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New analysis gauges economic impact of a West Heating Plant redevelopment

Daniel J. Sernovitz | 3/12/2018 | Washington Business Journal

The team behind the proposed redevelopment of a former Georgetown heating plant into high-end Four Seasons condos hopes to convince city officials that the project's benefits would far outweigh the substantial demolition and reconstruction of the historic property.

New York-based The Georgetown Co. and D.C.-based The Levy Group submitted an economic analysis to Mayor Muriel Bowser's office on Friday detailing some of the $215.1 million project's financial benefits. Among its findings, the study prepared by Partners for Economic Solutions estimates the West Heating Plant's redevelopment could generate $187 million in new tax revenue over the first three decades; 329 construction jobs and another 60 permanent ones; and financial contributions to support about 500 affordable housing units across the District.

While the shuttered, World War II-era former industrial plant was granted historic landmark status late last year, the District's Historic Preservation Review Board is slated to meet later this month to consider whether to approve of the Art-Moderne building's substantial demolition and reconstruction into a 72-unit development with condos selling for $4 million apiece. Ultimately, the decision will rest with the mayor's agent for historic preservation, who has final authority to determine if the project is in the public's interest or if the building should instead be preserved as is.

"I think that the message is that the transformation of this historic property and the decision to allow it to happen can’t be decided in a vacuum," Georgetown Co. President and CEO Adam Flatto said in an interview. "What we wanted to do was show the economic benefits that come with this project."

Georgetown and Levy teamed up in 2013 to cast the winning bid of $19.5 millionto acquire the real estate at 1051/1055 29th St. NW from the General Services Administration. It has enlisted world-renown architect David Adjaye and former Mayor Anthony Williams to help with the effort, which has gone through a number of twists and turns, including an initial vote by the HPRB to reject the D.C. Preservation League's nomination of the property for landmark status.

The project, the program and design, has changed multiple times in response to feedback from residents and advisory groups, and the team behind it hopes its current proposal will be enough to win final approval from the District.

Flatto said he believes the effort to preserve the building is misguided as it was never intended to be used as a building in the traditional sense. Internally, it is made up of a series of catwalks rather than floors, designed essentially as a machine to convert coal to steam. Its current condition does not support adaptive reuse, Flatto said, but the substantial demolition and reconstruction was designed to capture the building's essence.

While the project has taken longer and cost more to advance than expected, Flatto said the potential to create something that will have a lasting impact on the area is significant enough that the team has pressed forward.

"From the Georgetown Company's perspective, we do projects all across the country, and the one consistent element that goes through all of this is projects have exceptional quality," Flatto said. "This was an opportunity to do something wonderful and new."

The exact affordable housing provisions are still being refined, but the current proposal includes a $250,000 grant to Local Initiatives Support Corp. and another grant in an amount to be determined to the D.C. Housing Production Trust Fund. Among its other benefits, according to the analysis, is a 1-acre park and pedestrian bridge expected to cost $17.65 million, counting land value and construction costs, and $16.4 million in tax revenues through the project's construction phase.

If approved, Flatto believes the project's units will command a premium. In addition to the building's designs and finishes, the Four Seasons Hotel overlooking it at 2800 Pennsylvania Ave. NW will operate the condo building and provide concierge and food services.

"There’s no doubt that’ll have to be expensive," he said. "They’ll have to sell for a great amount, but if we get through it and are able to realize our vision, we just are confident that the market there will recognize the value of it."

 

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