O Street Market Hearing
This morning, the DC Council Committee on Finance and Revenue, chaired by Jack Evans, held a hearing on the O Street Market Tax Increment Financing (TIF) package. This TIF would provide $35M of publicly backed bond financing to support the high infrastructure costs of the $320M CityMarket at O project. The hearing was well attended by Shaw residents and was strongly supported by almost everyone. Evans announced that he expects his committee to mark up the bill (B17-0800) in the near future and have it for a first vote before the full council on July 15, with final passage when the council comes back in session on September 16. Roadside Development said they don't expect to break ground on the project until the fall of 2009, with construction estimated to take three to three and a half years. The Giant, however, would be operational within two years, meaning the earliest we can hope to be shopping in the new O Street Market is the fall of 2011. [Great PDF outlining the O Street Market project is available from Roadside.]
A large number of witness spoke about the O Street project. I'll give you a brief rundown. Unfortunately, I didn't grab a copy of the official agenda, so my spelling of names is going to be horrible. I apologize in advance... (Thanks to Martin for a few corrections.)
Ralph G. Brahbham, Esq, is a Shaw homeowner and started off with themes that most witnesses would echo, voicing his strong support for the project and highlighting a number of things, including the affordable senior housing, restoration of the O Street Market, a new grocery store, underground parking & loading, and the restoration of 8th Street.
Leroy Thorpe, of Red Hats and the ECCA, said he was strongly supportive of the project.
Alex Padro, the ANC commissioner who represents the area that includes the O Street Market, spoke of the "overwhelming community support" for CityMarket at O.
Kevin Chapple, my ANC commissioner, also spoke of the strong community support and excitement about this project. [testimony available here in PDF]
Timothy Mack, chairman of Shaw Main Streets, spoke of his support and the importance of the market to the Shaw community.
Jenny Reed, a researcher with the DC Fiscal Policy Institute, was the only real critic of the TIF bill for this project. She said that we do not have enough details to know if the TIF really makes sense. She outlined three main concerns: 1. the District's CFO says it can't tell what the financing gap really is, 2. we don't know if the project will generate enough tax revenue to pay off the bonds, and 3. this brings DC close to its bond limit. (Evans responded to these concerns later.)
George Jones, executive director of Bread for the City, spoke in support of the project.
Charlie Whitaker, project coordinator for the Shaw Green Team, spoke in support of the project and about the funding that Roadside Development has provided to the Shaw Green Team.
Evans then responded to Reed's concerns about the TIF package by saying that the CFO would be speaking shortly on the gap analysis issue, that TIF funding is never a sure thing, but generally has been wildly successful in DC (he pointed to Gallery Place as an example), and mentioned that the Downtown TIF is a backstop to this TIF, which provides security to the project.
Rev. Joseph Williams, from Emmaeus Services for the Aging, spoke in favor of the project and highlighted the affordable housing for seniors that is being included, and mentioned that Roadside has worked to provide Peapod grocery delivery service to seniors during the two years that the new Giant will be under construction.
Martin Moulton, interim president of the Convention Center Community Association, had the best line of the hearing, saying that "the CityMarket project will finally bring us a grocery store worthy of the name 'Giant.'" [testimony available here in PDF]
Ibrahim Mumin, supported the TIF and talked about his participation in the development of the current Giant store in the 70's. The current Giant was the first grocery store built in the city after the '68 riots, and it wasn't built until the mid-70's.
The Roadside Development team then spoke and mentioned a few interesting tidbits. They have entered into a firm agreement with Giant and Giant is contributing $12.5M towards the development and their lease goes until 2051. Their research shows that the neighborhood could support four additional grocery stores. Roadside argued that the TIF was needed due to the high infrastructure costs associated with this project: restoration of a historic market, rebuilding 8th Street throught the middle of the project, and the underground loading/parking space. They estimate $42M in infrastructure costs, of which the TIF is covering $35M. Roadside is under contract to close the Giant store for a maximum of two years.
Paul Brown, from CPDC--a non-profit affordable housing developer, is the part of the development team working the seniors housing. They will be developing 80-100 units of affordable senior housing, at 60% of Area Median Income (AMI) or less, in 1 or 2 bedroom configurations.
Raul Horton (??) is a managing partner of Blue Sky Housing, who are working with CPDC on the senior housing.
Dennis Conto & Ben Soto are developing the hotel piece of the project. LSDB will own 51% of the hotel, and Roadside will own 49%. They expect to have a 200 room hotel, which will be located on the southwest corner of the development.
Finally, the city government witnesses came to the table. Valerie Young, the COO for Deputy Mayor for Planning and Economic Development Neil Albert, spoke about the TIF package proposed. The site is a 150,000 sq ft lot that will have 400 apts, 150 condos and 87,000 sq ft of retail (Giant occupies about 70,000 of that). The legislation seeks issuance of bonds not to exceed $46.5M. $35M will go toward construction costs and $11.5M will go toward financing the costs of the bonds. Cost overruns will be born by the developer. The District's investment is about 15% of the project, similar to other projects the District has supported. 90% of any construction savings will go back to the District.
John Ross, senior advisor to the Chief Financial Officer of DC was the last witness. He said that they had provided a financial impact statement to the Council. The CFO does not expect a budget impact until 2012, at which point it will be in the $3-5M range. This debt service may be needed for an additional 3 years, as they don't expect the taxes from the site to pay for the TIF until 2015 or 2016. He also said that no gap analysis is possible until the developer reorganizes their financing. Lastly, he noted that a signed hotel development deal is important for the whole project, as 44% of the taxes for the TIF will be coming from the hotel.
That's a lot, but will hopefully give folks a full picture of the hearing...
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