Editor’s Note: The following article is one in a series of six profiles of winners of NCPPP’s 2016 National Public-Private Partnership Awards, which recognize organizations and individuals who have gone above and beyond to advance the concept and implementation of P3s across the country. The winners were honored during P3Connect 2016 in Chicago.
Lot 31 may have started out as just another example of “they paved paradise and put up a parking lot” but fortunately, the story did not end there. Thanks to a partnership between two private developers, a life insurance company and Montgomery County, Md., two street-level round, county-owned parking lots on prime real estate in Bethesda, Md., have been transformed into a successful mixed-use development without depriving residents and visitors of parking spaces the new buildings replaced.
Lot 31 consisted of two parking lots that provided about 300 spaces on about 3 acres of land on Bethesda Row, a highly popular commercial area, widely known for its many fine restaurants and shops. Aware that these lots were underused, Montgomery County entered into a public-private partnership with StonebridgeCarras, LLC and PN Hoffman in 2005 to replace them with 250 residential units, 40,000 square feet of retail space, a 1,200-space underground parking garage and other amenities. The residential portion would ultimately consist of The Darcy is a nine-floor, 88-unit luxury condominium complex and The Flats a 162-unit high-end apartment complex, 25 percent of which would be reserved for affordable housing — more than twice the percentage that must be included in Montgomery County residential projects.
The developers acquired the Lot 31 land and agreed to assume all risks associated with the $215 million project. In return, the county would finance the construction of the 900 spaces it would own in an underground garage, which it would make available for public use.
Although the start of the project’s design phase coincided with the beginning of the 2008 recession, which forced the partners to pause and seriously assess the project’s viability, they agreed to follow through on it. They based their decision in no small part on the county’s commitment at the height of the recession to provide the $2.5 million for necessary infrastructure improvements, such as the relocation of 2,900 underground phone and data lines, that had to be completed prior to construction of the entire project.
StonebridgeCarras and PN Hoffman secured private financing through Northwestern Mutual Life Insurance and the county used the proceeds from its sale of Lot 31 along with bond financing to cover its portion of the project’s costs. Together, the partners surmounted all of the logistical hurdles that followed, ranging from ensuring proper cost allocations, even though a single contractor would perform all of the construction, to arranging for the temporary closure and subsequent reconstruction of a major arterial road, to excavating a nearby 3.3-acre site, family homes and part of a popular hiking/cycling trail.
Despite all of these challenges, The Darcy and The Flats opened to much fanfare in June 2015. The project not only has increased Montgomery County’s residential and commercial tax base while adding affordable housing, but has widened and enhanced a portion of the heavily travelled Capital Crescent Trail while improving the quality and availability of public parking in a very popular dining and shopping destination.
NCPPP conferred on Lot 31 – The Darcy and The Flats at Bethesda Avenue and the project partners — the Montgomery County (Maryland) Department of Transportation, Northwestern Mutual Life Insurance, PN Hoffman and StonebridgeCarras, LLC — its 2016 Innovation Award to salute them for their collaboration, despite many economic and logistical obstacles, to complete a highly creative and challenging P3 project.