The District will spend upward of $400 million over the next two decades to purchase, redevelop and occupy a cavernous former printing plant in Southeast that it has rented, but done nothing with, since 2007.
The city agreed to rent 225 Virginia Ave. SE, a vacant building near Nationals Park, in late 2006. The D.C. Council recently approved a 20-year, $174.4 million lease with developer StonebridgeCarras LLC, which will overhaul the property to house three government agencies.
From the first rent payment in July 2007 to the end of the StonebridgeCarras deal, the District will have spent more than $274 million to lease, buy, renovate and lease the building again. Operating costs for 345,120 rentable square feet will be in the $6 million-a-year range, adding $120 million to the price tag.
“I think we made the very best decision that we could given the situation we were in,” said Sean Madigan, a spokesman for Mayor Adrian Fenty.
» Rent from 2007-2009: $15 million
» Purchase price: $85 million
» New 20-year lease: $174.4 million
» 20-year operating costs: $120 million
The District entered a $6.5 million annual lease on the property in December 2006. Rent payments to Washington Telecom Associates, which started six months later, totaled $15 million between 2007 and 2009.
The plan, initially, was to move the Metropolitan Police Department into the building. But the Fenty administration killed the relocation in late summer 2007, citing the estimated $100 million tab to redevelop the property. It declined to pick up the $80 million purchase option, and the next two years were spent trying to dump the lease.
But the commercial real estate market dried up, as did any private-sector interest in the property.
Fenty announced last fall that the District would buy the building for $85 million. The sale closed in October.
The administration “screwed it up from the start,” said at-large D.C. Councilman Phil Mendelson. If the trigger was pulled earlier, he said, D.C. taxpayers would have saved millions.
“The mayor has the cards and he played them for $400 million,” Mendelson said. “I think he could have played them for less.”
StonebridgeCarras is expected to strip the building bare and then redevelop it as office space for the Child and Family Services Agency, Office of the Chief Technology Officer and the Commission on the Arts and Humanities — a project the city will pay off through its 20-year lease.
The District spends about $8.2 million a year to lease space for those three agencies, about what it will pay annually to StonebridgeCarras.
