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How Georgetown’s Four Seasons Hotel Pursued and Won the West Heating Plant
The Levy Group and the Georgetown Company obtained the property for $19.5 million and plan to turn it into luxury residences.
There was fanfare this week as the General Services Administration announced it had accepted a $19.5 million bid for the last large-scale parcel of real estate in Georgetown—a ten-story, decommissioned Deco-style heating plant that is more than 60 years old. Once upon a time it sent heat through a steam tunnel to federal buildings such as the State Department. The successful bid came from a DC real estate company and a New York development company, acting on behalf of the Georgetown Four Seasons Hotel. The plan is to transform the old building into gleaming Four Seasons-brand luxury residences.
The journey from the building’s closure to its sale, not surprisingly, was a long and winding road, and it could be much the same as the project travels forward to completion. It’s Georgetown we’re talking about, where nothing is ever simple, which is why it’s good that an individual at the heart of the project is Richard Levy, a true Georgetowner if there ever was one. He grew up in Georgetown, still lives there (despite forays to Yale and London to study economics, and New York, where he cofounded the Big Apple Circus), owns and has developed quality commercial properties throughout Georgetown, and is a dedicated booster, backer, and agitator for numerous Georgetown projects and causes. If anything, Levy is an accidental real estate mogul; he came into it reluctantly, at the behest of his father, Sam Levy, who began with an M Street retail clothing store (the family lived upstairs ) that was the starting point for a booming real estate investment and management business.
When Levy and his company, the Levy Group, joined up with New York-based developer the Georgetown Company, they formed what Levy considers a sort of perfect union, each bringing important strengths to the project. Levy brings strong working relationships with current and former DC officials and their staffs, plus a keen appreciation for and record of historic preservation. In particular he understands the mysteries of the Old Georgetown Board (OGB), an advisory committee within the US Commission of Fine Arts. It may be small and made up of mere mortals, but the three board members, all architects who serve without pay, collectively have enormous power over what gets built in Georgetown. The OGB can be the best friend or worst nightmare of developers, their architects, and their plans. Their reticence is legendary, and it’s wise to assume they will be meticulous in weighing every molecule of what Levy and his group want to do.
Renovating the West Heating Plant is a project that has been on Levy’s mind for a dozen years, he tells me over breakfast at the Four Seasons, with the plant itself looming in the window behind us. “I’d known Bob Peck for 30-odd years, from when he was in the Carter Administration,” he says. “He was out of special services in the army and was a lawyer on the National Council of the Arts and Humanities. We had friends in common.” Over time Peck became the powerful public buildings commissioner for GSA, which included oversight for the West Heating Plant. That Peck was eventually fired from GSA in a lavish spending scandal does not diminish the high opinion of him held by many people in DC real estate.
Levy was aware of the heating plant, and that it was no longer in use by the federal government. He was on the Georgetown BID board and in that role asked Peck if the village could store dumpsters there. He also asked Peck why he was holding on to it. “He said he couldn’t get anybody to look at it.” And so it idled, until a few years ago, when Levy started discussing the property with Four Seasons executive vice president Chris Hunsberger (also once the Georgetown hotel’s general manager), who had been coveting the building. Over breakfast with Levy, Hunsberger was plain: “I want that building.” Levy went back to Peck, an occasion he remembers well.
“It was three years ago to the day,” he says. “We met for breakfast at Founding Farmers. I told him, ‘I have an idea for you. The Four Seasons would like [the plant]. Peck agreed to finally look at whether they could sell the building.”
They could, but this was the federal government, and there had to be a process. First the GSA had to do its own research to determine whether the building could be retrofitted and used as a backup heating facility. The research showed it would be too costly. Then there was the issue of the land, three-quarters of which belonged to the National Park Service. NPS was reluctant to let go of any of it, according to Levy. “Ultimately Bob Peck had to go to the White House and the White House to Interior and Interior to the NPS.” The message? “Let go.” The NPS did, but there is an agreement that when the property is developed, some of the land must remain open space.
There were more hurdles. The building had to be offered to other government agencies, which passed, and then to the DC government, which also passed. DC wasn’t interested because it could not de-acquisition the property; it would have to keep it. Levy says jumping through all these hoops took another year.
On a separate track, Levy looked for a developer to bring into the project. “I was thinking about the various obvious suspects, and the one that rose to the top of the list was the Georgetown Company,” he says. What impressed Levy was that the founder, Marshall Rose, was originally a partner with Hines in building CityCenterDC, and that he’d been involved in the revitalization of the New York Public Library and had consulted with Levy on the DC project to rebuild the city’s Martin Luther King Jr. Memorial Library. “We first worked together on the library,” says Levy, who is a member of DC library board. “I really wanted to work with Marshall and his team. I understand the smarts with which they approach a project.” The team included Georgetown’s CEO, Adam Flatto.
The Georgetown Company principals came to Washington to tour the West Heating Plant with Levy. “We got to the top of the building, looking down the Potomac, and Adam turns to me and says, ‘This is complicated enough that there are not many people who could handle it. I’m willing to go for it,” Levy says. That was November 2010.
In August 2011 the GSA determined the building could be sold, but not as a sole source sale. It would have to be through an auction. Levy, Hunsberger, Rose, and Flatto would have to compete with anyone else who was interested. “We had the skill to give us the competitive edge,” Levy says. “We believed early on, given our exclusive arrangement with the Four Seasons as their developer—something they had never done before with a developer before an acquisition—that it was logical.”
Still, it wasn’t until January 18, 2013, that bidding began. The registration deposit was $500,000, and the winning bidder would have to prove the ability to comply with a mountain of historic preservation, city zoning, and environmental regulations, as well as pass muster with the Old Georgetown Board.
Levy says he felt their only competition was “unknowing money or very patient money.” Was the waiting period a high-wire experience? “Oh, yeah,” he says, recalling the range of emotions. At the beginning of March, at the eleventh hour, his group became dispirited and thought they might be outbid. By whom? “Bidder number five, but we don’t know who that was,” he says. But on Tuesday, March 12, a press release announced that the Levy Group and the Georgetown Company, on behalf of the Four Seasons, had won the West Heating Plant.
Now the attention will turn to a range of new challenges. The group has picked an architect, David Adjaye of the London-based Adjaye Associates, which is known for designs of private residences and civic projects. Adjaye is lead design architect for the National Museum of African-American History and Culture that is under construction on the Mall. The landscape architect is Ignacio Bunster of Wallace Roberts & Todd Landscape Architects of Philadelphia, who was involved with the design of the acclaimed Georgetown Waterfront Park.
The building itself is the biggest challenge, however. “We have a concept of how to make it livable,” says Levy. “We have not designed the floorplan yet. We have a general approach to it. The biggest obstacle is the building itself, but the asset is its location and height. What we believe we have is a concept and approach consistent with what we’ve heard from the community. They have not seen any design. They know we’re going to handle this well, and we’re committed to the park.” Wouldn’t they rather just tear it down, if they could? Levy quotes Italian and British architect Richard Rogers, whom he consulted. “He said it’s the constraints that really bring out the creativity. It has to speak to what’s there.”
First things first, though, which means dealing with the environmental issues. “We’ve got to get rid of the tanks, asbestos, PCBs,” Levy explains. They also have to close off the tunnel that runs from the plant to the federal buildings it served. Levy was scheduled to walk the tunnel for the first time on Thursday afternoon. “We have to close it off on the east side of Rock Creek Parkway,” he says. But even that constraint he sees as a chance for creativity. Maybe the remaining part of the tunnel will become a wine storage facility for condominium owners.
Levy says whether the project is complete in three, five, or even six years “depends on how long the entitlement process goes on.” The goal at the moment is to have a plan to present to the community and to the Old Georgetown Board by June 13. “Is that realistic? We don’t know,” he says. “If not June, then July or September. We’re not going to let anything interfere with the process of community engagement. The only way this is going to get done is to have the community 100 percent behind us.”
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