Michael NeibauerSenior Staff ReporterWashington Business Journal
The District is only days away from taking ownership of its portion of the Walter Reed Army Medical Center and getting to work on a massive, multidecade redevelopment.
D.C.'s Office of the Deputy Mayor for Planning and Economic Development has finalized its agreement with the U.S. Army that will result in the transfer of 66.27 acres of the 110-acre campus to the city. Under the deal, the District will pay $22.5 million for the property— $10 million at closing and $12.5 million one year later.
In documents submitted to the D.C. Council on Wednesday, Mayor Muriel Bowser's administration wrote that closing is expected this month. Shortly after closing, the District will ground lease the property to the private development team — led by Hines Interests LP, Urban Atlantic and Triden Development Group — who will pay the city $25 million in eight payments over seven years ($10 million in the first two years).
The council's 10-day review ends July 10. If no council member introduces a resolution to stop or delay it, it will be deemed approved without a vote.
Walter Reed Army Medical Center, which dates to 1909, was closed in 2011 and its operations were transferred to Bethesda. The District has worked for more than a decade to plan the shuttered campus’ future. The Northwest site is bounded by Fern Street and Alaska Avenue to the north, 16th Street to the west, Aspen Street to the south, and Georgia Avenue to the east.
The development team also includes Weingarten Realty (retail leasing) andToll Brothers (residential). Its proposal for the Parks at Walter Reed was selected in November 2013 by then-Mayor Vincent Gray. The 3.1 million-square-foot plan calls for 2,100 housing units (432 affordable), 250,000 square feet of retail anchored by a large-format supermarket ( possiblyWegmans), 14 acres of open space, a Hyatt hotel and conference center, space for arts organizations, an ambulatory care clinic from Howard University, and an innovation core anchored by George Washington University and the Massachusetts Institute of Technology.
Because the District is paying a below-market price for the campus, it will be required, under Army rules, to reinvest all proceeds from the sale or lease of the property “to support job creation and economic development” on the campus. The reinvestment period lasts for seven years. The money may be used for road, storm and sewer construction, public facilities, utilities, building rehabilitation demolition, landscaping or marketing the redevelopment.
There is a lot of work to be done. Much of the campus’ infrastructure must be replaced. At least 24 buildings there might still have asbestos inside. And every building constructed prior to 1978 is presumed to contain lead-based paint that will have to be removed, unless the building itself is being torn down. The cost of readying the site for new construction and historic reuse, which will be shouldered by the development team, is expected to top $50 million.
The District expects the redevelopment to generate 2,300 construction jobs 3,460 permanent jobs, $1 billion in new tax revenue over 30 years.
The Army has already transferred roughly 33 acres of Walter Reed to the Department of State for the development of a Foreign Missions Center (one building, the Mologne House, has already been leased to a foreign mission for temporary housing through 2017). Much of what remains will be conveyed toChildren's National Medical Center. Two buildings, totaling roughly 1.1 acres, are subject to a ground lease between the Army and Fort Detrick that doesn’t expire until 2054.