Imagine a businessman walking into the office of a prominent politician and exiting a short time later with a lucrative real estate deal that effectively kills a three-day-old contract with the businessman’s competitor. Factor in the fact that this young, aggressive businessman used to pal around with the politician during the older pol’s notorious drug-sniffing, women-chasing days, and recall that he owes his fast rise in the business world to political favors from his mentor. Throw in the presence of a friend and fund-raiser to the politician who would make more than $1 million on the new deal for just standing around and nodding yes at the appropriate times.
What you have here is: a.) the plot for a Mario Puzo mob novel; b.) a scenario that would quickly catch the eye of the local prosecutor and get him busy offering immunity in return for cooperation; c.) a Marx Brothers spoof; or d.) business as usual in the District of Columbia.
If you answered “d,” you are correct, and may have a future as a real estate broker on city contracts.
Fast-dealing businessman R. Donahue Peebles was just another Capitol Hill aide until Mayor-for-Life Marion S. Barry Jr. picked him in 1984 to head the city’s property tax appeals board. Peebles, then in his mid-20s, used that post—and the access it provided to inside information about commercial real estate—to quickly build an empire as a developer and commercial tax appeals specialist. While chairman of the property tax appeals board, Peebles also negotiated a long-term city lease on a building he purchased at 2100 Martin Luther King Jr. Ave. SE, which now houses the D.C. Department of Human Services.
In an audit last year, D.C. Inspector General Louis Ramist concluded that the 1988 deal would eventually gouge D.C. taxpayers for $12 million in exorbitant payments and hidden costs over the 20-year life of the lease on the Anacostia building. Ramist recommended to then-Mayor Sharon Pratt Kelly that the lease be canceled immediately. Instead, Ramist was fired for insubordination, and his report was rewritten and watered down by Tom Brown, now the city’s acting Inspector General.
(Brown hopes to make his temporary gig a permanent meal ticket, based on his past loyalty to Barry and his protégé Peebles, but Brown’s nomination has about as much chance of getting past the control board and Congress as boxer Peter McNeeley had against Mike Tyson.)
Mayor Barry’s relationship with Peebles goes beyond cronyism to a darker realm. According to testimony in his 1990 drug trial, Barry used Peebles’ stylish West End home for late-night rendezvous with women and drugs. After Peebles emerged from a July 28 meeting with Barry in possession of an agreement to move 720 D.C. employees displaced by the new downtown sports arena into two buildings he owns or controls, many D.C. watchers wondered out loud: “What does Peebles have on Barry?” LL and everyone else suspect that the answer is “plenty.”
The word on the street is that Peebles is stretched pretty thin and needs the infusion of cash from the city contract to keep his empire afloat. He owns two residences, including one on Rock Creek Park Drive in upper Northwest. When Peebles hosted a fundraiser for Bill Clinton in 1992 at the Rock Creek estate, the would-be president gushed that it was more elegant than the governor’s mansion in Arkansas.
Those were better, more prosperous days. Peebles snatched up downtown properties in hopes of leasing them to the federal government, which is now downsizing, or the D.C. government, which is downsizing even faster. He owns a building at 9th and F Streets NW that he is trying to lease to the school board, which is currently searching for new quarters. Newly elected Ward 7 school board member Terry Hairston has been carrying Peebles’ water before the board, but so far has been unable to convince his skeptical colleagues to approve the deal.
Peebles is looking for a majority of seven councilmembers—many of whom he helped in raising campaign funds—to stick with him and the mayor on his latest lease caper. In customary Barry fashion, Hizzoner waited until the last minute to send forth his proposal to relocate city employees and clear the way for work to begin on the arena in October. Now Barry is pressuring the council to act soon or risk taking the hit for tanking the arena project.
The mayor has known since at least February that he would have to come up with space for the displaced H Street workers. Negotiating a lease early could have meant getting a good deal for the city—or finding free space for the workers in buildings the city already owns—but that’s not the Barry way.
Competing developer John Akridge III is probably still wondering what hit him. Akridge signed a contract with the city July 25 to move the workers from the doomed buildings in the 600 block of H Street NW to his building at 941 North Capitol St. Three days later, Peebles persuaded Hizzoner to rip up the Akridge contract and deal with him. In reuniting with his old pal, Barry reportedly ignored the counsel of his advisers.
Perhaps Akridge’s biggest mistake was not throwing in a $1.4-million finder’s fee for Fred Ezra, the fund-raiser who collected campaign funds from the development community for Barry in last year’s mayoral race.
City council fax machines have been humming lately with memos from Akridge and Peebles disparaging one another’s deals. Peebles and Ezra claim the Barry-backed plan would save the city $46.8 million over the Akridge proposal because the city would end up owning a $48-million building at 1121 Vermont Ave. NW at the end of the 15-year lease. That’s a mighty optimistic price tag for a building that’s been described even by D.C. workers as unfit for human habitation.
Akridge counters that the difference in the two offers is “negligible—about $100,000 a year,” and, unlike Peebles, he is willing to lease for eight years instead of 15. The Peebles lease, Akridge claims, will cost taxpayers $21 million more because the city doesn’t need the office space for 15 years.
Peebles played the race card early, claiming that his offer wouldn’t be undergoing such scrutiny and criticism if he weren’t a minority businessman. That argument seemed to sway Ward 5 Councilmember Harry Thomas, ever on the lookout for slights against African-American business-owners. It also helps that Peebles is friendly with Thomas’ son, Harry Thomas Jr., who is trying to build a career as a lobbyist and businessman. Family considerations are of paramount importance to the Thomases.
But the race argument didn’t sway the other 34 commercial landlords who had sought the contract. Many of them have complained that Akridge, who is white, and Peebles, who is black, were both given favorable treatment not afforded other bidders. City law forbids leases in office buildings where the D.C. government would end up occupying more than 49 percent of the leasable space. Peebles and Akridge eluded the 49 percent limit by counting every stairwell, elevator shaft, and trash chute as space that could be occupied by tenants. Other bidders, including developer Conrad Cafritz, say that if they had been allowed by city officials to make the same calculations, their offers would have qualified.
Last week, the D.C. financial control board urged the council to reject Peebles’ lease, in part because it violates the 49 percent limit. The board calculated that city workers would occupy 93 percent of the leasable space in the 1121 Vermont Ave. building, and 73 percent of the space in Peebles’ building at 801 North Capitol St. The board also criticized Ezra’s lofty finder’s fee, and determined that the lease could end up costing much more than Peebles and Ezra had calculated.
Peebles is the unchallenged master of real estate manipulation. Two years ago, he managed to keep a new office building at 1401 H St. NW off the tax rolls for a tax cycle on behalf of the building’s owner, who was his client. He successfully argued that since the upper floor was not yet ready for tenants, the building should be tax-exempt, even though the lower floors were occupied by paying customers. The tax appeals board he once chaired bought his twisted logic.
The D.C. Council, in its infinite lack of wisdom, may push ahead with Peebles’ lease in the name of home rule, despite strong opposition from the control board and within Congress. The swing votes appear to be At-Large Councilmember Linda Cropp and Ward 7 Councilmember Kevin Chavous. Supporters of the lease are Thomas, Ward 1 Councilmember Frank Smith, Ward 8 Councilmember (and Barry marion-ette) Eydie Whittington, and At-Large Councilmember John Ray, whom Peebles raised campaign cash for in last year’s mayoral race. The opponents are Ward 2 Councilmember Jack Evans, Ward 3 Councilmember Kathy Patterson, Ward 4 Councilmember Charlene Drew Jarvis, Ward 6 Councilmember Harold Brazil, and At-Large independent Councilmember Bill Lightfoot.
Council Chairman David Clarke has made noises for and against the lease, but look for him to end up riding with Peebles, who raised money for the chairman following Clarke’s 1993 return to the council’s helm. As is her custom, At-Large Statehood Party Councilmember Hilda Mason is expected to follow Clarke, which means she’s going in circles at the moment.
The late Council Chairman John Wilson liked to describe the D.C. government as “the best that money can buy.” But, unfortunately for city residents, you rarely get what you pay for in the District.
In this column two weeks ago (8/11), an editing error incorrectly lumped Ward 1 Advisory Neighborhood Commissioner Leroy Thorpe in with those who “waxed indignant” against interference in home rule during House Speaker Newt Gingrich‘s Aug. 2 town meeting. Thorpe was in fact gracious and even-tempered as he urged Gingrich to spare the D.C. School of Law when the District’s budget comes before Congress next month….While we are on the subject of that town meeting, At-Large Councilmember Bill Lightfoot said the dashiki for which he shed his well-tailored business suits on that humid evening was fabric, not leather, even though it looked like it. Shows what LL knows about fashion….
When Eydie Whittington won the hotly contested Ward 8 council race three months ago, bitter rivals said the newcomer would need lots of help in finding her way around the city council. They were proved right when Whittington recently voted for legislation abolishing the D.C. Taxicab Commission and the $78,905-a-year job of its chair, Karen Jones Herbert, who managed Whittington’s winning campaign. The new councilmember reportedly said afterward that she thought she was voting to cut the commission’s budget, not eliminate it entirely.
Now the joke around the District Building is that Whittington needs an aide to sit in the audience during council sessions and hold up cue cards telling her which way to vote. LL thinks the usual hand signals should be easy enough for Whittington to follow. Whittington may not be the only one who is confused, since $1.5 million still remains in next year’s budget for the now-defunct agency….
Ward 8 runner-up Sandy Allen was invited to the Barrys’ picnic last weekend by Hizzoner, who apparently wanted to reach out to his former aide and longtime friend. But when Allen showed up last Saturday, Aug. 19, she was informed that Cora Masters Lady MacBarry, who chaired Whittington’s winning campaign in Ward 8, had “uninvited” her. It reminds LL of the breakfast the mayor held a while ago to make nice with reporters. Lady MacBarry showed up and used the opportunity to hammer Washington Post reporter Yolanda Woodlee. It’s hard to build bridges when your wife is so fond of burning them.