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D.C. officials declare end to ‘land bank’

Developers must build or get out

- The Washington Times - Monday, October 24, 2011

D.C. officials say the days of allowing developers to "land bank" on D.C. property without building are over.

Victor Hoskins, deputy mayor for economic development, joined a long line of D.C. officials who said they intend to clean up decades-old agreements that allow developers to sit indefinitely on tax-exempt and other below-market city property.

"Records are better now in the digital age, and we are more proactive in selecting developers to build on city-owned property," said Jose Sousa, director of communications for Mr. Hoskins. He said Mr. Hoskins' office is still assessing the city's project inventory, and pointed to a requirement that developers secure financing, produce architectural drawings and break ground within two years of a land disposition approved by the D.C. Council.

Though that requirement, if not met, could lead to nullification of land agreements, he did not cite any examples of the District taking such measures.

The deputy mayor's office was reacting Monday to a story in The Washington Times that examined the ties of politically connected Wal-Mart lobbyist David W. Wilmot to a development group that sat on blighted property in Ward 6 for 21 years without breaking ground. Mr. Wilmot and the Bennett Group have plans to develop the property into one of the District's four proposed Wal-Mart locations.

D.C. Council Chairman Kwame R. Brown said last week that he had not been adequately briefed on the Ward 6 Wal-Mart proposal, but on Monday said, "Given the details that came to light in your article today, we're looking into the matter." He noted that he sponsored the legislation in 2009 that led to the two-year deadline for council-approved projects to break ground on city-owned land.

Of the District's land-use policy in general, with its history of sweetheart deals and unmet promises, Mr. Brown said, "The city needs to pull back land that isn't being developed. The party is over for developers who make promises and don't deliver."

After subleasing the proposed Wal-Mart property to a federal agency as a parking lot for 18 of the 21 years - tax-free for much of the 1990s - Mr. Wilmot and the Bennett Group are developing the 161,000 square feet at New Jersey Avenue and H Street in Northwest into a multimillion-dollar Wal-Mart complex with workforce housing and additional retail comprised of small businesses.

Mr. Sousa said the city is renegotiating a 99-year ground lease it signed in 1990 with the Bennett Group - an agreement repeatedly amended by previous administrations that allowed the land to lay fallow, until the Adrian M. Fenty administration in 2007 imposed $750-per-day damages that began Jan. 1.

The new agreement will result in a zoning change from commercial to residential and retail, he said, as a means of capturing sales and property taxes.

"We're looking to push this project across the finish line and put the property back into productive use," he said.

On the issue of Mr. Wilmot's previously undisclosed financial interest in the deal, as both a lobbyist and a development partner, Mr. Sousa said, "We don't know the details, but we do want to know who's involved, and we are going to be transparent about the roles they play."

Unnamed investors remain a reality in the development game, he said. "I wish we could force disclosure of some arrangements, but we can't," he said.

In responding to questions about the Ward 6 parcel, government officials have displayed a shaky grasp of its history, raising questions about their ability to ensure fair deals for the District when negotiating with developers who acquired land from previous administrations.

When The Times first inquired several months ago, Mr. Hoskins' office was candid in conceding that it lacked information about how the New Jersey Avenue property was allowed to lay fallow for two decades.

"No one in our office would have insight into that," Mr. Sousa said at the time, noting that the deputy mayor was not involved with the project until earlier this year.

Deron Lehman, chief operating officer for the Department of Real Estate Services, which previously administered the lease, was more blunt: "No one here knows the history on that property," he said. "There's no documentation of the business developments at that site."

When first asked how much rent the District collected from the Bennett Group during the first decade of its two-decade control of the property, Mr. Lehman replied, "That's a good question."

The deputy mayor's office later confirmed that since 1990, the District 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.

In the meantime, the Bennett Group received more than $5 million in parking-lot rent in the past decade alone - collecting unspecified amounts of tax-free rent from the U.S. Government Printing Office for much of the 1990s.

Now D.C. officials are preparing to make way for a sublease to Wal-Mart, possibly for as long as 30 years. Officials say that depending on the modifications to the ground lease, a new arrangement could require approval of the D.C. Council.

Ward 6 Democrat Tommy Wells, in whose district Wal-Mart is seeking to build, was uninformed about the New Jersey Avenue property when visited recently in his office.

"I believe the Bennett Group got the property during the Anthony Williams administration," Mr. Wells said of the Marion Barry-era land disposition. "Someone told me a federal agency was moving in there but it fell through."

Asked of Mr. Wilmot's role, Mr. Wells said, "I have held four meetings with council offices where Wal-Mart is coming in and I've never seen him attend. I'm generally very aware of him, though. I generally don't deal with Mr. Wilmot."

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