Many small businesses in the Shaw neighborhood in Northwest are unhappy with one of their newer neighbors: the Washington Convention Center.
The Mount Vernon Business Alliance, a group of businesses near the convention center, filed suit earlier this year against the Washington Convention Center Authority (WCCA), saying it didn’t come through on all the grants it promised the businesses during construction.
The alliance said its members put up with at least four years of construction-related woes and lost significant business — some have even closed — as customers gave up trying to navigate construction detours and find parking.
It seeks damages and asks the WCCA to restart the grant program, which was required by the city, and said the WCCA violated terms of the agreement by abruptly ending the program when the convention center opened.
Of the 28 businesses that made up the alliance in 2002, 11 have since closed or relocated — including Crimpz Hair Salon, Ruppert’s Restaurant, Paradise Deli, A Gentleman’s Request Barbershop, First Lady International Inc. and Art’s Printing.
Alliance co-founder Helen Durham said her business, Crimpz, was pulling in about $90,000 to $100,000 annually before the convention center construction started. By 2005, the 20-year-old business couldn’t pay the rent and closed, she said.
The WCCA declined to comment on the ongoing lawsuit. But in court documents, the authority said it followed through with everything it agreed to do and pay.
The grant program began in 1999, as construction of the new 2.3 million-square-foot Washington Convention Center ramped up.
The WCCA and the alliance met to hammer out details of how the authority would distribute grants to help neighborhood businesses that could prove a drop in revenue during construction. The WCCA was required to provide the grants, under an agreement with the mayor’s office and local historic preservation groups, according to a memo both parties signed in May 1999.
By early 2003, both parties agreed the program was not working correctly because applications were complex, preventing some businesses from getting funds, according to meeting transcripts the alliance put in the court documents. The groups met to make the applications less complicated and the WCCA extended the program through “streetscape” — the period of reconstructing or replacing sidewalks, trees, grass and parking meters, which is common after any extensive construction.
The WCCA distributed about $920,000 in grants to neighborhood businesses through August 2003, according to court filings.
In a letter dated Aug. 27, 2003, the WCCA said the program was ending immediately because it spent more than $1 million on grants and administrative expenses and was over budget.
“Nonetheless, we believe we have substantially fulfilled our promise to ensure the survival of those small businesses that would be the most severely impacted by the construction of the new convention center,” Claude E. Bailey, then the acting deputy general manager and general counsel of the WCCA, wrote in the letter.
In March 2004, some retailers received a final grant check and a waiver. For the merchant to accept the check, he had to sign a waiver releasing the WCCA from the grant program.
The merchants’ suit says the WCCA violated terms of the grant program by ending it without advanced notice and that the program was cut off before the merchants could file for losses incurred during streetscape.
The original memo says either party could revise or end the program at any time, while the 2003 addendum says both parties must approve of any changes to the program or to the end of the program. The alliance rests its case on the addendum, while the WCCA is defending itself with the original memo.
The WCCA maintained the grant program through construction to keep the alliance from protesting the building and construction, said the merchants. When the WCCA was almost finished with construction, it pulled the grants, the alliance said.
“They basically had the carrot-on-the-stick routine for the horse,” said Richard Alperstein, chief financial officer of Alpersteins Furniture Co. and president of the Mount Vernon Business Alliance. “And as soon as the convention center doors opened, that stick and carrot disappeared like a magic trick. And they wouldn’t talk to us.”
The merchants attended groundbreakings and ribbon cuttings and signed the last beam installed in the building because they thought they would be receiving more financial support from the WCCA, said Raymond R. Ruppert Jr., president of Ruppert Real Estate and a member of the alliance.
The WCCA, in court documents, says it never required that the alliance not protest construction as a condition of the grants.
In meeting transcripts now in the court record, the WCCA makes it clear that the grant program was designed to assist local retailers, not to totally recoup all of their losses connected to convention-center construction. The merchants said they didn’t realize how significantly construction would affect sales.
Ms. Durham, for example, said she received about $100,000 in grants — more than most — but that her losses between 1999 and 2005 totaled “a few hundred thousand.”
Hungerford Printers Inc., which had been in business near the convention center since 1963, had revenue fall by several hundred thousand dollars during construction of the convention center, said owner Rob Hungerford.
“Our losses were so high, I winced and never looked at it again,” said Mr. Hungerford, whose company relocated to Anacostia.
Alliance member Adgie O’Bryant, of the law offices of Anderson & O’Bryant PC, said clients and customers became frustrated navigating construction detours, walking over mud instead of a sidewalk and looking for scarce parking. He documented $380,000 in lost business through 2005, according to the complaint.
“We lost all kinds of clients and even clients who had established relationships with us. They said, whenever they fix the streets, maybe we’ll come back,” Mr. O’Bryant said. “Once you lose a client, you never get them back.”
The parties are gathering evidence and taking depositions. A trial could begin in late 2008.