FOGGY BOTTOM AND WEST END ADVISORY NEIGHBORHOOD COMMISSION 1920 G STREET, N.W., WASHINGTON, D.C. 20006 • (202) 659-0011 March 7, 1988 Mr. Edward Curry Executive Director Zoning Secretariat District Building, Room 11 1350 Pennsylvania A venue, N.W. Washington, D.C. 20004 Re: Z.C. Case No. 87-18M/86-1C Dear Mr. Curry: This letter and the attached exhibits respond both to the summary /abstract report filed by the Office of Planning on February 17, 1988, in the above­ referenced case and to the additional material submitted on February 29, 198~ by the applicant -- Boston Properties -- in the same case. In exercising our righls as a party under the Zoning Regulations to respond to Boston Properties' submission, ANC 2A would like to acknowledge the technical assistance provided by the Washington, D.C., Justice for Janitors Organizing Committ'ee, Local 525 of the Service Employees International Union. We reiterate our unequivocal opposition to the approval of Boston Properties' application for a Planned Unit Development at 25th and N Streets, N.W. (Square 24, lot 110). We see no merit in the total package prepared by the developer and we ask that it be rejected. First we should like to address the paper submitted by the Office of Planning. Though necessarily there will be some repetition in our comments on it and on the Boston Properties submission of February 29, we believe it important to comment directly on each so there will be no doubt about our position. We note with dismay that the Office of Planning does not even address the matter of the covenant though in the past it urged ANC 2A to mute its objections to the transfer of all commercial FAR from lot 110 to lot 111 so that the U.S. News and World Report building could be constructed to its present configuration, thereby enabling the developer to increase his profit there. We would note that both ANC 2A and ANC 2B oppose the setting aside of the covenant. ANC 2B, as you are aware, has within its boundaries lot 802 on Square 35, which would be changed from mixed use to residential under the applicant's proposal. As we have stated previously, we believe the proximity of the 25th and N Street site to extensive and varied recreational facilities, a school and places of ZONING COMMISSION District of Columbia CASE NO.87-18 EXHIBIT NO.83 employment for potential occupants of a residential building there make it uniquely suited for residential use. It would also create a logical link with other nearby housing and would go far to improve the safety and ambience of the area, thus helping to restore to the West End some of the residential quality which has been steadily eroding in recent years. The Office of Planning report ignores all that as well as the fact that other proposals for the West End are beginning to include housing in their plans. It is our contention that lot 110 is an important site for residential construction and that the applicant should be required to meet his obligations as provided in the covenant. Adding some housing to an already approved mixed use project does not represent linkage as we understand it, and it should be clear both to the Commission and the Off ice of Planning that Boston Properties' proposal would result in a net loss of housing since relatively few additional units would be created at 23rd and N Streets to compensate for the waiver of the requirement for a strictly residential building at 25th and N Streets. In fact, about 100,000 square feet of residential development potential would be lost. Nor do we agree with the Office of Planning that Alternative A is preferable to Alternative B as set forth in the application. Clearly we are opposed to both, but we find Alternative A even more objectionable than B. It is not in character with the adjacent Bureau of National Affairs building and would seriously dwarf it. We do not share the enthusiasm of the Office of Planning for the amenities proffered by Boston Properties either. Most are meaningless, though in the self­ interest of the developer, and both singly and in combination they cannot compensate for the negative effects of the proposal on West End development. We think the Office of Planning report reflects a singular disregard for the community and its citizens and we trust the Commission will recognize its shallowness. Now let us turn to the February 29 submission by the applicant. Boston Properties again has ignored the seriousness of its attempt to renege on the covenant on lot 110. The applicant asks the Commission and the entire Government of the District of Columbia to set a dangerous precedent that can lead to an assault on the public trust. Given this possibility, the applicant's proposal must be scrutinized with great care. We have undertaken such a review and have come to the conclusion that Boston Properties' proposal can not meet this necessarily high standard. The applicant supports its extraordinary request to be released from the covenant restricting lot 110 on Square 24 to residential use by citing economic and design constraints. These conditions were self-imposed and are overstated. A careful analysis of the costs and benefits associated with the proposed PUD reveals the shallowness of the assertion that residential development of lot 110 is infeasible. Boston Properties overstates the land value of lot 110 To substantiate the contention that residential development of lot 110 is infeasible, Boston Properties presented a cash flow analysis for residential condominium development on lot 110 that relied on a 1987 land value of $7.9 million.1 This value is not supported by publicly available documents: lot 110, according to property tax assessment records, has a market value of $5.8 million during the current 1988 tax year. Boston Properties thus has overstated the land value by as much as $2.1 million. (The applicant also has presented other land value figures, all of which are greater than $5.8 million.) Boston Properties' estimated "loss" from residential use of lot 110 is high By overstating the land value of the site, the two residential pro formas presented by the applicant overestimate by $0.9 million or $2.1 million the cash flow loss from residential development of lot 110. This misrepresentation leads us to question the validity of the other cost and income figures contained in Boston Properties' residential financial analyses for lot 110. Even if these other figures are correct, the applicant's estimated pre-tax cash flow "loss" of $4.1 million from residential condominium development of lot 110 shrinks to a $2.0 million loss when based on an accurate land value. Boston Properties forgets that the current proposal covers 3 lots There are more errors in Boston Properties' analysis than simply the unreliable estimates related solely to lot 110. The commercial FAR and the associated subsidy transferred to lot 111 also need to be considered. Once again the applicant resorts to selective inclusion and financial manipulation in its presentation of the relationship between these two lots on Square 24. The applicant appears to have forgotten its own proposal when asserting that the "simplest way to understand the relationship is to think of the property [on Square 24] as a single lot containing approximately 50,000 square feet of land zoned CR." This is misleading. The proposal under consideration involves three lots -- two on Square 24 (lots 110 and 111) and one on Square 35 (lot 802) -- with approximately 75,000 square feet of land combined. And the simplest way to understand Boston Properties' proposal is to view it as a request to build two office buildings and one residential building, rather than the one office building and two residential buildings allowed as a matter of right. Boston Properties mistakenly argues that land alone must catry the subsidy for residential development Boston Properties states that, because the land cost of lot 111 reflected its commercial development capacity, there is no subsidy available for residential development of lot 110. If commercial value was paid for the lot 111 vacant land, the cost of lot 110 land then reflects residential use potential only -- lot 110 1 Base figures and calculations described in the text of this letter are presented in Figure l; the exhibits to this letter in which the base figures are presented are also identified in Figure 1. would have a lower value per square foot of land than if it had any commercial development potential. But, more importantly, Boston Properties' assumption that the commercial-residential land value differential alone is to carry the subsidy for residential development on lot 110 is patently absurd. The applicant has ignored the availability of subsidies from cash gains from the already completed and occupied commercial improvements on lot 111. Boston Properties fails to present figures on such gains yet they are relevant -- as it knows. For example, in its original, approved PUD proposal for lot 802 on Square 35, Boston Properties' cash flow analysis for the mixed use building shows a pre­ tax positive cash flow of $11.3 million over 11 years, while the developer showed a loss of $3.3 millioh for a building solely devoted to residential use on the site. (See Exhibit 5.) Under that original proposal, the cash flow gains from the entire office building element -- not just the land value.differential -- provided the positive cash flow for the project as a whole. Boston Properties ignores normal gains from lot 111, interest sale of $80 million The applicant may not currently have any ownership interest in the improvements or land on lot 111, and, thus, there may be no way to match year by year or dollar for dollar the positive cash flow from the office building on lot 111 with the projected "losses" from residential use of lot 110.