The District will give up millions of dollars it could have reaped from the sale of developable skyline over Interstate395 to quickly advance construction of a massive mixed-use project above the freeway.
Under a settlement agreement approved by the D.C. Council but still to be finalized by the courts, the Louis Dreyfus Property Group will purchase the so-called “air rights” above the cavernous Center Leg Freeway for fair market value, estimated at $52 million.
But the city’s coffers won’t swell from the sale, at least in the short term.
“We plan on not accepting cash for the land and instead rolling all the value into providing affordable housing on the site,” said David Jannarone, the District’s director of development.
The air rights over I-395 between E Street and Massachusetts Avenue Northwest, a span of six city blocks just west of Union Station, were transferred to developer Conrad Monts in 1988. But the much-anticipated project went nowhere, the relationship turned sour and the sides eventually went to court, where the issue remains.
Monts won an $8.4 million judgment against the city in 2004 that D.C. appealed.
Under the Dreyfus deal, the property’s $52 million value will be pared by $9.8 million to settle and cut ties with Monts, $12 million to include 50 affordable residential units in the project and roughly $30 million to relocate the District’s data hub, currently located just off Massachusetts Avenue.
“Whether we write a check to him today or whether we take the value of the air rights and use that to pay, either way the District owes that money,” Jannarone said of Monts.
In any case, he said, the settlement will be “dwarfed” by the $400 million in tax revenue the city expects to garner from the project over 20 years. In recent testimony before the council, a Dreyfus official promised to “immediately commence development.”
“We need to move projects along here in the District of Columbia,” said Council Member Kwame Brown, chair of the economic development committee.
Details of the project, which will require Federal Highway Administration approval, are not yet available.
