Testimony of Jonathan Kayne
Deputy Director
Office of Property Management

Adrian M. Fenty
Mayor

COMMITTEE ON GOVERNMENT OPERATIONS AND THE ENVIRONMENT
Councilmember Mary Cheh, Chairperson

Wednesday, July 1, 2009

10:30 am

Room 120
Council Chamber
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004-3003

Good morning Chairperson Cheh and members of the Committee on Government Operations and the Environment.  My name is Jonathan Kayne, Deputy Director of the Office of Property Management (“OPM”). I am joined today by OPM’s General Counsel, Camille Sabbakhan, who will also be available to answer any questions after I conclude my written testimony.

To begin, thank you for the opportunity to provide testimony on Bill 18-143, the “Old Naval Hospital Grant Act of 2009.”  The anticipated development and use of this property will increase the quality of life for District residents, allow for the delivery of new services in the local community and improve the overall value and quality of the District’s real estate portfolio. 

History and Background

The Old Naval Hospital, located at 921 Pennsylvania Avenue, SE, is located in the central sector of the Capital Hill Historic District.  The building is a historic landmark and is easily accessibly by public transportation such as the Eastern Market Metro Station and several bus routes along Pennsylvania Avenue.

The main building was constructed in 1864 to serve Civil War forces and was used as a naval hospital until 1911.  Over time, however, the building has fallen into disrepair and needs to be renovated in order to be returned to productive use.  The building has significant potential to benefit both the District and the local community. 

Although the District has jurisdiction to use the property, the building is owned by the federal government.  A land transfer is currently pending that will give the District full ownership.

Previously, the District issued a request for proposals on February 12, 2007 to seek interested tenants who would occupy and renovate the property.  The solicitation emphasized that the property needed to be made available to the public and that the renovation had to preserve the historic integrity of the building.

The Old Naval Hospital Foundation (“Foundation”) was then competitively selected among several other proposals because of their superior commitment to a broad range of community programs.  The Foundation plans to restore the interior and exterior of the building, Carriage House, and grounds.  In addition, they will offer a wide range of educational and learning opportunities for local youth and adults, including classes in computer literacy, languages, music, drawing and painting, parenting, creative writing and cooking and nutrition. The Foundation will also provide space for lectures, recitals, art shows and other community events and include a café in the Carriage House.  The coffee house, in turn, will be part of the long-term financial strategy to sustain the facility and continuous operations.  By execution of a lease, the District will transfer all costs of operation, maintenance, utilities and capital improvements to the tenant.

Details of the Grant

As part of the pending lease agreement, the District will contribute up to $5.5 million to assist with the renovation of the property.  Council previously authorized the Office of Property Management, by emergency and temporary legislation, to provide a grant of up to $5.5 million for the redevelopment of the property.  Pursuant to such authority, OPM entered into a Predevelopment Grant Agreement for up to $950,000 and a Right of Entry Agreement to facilitate commencement of the design and predevelopment activities.  The legislation provided that the District will not lease the Old Naval Hospital or award the full grant until the federal land transfer is completed.  Since the temporary legislation expires tomorrow, July 2, 2009, and the federal land transfer has not yet been completed, permanent legislation is now needed.

Conclusion

Once completed, the Old Naval Hospital will restore a vibrant real estate asset to productive use.  The valuable services, as previously described, will be provided to the local community.  In addition, the renovation of this dilapidated structure will improve the character of the neighborhood and further demonstrate the District’s commitment to the preservation of its historic structures.

Thank you for the opportunity to testify. I welcome any questions you may have.