property in 2007 and paid off a promissory note the next year.
In contrast, a review of the ground lease shows that had the Bennett Group performed under its agreement, it would have been required to pay the District more than $41 million by now.
The Bennett Group’s control of the New Jersey Avenue property came as the District was in a state of chaos at the end of the first Barry administration. The Barry era of the 1980s had presaged a re-examination by city officials of District land use.
Soon after Sharon Pratt was elected D.C. mayor on a promise of reform in 1990, she sought to address the glut of city property that had not been taxed while in the hands of private developers for years, said Merrick Malone, Ms. Pratt’s deputy mayor for economic development.
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