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The deal over the Wilson Building originally had all the sophistication of a New York movie cliché: Impoverished rubes arrive in town, meet friendly local, learn he’s just found a big bag of money. Rubes are told that bank policy will allow local to claim bag if he can just put up a cash deposit. When new friend doesn’t have cash, rubes kick in own meager stash, aiming to split the bounty. Local says he’ll be back in an hour. Rubes wait patiently.
Fast forward to a February afternoon at One Judiciary Square and the spectacle of the D.C. Council in a rare tizzy. Less than two months earlier, the city filed a suit in D.C. Superior Court, charging T. Conrad Monts, the developer heading renovations to the city’s beloved John A. Wilson Building, with breach of contract. Despite repeated requests and a subpoena, Monts has been a no-show.
Until today, that is. A court order has finally directed Monts to appear at a public hearing about the building’s status. Councilmembers take turns berating the witness. At-Large Councilmember David Catania demands a public apology. Ward 4’s Charlene Drew Jarvis asks Monts, schoolmarm-style, just who on Earth he thinks he is. In the next day’s newspapers, a black hat will be firmly affixed to the developer’s head.
Monts, of course, is an old hand at being bashed in the press. The longtime Marion Barry ally’s history of being investigatedbut never chargedover years-old fraud and other allegations got quite a bit of play in 1996. Of course, that year, the council ignored the developer’s bad press and inked a deal with him to repair D.C.’s crumbling city hall free of charge. The one catch was that the city would have to lease two-thirds of the building to the U.S. General Services Administration (GSA), whose rent would then pay off the loan to finance the transaction.
Now, though, the building is once again at the center of an argument. Councilmembers fear Monts is getting ready to screw them on how much space will be allocated. According to Catania, the biggest mistake wasn’t getting into the deal, but in failing to keep an eye on Monts. “If we’re guilty of anything, it’s that we went to bed with a snake and we didn’t watch him,” he says.
But there’s still a chance that this rube-in-the-city story won’t yet end with our hapless protagonists wondering how they’ll make bus fare back to Palookaville. Ironically enough, Monts’ own alleged bad faith may be the key to getting D.C. something it couldn’t get back in 1995: the whole building. “Monts has presented us with an opportunity here,” Ward 2 Councilmember Jack Evans says. In papers filed in December, he and his council colleagues charge Monts with breach of contract for allegedly promising more space to the GSA than was originally approved, and demand that the court remove him from the project as well as order him to fork over an unspecified amount in monetary damages.
A decision removing Monts could allow D.C. to get a whole new dealone that could conceivably spare the city the ignominy of renting out huge chunks of its own city hall. The first hearing is scheduled for April. In the meantime, the council awaits word on a requested injunction to stop Monts from interior construction on any of the floors currently leased to the GSA.
Of course, the lawsuit could also mark the start of a litigious new misadventure that will keep the sad Wilson Building saga and its befuddled players in court, and in the papers, well into the next century. But the council, anxious not to play the bumpkin yet again, is determined to go forward.
“If the deal had been honored, we wouldn’t be in the position we are in now,” says Council Chairman Linda Cropp. “I think the council always wanted the whole building.”
Court victory or not, if D.C. politicos want their building back, it’ll cost them. To finance his original deal, Monts signed an agreement enlisting John Hancock Mutual Life Insurance Co. as principal lender of $52 million. As part of the transaction, the developer agreed to use rent from the GSA to pay off the loan over 20 years. If the city government wanted to take back all six floors of the Wilson Building, it would have to make up for the GSA’s $6 million yearly paymentsno easy task.
And even that figure assumes that the District could renegotiate the loan at the same cost. When he inked his deal to finance the renovation of the Wilson Building, Monts used the signed lease agreement with the GSA as collateral. If the GSA is out of the picture, John Hancock might well not want to continue the loan at the same rates. “If the tenant changes, then you have to review the financing,” says Tracy Harris, the District’s associate treasurer, who is looking over the transaction at the request of the mayor and the council.
D.C. Council Secretary Phyllis Jones, the city’s point person on the project, says the city has yet to approach John Hancock about rejiggering the plan, but she’s hopeful that the company will cooperate. “The District’s not talking about not paying back the loan,” says Jones. “They’re just talking about how they’ll pay it back.”
In the face of potential extra costs, the council and mayor have been making noise that they’re analyzing ways the District could afford the loan takeover. The mayor announced a surplus of
$112 million this month, which could conceivably cover the costs. But some or all of that money may be destined for a mandatory cash reserve, says Bill Highsmith Jr., special assistant to the mayor for planning and development.
Last spring, Highsmith, then special assistant for real property in Williams’ chief financial officer’s office, put together some figures showing other ways to offset the yearly payments for the Wilson Building. Highsmith reported then that the District could save more than $4 million a year if offices that currently rent space all over the city moved into One Judiciary Square once the council and mayor move out. That savings would have left the District to come up with $2 million a year.
Of course, the offices Highsmith looked at last year are no longer in the running. Prospective offices located at the Presidential Building at 415 12th St. NW, such as the Office of Planning, have since moved to an office complex at 801 N. Capitol St. NE, and are now ensnared in other leases. (Breaking those agreements could mean still more fees.) And others, at 717 14th St. NW, like the Office of the Inspector General, have since renegotiated their leases through the year 2007.
With his original scheme overtaken by time, Highsmith has been asked by Williams to take another look. He has the same basic idea, of moving D.C. government offices from privately owned buildings for which the city currently pays rent into the One Judiciary Square space that will be vacated when the mayor and the D.C. Council make their move back to a fully D.C.-occupied Wilson Building. Highsmith says he has 700,000 square feet of occupied space all over the city to choose from, but he admits that several city agencies have practical drawbacks.
Candidates like the Department of Motor Vehicles, currently located at 65 K St. NE, could not be moved to One Judiciary Square because of “parking issues.” And Highsmith is also looking at several offices like the Department of Human Services at 300 Indiana Ave. NWwhich is, of course, a District-owned building and therefore wouldn’t allow for the same savings.
Somehow, however, Highsmith remains confident. He says there are plenty of agencies renting space in the city that need to expand or relocate to other offices. “Coming up with tenants [for One Judiciary Square] is not going to be a problem,” says Highsmith. He’s less confident about how much money the District will actually save. “I wouldn’t say [it’s a] sizable [amount]. But there could be savings,” says Highsmith.
Even if Highsmith can manage a cost-saving office-space switcheroo, it would save just $4 million a year at best. The mayor and councilmembers, as well as local activists, have suggested still other ways to cover the remaining $2 million gap. The city could use revenue bonds to finance some or all of the costs, says Harris. Former journalist and onetime D.C. Council hopeful Bill Rice says that the government could install a city museum in part of the Wilson Building, financed by corporate sponsorship, to raise extra funds, as some opponents suggested at the time the deal was made with Monts.
“It becomes affordable,” says Evans. “All of this is doable. The key to it all is getting GSA out of the deal.” And whatever the real estate math, the agency has to be persuaded to back out of the deal. Councilmembers and the mayor’s office have met with representatives from the GSA and say negotiations are on track. But they’re tight-lipped on any real specifics. “GSA has been a good neighbor,” says Cropp. “I expect they’ll continue to be a good partner.”
One person who could speed things along is D.C. Congressional Delegate Eleanor Holmes Norton, who is a member of the House subcommittee that oversees GSA funding and operations. Norton also has the ear of the White House. If she wanted to, she could go to the White House to pressure the GSA into giving D.C. a hand, says Rice. “She would be very helpful in working with GSA and negotiating terms,” adds Cropp.
The congresswoman issued a statement saying she has met with “the appropriate high ranking GSA officials” and will meet with them again after all groups have had time to analyze finances and options. Donna Brazile, a spokesperson for Norton, says the congresswoman will say nothing more until those meetings take place.
Like Norton, however, the GSA is content to let a few more grains tumble through the hourglass before it makes any move. According to GSA spokesperson Hap Connors, GSA employees heard rumors last year that District officials were having second thoughts about the deal because of complaints that ground-floor space had been unfairly allocated to the GSA. Connors says that in response, the GSA sent the council a proposal offering to swap the ground-floor space for space on the floor above, leaving the city the bottom level for itself. GSA never received a response. “I suppose, from the news reports [about the suit against Monts], the answer was no,” says Connors.
Connors says the GSA is open to changes, but adds it has already committed to the Environmental Protection Agency (EPA), which expects to move some of its offices into the Wilson Building this August. “We’re going to maintain the posture of being cooperative with the District,” he says. “We’re willing to do anything that’s reasonable, but we do have to take care of EPA.” He adds that the GSA plans to continue work on its own portion of the building in three weeks, “unless we hear otherwise.”
Regardless of the lawsuit’s outcome, some councilmembers are insisting that the city end the deal with Monts. “I want out,” says Evans, who has also asked the Department of Finance and Revenue to take a look at ways the District could afford the Wilson Building. Catania takes it a step further, saying he wants to see Monts “penniless,” rather than the recipient of the $2 million developer’s fee he’s currently due under the deal.
Jones estimates that the earliest the city government could return to the Wilson Building would be this fall but admits the move could be delayed for years, especially if the court proceedings carry on, as they’re likely to do. Wilson Building activists worry that the time lapse might mean that the city will back down in the meantime. “We should never lose sight of the fact that we want to have full occupation of the building,” says Mark Plotkin, the WAMU political commentator who has turned the building into a personal crusade. “I hope it’s not slipping away.”
Evans also worries about the attention that seems to have subsided in the last few weeks. “It’s almost like it’s dropped off the radar screen,” says Evans, who adds that action should take place before construction starts on the building’s interior. Evans called in to Plotkin’s show last Friday and said he may draft a council resolution to take back the whole building, calling it a symbolic win for the city. “The only victory is to occupy the entire District Building,” he said. CP