Recording in progress.

Good afternoon.

I am Matt Freeman Ward 3, Councilmember and Chairperson of the Committee on Human Services.

Today is Tuesday, June sixteenth, 2026.

We are meeting in person in room five hundred of the John A.

Wilson building and virtually via Zoom.

The time is now one oh seven p.m.

Today we are conducting a public round table to discuss PR twenty six-07 three six, the Hill East phase two bundle two disposition term sheet amendment approval resolution of twenty twenty-six.

Hill East, formerly known as Reservation 13, is comprised of sixty-seven acres located between the eastern edge of the Capitol Hill neighborhood and the western shore of the Anacostia River.

Located at 1900 Massachusetts Avenue Southeast, phase two, bundle two consists of approximately six point three acres and includes parcels C, E, and H, and the streets parcel all within lot seven in Square E-112.

Development of these parcels will include multifamily residential buildings, town homes, mixed-use buildings with multifamily residential units over commercial and or retail space, a hotel, a public park, and public streets and sidewalks.

The park would be leased to the developer for up to 25 years.

A change from the prior ninety-nine year ground lease, and the developer would be responsible for maintenance of the public park throughout the period of the ground lease.

Lastly, the period for substantial completion of each parcel would be extended from 30 months to two 32 months following the start of construction.

Uh Mr.

Charles, you will have five minutes for your testimony.

Before you speak, please make sure to turn on the microphone in front of you.

Perfect.

Um, and when you are ready, you may begin.

Great.

Okay.

Um good afternoon, Chairman Freuman, members and staff of the Committee on Human Services.

I am Evans Charles, a DC native and a principal of R13 Community Partners, the designated developer for Hill East Phase 2 Bundle 2 project and Ward 7.

Our team is comprised of 51% CBE, is 51% CBE owned, and it's led by all DC natives.

Thank you for this opportunity to testify in support of PR26-0736, the Hill East phase two bundle two disposition term sheet amendment approval resolution of 2026.

The committee and the council already approved this project and this disposition in 2022.

We are here to request three amendments to the term sheet that would allow the project previously supported to move forward.

The bundle two project is transformative, mixed use, mixed income development on roughly 275,000 square feet of district land along Massachusetts Avenue Southeast.

As currently planned, it will deliver approximately 1,089 new residential units, including 332 affordable units or about 30% of the project, alongside a 243 key hotel, nearly 38,000 square feet of neighborhood serving retail and a new public park on Parcel E.

Over 30 years, the project is projected to generate more than 200 million in tax revenue, creating over 2,000 construction jobs and more than 500 permanent jobs and advance the council approved Hill East Master Plan vision of reconnecting Capitol Hill to the Anacosia River.

Like every other large-scale development in today's market, Bundle 2 faces difficult a difficult financing environment.

A tight lending climate combined with elevated construction costs has created a larger than anticipated funding gap.

To keep this project moving forward and financially feasible, we have worked closely with the deputy mayor for planning and economic development on a narrow set of amendments to the term sheet the council approved in 2022.

There are only three changes before you today.

First, the district will construct the public infrastructure, the streets, and the sidewalks on the street parcels, which the district is already building for the broader phase two road network serving both bundles one and bundle two.

Second, the district will construct the public park on parcel E.

The parcel would be leased to developer for a period of 25 years to support the ongoing maintenance and operations of the publicly accessible park with no financial obligation to the district.

Third, the substantial completion of each parcel will be extended modestly from 30 to 32 months after construction begins.

We are actively advancing design development and identifying funding partners.

Concurrently, the district through DGS anticipates beginning construction on phase two public infrastructure in early 2027.

We anticipate closing on the first phase at Parcel C by December of 2027.

Over the years, this project, we have engaged consistently with the Hill East community, including ANC 7F, ANC 7D, and the neighborhood residents, and we are committed to continuing that engagement as the project moves forward.

In closing, I want to thank the Deputy Mayor's Office and its team who have worked tirelessly on this project and these amendments.

We respectfully ask the committee to approve PR 26-0736 so we can complete design, secure financing, and deliver housing, jobs, and public space that ward seven in the district has long been promised as this council endorsed in 2022.

Thank you, and I welcome any questions.

Thank you very much.

Um all very exciting.

Um I understand there were issues with the sewage pipe and utilities that had affected the project and design.

Where do we stand on those issues?

Are you familiar with what I'm talking about referring to?

Um I am, and at one point we were in charge of handling infrastructure, but now through DGS, um DIMPED is handling it.

From what I understand, um, those issues are being addressed, and DIMPEG can speak further on it.

I see.

So it comes up, that's part of what comes off of your shoulders and gets picked up by the city.

Exactly.

Um there other factors that have impacted progress on the development.

We we hear a lot about the capital market these days and the impact on the on development projects.

What other kinds of constraints have you faced?

Um I would say that's that's that's the the bulk of it.

If you think about when this was originally awarded back in 2021, this was a completely different environment, economic environment at the time.

Interest rates were close to zero, the inflation hasn't taken place, construction costs were not where they are today.

So with that um with all those factors taking place over the last three, four, five years, it's made the project um infeasible, which is why we had to come back for these amendments, such as infrastructure.

And your feeling is now with these changes, you can get to closing with financial partners to bring the investment on site in order to make this happen?

Yes.

And you said the hope is closing on the first piece of the project by December 2027?

Yes.

And then if you were to close then, when would you hope hammers would start hitting nails?

When would we start seeing construction?

A construction closing would mean that we would be doing a groundbreaking shortly thereafter.

Is that right?

Oh so you would have construction documents in place?

That's what that's what's part of closing.

You'd have your permits, your construction documents, all those things would be in place.

That's correct.

And where are you now on those things?

Do you have are they in permitting at this point?

Um right now we're in the in what's called design review.

Um the what we're doing is already by right, so in the process of design review, we will also, you know, increase our process as relates to the permitting process.

I see.

But but so if closing and groundbreaking were end of 2027, you still have 18 months in order to go through design review, get permit ready drawings, get permits, and there.

That's correct.

Are there any changes in the uh in the planned residential mixed use and hotel buildings, the the mix of units, the mix of income levels, the amount of residential versus commercial?

What what is changed in the mix on those metrics from by this amendment or from the time when the project was originally approved?

Um there are I'm just trying to think from this amendment.

Um if there was so I'm sorry, I'm just thinking through the question or so.

Um we're maintaining the affordable requirement in accordance with the um AWS Act.

Did I say that correctly?

The 30% requirement or so.

Um and we, because of what took place with the sewer change, we've had to reduce the size of the building.

So that the number of units did did get modified from when this was originally awarded.

Um the number of units in the hotel, you know, was modified, particularly as a result of the announcement of the the stadium.

So that there were some small tweaks made to to the account, but for the most part, we still are maintaining our 30% affordable requirement.

And and and the program hasn't changed as relates to the uses that we're bringing to Hillis.

Okay.

I mean, what was it?

We're everybody's trying to sort this thing these things through and get to a place where we can build things.

And so, but just trying to understand, was the affordability mix higher than 30%, but now it's 30%, that it's always been the requirement that it be at least 30%, but has it come down from where it had been before?

Um we had a yes, we had a segmentation um where we were trying to do a um another 30% of affordable, but that we we because of limitations on the bond caps and HBTF, we decided not to go like tech and and so we wanted to make the project feasible.

So that was one of the changes that needed to be made.

I'm asking about this, not to criticize this project, but I think we are going to be seeing projects coming forward and with folks talking about, we would have liked to have done X, but the numbers just wouldn't work if we did that.

And this is one of those cases where even if you might have liked to have done 40 or 50 percent affordable that when push came to shove the numbers wouldn't add up, and in order to get to closing, you have to be at 30 percent.

Is that a fair characterization?

Yes, that is a fair characterization.

Okay, and then can you talk to me about the mix of rental versus for sale that are in the mix here and how many of the units you're expecting will be family-sized?

I I take it there's a thousand eighty-nine units.

It's a lot of units, which is good.

Um, how many will be for sale?

125 will be for sale, and 964 would be rentals.

And then what about two and three bedrooms?

How many how many will include two and three bedrooms?

I don't have that exact number with me.

Two and three bedrooms are definitely incorporated.

Um I don't know if that's something I can come back to provide that answer.

Is that is that possible?

Sure.

I just don't have the exact numbers with me.

Okay, and then um in the 30 percent, which is I think it's I think you're you're I think it's AWDZ.

I think it's the Anacasia watershed development zone uh that has the 30 percent requirement, and 15% is I believe low income and 15% is moderate income.

Do you know what the your mix is and at what AMIs the units will be?

I do.

Of the of the 1,089, um 332 affordable units, 166 units will be below 30 percent MFI, 146 units will be at or below 50 percent MFI, and 20 units at or below 60 percent MFMI MFI.

And and do you have a sense of um whether or not you'll be seeking vouchers to support some of those low or moderate income units?

Yes.

And what's the plan again?

I I want to understand this.

What I'm new in this position and gonna have lots of projects coming in front of me and want to begin to understand what's the standard, how how what what's the mode of operation today in order to make the numbers work?

Um for how many of them do you think will be uh supported by vouchers?

I would have come prepared with those details had I known.

Um we will be seeking some place-based vouchers, uh and I just don't want to I do not want to give a wrong answer for the record.

Okay, yeah.

Um, okay.

Um the term sheet makes the district or in follow-up, be good to get those numbers, and maybe.

I have it on my laptop.

Okay, great.

Uh the term sheet makes the district responsible for construction of the public park and the streets and the sidewalks.

Yes.

And before that was part of your scope?

Yes.

And what what how big of a cost did you anticipate that was gonna be?

That was years ago and in I'm thinking 30 million.

Yeah.

I just don't remember the exact number, but that number is kind of what's what's on my hand.

So and that goes into did was it did you request that change?

Did the city request that change?

Was that a thing that together you were scratching your heads?

How do we make the numbers work?

And that was a solution that was arrived at how how did we get to a place where the city took that?

It was it was it was together of just exchanging different ideas on how could we make this project work?

Um, and you'll be responsible for the maintenance of the park?

That's correct.

What do you see as the have you built something in to your pro forma of the cost of maintaining the parks?

What does that look like?

Uh once again, that's on my laptop as far as the specific number, but we have built that into the pro forma.

And then if you if you're gonna have place-based vouchers, have you built anything into the pro forma for any staff to support uh those residents who might have place-based vouchers?

Yes.

Yeah, yeah.

I'll be curious to see to learn more about that as well.

Okay.

Um, what I should know.

But what's the park?

What is the park?

Because I I see it on paper and I'm sure there's rendering somewhere, but what how big is the park?

What kinds of things are gonna be in the park?

Is it open green space?

Is it playground equipment?

Is it a field?

What is it?

What are we talking about?

The park is uh roughly about an acre, um, and I know originally we we had like an amphitheater, uh a playground, um open green space, and all of that.

I mean, this is what we originally proposed when we and now is it gonna fall to the city and DPR to figure out what's gonna go in that space?

Maybe it'll be the amphitheater and the playground in green space, but it might it'll be what DPR and and the city decide, or will you work together with them to figure out what it'll look like?

Um I would anticipate we would work together because it all needs to be a fabric of the entire community that we're building.

Okay.

Um, the term sheet amendment also adds 60 days to the period of completion for each parcel once construction begins.

Can you talk about why that additional time is needed?

I have to say, like, just doesn't seem like that much time.

So to go to the trouble to add it, it sort of has me wondering what what's happening.

Sure.

It was um when this was originally approved in 2022, it was a typo.

So we're just taking this opportunity to correct the title.

Okay, well, you can see why it puzzled me, and that's a explanation I was not expecting.

Right.

Okay.

Um if you plan to start construction on the first one, let's just say January, you want to close in December.

Let's just say January.

It might not be January, but how long do you anticipate for construction for that first phase?

Twenty-four months.

So we could in early 2030, we could see a ribbon cutting.

The hope would be we would see a ribbon cutting for that first one.

That's correct.

And then what's happening with the other phases at that point?

When do you expect that those that you would start work on those?

Um the same, I guess before the uh March of 2028, um to deliver just shortly thereafter.

Closing on closing on March of 2028?

Yes.

And then so then if it was two years then it would be in March of in a in spring of 2030.

That's the goal.

That's right.

For both of them?

Yes.

So the whole thing could be done sometime in 2030.

Yes.

That's the goal.

Um again I know there were some unforeseen infrastructure challenges and economic headwinds, but for those in the community who are eagerly awaiting the groundbreaking and completion of this development.

So I guess we've talked about the target dates for groundbreaking and the target dates for delivery.

I do I worry and maybe you can help make me feel better.

Because there's lots of conversation about why it is that so little building is happening and there's some folks who think that it's a lot about regulation and other folks I have I I don't doubt that regulation can play a role but I also think it's challenging economic environment with a lot of vacancy out there.

That's right and so lots of people are waiting but you're not you're you're not waiting you're gonna you're you're gonna move ahead what what and maybe it's that this site is so attractive that you feel like well it might be harder to fill other things but this isn't going to be hard to fill how how do you in an environment where lots of people are pausing because they're concerned about the economic the big picture economic conditions.

Why are you confident about this project?

Or first and foremost um it's a uh it's a public-private partnership um and when you have um a waterfront site you have over three billion dollars of development taking place directly across the street you have I mean there's so many factors that make this project so unique and would be attractive um this is and and and and the schedule what's happening on the RFK site is is plowing ahead so that's already funded that's already moving forward so it seems to make sense to create an entire community so that there would be far more interest in something like this today.

All right well that was about the most effective advocacy for the RFK site I've heard like it's the catalyst that makes you feel like okay there's gonna be a lot happening here and so even if there might be another place where I'd be hesitant to make an investment like this given the given everything else that's happening there this investment makes sense which is part of the argument that everyone made for why it was that we should proceed with RFK in the first place.

So that's right uh good validation thank you.

Um all right well I think that covers it for me.

I I will be curious about the uh the number of two and three bedrooms that'll be part of the project I'm curious about the cost that you're building in to support um the park and the cost that you're building in to support the residents, particularly um uh voucher tenants.

Okay.

But with that, unless is there if there's anything you want to add the here's your chance, but otherwise I'm done with my questions.

Am I done with my questions?

No, I I um appreciate this opportunity where we were extremely enthusiastic about this investment into the city that I love and looking forward to hopefully breaking ground in a couple years.

All right, let's make it happen.

Let's make it happen so I can be there at the ribbon cutting.

Awesome.

All right, thank you very much.

Thank you.

All right, we will turn to our government witness.

Um, I believe Ms.

Latrina Owens, director of real estate at Demped and Mr.

Daryl Thomas, real estate development manager at Dempet.

If you could join us at the table.

Great.

Uh it is the practice of this committee to place our government witnesses under oath.

Please raise your right hand.

You guys are old hands at this, so you're ahead of me.

Do you swear or affirm under penalty of law that the testimony you are about to provide to the committee on human services is the truth, the whole truth, and nothing but the truth.

Let the record reflect that they both said yes, although a distance from their microphones.

Um I take it uh Ms.

Owens will you be the one giving testimony.

So when you are ready, you may begin.

All right.

Good afternoon, Chairperson Fruman and members and staff of the Committee on Human Services.

My name is Latrina Owens, Director of Real Estate in the Office of the Deputy Mayor for Planning and Economic Development.

I am here to testify in support of PR26-0736 HILE's phase two bundle two disposition term sheet amendment approval resolution of 2026.

The approval of this resolution will allow the HIS phase two, bundle two development project to move forward, and we'll support the broader redevelopment of the Hilly's campus.

I would like to thank you for holding this round table and for you and your team's collaboration to move this project forward.

I would also like to recognize the invaluable contributions of the community, particularly the past and present members of ANC 7F and ANC 7D, residents of Hilly's, and the many other neighbors and community members who have been active in making the Hilly's phase two project possible.

Hillies, formerly known as Reservation 13, is comprised of 67 acres located between the eastern edge of cap of the Capitol Hill neighborhood and the western shore of the Anacasia River.

The district's goals for the redevelopment of Hillies are set forth in the Hilly's Master Plan, which was approved by council in late 2022.

Rich in economic promise, the entire Hilly's campus is only two miles and just a few metro steps from the U.S.

Capitol and abuts the RFK Stadium campus.

The Hillies campus invites a mixed use development that simultaneously serves nearby communities, DC government facilities, and the local demand and a local demand of retail, residential, hotel, and office uses as envisioned by the Hilly's master plan.

The plan outlines the potential for 3,000 new housing units and over 2 million square feet of non-residential space.

The resolution authorizes amendments to the term sheet for the development of the Hilly's bundle to phase two bundle two property located at 1900 Massachusetts Avenue Southeast.

Under the amended term sheet, the district will construct the public infrastructure inclusive of public streets and sidewalks and a public park located on parcel E.

After construction, the park on parcel E will be leased to the developer for a term of 25 years and will be maintained by the developer at no cost to the district.

In addition, the term, the time period for substantial completion for the development of each parcel will be extended from 30 to 32 months after commencement of construction.

The council's adoption of this resolution will allow the Hilly's phase two bundle two development project to move forward and will support the broader redevelopment of the Hilly's campus.

Dempad is proud to be moving this exciting project forward, which will bring home ownership opportunities and provide vital resources of affordable housing, tax revenue, jobs, and jobs to the Hilly's community.

Thank you for your time and consideration of this legislation.

I'll be happy to answer any questions.

Thank you very much.

When this project originally came before the council, I believe Demped projected April 30 April 2030 as the completion date.

And I understand there have been delays and now this change in the term sheet, but it looks like April 2030 may still be achievable for the delivery time.

Is that right?

Yes, from the development yes, it appears that to be still possible.

And is the sewer relocation completed yet, or is it on track to be completed?

Looking back at DEMPED's performance oversight question responses, some answers indicated completion by Q3 FY26, while others mentioned October 26.

So Q1 FY27, where do we stand on the sewer really?

Well, it's underway now.

So and then any sense of how long is it is the target that it would be in the next six months that it'd be done?

I think uh prior to six months because they've already started the sewer relocation work.

So also on potentially on track if it's more like Q426.

Well, we're almost to Q426.

So it's going to be either Q426 or Q127.

So let's say early Q4, but it should be completed in the next couple of months.

Okay.

Um, and the target completion, the April 2030, that's that's for the whole thing for the whole bundle too.

The because one would close in December and hopefully take 24 months.

The other, the hope is March and 24 months.

So both of all of it could be done.

Yes.

You said 3,000 units, and forgive me because I for the entire Hilly's.

Because I should know the whole Hill East landscape, but I don't.

So this is a thousand.

Mm-hmm.

So there's two other thousand.

How much of that other two thousand has been built already?

Uh let me defer to Daryl because I know on um bundle one, we have the ethyl comprised of, you can tell me your money.

Yeah, the ethyl building is uh holds two hundred and sixty-two units, and then the uh I'm sorry.

Park Kennedy is two hundred and sixty-two units, and the ethical building is a hundred uh permanent supportive housing units.

So that's 360.

100 362 total.

362 total.

Yes.

So then with this 1089, you're up to 1450 or so.

So there's 1550 in some other projects that are where do they stand?

So there's still about um five parcels that have not been put out uh solicited in the RFP, so potentially on those um lots.

And but there hasn't been an RFP for those, so at this time.

The one that had an RFP is done.

Another that had an RFP here we are.

And then there are five parcels for which there has yet to be an RFP, and that those could yield the additional units as proposed.

How are you thinking about that?

Because the the questions I was asking about, like why are you confident when other people aren't confident, the same reasons for being confident could apply to those other five parcels.

How's Demped thinking about those other five parcels?

So I think right now we're here today uh trying to get uh this one over the finish line.

But I do agree with the developer.

Um Hilly's is an opportunity zone, so the investors will get the tax benefits if they invest in these properties.

Um it has close proximity to the RFK stadium.

Uh there is a lot of infrastructure work as far as the roadways that will be upgraded and the proximity to the waterfront is also desirable as well.

So I'm dangerously off script, but uh I'll get back.

Uh schools, like all these units.

How are you thinking about school?

It's not your job, except it is your job to alert the people whose jobs it is, and so to what extent is there a conversation, and I get it, it's 2030, and so it's a it's a while, but it's a lot of new people come in there, 3,000 new units.

How how are who's thinking about school capacity and to the extent that you have any sense of it?

How are they thinking about it?

So it would uh be DCPS because they would think about this how the school capacity.

Um we have not yet had a conversation, but we do just advise them of what's coming online, similar to what we've done at St.

Elizabeth's East.

We had a we have about 1,500 units in the pipeline.

Um though that campus is surrounded by five charter schools, we do need to let the the pub let DCPS know um how many units we do have coming online, and with school choice, it's not the assumption that all students will be going to a neighborhood school.

No, I understand that, but this is a whole different topic, and we had this.

Okay, uh.

So originally disposition was projected to be completed within five years, so 2027, where are we um on that timeline for to complete the disposition?

The disposition of this property, yeah.

Um we have completed the disposition process, disposition.

Is it March 2028 for the act?

Okay, so the act ends in March 2028 for the the act for this ends in March of 2028.

So they will be closing prior to that time in December of 2027.

So we'll probably need an requirement extension as they as they are in the construction phase.

Wait, okay, help me understand.

So disposition authority would end in March of 2028.

Correct.

But if you if there's if they close in December 2027, then don't they make it?

Yes, they make it, but they'll still be under construction, and we still want to um, we still won't we'll still have oversight until they complete the construction process, so they will make it.

So they they'd be under construction, but you still would not formally dispose until they get a certificate of occupancy after construction.

Is that how it works?

So, yeah, that's how it works, even though um I think the disposition authority can burn off, but we'll still have those um, we'll still have that oversight under our construction covenant and some of the other things um as they build.

And you know, forgive me, because it's not really specific to this project.

Sorry, Mr.

Evans, just me trying to make sure that I fully understand how the process works.

The disposit there is a final act that executes disposition, yes, and the city and that act comes after the certificate of occupancy.

No, so they have to formally close on the property before the disposition authority expires.

So they will in December 2027.

They will start construction.

We also have other docks outside of the land disposition agreement, but you see them as exhibits when they come to council, like the construction and use covenant and some of the other ways that the schedule of performance that they have to keep up with.

So we have those documents that will still guide us as they go through the construction of these properties.

And then on the closing, who has discretion on whether or not to close?

Like, so we're gonna do well this will happen.

I feel confident I've heard from all of the relevant council members.

And in October of 2027, there could be lots of negotiations about closing.

Who's who's at the table in those so closing is not a negotiation?

Um the developer has to get there, as you heard him say um in his testimony, his capital stack is what we call it together.

Um so his funding, he has to bring it to the table and be prepared to close.

And so it's no different than when you show up to close on a home and you have to have if you have to have money at the closing table.

So he has to get his capital stack, whatever loans or whatever, however, he makes up that stack at the table, and then he comes to us by the date determined in the schedule of performance to close on the property.

I see.

And part of that capital stack could be city dollars.

Um it might not be in this case because I think he said he doesn't want to do HBTF and he's not doing LITACO.

Right, so it'll be other settings, it'll probably be more equity, probably bank, but I don't I haven't seen it yet, so right.

So it's premature for me to answer.

But to the extent that the city is at the table in that closing, it's because there's a question about what dollars the city will bring or won't bring to the table.

Right.

Well, some developers come with no money from the city um to close.

And in this case, if he asks uh for vouchers, that's through another entity, and he would they would have to apply through that process to get vouchers, but as of this time, if it's no HPTF, we probably will not have any of our dollars because that's how we generally fund through HPTF.

Okay.

Okay.

So I asked about the 60 days.

It's a typo, that's why it goes from 30 to 32 months.

Uh yes, that's what he said.

I thought it was just to give them a little additional time to meet the outside closing date.

Okay.

So the park was originally in his scope, and I I he I asked and he was being careful not to give numbers that could be inaccurate precisely because I would then turn around and say, sounds like around 30 million dollars for the park.

How did that conversation go about the city taking over responsibility for the park?

How did that come up?

So I think it was the funding gap, um, the large funding gap that was determined by the developer.

And if you look at some of um our other campus projects, the district has been responsible for the roadway infrastructure just so that we can ensure that it's constructed to D dot standards.

So in the case of St.

Elizabeth's East, the district pay for all of the roadway infrastructure there.

We've also um we'll pay for it at Fletcher Johnson and also with the RFK Stadium project.

So we have um with our larger campus projects, this is not inconsistent with something that we're already doing, but I think prior to us starting to do infrastructure on these other projects, they had already negotiated it in um in the Hilly's deal.

So what we're seeing is when you leave the onus on the developer when it's about $30 million dollars, uh, in this case $30 million dollars for the roadway infrastructure, and then an additional $30 uh five million dollars for the sewer relocation.

What they'll end up doing um right now, if he's not asking a district for any money, he would be coming back to ask the district for that money to to build this infrastructure, yeah.

And I am not asking because to challenge it, but I'm frankly, and it's it this is more about education for me about as you know uh done a couple of these but more and more.

So I just want to try to make sure I understand, but it and I hear you.

So part of it would be everybody wants this project to move forward.

There is a financing gap, you know, costs have gone up, different things, and so then you with the developer worked to come up with a way of how do we bridge that gap so that this can go forward, and part of that is the city taking on these obligations in order to unlock the potential of the deal.

So, yeah, taking on especially the infrastructure obligations and to ensure that they are designed and constructed to D dot standards, and so we had done it with all of our other campus projects, so um again we decided to do it um with HILIS as well.

Okay, and um, is it when the deal was originally closed?

It's twenty twenty twenty-one or twenty twenty-two?

Is when it was um granted, correct.

And were these financing gaps apparent then, or were there things that have happened since 2022 that created a gap that required a stepping back and figuring out how to make the numbers work?

Yeah, the market, you know.

Um a lot has happened in the financial market um as it relates to construction before you saw cranes everywhere in DC, and then after the market just the lending wasn't what it was, you know, you don't see as many.

So that was it was based on a decision based on um how the market and for them to be able to be able to get a financing and the investment that they need in this deal.

And then again, and this isn't so this is less about this project and more more about broadly.

I mean, my sense is rents have not been climbing quickly, so that one of the things would be the revenue that's anticipated from so that could come back.

That's a that's uh correct, and then another thing is construction costs, tariffs, before tariffs, but then with tariffs, construction costs are going up and up.

So that also contributes to it.

So it's a combination of a lot of things, the market, construction costs, um, the non-payment of rents, uh, because that's how you get the capital market comfortable with making these investments.

But I guess I'm assuming I I've been involved in one significant HPTF deal.

I think we were based on 95% occupancy.

I mean, are we are capital markets requiring us to have a pro forma that works on a lower level of occupancy than 95%?

I would have to check to see what is happening um now.

So while we are shoring up deals so that they're able to close, we have not quite closed on something in a while.

So I just need to see where they are.

Um what will be the cost to the district and is the capital funding currently available?

So you talked about $30 million for the streets and $35 million, I think for the sewer, is that in the capital budget already or do we need to find.

No, it is, and there's sufficient money for the roadways and also the park infrastructure in their current budget.

And do they total to around sixty-five million?

Is that I don't know what the actual total you know what it is of your budget.

Um so we'll have to get back to you with the exact total that's in the current budget for HILES.

And can you point me to where in the current budget it is?

Because I mean maybe the park is in DPR, but I could be wrong.

No, it's in um is just in Hilly's infrastructure.

Oh, it's in Hilly's infrastructure.

Because it is correct.

Okay.

So in terms of a follow-up, that would be uh a follow-up on that.

Okay.

Uh in terms of what's the timeline for the uh design and construction of the park?

Usually when the when a park is about to be built, like you bring in the community and you ask who what do you want and blah blah blah, but the community doesn't exist.

So how well how are you thinking about what's the timeline and what's the path to design the park?

So right now we're currently in design for the for the roadway infrastructure, and that'll start in early 2027.

After that will be the design of the park.

I do think it was uh the design of the park was proposed and the response um for the developer.

So the community has seen the park, we'll just make sure that what was proposed will be designed to um DPR standards.

And and will DPR are is DPR, even if it's not in their budget, is DPR in the mix and thinking about this park?

They should be because again, it'll be for 25 years that a developer will maintain it.

So after that 25 year period, it will be in their inventory.

Okay.

And I will be curious, so the idea that the developer will maintain it seems like good, glad to hear it.

Um, and who knows, 25 years out.

I am curious, and I asked in terms of follow-up, what does that look like?

What is the what's the budget for the maintenance of the park?

Okay.

And so the streets and the sidewalks had been part of the developer's scope.

And but now the district's taking it on, and I understand it, and then the cost of that I think we've reviewed is around on the order of 30 million dollars and somewhere in the Hill East uh development project.

That's where that is that housed with DDOT or DPW, or is that also in the in the DemPed budget for HILE?

So it's in the DEMPA budget budget and via MOU will transfer funds to DGS.

DGS is doing the roadway construction and DDOT will do does the oversight of inspections.

Is that the way it usually is that DGS builds the roads?

That's what it has been for campus projects, yes.

Okay, okay.

Um so before it would have been on the developer's shoulder and in their whole capital stack thing, comes out with this and goes on to ours, but it's already built into the budget.

The dollars are there in the budget.

Did they just get added to the budget in this budget cycle?

No, they've had some infrastructure money in their budget for for yeah, for a while.

And I think the developer didn't no.

The city, yes.

I see.

And did we expand it in this most recent fiscal year?

Um just by a little, and it wasn't, it's really the the expansion was the interior streets are accounted for, but the expansion was to um complete the inf at roadway infrastructure that borders Hill East on Mass Av and also at the end on Water Street.

I see.

So the city was going to be doing infrastructure, had the money in the budget.

Correct.

Now the city is saying, okay, we're gonna do the infrastructure associated with your project as well.

That the when did the dollars get added to pick up the cost of the infrastructure for these parcels?

I mean, it could be that it's in this year, it could be that it was in last year and you were already in the process of negotiating this.

You knew you were gonna need to do this.

Here we are now, but in last year's budget, you may have known, oh, this is where it's gonna go, so we might as well put the money in the budget.

Just help me understand the trail.

I always had it in the budget, but I think in the negotiations, they were um getting the developer to do it, but they've always had some infrastructure dollars, they just didn't have all of the infrastructure dollars to do um the construction.

So they have had money in the budget since about 2022.

So I guess what I'm getting at is I hear you that they have always had some money in the budget, and what I want to rest assured of is we have enough money in the budget now to get this done.

Do we have enough money to do all the infrastructure at Hill East or are we gonna need to plus up in order to no?

We have all the money in the current budget to do the infrastructure in the park.

Okay, and when do we hope all the infrastructure, frankly, for the whole site will be done because it's all part of the same thing, right?

So I can't speak for it, but I know it'll start in late 2027.

You give about 18 months for infrastructure once it starts, but I'm not certain is that all phases I'll look to Darrell.

Will that be the completion of infrastructure?

No, it it will not complete the infrastructure.

This will complete the uh roadways that will serve the development parcels that are a part of bundled or uh phase two redevelopment.

But the others for which there's been no RFP, that infrastructure will not have been done, isn't built into this budget yet?

No, not at this time, okay.

So someday we will do an RFP for the other parcels, and presumably, unless the economy changes so that the developer could more easily carry the financial burden of doing the infrastructure, we will then also have to add infrastructure dollars for those other parcels.

Potentially, yes.

But if this work is started and it takes 18 months, it should it will be done when the before the projects are done.

Um yes, it it should be.

So it shouldn't be a choke point for the projects.

Frankly, does it need to be done so that you can build?

Do you don't you need to have the roads there in order for the trucks to come in order to bring the building supply?

So you do.

So that's why it's phase based on their development so that they can um do the roadway infrastructure, move out of the way, the developer can come in and they can move on to another part um of the roadway infrastructure.

Um, okay.

In the original surplus and disposition legislation, there was testimony that one of the mixed-use tenants was intended to be a grocery store.

Is that still in the plan?

It's not confirmed in the plan for this bundle, um, that they'll have a grocery store.

I just know they have about 38,000 square feet of leasable retail space, but I don't know that a grocer is confirmed, it's sort of a tricky thing because it's starting to happen, and at some point there will be enough people there that you absolutely have to have a grocery store, but it may not be the first thing that you put there.

I don't know exactly how that works.

Um, I feel like we have covered all the questions that I have.

And I have that confirmed.

Is if there is there anything else that you plan on submitting written testimony for the record, please do so by uploading it to the council's electronic hearing management system before the close of business on Tuesday, June twenty-third, twenty twenty-six.