DC Zoning Shakedown Dance, Part 1

April 23, 2017



        DC activist Chris Otten and his lawyer Daniel Hornal are seated across the table from me in Adams Morgan’s Himalayan Restaurant on a bright Saturday afternoon in April, trying to persuade me that the $2 million, multi-year settlement they and others extracted from the owners of the Adams Morgan Church Hotel, near completion at Champlain and Euclid Sts. NW., shouldn’t be compared with community benefits agreements, frequently negotiated between residents and developers.


“They are two different things,” Otten exclaimed. He likely will make a similar argument when he meets later with a reporter from The Washington Post.


This is my second sit-down with Otten. In the interim, we have had intense text exchanges and telephone conversations. Like most community organizers, his uses words to incite action, radicalize citizens and intimidate elected officials and journalists like myself. “We know it’s all about profit and there is a layer of racism,” he continues as he trashes by name city leaders like former Mayor Anthony A. Williams, former Deputy Mayor for Planning and Economic Development Neil Albert and DC zoning commissioners.


“It’s like a play,” continued Otten, referring the zoning process. “It’s all set up with a wink and a nod.”

Some residents let their eyes glaze over zoning issues and decisions. That may be a serious mistake, however. Land is at a premium in DC. How it is sold or given away affects how much money does or doesn’t reach government coffers. Decisions by the zoning commission also often determine which citizens get to remain in place or are displaced. And, there is little dispute that it can affect whether the local and historical culture is preserved or radically altered.


That tension is usually at the center of every fight before the zoning commission. Developers and residents seek to gain leverage over the other using a number of vehicles, including the community benefits agreement (CBA).


Traditionally these are negotiated deals, facilitated by the advisory neighborhood commission near the proposed project. The agreement can involve developers providing cash contributions or valuable in-kind services to select local organizations. In many cases those recipient organizations are identified by the ANC or civic leaders who have been invited to participate in the deal-making. Each side asserts that the pacts ultimately benefit residents in the neighborhoods surrounding the proposed project. In exchange for bennies, the ANC and others agree to support—not impede--developers’ request for a zoning change.


      Otten and Hornal may be right that deal with the hotel developers isn’t the normal CBA. The Champlain Street Neighbors Hotel Study Group; Otten said he was the group's "authorized representative to the zoning hearing." It filed a lawsuit objecting to the zoning commission’s decision to grant the variance requested by the hotel. Other individuals including Teresa Lopez and Ron Gluck had also filed their own legal complaint. The opponents eventually came together as a group to negotiate a settlement, which had some of the same dynamics as a community benefits agreement.


“The money came with no strings attached,” said Hornal, making another exception to my assertion.  In

accepting the $2 million cash outlay, however, Otten and others promised to ensure the money would benefit the community.


The agreement, a copy of which was provided to TBR, said, in part that “The collective goals of this agreement is to seek and protect and preserve the longstanding affordable housing and small business in close proximity to the location of the project with the collective goal of safeguarding the unique diversity that remains in Adams Morgan.” Moreover, the hotel owners codified in that document what they already had agreed to in their zoning filing: provide garage parking spaces, invest in maintenance of the local park and create a community center within the hotel, among other things. 


Further, as is consistent with many community benefits agreements, in exchange for that $2 million pay-off Otten and others pledged not to “take a position adverse to the owner in any legal action in DC… ”


So, dear readers, if it quacks like that proverbial duck, don’t be fooled by someone calling it a chicken.


            The initial payment under the signed agreement from the hotel developers to the group was $100,000. Hornal said he placed that money into a special "trust"banking account, and funds were disbursed based on directions from his clients. He and Otten said, $30,000 of those funds was “spent on individual invoices by key members” for attending meetings and laying the foundation for the Forget Me Not Adams Morgan Fund,a nonprofit tax-exempt charitable organization. “Approximately $7,500 was spent on office supplies, including a computer, camera and other typical business expenses.” Another $30,000 was spent on “setting up and funding tenant associations on Champlain St. NW.” Less than $20,000 was spent “on legal fees setting up the fund.”


In November 2016, the group received another $850,000, according to documents provided to TBR. Hornal said that money and future payments will go to the Forget Me Not Fund. However, neither he nor Otten provided a specific breakdown of how the $850,000 have been disbursed—except to say a $126,000 grant was provided to the Columbia Road Small Business Association, headed by Teresa Lopez.


Next month, when the hotel formally opens, The Forget Me Not Adams Morgan Fund will receive an additional $250,000. And, it will receive an annual payment of $50,000 for the next 15 years.


“The owners felt that Chris would litigate and litigate and appeal, and litigate and we would have been tied up for years,” said one of the people involved in the project who requested anonymity since he wasn’t authorized to speak for the development group. 


Prior to the agreement with Otten and the Champlain Street Neighbors et al, the hotel owners had

worked their way through the process winning support by agreeing to an array of  concessions from the Reed-Cooke Association, Lanier Heights Association and the Adams Morgan Youth Leadership Academy. Nothing came without a cost, however, including reducing the size of the project. Moreover, as has become customary, the developers had agreed through ANC 1C to make cash donations to several organizations or specific projects:  up to $100,000 to refurbish Unity Park, $35,000 for Marie Reed Leaning Center, $41,413 for H.D. Cooke Elementary Schools, $20,000 for the Patrice Sitar Arts Center and $35,000 to For Love of Children, according to documents filed with the zoning commission.


“For us the payment was all over the place,” said the project associate. So far, the total community benefits outlay by the hotel owners and developers could be more than $2.2 million. “The PUD process is a good process when not abused by people like Chris Otten.”


Truth be told, the PUD process, particularly the community benefits aspect, is a mess.  It is routinely abused by both developers and activists, becoming what appears to be a fine tuned two-step hustle.

Community members often demand a ransom, hoping to secure changes they believe important, although sometimes those alterations are more subjective than objective and not germane to the zoning request. Developers, like those of the Adams Morgan Hotel, feel pressured to fork over the cash or in-kind services mostly out of fear their projects will end up in a purgatory, even when their proposals could be good for the community, bringing in jobs, enhancing property values, and increasing the neighborhood economy.


“Right now, it’s so ripe for corruption, with tons of money floating around here,” one lawyer who handles landlord-tenant cases and has seen his clients disadvantaged by zoning and so-called community benefits agreement.


Who really benefits from community benefits agreements? Who tracks down these contracts to ensure that all parties honor the terms of their deals?  Will the new organization Otten created actually distribute the money as it has claimed it would?  What will happen to that $850,000 payment? While they formed a nonprofit organization, Otten and crew have yet to submit the required federal 990. As an unincorporated nonprofit was it required to submit a local tax return? Hornal told TBR that he and Otten are meeting with tax experts who will help them figure out those latter issues.


Such unclear details only exacerbate concerns about the process. Should community benefits agreements even be allowed, particularly since they ultimately involve the exchange of certain government privileges that can have an affect on far more people than the few signatories of the pact?

Thus far, the zoning commission seems to have resisted getting involved. The director of the Office of Zoning made clear that CBAs are “proffered by the developers.”  The signed deals can be included in the file for a project but they are not necessarily part of the final zoning order, which means there may or may not be any instrument to effect compliance or enforcement. The city auditor reported last year on two zoning cases where the public benefits aspects of the projects which were included in the order. Compliance and enforcement by District government agencies were either nonexistent or weak. Fortunately, developers often tried to honor their agreements.


A 2007 zoning regulations study committee asserted that there was “a need for determination of what are acceptable public benefits and how they should be assessed against the bonus of density that is being requested.”


“Without specific standards or a rating system to identify relative value for a given benefit each project is subject to a negotiated process which can have unpredictable and sometimes undesirable results,” the group wrote in its report. It suggested creating a list of specific public benefits. “They must be measurable. They cannot include monetary contributions. And, they should last for the life of the project, unless specified.” The Office of Planning suggested in that same report assigning a point value for each benefit.


Those recommendations appear to have been ignored. Consequently, securing a PUD continues to be a shake-down process where neither developers nor communities are well served.



Stay tuned for Part 2.

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