Court of Appeals to Hear Arguments in West End Deal

Oral Arguments, Case 12-AA-1183
DC Library Renaissance Project vs. DC Zoning Commission (West End Deal)

Thursday, February 14, 2013 at 9:30 AM
DC Court of Appeals
430 E Street, NW
Washington, D.C. 20001

COA calendar:  http://www.dccourts.gov/internet/documents/February-2013-RegularCalendar-FINAL.pdf

Read the Documents in the Case:

DC LRP Brief:  Brief of Appellant

Eastbanc Response Eastbanc Reply Brief 

DC LRP Response     2012_12_25_westend_WELAG_response_brief

Proceedings are open to the public.

Gandhi Announces Resignation Questions about West End Deal Remain Unanswered

The D.C. Chief Financial Officer’s economic impact statement about the West End land sale provided contradictory information, and failed to fully analyze an extremely complicated deal involving publicly owned city assets, the DC Library Renaissance Project has found.

The information that D.C. Council members were provided by the CFO, while not untrue, omitted a key variable: the estimated fair market value of the land to be sold. Without further analysis of their own, Council members would not have had adequate information to evaluate the deal.

At stake is the value of three properties in the West End “sold” to a developer, Eastbanc, through a complex and unprecedented land swap. The deal calls for a new library facility, new firehouse, and new affordable housing — together worth $30 million according to Eastbanc — in lieu of payment for the land.

The CFO’s report states, based on values from its own tax database and those of an independent valuator, that the land sale would reduce the city’s assets by approximately $30 million. The Mayor, D.C. Council members, and community groups assumed that $30 million in new construction matched the $30 million reduction in assets, making the deal seem reasonable.

In his testimony, however, the CFO noted that deed and recordation fees totaling $1.45 million would be forgiven as part of the deal. Since deed and recordation fees in D.C. are based on a formula of 1.45% of the total estimated fair market value, the real value of the land is $100 million, not $30 million. So transferring ownership to Eastbanc is a giveaway worth roughly $70 million.

In addition, Eastbanc asked for help to complete the affordable housing, claiming it could not make a profit without a subsidy. In April 2012, Mayor Vincent Gray announced that the city would provide an additional $7 million in cash to Eastbanc so it would construct the legally required affordable housing.

The CFO’s office is an independent agency charged with providing objective and unbiased information to the Mayor, City Council, and city agencies regarding fiscal matters. D.C. Council members often rely on information from the CFO to make decisions. They should be able to count on a full and faithful analysis. If the omission was deliberate, it could constitute corruption. If the CFO’s office simply made a mistake, it was incompetent.

The waiving of deed and recordation fees is not uncommon or unjustified when eventual resale is the goal of a construction project, as in this West End deal. The far more serious issue is that the $100 million number, the fair market value on which the $1.45 million fee is based, was omitted from the Financial Impact Statement.

Come to the West End Do the Math Forum Saturday February 9.