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What the District is doing to catalyze economic development east of the river

Saturday, August 5, 2017

Washington Business Journal by Karen Goff

Development in D.C.'s Wards 7 and 8 has lagged behind the rest of the city’s boom for a number of reasons — entrenched poverty, the Great Recession, the Anacostia River as a barrier, and deals that just plain fell apart.

Wal-Mart, we're looking at you.

But with dirt turning on both campuses of St. Elizabeths, the first phase of Skyland Town Center about to go vertical, a viable plan for the Strand Theater finally in place and a host of developments planned for historic Anacostia, there is a tinge of optimism as we enter the latter half of 2017.

And much as the private sector is making a move there, it's up to the District government to make it happen.

“When I look at projects now in 2017, we have the first phase of development at St. Elizabeths, we have the sports and entertainment arena underway,” said Deputy Mayor for Planning and Economic Development Brian Kenner. “We have very much taken the tack, especially in the last 2 1/2 years, that the feds are not going to drive development there. They are just not.

"Whether that is consolidation of Homeland Security across the street or having feds appropriate money for a federal tenant on the St. Elizabeths East campus," he continued, "they have proven they are never going to do that in a time frame that makes sense, so we have had to be the catalyst for interest, development and activity over there.”

D.C. Councilman Vincent Gray, D-Ward 7, returned to the council in early 2017 with plenty of unfinished business from his single term as mayor. He has introduced more than two dozen bills since January — a number of them focused on economic empowerment in Wards 7 and 8.

Among them: a bill to reduce commercial property taxes, another for tax breaks for grocers and small business owners who employ Ward 7 and 8 residents, another to establish the East End Medical Center at St. Elizabeths East, one allocating surplus general fund money to capital projects related to the medical center, and one that would provide tax abatements for senior citizen property owners.

The East End Medical Center was allocated$300 million in the newest six-year capital spending plan, beginning in 2020.

“We have a momentum that is continuing to build on the east end of the city,” Gray said in an interview. “The fact we got this money for the hospital and locating it on the campus of St. Elizabeths is going to be a tremendous boost. It is hard to call a hospital an amenity, but at least it is a service everybody needs. As folks see the investment made by the city, I think they will view it as a catalyst for the kinds of services that have been lacking in the east end for decades upon decades.”

Gray has also rallied a high-profile group of developers to brainstorm how to boost the east of the river economy, while Mayor Muriel Bowser has Kenner and Deputy Mayor for Greater Economic Opportunity Courtney Snowden working on the same issue. Gray’s Ward 7 Economic Advisory Council includes Jair Lynch, Warren Williams of The Warrenton Group, Chris Smith of WC Smith and Chris Donatelli of Donatelli Development. All have projects in the pipeline, or under construction, east of the river.

For his part, Kenner says he is focused on increasing affordable housing, tax revenue and jobs citywide. Wards 7 and 8 remain a top priority though, especially given its lack of federal tenants and the fact that the consolidated Department of Homeland Security headquarters on the St. E's west campus has yet to catalyze development nearby. DMPED is taking an active role.

When Wal-Mart pulled out of Skyland in early 2016, the deal suffered a potentially fatal blow. Kenner's office helped developers Rappaport and WCSmith obtain a smaller tax-increment funding package, as well as additional EB-5 investments to move the town center effort forward. A revised first phase, anchored by apartments and retail, will get underway this fall.

In May, DMPED launched a new initiative, the Neighborhood Prosperity Fund, through which it will award up to $3 million for catalyzing mixed-used, real estate or retail development projects in areas where unemployment is 10 percent or greater. Thus far, no grants have been awarded.

“We have the housing production trust fund to take care of the affordable housing part,” Kenner said of Bowser's $100 million annual commitment to preserve or add to affordable units in the District. “We want to make sure we have something a little more focused.”

Check out our cover story on development in Wards 7 and 8. In the gallery, we have renderings of major development projects proposed for east of the river communities.