City Market at O Street – Jobs Fund 2
City Market at O Street received funds from two of EB5 Capital’s partnerships (Jobs Fund 2 and Jobs Fund 4) and includes a Cambria Suites hotel, multi-family residential apartments, a 500-car parking garage, and over 85,000 square feet of retail space. The keystone of the project was the redevelopment of the historic O Street Market into a 70,000 square foot Giant grocery store. Constructed in 1881, the O Street Market was one of Washington, D.C.’s three original outdoor farmer’s markets and was a central establishment of Northwest D.C.’s Shaw neighborhood. The market housed a variety of vendors, supplying goods and services to local residents, and also serving as a popular gathering place and social scene for the community throughout the 19th century. As the O Street Market continued to operate over the decades, the Shaw neighborhood developed and thrived into the 1960’s. During this period of great political and social change, Shaw came to be known as D.C.’s epicenter of African-American culture and was home to some of the most influential writers and artists of the era, such as poet Langston Hughes and jazz musician Duke Ellington. The Shaw area also prospered from the influx of middle-class Americans seeking the many employment opportunities made available by the federal government.
However, the Civil Rights Movement of the 1960’s was a volatile and unpredictable time across the country, and in 1968, the assassination of Martin Luther King Jr. led to five days of rioting in D.C. that left much of the city damaged or destroyed. In the aftermath of the riots, the O Street Market went unused and fell into disrepair, until in 2003, a snow storm caused its roof to collapse. It wasn’t until several years later when Roadside Development, the developer of City Market at O Street, envisioned a modern-day version of the historic market that would honor its past and contribute to the ongoing revitalization of the whole Shaw area. The Giant supermarket that now sits in its place maintains the same red-bricked, steeple-topped façade that the original O Street Market featured over a century ago. In 1991, the site was added to the National Register of Historic Places.
City Market at O Street provides one example of the recognition and government support that EB5 Capital’s projects have received. The backing that City Market received was particularly important due to the obstacles the project faced right from the start when the deal was first under development. Beginning in 2007, the United States entered a period of extreme financial crisis leading up to the Great Recession, which lasted several years with devastating effects on the real estate market and financial institutions. The federal government had to step in and provide financial assistance through the bailout of banks in order to prevent the collapse of large financial institutions. In such an unstable market, many lenders were not in a position to supply funds for new development projects and were forced to back out of loans. In the case of City Market at O Street, the project received initial approval for federal funding from the U.S. Department of Housing and Urban Development (HUD). However, the process of receiving a HUD loan involves several steps, including multiple detailed applications that describe the plan and specifications of the project, followed by the negotiation of closing documents. For a project as large and complex as City Market at O Street, this process was particularly time-consuming, and development was put on hold while the developer waited to close on the HUD financing.
Fortunately, despite these initial delays, the business and development plans behind City Market at O Street made it one of the strongest infrastructure projects in the nation. This was largely due to the project’s strong job creation and its representation of best practices for efficient project delivery and improved environmental and community outcomes. President Obama’s administration considered the project to be so beneficial to the District’s economic development that he issued a Presidential Memorandum on the recommendation of his Council on Jobs and Competitiveness. The memorandum directed agencies, such as the Department of Housing and Urban Development, to expedite reviews and permit decisions for a select few of the country’s most high priority infrastructure projects that would create a significant number of jobs. City Market at O Street was one of these 14 high priority projects chosen for fast-tracking by the Obama Administration. The project is still listed on the official White House Website, as well as the Federal Infrastructure Projects Permitting Dashboard website, which provides descriptions of the projects and allows the public to review the status and progress of all current and completed government-expedited infrastructure projects. Once President Obama expedited City Market at O Street for immediate review, the long-awaited HUD loan came through much more quickly. With this piece of the financing finally in place, development of the project could proceed as planned.
As of May 2014, construction of City Market at O Street is complete and the Giant supermarket, the Cambria Suites Hotel, and the residential units are all open and fully operational. All Group 1 investors in City Market at O Street received their permanent green cards on schedule, and were repaid their $500,000 capital investment in April of 2014. In fact, the investors had their funds repaid early in only 4.5 years, rather than at the end of the anticipated 5-year investment term.