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D.C.’s SLS Hotel is finally poised to move forward

Tuesday, May 30, 2017

The developer has been in negotiations over the affordable housing piece of the project for nearly a year. There's now a deal.

There’s finally some movement on the SLS Hotel planned for downtown D.C. The hotel’s developer, Peebles Corp., and Mayor Muriel Bowser's office have reached an agreement in principle on the affordable housing piece of the project.

Peebles, which is developing the hotel at 901 Fifth St. NW in Mount Vernon Triangle, will build 31 units of affordable housing at 2100 Martin Luther King Jr. Ave. SE, and it will build the additional 30 affordable units it promised as part of the project on a different site at a later date.

To review, quickly: Peebles was chosen by the District to develop the property at Fifth and Eye streets NW back in 2014. The company said last year that it planned to put the SLS flag on the hotel, bringing another luxury hotel option to the city. As part of that bid, which also includes 59 SLS-branded condominiums, Peebles proposed building a six-story, 61-unit affordable rental building at the site in Anacostia as a community benefit.

But the Historic Preservation Review Board and members of the Anacostia community didn’t approve of such a large project in the neighborhood’s historic downtown.

Which meant that Peebles Corp., specifically Donahue Peebles III, was left trying to figure out, with District, how to fulfill the affordable commitment while moving the Fifth and Eye project forward. After many months of negotiations, they reached a deal earlier this month.

The term sheet for 901 Fifth St. NW will need to be updated and approved by the D.C. Council. That term sheet will include a time frame in which Peebles will build the additional 30 units, though that time frame has not yet been finalized, according to a spokesman for Deputy Mayor for Planning and Economic Development Brian Kenner.

It was actually at the suggestion of D.C. Council Chairman Phil Mendelson that the mayor and Peebles found their deal, according to one DMPED official. No one wanted to give up the 61 affordable units that were promised, so splitting up the affordable component was a way to keep that part alive but allow the hotel to move forward sooner rather than later, the official said.

HPRB staff has recommended that the new building, a three-story, 30-unit affordable project on a Peebles-owned lot, be approved in concept. The board is expected to vote on the project Thursday.

The way the Fifth and Eye deal is structured, Peebles won’t close on the more lucrative Mount Vernon Triangle site until it is ready to begin construction of the affordable units. Peebles hopes to be able to do that “as soon as possible,” with an eye toward getting the hotel open in late 2019 or early 2020, he said.

“I think it’s a win-win,” Peebles said of the agreement. “It’s an expert move in balancing what could be considered competing interests.”

It’s also a bit personal for Peebles, whose father, Don Peebles, founded the company in 1983 and built his first project at the 2100 MLK property — an office building that still stands there today. The affordable housing and the combined SLS Lux hotel and condo is one of the first projects the son is spearheading for his father's company.