Thursday, October 4, 2007

In Columbia Heights, Room for the Little Guys

By Alejandro Lazo Washington Post Staff Writer Monday, October 1, 2007; D01

The shells for what will be some of the biggest big-box retailers Columbia Heights has ever known are rising along 14th and Irving streets and Park Road NW. They include Target, Best Buy, and Bed Bath & Beyond.

Yet below these retail giants, space has been reserved for the little guys.

 

A Peruvian restaurant has signed a lease, as has a local African American franchiser of the Quizno’s sandwich chain. A Vietnamese grocer is negotiating to bring a Pho restaurant to the development. A locally owned spa may also come.

The $149.5 million DC USA project is being developed by Grid Properties of New York. President Drew Greenwald said the firm will reserve 15,000 square feet, or about 11 percent, of ground-floor retail space for local and minority-owned businesses, under an agreement with the District to buy and develop the land. He will reduce rents by 30 percent to encourage smaller tenants.

“With all the projects, it is going to be a nice mix,” Greenwald said. “It kind of has a little bit of everything.”

Throughout the District, developers are carving out space for locally owned or small businesses. While small businesses tend to be riskier bets than their better-financed corporate counterparts are, mixing local and national retailers is a goal of city officials when selling or leasing public land.

Mayor Adrian M. Fenty has made these set-asides for small and local businesses a priority in many negotiations with developers who seek to build on public land.

At the site of the former convention center on New York Avenue and Ninth Street NW, the city has struck one of the biggest of such agreements. The development team of Hines and Archstone-Smith has agreed to set aside 82,500 square feet, or 30 percent, of retail space for local or “unique shops.” It defines unique shops as operating fewer than six locations nationally. The development team will adjust rents accordingly to meet the mandate, said Howard J. Riker, a vice president in Hines’s Washington office.

“Local doesn’t necessarily mean small or local doesn’t mean new; it doesn’t necessarily mean ‘put at a disadvantage,’ ” Riker said. “The way that we will approach the leasing is that we want to make sure that all the retail tenants will succeed.”

Yet questions remain as to whether small and local businesses can compete in an environment of national brands.

“We may want to support the little guy in the neighborhood, but if his coffee doesn’t taste as good as Starbucks, if his clothes fall apart when you wear them or his furniture is out of fashion, are you going to go his store? You’re not,” said John A. Asadoorian, founder of Asadoorian Retail Solutions, a District brokerage firm.

Asadoorian added, “They should be viable businesses, and if they are viable, the property owners will want to put them in their projects anyway.”

Others question whether driving up the cost of these projects is worthwhile. In the short run, a few small businesses benefit from a program, but the cost is distributed across the entire tax base, said David H. Downs, a professor of finance and the director of the Kornblau Institute at Virginia Commonwealth University.

“If the taxpayers aren’t properly monitoring what is going on with these programs, they can be inefficient,” Downs said.

Mixes of national and small retailers already exist in the District. When Horning Brothers sought to renovate the Tivoli Theater, the original 1998 request called for the inclusion of at least one local business, said David Roodberg, chief executive at Horning Brothers. The project is also in Columbia Heights.

The project, anchored by a Giant grocer, includes several minority-owned and local businesses, including the Rumberos restaurant, Mayorga Coffee cafe and the Destiny De’ve hair salon and spa. Ruby Tuesday and Wachovia are the other national chains that are part of the mix.

“There is some risk,” Roodberg said. “But you have to evaluate the individual retailers and their experience.”

In the case of the DC USA development, the Development Corporation of Columbia Heights has played the role of recruiter for neighborhood businesses, overseeing an application and selection process and making recommendations to Grid. Robert Moore, chief executive of the group, said start-up costs for small businesses can be one of the biggest hurdles, particularly for businesses that are not franchises.

“When you walk down the street, the smells that you smell are the smells of the neighborhood: Ethiopian food, Peruvian kitchen, so I really think it’s going to give cachet to the place, and you’ll know you’re in someplace special,” Moore said.

Alejandro Lazo covers commercial real estate. His e-mail address islazoa@washpost.com.

Posted by M at 17:39:48 | Permalink | Comments (22)

Is O.C. parks debate a power play?

Supervisors will examine a plan to change how the county’s parks are managed. The Irvine Co.’s influence may be a factor.
By Christian Berthelsen, Los Angeles Times Staff Writer October 2, 2007
When Orange County officials first reviewed a plan by the Irvine Co. to drain runoff from its massive Santiago Hills housing development into county-owned Irvine Regional Park, they were deeply troubled.

Parks administrators thought the arrangement amounted to a “gift of public funds” because it granted the development firm exclusive use of public property that would benefit its private 1,750-home development, according to documents and correspondence provided to The Times. At a minimum, they reasoned, the Irvine Co. should pay for the land, and they drafted a letter to the company saying as much in April 2005.

But after a series of hand-written changes by senior directors at the county’s Resources and Development Management Department, the county’s position changed diametrically.

A large “X” was drawn through the paragraph demanding the company provide “overriding public benefits” in exchange for the land. The final version said the county found the drainage system was in the public interest and made no mention of compensation. Supervisors unanimously gave final approval earlier this year, over the objections of environmentalists, homeowners and some of the county’s staff.

Now, that episode is serving as a backdrop to a debate over a plan for future management of the county’s parks.

One option calls for turning over management of some of the county’s parkland to a private trust established by Irvine Co. Chairman Donald L. Bren and overseen by executives of the development firm.

In August, the county’s Harbors, Beaches & Parks Commission narrowly voted against endorsing the parks plan, in part because it did not grant the parks agency autonomy from the more business-friendly resources department. The resources department oversees county facilities and ultimately signed off on the drainage deal. Supervisors are scheduled to take up the parks management proposal today.

The debate comes at a critical time for Orange County’s park system, which has suffered in recent years as officials diverted nearly $150 million from parks in the last decade to cover other costs, such as the county’s bankruptcy debt. In 2005, an Orange County Grand Jury report found the park system underfunded and understaffed, and recommended it be afforded higher status in the county bureaucracy.

More than anyone else, the Irvine Co. and Bren are the architects of the image of modern Orange County, with its meticulously planned communities and tidy, tree-lined streets.

To the Santiago Hills drainage plan’s opponents, the county’s acquiescence demonstrates that the firm wields quiet but powerful influence over county affairs.

“I don’t think the public interest was served here,” said Kevin Thomas, the county’s former parks director who was a critic of the proposal and was fired last year.

“I was not an obstructionist. I did not object to the development. I believed the Irvine Co. had every right to develop the property,” he said. “I just didn’t believe it had the right to put something on the backs of the public without paying for it.”

County officials defend their handling of the matter. Bryan Speegle, head of the Resources and Development Management Department, said the county had never required developers to compensate the county for the use of public property to handle runoff, and that county lawyers rejected the notion that it was a gift of public assets.

Supervisor Bill Campbell, whose district includes the project and the park, said the Irvine Co. had rights under a 110-year-old land deed that could have allowed it to build its drainage system through more popular areas of the park. Other officials note the final proposal was approved by state and federal wildlife officials, and that Orange’s approval of the project has been upheld thus far by the courts despite a legal challenge.

For its part, the Irvine Co. said its project did not constitute a taking of public land and was a product of compromises after much community discussion. The company also notes the environmental group Coastkeepers endorsed the ultimate plan.

“We are not taking public land,” said John Christensen, an Irvine Co. vice president.

The 114-acre parcel where the drainage facility is planned was bought by the county in 1972 — from the Irvine Co. — for nearly $400,000. Roughly 30 years later, the company decided it wanted some of it back.

As the developer pursued approval from Orange to build the second phase of Santiago Hills, it filed a runoff management plan with the county. Almost immediately, its central premise — to divert runoff from the development into the county park — raised hackles in the bureaucracy.

The first draft would have used acreage thick with California coastal sage-scrub, the habitat of the federally threatened California gnatcatcher, according to an Aug. 26, 2004, memo from Thomas. Five gnatcatchers had been observed there just weeks earlier. There were also concerns that heavy rains could wash out park trails.

In a March 4, 2005, memo, Cathy Nowak, a parks official, noted the company had accepted some changes to minimize effects on the natural habitat and the views of neighboring homeowners, but that it was resisting paying for the property.

Then came the series of letters in which the county first insisted it receive compensation for the land, only to ultimately approve the proposal without that condition. Speegle said he did not know who edited the letters, but acknowledged he signed the final version.

Earlier drafts also said the proposal would have to be vetted through public hearings, but the final one said no hearings were necessary. That rankled nearby homeowners, who said they never even knew of the plan until it was practically a done deal.

“We had no notice whatsoever of anything,” said Cynthia Burns, the president of the Hillsdale Community Assn., which represents homeowners in a development where several views look out directly onto the park where the drainage facility will be built.

Speegle said the parks officials were overruled because their sentiments were not consistent with the law or the county’s historical practice.

Orange gave final approval to the development plans in November 2005, but the Irvine Co. still needed a series of approvals from the county after that.

As the process dragged on, documents show, county resource managers repeatedly complained they were not receiving proper documentation from the company for its plans.

They also said the company had agreed to changes in the drainage plan, only to submit new designs that did not reflect the compromises. In one Feb. 28, 2006, exchange, a county engineering specialist complained to an Irvine Co. consultant that the county had not received approved tract and topography maps it requested, only to be told that Speegle — her ultimate boss — had told the company it didn’t have to comply with the request.

In an interview, Speegle acknowledged he may have done that, but only because Orange had agreed to assume responsibility for the facility, thus relieving the county of oversight for it.

As the Irvine Co. sought final county approval of its permit and plans, county parks officials continued to press for compensation for the land. If the shoe was on the other foot, Thomas said he asked Irvine Co. officials during a meeting in the fall of 2006, would the company ever give land to the county for free?

Within seconds, according to Thomas’ account, the executives, and Speegle, stood and left the room, ending the meeting. He was fired in December and believes the dispute played a role in his dismissal. Speegle says he does not recall the meeting or the comment and declined to comment, citing personnel matters.

The final plans, approved in March, moved the drainage facility and shrank its size to about 1 1/3 acres, to address concerns about the gnatcatcher habitat, and added trees and shrubbery to cover fencing and piping from neighbors’ views.

The runoff from the development would empty into to the park through a 6 1/2 -foot-wide pipe.

christian.berthelsen@ latimes.com
 

Posted by M at 17:38:35 | Permalink | No Comments »