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Visitors to The Line Hotel in Adams Morgan can walk into the elegant lobby and order an espresso with a delectable pastry, enjoy a ritzy dinner, or sit and people-watch some of the most stylish hotel guests in the city.
But on paper, as far as the District is concerned, construction on the 220-room, restaurant-filled Line Hotel is still taking place, even though the hotel began welcoming guests in December.
That determination leaves open the possibility that the project, where rooms currently start at around $200 a night, could yet meet the requirements of a $46 million tax-break deal brokered several years ago by community members and the hotel’s developer, New-York based Sydell Group. The deal laid out local-hiring requirements that the developer has to meet to receive the property-tax break, to be distributed over 20 years after the completion of the project.
But since late 2016, Line-watchers have raised concerns that Sydell and its contractors were falling short of the required 51 percent of construction-job hours and the 342 full-time positions that District residents must fill under the terms of the 2010 agreement, which the D.C. Council amended in 2013. The deal also stipulates that 51 percent of the permanent jobs generated by the hotel must go to D.C. residents, of which about half must go to Ward 1 residents, among other provisions.
Now, those concerns are resurfacing after Ward 1 Councilmember Brianne Nadeau, whose ward includes Adams Morgan and who survived a bevy of challengers in the Democratic primary this month, sent a letter to City Administrator Rashad Young on June 8 that sounded the alarm about the hotel’s recurring use of temporary occupancy permits rather than permanent ones.
The project’s temporary occupancy permits—granted by the Department of Consumer and Regulatory Affairs—have seemingly allowed Sydell Group to manipulate the clock and boost their construction-jobs numbers to demonstrate compliance with the tax agreement, since the District does not consider the project completed until DCRA issues a final certificate of occupancy, Nadeau and some residents say.
In effect, the developer can keep claiming construction-job hours and positions filled by D.C. residents until that point. The Ward 1 councilmember said she was worried that the series of temporary certificates of occupancy—at least nine consecutive ones since the opening of the Line—was “an attempt to disingenuously extend” the development window for the project and lock down the $46 million tax break.
DCRA’s online permitting database shows the property has received more than a dozen temporary (or “conditional”) occupancy permits since last November. The five most recent ones were issued in May and June and cover two parking levels, the concourse, the ground floor, the first through seventh floors, and the roof.
LaToya Foster, a spokesperson for Mayor Muriel Bowser, says in a statement that the project will not receive temporary occupancy permits any longer. “In consultation with our office, DCRA has issued the final Conditional Certificate of Occupancy (CCO) to the Line Hotel,” Foster says. “The Line Hotel has been given a detailed timeline that gives them until August 1, 2018 to address all outstanding issues, and there will be no more CCOs issued.”
Conditional certificates of occupancy are not uncommon for major mixed-use projects in the District. According to DCRA, the agency can issue these sorts of permits “if the building, structure, or portion thereof may be safely occupied even if the work required under the issued permits is not complete.”
In a September 2017 letter to DCRA that City Paper obtained, a vice president of development at Adams Morgan Hotel Owner LLC—the business entity Sydell uses for the project—requested “a Phased Conditional Certificate of Occupancy Plan” for the eight-story hotel, to be built in two phases. He wrote that the developer would file for a “Phase II Final Certificate of Occupancy … in October 2017” and that it would “include the full Building.”
DCRA also issued the property a notice of “outstanding fire and life safety, [Department of Energy and Environment], and zoning issues” on June 11, but removed the notice on June 14, records show. A spokesperson for Sydell Group did not immediately respond to requests for comment on Friday, though City Paper will update this post upon hearing back.
On Thursday, questions about the project featured prominently at a public roundtable of the Council’s labor committee, which At-Large Councilmember Elissa Silverman chairs. The roundtable focused on the District’s three-decade-old “First Source” program under which unemployed D.C. residents are supposed to be the “first source” of employment for contractors working on projects that are significantly subsidized by taxpayer dollars.
In April, D.C. Auditor Kathy Patterson published a critical audit that found that the District did not rigorously enforce the program’s rules from 2013 to 2016. The Department of Employment Services, which administers the program, only issued one fine for non-compliance over that period and was not able to provide full data on how many residents had been hired through First Source, according to the audit.
The agreement for the Line Hotel is part of the program, but is unique in that it was formalized in legislation. DOES is responsible for monitoring reports on District hires from a project’s developer and ultimately coordinates with the Office of Tax and Revenue in determining whether a project has met the requirements for such a tax abatement. That certification has not happened yet for the hotel project.
At the roundtable on Thursday, former Ward 1 advisory neighborhood commissioner Bryan Weaver, who helped forge the original deal for the Adams Morgan project, said he was concerned that the construction jobs the developer had claimed in a recent monthly report were not all construction jobs.
John Boardman, executive secretary-treasurer of UNITE HERE Local 25—a D.C.-area union that represents hotel employees—shared this concern, saying “a significant piece of hours included should not be included.” But Boardman said his suspicion is “hard to verify because we can’t get at the source documents.”
Silverman’s committee received the report from DOES. It runs through March 2018 and purports to show that the project had created 1,472 total jobs, of which 670, or 45.5 percent, were filled by D.C. residents. It also purports to show that people had worked 518,757 total job-hours, of which 268,456, or 51.7 percent, were filled by D.C. residents.
“I feel like they’ve thrown spaghetti at the wall to see what would stick, where this just really doesn’t even pass a laugh test,” Weaver said, citing a line item on the spreadsheet for 45,000 D.C. job-hours and 230 D.C. jobs for AMYLA, a youth-development nonprofit based in Adams Morgan.
He questioned whether these were really construction jobs, and said he was not opposed to the project, but wanted the District to better ensure that local-jobs agreements work “for both sides” during development. A page on AMYLA’s website for the nonprofit’s “partnership with the Line Hotel” currently does not work.
When DOES Interim Director Unique Morris-Hughes testified at the roundtable, she and Silverman—the committee chair—had an exchange over whether the Line Hotel is still in fact under construction. Morris-Hughes said DOES considers the development to be ongoing, but demurred when asked whether the hotel is “gaming the First Source system.”
“I have no expertise in determining whether or not they should receive a temporary [certificate of occupancy] or when they receive a final [certificate of occupancy,]” she said, referring to DCRA as the point agency. “There is not a role with DOES on the [certificate of occupancy] discussion.”
“This is a lot of money, $46 million,” Silverman said, asking how the department would verify the developer’s numbers. Morris-Hughes said DOES would “look at the life of the project” and independently review the project “in a very thorough manner.”
A January 2017 lobbying report filed with the Board of Ethics and Government Accountability shows that the hotel LLC retained longtime lobbyists John Ray, a former D.C. councilmember, and his associate Tina Ang, who work at Manatt, Phelps & Phillips. (No 2018 reports for the LLC are available on BEGA’s online database.)
The lobbyists spoke on the phone with DOES’ general counsel in November 2016 and met with Nadeau’s chief of staff that December, according to the report.