A familiar, long-running story is back in the news—-and that’s definitely a bad thing.
For years, D.C. officials have wanted to build a hotel to support big groups hosting events at the Washington Convention Center. That project—-despite the economic downturn—-was rejuvenated this summer when Councilmembers Kwame Brown (At-large) and Jack Evans (Ward 2) decided it could wait no longer.*
And so we got our convention center hotel after a new financing deal was inked! Two thousand jobs were on the way! An August 2009 press release from the city stated that “the development team expects to break ground on the hotel project this fall and it is expected to be complete in 2013.”
Yet, fall has come and gone, and I recall no groundbreaking. Instead, D.C. was served with another roadblock, this time in the form of a lawsuit from a competing developer. The Washington Post covers all the latest twists—-“No construction bonds have been issued, and a D.C. Superior Court judge has twice refused to dismiss the case”—-in a story published yesterday.
On its face, the lawsuit by Wardman Investor, a company controlled by Chevy Chase-based JBG Companies, is a protest against the bidding process. The city selected Bethesda-based Marriott several years ago to develop the hotel, but when financing grew scarce, increased the public subsidy before the deal was finalized last summer.
Wardman Investor claims the D.C. Council acted illegally by negotiating exclusively with Marriott, granting the firm “extraordinarily favorable terms,” including not only the subsidy but also a 99-year lease on a city-owned site, with no payments during construction or the first three years of operation. Marriott would run the hotel, which would be built by Quadrangle Development and Capstone Development.
The suit seeks to halt construction and require that the city solicit new bids for the project. When the city initially opened the competition, JBG did not bid, but managing partner Ben Jacobs said the developer “would have been an obvious contender” if the original bidding process had included the new terms negotiated with Marriott.
*After all, Disney had just purchased 15 acres near National Harbor, igniting new questions about whether P.G. county’s own hotel mecca was eating up hospitality profits that could be going to D.C.
Image by Kjarrett, Flickr Creative Commons Attribution License