See this article printed on Scott Robert’s Bloomingdale listserv. I don’t find it online or I’d just link to it, but I did find this link to some history about the market.
Despite city help, Shaw’s O Street Market project faces further delays
By KATIE PEARCE
Current Staff Writer
4/1/2009
The redevelopment of the historic O Street Market in Shaw, a project with a long history of delays, is continuing to move at a slow pace due to financing hurdles.
At a ceremony last July, Mayor Adrian Fenty announced that the $300 million project, which many consider critical to the revitalization of Shaw, would break ground in fall 2009. The tanking economy has now pushed that date back, uncertainly, to May 2010.
“This is a hole in Northwest just north of the convention center,” said Susan Linsky, a project manager at Roadside Development, the firm that purchased the two-block area between 0, P, 7th and 9th streets nearly a decade ago.
“It’s an important project for Shaw; it’s an important project for the city,” Linsky said, noting that the development will create around 400 full-time jobs. “Everyone, including the community, wants this project to break ground as soon as possible.”
The redevelopment, dubbed “Citymarket at O Street,” will center on 8th Street, which will become a pedestrian thoroughfare. Plans call for a 200-room boutique hotel with ground-floor retail, four residential buildings (including more than 90 affordable units for seniors), and a brand-new Giant, built around the shell of the site’s historic market. At 71,000 square feet, the new grocery store will become the city’s largest.
Roadside, the firm that redeveloped the Sears building in Tenleytown, purchased the O Street Market site in 2001. Plans for a mixed-use project hit multiple snags along the way. In 2003, the roof and much of the market building collapsed beneath heavy snow. Prolonged zoning debates over the development’s size caused more delays.
But the D.C. Council gave the project forward momentum last September when its members voted unanimously to approve a $35 million financing deal with Roadside. The city plans to provide the funds through Tax Increment Financing, a fiscal tool that allows the sale of bonds backed by the anticipated property and sales taxes the new development will create.
According to Sean Madigan, spokesperson for the Office of the Deputy Mayor for Planning and Economic Development, the financing package can move forward only when Roadside has satisfied certain conditions: evidence that its own financing is in place, a firm commitment from a hotel, and secured building permits.
Madigan said none of those conditions have been met so far.
“Securing financing in this market is a major issue,” said Linsky. Roadside is exploring numerous options and “trying to get the lowest equity possible,” she said. “We’re … looking at HUD financing, we’re looking at new markets — a lot of different financing structures, equity firms, banks.”
One problem is that Roadside spent more than $2 million to develop documents and architectural drawings to move the project through the extensive historic preservation and zoning processes. Last year, Ward 2 Council member Jack Evans arranged for a grant to cover those costs, expected to come from the city’s surplus.
“But the surplus was usurped by the recession,” Linsky said. “So there was none.”
More recently, the council passed legislation increasing the fees for parking meters downtown. Evans arranged for $1 million of the extra revenue to go toward the affordable senior housing in the O Street project. But the mayor has said that money cannot be released until the fees are actually collected.
Linsky said Roadside is “in active discussion with the administration and the council” about these matters.
Alex Padro, a local advisory neighborhood commissioner and executive director of Shaw Main Streets, calls the delays “extremely frustrating.”
“From where I’m sitting, the mayor is holding up a project that is shovel-ready,” Padro said. The delays have “a negative impact on the Shaw’s neighborhood’s revitalization.”
Linsky said Roadside is currently in negotiations with one hotel, but she could not give a name.
Bates Area Civic Association 
another troubling aspect of this is the empty boarded up housing that now is located for several blocks on 7th street. it was vacated for this work to start but the empty buildings will now sit there for at least a year before anything is started.