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.

 

 

 

 

 

Shakespeare and Erkiletian Make a Change No One Wants

IMG-2976
Situation-appropriate quote found attached to the 501 Eye Street fence.

At the Advisory Neighborhood Commission meeting on September 11, 2017, Erkiletian’s lawyer and the developer’s architect presented a change to the 501 Eye Street SW plans that they said the community requested at the June 2017 meeting. Another pedestrian entrance was added to plans for the development. In fact, no one in the neighborhood recalls such a change ever being requested. Ever. Going back 3 1/2 years since all this started.

So the developer made a change that no one wanted and presented that change as being responsive to the community. These are not actions on which a trusting relationship with the community is built.

Further examination of the developer’s revised plans boggles the mind. The main building is now right up against the sidewalk on the 6th Street side. Several years ago, the neighborhood let the developer know that the lot they purchased did not go all the way to the sidewalk on 6th Street.

Worse, the second floor of the I Street side of the development actually overhangs the sidewalk. The developer confirmed that fact at the meeting. The sidewalk is a public space. It seems incredibly unlikely a developer would be allowed to build a structure that overhangs public space.

And then there is the equal-height  annex building being wedging into a tight spot between the townhouses and the main building. Rarely spoken about, the annex lurks on the sidelines. It’s like they don’t want to draw attention to that significant structure in the plans.

The developer group also spoke briefly about identifying off-site parking for Shakespeare Theatre. No details were provided. The number of spots they were talking for Shakespeare staff pales in comparison to the unmet need for the apartment dwellings they are trying to entice into the building.

Per the usual, no one from Shakespeare Theatre appeared to be in attendance. Instead, the community continues to interact with the developer, their latest lawyer in a string of lawyers, and a public relations firm or two.

At the conclusion of the presentation, the Advisory Neighborhood Commission noted the sorry state of the site, which had seen little or no upkeep throughout the summer. The green fence lining is tattered in places and seems completely unnecessary. Brown and yellow weed patches were grown up all over the lot to above the height of the fence. The developer promised to get someone on that situation right away, which apparently meant five days later. The lot is still in a pretty sorry state.

It’s as if Shakespeare and Erkiletian don’t have a plan. They don’t seem to understand how important public space is to D.C. residents. They aren’t being responsive to requests from the community. Shakespeare and Erkiletian continue to demonstrate that they don’t know how to be a good neighbor, and they don’t know how to build trust with the community.

 

 

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.