Fifth and Eye parking lot
This parking lot was supposed to be the site of the Fifth and I project in Mount Vernon Triangle. Credit: Alex Koma

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Top D.C. development officials dealt a death blow to a long-stalled project in Mount Vernon Triangle in order to “appease politically connected allies like Neil Albert and friends of the current administration,” according to a lawsuit from one of D.C.’s most litigious and politically active developers.

The Peebles Corporation is making a series of explosive claims in the suit, which faces a key motions hearing Wednesday after the company filed the case in D.C. Superior Court in March 2022. Peebles is seeking to recoup the $25 million it claims it lost when its development project at Fifth and I streets NW collapsed nearly four years ago. The developer spent five years trying to redevelop a piece of city-owned land at the eponymous intersection into a high-end hotel and condos, only to watch the effort dissolve at the last minute in 2019. The land has sat as a parking lot ever since, and Peebles (once an active builder in D.C.) has pretty much fled the city.

The circumstances of the deal’s dissolution have remained largely under wraps for years now, but this lawsuit (uncovered by Loose Lips after the Office of the Deputy Mayor for Planning and Economic Development disclosed it in recent submissions to the D.C. Council) offers the most extensive accounting yet of the drama unfolding behind the scenes. Peebles paints a picture of a government more interested in doing favors for Mayor Muriel Bowser’s close confidants than ensuring a major project’s completion, and feeds the perception that a certain well-connected group of developers tends to exercise outsize influence over lucrative projects.

The dispute stems from Peebles’ attempts to remove the Walker Group as one of its local partners on the deal. But the company counted Albert (one of the most prominent figures in the D.C. development world before a nepotism scandal made him a political outcast) as an adviser. The lawsuit alleges that Albert wielded his influence to protect the Walker Group’s interests, as did some of its other prominent backers, and the deal couldn’t survive city officials’ decision to allow TWG to remain on the project. Peebles doesn’t go into detail about the actions of other insiders, but it’s worth noting that TWG also lists Buwa Binitie (a favorite developer of Bowser’s and former chair of the D.C. Housing Finance Agency’s board) and Donald Temple (a politically active civil rights lawyer) among its consultants.

Spokespeople for D.C.’s Department of Small and Local Business Development and the Office of the Deputy Mayor for Planning and Economic Development, both of which were deeply involved in this disputed deal, declined to comment.

Of course, LL sees plenty of good reasons to be skeptical about the company’s claims (Peebles’ attorneys at the high-powered firm Holland and Knight did not respond to a request for comment). Any firm that loses out on a $150 million development deal is going to have sour grapes, and Peebles isn’t just any firm. The company has tangled with the city in court on multiple occasions over other development deals, and its CEO, R. Donahue Peebles, was a rabid opponent of Bowser’s political mentor, Adrian Fenty. He even flirted with a run for mayor himself back in 2010 (the fact that he didn’t actually live in the District helped scuttle his political ambitions).

R. Donahue Peebles

What’s more, Peebles Corp. ran into major hurdles getting the project financed and repeatedly earned the ire of D.C. officials with its delays, according to email exchanges unearthed by the Washington Business Journal back in 2019. The fact that Peebles wanted to swap out the Walker Group for a company run by his own son, Donahue Peebles III, didn’t exactly lend the city confidence either. In a motion to dismiss the case filed last May, D.C.’s attorneys argue that such an arrangement might not have been “ethically acceptable.”

Peebles Corp. argues in its suit that the Walker Group was to blame for issues with financing and other problems, leading to its efforts to remove the small firm as the main certified business enterprise (or CBE) on the project. The company is based in D.C., and big out-of-town developers like Peebles Corp. will often partner with these local firms to win work with the city, which prioritizes CBE participation in awarding major projects. TWG CEO Skip Walker did not respond to a request for comment.

Specifically, Peebles claims TWG was supposed to supply $1.6 million to help get the project off the ground and never did. The developer also alleges Walker “failed to perform” any work on an affordable housing project in Ward 8 that Peebles Corp. agreed to back as part of its pitch to win the Fifth and I deal. And Peebles says a group of people “politically connected to the Bowser administration” working with Walker, including Albert, promised to help secure financing for the $150 million undertaking but also failed to deliver. Still, “its members continued to hang around the periphery of the transaction,” the suit claims.

“It became clear when closing with the District drew nearer that The Walker Group lacked the necessary development experience, financial capacity, or desire to fulfill its role as CBE Participant,” Peebles’ attorneys write in court filings. “The failure of The Walker Group as the CBE Participant created a financial and legal risk that endangered the whole project.”

That’s when Peebles proposed reducing Walker’s equity in the project and subbing in another CBE run by the younger Peebles. “Almost immediately, Mr. Walker and his allies complained to the District about this proposal and began to lobby District officials to block the proposed replacement,” the suit alleges. Those efforts included entreaties from Albert, who has served over the years as city administrator, deputy mayor for planning and economic development and chair of the D.C. Housing Authority’s governing board.

Peebles claims that Albert lobbied DSLBD, which oversees the CBE program, to keep TWG in the deal. Walker himself also emailed DSLBD officials with these entreaties and copied Albert, the suit claims. (Notably, Peebles has yet to supply exhibits supporting these allegations as part of any of its court filings.)

DSLBD subsequently denied Peebles’ requests to remove TWG and urged the two sides to come to some sort of resolution as the April 1, 2019, deadline for closing on the land’s purchase approached. Then-Deputy Mayor for Planning and Economic Development Brian Kenner refused similar pleas from Peebles and “leaned on plaintiffs to cave into The Walker Group’s demands” to remain on the project, the suit alleges. DMPED even convened a meeting with Peebles, Walker, and then-Ward 5 Councilmember Kenyan McDuffie to hash out these differences, to no avail.

TWG subsequently “demanded that it be paid” $5 million to walk away from the project, but Peebles “refused to be extorted” and did not do so, the suit says. Lenders began to back away from the project amid these disputes, and Peebles was unable to close on the deal, leaving it functionally dead. TWG would even sue Peebles as this process played out, though a judge ultimately tossed out those claims.

“In order to advance the interests of political friends, the District has blown up deals and breached its contracts, hurting the public tremendously,” Peebles’ lawyers write in court filings.

D.C. has made only limited arguments in its defense thus far, but its attorneys note that DSLBD has broad discretion in deciding whether or not to replace a CBE in a deal such as this. Despite Peebles’ salacious accusations, the District argues that the suit will turn on much more narrow procedural grounds: namely, that the CBE agreement “does not detail any factors the [DSLBD] Director must consider in determining whether to approve the proposed replacement or in any way dictate how a request for substitution should be handled by DSLBD.”

“In refraining from consenting to the substitution, the District did not breach the CBE Agreement,” the government’s lawyers write. They argue that DSLBD officials were merely making a “discretionary policy judgment” and had to consider factors like “what financial resources would be expended or jeopardized as a result of a change to the CBE participant,” not to mention the wisdom of awarding the project to a CBE controlled by Peebles’ son.

It may be some time before the case is fully decided. (In a sign of just how incestuous this whole dispute feels, the proceedings were briefly held up by protests from Peebles, who argued that Associate Judge Ebony Scott should recuse herself from the case because she served as the deputy director of the Mayor’s Office of Legal Counsel as much of the CBE dispute unfolded; Scott declined to do so). Scott is set to hear arguments on several motions related to the case Wednesday before the discovery process, where each side gathers evidence, can begin.

And it may be an uphill battle for Peebles Corp. to prove it deserves the $25 million it’s seeking in damages. Even if its allegations about political influence are true, District officials have pretty broad discretion in managing development projects like this. But the case does, at least, help explain why there hasn’t been any movement at all at Fifth and I since this deal dissolved, despite frequent pleas from a community eager to see a parking lot transformed.