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 Approves Set-Down Hearing

After much discussion, the Zoning Commission approved a set-down hearing for 501 I Street SW, which is case file 17-21. As part of the discussion, Commissioners noted that they were only allowed to review certain government documents and not others already included in the case file.

Commissioners voted to approve a set-down hearing in part to explore the issue of whether the Planned Unit Development (PUD) that Erkiletian Construction and Shakespeare Theatre proposed is consistent with the Comprehensive Plan. The Advisory Neighborhood Commission (ANC) and United Neighbors of Southwest contend that the PUD is inconsistent with the Comprehensive Plan. The Office of Planning, which has had some staffing changes recently, altered their position and now contends the PUD is consistent with the Comprehensive Plan. Commissioners said the only way for them to explore the issue of consistency with the Comprehensive Plan was to have a set-down hearing, which was approved as a contested case. Here’s a link to the most recent ANC opposition letter.

This is not the only issue where Office of Planning and the ANC are at odds. Certain elements within the city are currently proposing to strip the ANCs (and by default the communities they represent) of their say in community issues. This gutting would happen by a wholesale rewrite of the Comprehensive Plan that would essentially hand developers the keys to the city and remove many protections from communities. The issue of changes to the Comprehensive Plan is being taken up by the City Council in a March 20, 2018, public hearing.

The bill appears custom-made for developers. Here are just a few examples of concern:

  • Any plot in the city not built to the maximum allowable height in its area would be defined under the new bill as “underutilized” (213.4).
  • The Future Land Use Map would no longer “express public policy” but instead only “generally depict public policy” (225.1).
  • The current land use definitions would be eliminated and replaced by general descriptions open to subjective interpretation (223, 224, 225, 226).
  • Neighborhood Conservation Areas would apply only to low density residential areas (223.4) – generally only the city’s richest neighborhoods – and would no longer be intended to conserve other, less affluent, established neighborhoods (223.5).
  • Historic districts would be seen to have “unique opportunities for growth” (205.3).

Here’s a link to the text of Bill 22-663 “Comprehensive Plan Amendment Act of 2018.”

This bill is part of an extremely worrying shift in the state of affairs in Washington D.C. over the last few years. It’s heartening to know that the Committee of 100 is completely against the changes proposed in 22-663, but individual voices must speak out against these changes, too.

Once Erkiletian Construction and Shakespeare Theatre meet certain preparatory conditions, a hearing date will be set to review their Planned Unit Development proposed for 501 I Street SW.

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.


Shakespeare Theatre’s Agreement with SWNA: A History of Broken Promises

Three years have passed since the Southwest Neighborhood Assembly (SWNA) withdrew its historic preservation application for the 501 I Street SW site in exchange for a package of community benefits from Shakespeare Theatre and $60,000. A copy of that agreement is here. Shakespeare Theatre made many promises in the agreement and did not keep them. The number of promises broken continues to grow with the new PUD submission.

Below is a list of Shakespeare Theatre’s broken promises from the agreement and the reality of their conduct.

Section R5. …STC is committed to engaging with the Southwest Community as STC develops its plans for the Property…

Section R6. …In consideration of STC’s commitment to engage the Southwest Community in a collaborative process as STC develops its plans…SWNA is willing to withdraw the Nomination.

Status of R5 and R6: NOT DONE. STC continues to fail to engage fully with the community. Instead, communication over the last two years at public meetings has been led by Erkiletian Construction Corporation, staff from the numerous law firms STC and Erkiletian have hired, and a public relations firm. Often, when STC does engage the community, it is in a secondary capacity, and those STC representatives also sit on the Erkiletian Board of Directors. This happened most recently in the June 2017 public meeting.

Section 3. Demolition. …Upon issuance of the Raze Permit…STC shall coordinate with…immediate neighbors to minimize impacts of demolition on…residents. [Status: NOT DONE. No coordination with the residents occurred at all.]

Section 4. Security of Site, Cleanliness. Upon acquisition of the Property, and notwithstanding the demolition of the Existing Building, STC shall immediately secure the Property, remove all trash and debris, clean out landscaped beds, and maintain the site free of all trash and debris. STC shall monitor the property and conduct trash removal and/or repairs necessary to keep the Property secure and free of trash and debris on a bi-weekly basis throughout pre-development and construction of the Development. [Status: NOT DONE. In the last 3 years, immediate neighbors and even those farther away have had to contact the developer repeatedly to get them to maintain the site. Often, a month or more would go by without any maintenance being done on the site, including snow not being cleared from several hundred feet of public sidewalk. At times, the lack of maintenance has been a physical hazard to Southwest residents.]

Section 5. b. Off-Street Parking…A minimum of 70 off-street parking spaces shall be provided on the Property for use by STC and residents of the Development. Residents of the Development shall not be entitled to participate in any existing or future Residential Permit Parking program…[Status: NOT DONE. STC’s new PUD doesn’t include the 70 off-street parking spaces promised. No mention is made of trying to ensure residents of the proposed development will not be allowed to participate in the Residential Permit Parking program]

Section 6. a. Community Engagement. STC will be responsive to and communicate regularly with Townhouse Management III, Inc., and Townhouse Management I, Inc., and a recognized group of residents thereof who live in houses surrounding the Property…regarding all aspects of the development process that will impact the Townhouse Residents, including but not limited to the demolition and construction schedule. STC will also fulfill its promise to make available to the Townhouse Residents all studies commissioned by STC related to the Existing Building, Property, and surrounding infrastructure, including, but not limited to, goetechnical, shading, utility, and transportation studies…STC will continue to provide the Townhouse Residents with further studies as they are completed. [Status: NOT DONE. I am one of the people named in this section. Shortly after the SWNA agreement was signed, I stopped received communications from Shakespeare Theatre and Erkiletian. The other person named in the neighborhood also saw this promise broken.]

Section 6. b. Community Engagement. Within thirty (30) days of Effective Date [September 17, 2014], STC agrees to organize a charette with SWNA and the Townhouse Residents at which three-dimensional models of the proposed massing concepts for the Property will be presented and discussed with meeting participants (the “Charrette”). [Status: NOT DONE. Despite repeated requests for a three-dimensional model of the proposals, the community has never seen one for either PUD. At one point, the STC/Erkiletian lawyer and PR team told the community that 2-D renderings were what they meant. That is ridiculous.]

Section 6.c. Community Engagement. Prior to filing a PUD application, STC shall hold at least two community meetings open to the general public at which STC will share its plans for the Development and process/timeline for construction. These meetings shall be advertised…by direct e-mail notification to neighbors…[Status: NOT DONE. With the first PUD, STC’s architectural firm and PR firm held one meeting the day before the PUD was submitted, at which point they were not making any changes to the design. The second PUD was submitted a few weeks ago. No public meetings on the new PUD have been held. Neighbors were not directly notified of the new PUD.]

Section 6.d. Community Engagement. Prior to filing a PUD application and after the Charette, STC shall hold at least one meeting with the Townhouse Residents to present its Development plans and discuss impacts and concerns of neighbors in the respective adjoining and confronting townhouse communities. SWNA and STC hereby acknowledge that although one such meeting has already taken place, STC shall be obligated to hold at least one additional meeting in accordance with this Section 6(d). [Status: NOT DONE for either the first PUD or the second one.]

Section 7. c. i. B. Public Benefits…Beginning on the Effective Date [September 17, 2014] STC shall reserve tickets and gift certificates for adult Master Acting Classes and Camp Shakespeare for Southwest Community special events and raffles…[Status: NOT DONE until 2015 and then only in part.]

Section 7. c. i. C. Public Benefits…Beginning on the Effective Date [September 17, 2014] STC shall coordinate with SWNA and/or ANC 6D to distribute free tickets to Ward 6 Night Free For All performances at Sidney Harmon Hall. [Status: NOT DONE.  For the first time, free tickets suddenly appeared on Thursday June 23, 2016, for a Saturday June 25, 2016 production. Few in the community were aware of the opportunity. A Ward 6 Night Free For All performance has not been established.]

Shakespeare Theatre hasn’t kept the promises they made three years ago in the SWNA agreement. It’s little wonder the community has no faith in Shakespeare Theatre now.  

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!