D.C. Attorney General Alerted to the Possibility Shakespeare Theatre May Have Compromised Its Tax Exempt Status and Laws Are Being Broken

6th and I Intersection

United Neighbors of Southwest asked the D.C. Attorney General to look into the possibility that Shakespeare Theatre Company (STC) may have compromised its tax exempt status as a result of its relationship with Erkiletian Construction Corporation (Erkiletian). The concern is three-fold:

  1. Over the past three years, STC has not declared its relationship with Erkiletian. 501(c)(3) law requires that declaration be on STC’s taxes. It isn’t, and it isn’t in STC’s financial statements either.
  2. Stephanie Erkiletian, who is the President of Erkiletian, sits on both the Shakespeare Theatre Board of Trustees and the Erkiletian Board. Because she sits on both boards and STC (a non-profit) has not declared this joint venture with a for-profit company, inurement laws* may have been broken.
  3. It is illegal for an owner of a for-profit company to sit on a non-profit’s governing board and cause that non-profit’s assets to benefit a for-profit company, as may be the case in the joint project between Erkiletian and STC.

Erkiletian’s plan is to put a four-story market-rate condo building atop two floors for STC. No matter what Erkiletian says about the benefit of this project for STC, the bottom line is that four floors of market-rate dwellings on nearly half a city block equals a very  profitable project for Erkiletian.

If Stephanie Erkiletian weren’t on the STC Board, would STC have entered into this venture that will greatly profit Erkiletian? Is STC’s status and position in D.C. being used to benefit the finances of Erkiletian, a large developer based in Virginia? Have any decisions been made by STC that aren’t in their financial interests and instead are in the interests of Erkiletian?

United Neighbors of Southwest alerted the D.C. Zoning Commission to these issues in February  2018. Erkiletian lawyers declared the allegations were “totally without merit,” but they’ve offered no evidence to support that denial. They also said UNSW’s concerns “have nothing to do with the land use and zoning issues that are the subject of this application” which suggests they do not understand law related to inurement and private benefit.

Meanwhile, the joint venture between Erkiletian and Shakespeare Theatre Company  submitted another Planned Unit Development to the Zoning Commission in September 2018. Stephanie Erkiletian is still the President of Erkiletian Construction Corporation, and she is still on both her company’s Board and the Shakespeare Theatre Board of Trustees. This joint project between a non-profit organization and a for-profit company is still undeclared. Inurement/private benefit is still illegal, and as the IRS says, even a small amount of private benefit “is fatal to exemption.”

This project between Erkiletian and STC has smelled bad since Erkiletian paid the Southwest Neighborhood Assembly $60,000 in September 2014 to withdraw their Historic Preservation application from the 501 I Street SW site. The project still stinks. The Advisory Neighborhood Commission and the Washington Gateway Neighborhood Association have repeatedly rejected Erkiletian and STC’s proposal to change the zoning at the site. Councilmember Allen has said he supports the ANC’s decision.

This project should be rejected by the Zoning Commission. The D.C. Attorney General’s review of potential inurement and any changes to STC’s tax exempt status as a result should be made available to the public as soon as possible.

A copy of the United Neighbors of Southwest letter to the D.C. Attorney General is available here.

*Here’s a link to the IRS’s discussion of inurement/private benefit. It’s an interesting document that contains numerous examples of private benefit, insiders, disqualified persons, and self-dealing. And here’s a more summary-level webpage describing inurement / private benefit.

 

Zoning Commission Offers a Rebuttal to Erkiletian and Shakespeare Theatre

Amidon-Bowen with Flowers 1On Monday January 29, 2018, the D.C. Zoning Commission declined to vote on a set-down hearing at 501 I Street SW. Instead, the Zoning Commission told Erkiletian and Shakespeare Theatre to work with the neighborhood on a more agreeable way forward at 501 I Street. Members of the Zoning Commission expressed concern that Erkiletian and Shakespeare Theatre were requesting a zoning change that the Advisory Neighborhood Commission unanimously opposed.

Depending on the amount of progress made, the issue may be taken up again at the next Zoning Commission hearing.

The neighborhood remains committed to maintaining the site’s current R-3 zoning. In December 2017, we presented our Advisory Neighborhood Commission with a petition signed by 244 local residents who opposed a zoning change at the site. Other places exist in Southwest where Erkiletian could build its family-unfriendly apartments and where Shakespeare Theatre could meet its costume factory, actor housing, and rehearsal space needs. For example, literally two blocks from 501 I Street, a 10,000-square-foot black box theatre is being built that could be used to address rehearsal space needs.

The neighborhood knows that the 501 I Street property could be sold at a profit to other developers who have already expressed interest in buying it and putting in housing that maintains the character of the neighborhood.

When are Erkiletian and Shakespeare Theatre going to stop wasting their money and using up everyone’s time on such a poorly-conceived project? They need to do the right thing and sell the property to a developer who will enhance the neighborhood instead of attempting to despoil it.

 

 

 

 

 

ANC Unanimously Recommends Against a Set-Down Hearing

2017 6th and I PoleOn Monday December 11, 2017, the Advisory Neighborhood Commission (ANC) voted unanimously against a set-down hearing at 501 I Street SW. With this vote and a subsequent report, the ANC sent a clear message to the Office of Planning and the Zoning Commission that a zoning change at the site is not appropriate. In a neighborhood of three-story townhouses and a two-story elementary school, Erkiletian Construction Corporation and Shakespeare Theatre (Erkiletian/STC) proposed two five-story buildings.

Neighbors testified about the issues most relevant to the question of a set-down hearing, though the full list of concerns was four times as large. For the December 11th meeting, the ANC heard from neighbors about the following:

  • Erkiletian/STC’s continued attempts to subvert community planning efforts codified in the Future Land Use Map, the Generalized Policy Map, the Comprehensive Plan, and the Small Area Plan.
  • The experience of a homeowner who followed the rules, was denied a zoning change to increase the height of her house, and now faces the prospect of having her solar panels blocked by a building taller than her house.
  • The unclear contractual and financial relationship between Erkiletian and Shakespeare Theatre. An Erkilteian family member claims full ownership of the property promoted as “The Bard,” which is alleged to be a cultural and institutional benefit to the community. (See here for Planned Unit Development Exhibit 2C – Stephanie Erkiletian as Owner of The Bard in a letter to the Zoning Commission. And remember that this site will be a vast majority benefit to the commercial, non-Shakespeare partner, who will profit from all the market-rate apartments proposed at the site.)
  • A 3-foot by 185-foot potentially misappropriated piece of land at the border between the Erkiletian/STC property and Amidon-Bowen Elementary School.
  • False claims in the proposed Planned Unit Development (PUD), like how the area around the site is commercial, how 6th Street is 100 feet wide, how the site could hold no more than 12 townhouses, and how a five-story building won’t block light to the surrounding community. In fact, there is no commerce around the site on any side; 6th Street is 42 feet wide; and the United Neighbors of Southwest (UNSW) commissioned a study that showed 18 townhouses could fit on the site (see previous post here). For the sunlight-blockage issue, obviously in such a already-closely-packed community, when you replace a two-story building with a five-story building, light is going to be blocked. (Note: UNSW actually found 28 falsehoods in the PUD.)
  • All the places in the PUD that Erkiletian/STC say they are meeting requirements then subsequently request relief from the requirements. Parking was in that category as was Erkiletian/STC’s relief request so they can build a barren 50-foot tall wall just a few feet from the balconies of neighbors in the apartments building at the end of H Street.
  • The fact 501 I Street SW is in a Neighborhood Conservation Area, where land uses are required by DC law to remain unchanged. Any adjustment to a Neighborhood Conservation Area requires a vote by the City Council and approval by the Mayor.
  • The neighborhood’s lack of trust in Shakespeare Theatre given their history of broken promises to the Southwest Neighborhood Assembly and to the neighborhood surrounding 501 I Street SW. See here for the most recent blog post about the status of promises in the September 2014 agreement.
  • How Erkiletian/STC is attempting to undermine the rule of law with their proposals that do not respect D.C. institutions or the community.

The Advisory Neighborhood Commissioners also spoke about their opposition to a zoning change at the site and their opposition to a Zoning Commission set-down hearing.

In particular, Commissioner Gail Fast spoke about how 700 residents participated in the crafting of the Southwest Small Area Plan several years ago. At the time, Southwest residents affirmed that the 501 I Street space should be for townhouses. In the Southwest Small Area Plan that resulted, the D.C. Office of Planning listened to Southwest residents and did not make a zoning change recommendation for 501 I Street.

Commissioner Fast also spoke about how she contacted the Southwest Neighborhood Assembly to review how well Shakespeare Theatre had met their obligations to the neighborhood under the November 2014 agreement. Commissioner Fast also found that Shakespeare Theatre had broken their promises.

The Advisory Neighborhood Commission voted unanimously 6-0 to oppose a set-down hearing for the Erkiletian/STC Planned Unit Development. The question of whether a set-down hearing should occur now goes to the Office of Planning, which will make a set-down hearing recommendation to the Zoning Commission. In July 2016, the Office of Planning recommended against a set-down hearing on the previous Planned Unit Development. See here for the Office of Planning’s previous justification for recommending against a set-down hearing.

 

Another Year, Another Bad PUD from Shakespeare Theatre

On November 8, 2017, Shakespeare Theatre and Erkiletian Construction Corporation filed another Planned Unit Development that proposes to change the zoning at 501 I Street SW. The new plan is just as bad for the community as the old one was.

The community doesn’t want a zoning change at the site. We want townhouses on the only Southwest parcel of land that does not yet have a plan for development. It’s not just the neighborhood talking.

501 I Street SW is part of the Neighborhood Conservation Area. The Zoning Commission says that Neighborhood Conservation areas are expected to maintain existing land uses and community character over the next 20 years.  The PUD that Shakespeare Theatre and Erkiletian Construction propose would change the land use and the character of the surrounding community, in contravention of the law governing Neighborhood Conservation Areas. The Zoning Commission also says that if change occurs in a Neighborhood Conservation Area, it will be modest in scale and will consist primarily of scattered site infill housing, public facilities, and institutional uses. Major changes in density should not be expected.

The new PUD violates the Neighborhood Conservation Area by changing the land use, altering the character of the community, and vastly increasing population density when compared to the surrounding neighborhood.

What a terrible PUD.

No, Shakespeare Theater, You Don’t Have the Office of Planning’s Approval (or the Neighborhood’s)

Despite a quote from a Shakespeare attorney to the media implying that the DC Office of Planning supports the revised high-rise plan, the Office of Planning does not!

A member of United Neighbors of Southwest contacted the Office of Planning about Shakespeare Theatre’s characterization in the media of the Office’s support. The Office of Planning confirmed it has not met with the developers for many months, and the Office of Planning has not even seen the proposal much less taken a position on it. The last time Shakespeare’s proposal came up before the Office of Planning, the Office said the developers need to demonstrate community support for any proposal.

Community support for Shakespeare Theatre’s plan does not exist. Shakespeare Theatre continues to scheme about ways to parlay their (formerly) good name into a cash cow that ruins the very neighborhood it looms over. Shakespeare Theatre shouldn’t put words into the mouth of the Office of Planning.

The battle to preserve our community continues on many fronts. It’s not yet clear if Shakespeare Theatre will be presenting their latest high-rise plan to the Advisory Neighborhood Commission at the September meeting. We’ll keep you posted!

Neighborhood Rejects Same Old Shakespeare Plan

A new building design was presented at Shakespeare Theatre’s community meeting today, but it was really the same old story.

Once again Shakespeare’s latest lawyer showed off a design. Once again community member after community member pointed out how the design would harm the neighborhood. Once again nobody from the community expressed any support for the new design. A snap poll of the audience found the neighborhood opposed to the new design by a margin of over 30 to 1.

Once again Shakespeare Theater promised unnamed “community benefits” that they apparently thought would win the neighborhood over. Once again Shakespeare Theater had no answer when it was pointed out how they had reneged on their previous promises. (See our June 28, 2016 post here for some examples.)

Once again Community members asked Shakespeare why they didn’t just sell the property at a profit and erect their hi-rise in one of the many DC areas zoned for large buildings. Once again Shakespeare had no answer.

Once again it was clear that Shakespeare was only holding this meeting to be able to say they had talked with the community. They weren’t interested in listening to us – they were interested in checking a box so they could move on to try to get the zoning changed.

The community is not going to let that happen.

Shakespeare next hopes to present their new design at an upcoming Advisory Neighborhood Commission meeting. We’ll be sure to let you know if and when that gets scheduled so the community can turn out in force.

Why Can’t Shakespeare Theatre Plan a Decent Meeting?

Repeatedly over the last 3 years, Shakespeare Theatre has provided inadequate notice of proposed meetings, and it has happened again with the Theatre’s planned community meeting on June 22 at 7pm at Amidon-Bowen Elementary School. Shakespeare Theatre should provide at least 2 weeks notice of a meeting, and they have repeatedly failed to do that.

Shakespeare Theatre has also repeatedly failed to make materials available ahead of time. The lack of information ahead of time leaves residents struggling to understand complex plans on the fly, and forces the neighborhood to argue from a disadvantageous position with Shakespeare’s phalanx of zoning lawyers and expert planners.

Over and over again, Shakespeare Theatre has attempted to put the community at a disadvantage over an issue the Theatre has disingenuously pursued since May 2, 2014, over 3 years ago. Shakespeare Theatre’s behavior continues to be a breech of faith with the community. Meetings should be scheduled at least 2 weeks in advance, and Shakespeare Theatre should provide materials to the community at least 2 weeks in advance.