With D.C. favoring Microsoft and two other firms as anchors for the old St. Elizabeths Hospital, the city no longer has to rely on the planned move of thousands of federal employees there to start attracting more commercial development.

The breakthrough marks a major shift for one of D.C.'s marquee redevelopment projects: The city now has the goods in its own right to turn this long-overlooked section east of the Anacostia River into a shining example of revitalization.

D.C. recently announced it had narrowed down 10 development proposals at St. Elizabeths to finalists Microsoft Corp., French lighting firm Citelum USA and Atlanta-based SmartBIM/Treasury Advisory Services, which creates information systems for the building industry.

Three anchors
Microsoft Innovation Center: technology facility for collaboration on new research, technology or software solutions and include government, academic and industry participants. None of Microsoft's 94 current centers is in the U.S.
SmartBIM/Treasury Advisory Services: Training center for developing energy-efficient building improvements.
Citelum USA: U.S. headquarters for French lighting company.

D.C. Mayor Vincent Gray, who wants the hospital's 170-acre east campus to be a technology hub for the District, told The Washington Examiner that city planners intend to select all three to build on the site.

"This will be one of the biggest things that's ever happened in the city," Gray said of the firms' plans.

With that base to build on, city planners can ease up on anxiously watching the progress of the federally run redevelopment of the hospital's west campus, where the Department of Homeland Security is slated to consolidate its headquarters and bring 16,000 employees to Southeast D.C.

Previously, city officials have said the speed of D.C.'s own redevelopment of St. Elizabeths would likely depend on the west campus' timeline. The idea was that the more employees working on the west campus, the more retail, residential and office space could be supported on the east side.

The U.S. Coast Guard's 4,400 employees are still scheduled to move to the west campus by mid-2013. But the remaining headquarters consolidation has hit funding roadblocks and new resistance in Congress. Initially expected to be completed by 2016, the project's has had its timeline stretched to 2021 -- if it is completed at all.

"I don't know if the DHS consolidation will happen or not," Gray said. "We hope it will, but even if it doesn't, we've got enough of a critical mass now to move rapidly ahead."

The tech proposals mostly revolve around creating centers that focus on education and job creation, though Gray said it would be "hard to quantify" how many jobs the companies would actually add to Southeast. But he said their biggest contribution would be "the catalytic effect" they'll have in attracting similar businesses.

University of Baltimore economist Richard Clinch said the shift away from relying on federal government dollars to provide that catalyst is something the District should be doing anyway. With expected spending cuts beginning in 2013, he said the more D.C. invests in private-sector industries, the better.

"Because of what's likely going to happen to federal spending, D.C. not only wants but needs these types of developments," Clinch said.

He added the old belief that DHS contractors would follow the agency by opening up offices in Southeast -- thus stimulating office development on the District's side -- may not have worked out for D.C. anyway.

"With contract values expected to be stable or shrinking ... I'm somewhat skeptical that DHS contractors are going to pick up and plop down in the District," he said.