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Residents cry foul:

Ft. Lincoln developer reneges on city deal that delivered land rights

(Published May 6, 2002)

By JOHN DeVAULT

Staff Writer

When Roy Pearson moved into his new condominium at Fort Lincoln New Town a couple of years ago, he was surprised to find that the management office lacked any maps of the winding streets through the 199-acre development in Northeast Washington.

So like the lawyer he is – Pearson works for the Neighborhood Legal Services Corp., doing legal work for poor defendants in Washington – he headed downtown and put in some document requests at a city agency.

He found more than his map, he says.

In a 402-page contract spelling out the original public-private agreement behind Fort Lincoln’s creation, he says, he found a paper trail pointing to what he calls a multimillion-dollar fraud on Fort Lincoln residents going back more than 25 years – a fraud that Pearson and other Fort Lincoln residents assert continues to this day.

It was perpetrated first, they say, by Theodore Hagans, Fort Lincoln New Town’s original developer, who signed a contract in 1975 with the D.C. government granting him millions of dollars in federal and local tax benefits – in exchange for explicitly stipulated financial and other benefits for Fort Lincoln residents, as well as other minority residents of Washington.

Hagans concealed from residents his obligation to provide those benefits after they began to buy homes and rent apartments in Fort Lincoln, residents say, and he never delivered them.

And, they say, the deception has been carried on by Fort Lincoln New Town Corp., now led by Hagans’ daughter, Michele V. Hagans, who took over as president in 1984 after Theodore Hagans died in a plane crash.

Michele Hagans – a prominent figure in local development, business, educational and charitable circles – did not return calls for comment that were made to her office and home. In addition to leading Fort Lincoln New Town Corp., Hagans serves on the boards of directors of several prominent business groups, including the Greater Washington Board of Trade, the Federal City Council and the D.C. Convention and Visitors Association. She also serves on the Board of Trustees at the University of the District of Columbia, where she recently stepped down as chairman.

Residents say the contract that Theodore Hagans signed mandated Fort Lincoln New Town Corp. to set up a nonprofit resident corporation to help plan and run Fort Lincoln New Town, and to seed the nonprofit’s operations with $250,000.

They say the agreement also required the corporation to give the resident group a 25 percent ownership share in, and at least 25 percent of the profits from, the Hagans’ company that manages Fort Lincoln – collecting rents, proceeds from condominium sales and other receipts.

They charge that these and other financial benefits also in the contract mean that today, the total amount owed to residents is between $5 million and $10 million.

"The astounding thing about this whole thing is that it’s not just the residents who’ve been defrauded here," said Pearson of his discovery of an ambitious attempt at citizen empowerment gone badly wrong. "It’s also the taxpayers of Washington, whose millions of dollars of tax money paid for this whole thing.

"Instead of this grand plan benefiting Fort Lincoln residents and other minority residents of Washington, as was intended, it all went into the pockets of one family – Ted Hagans’ family," Pearson said.

Reginald Lyons, president of Fort Lincoln Civic Association Inc., said he was "shocked" when he learned of the agreement.

"We were supposed to have been part of the planning of this community, to benefit from the development here," he said. "That a foundation was to have been established – that could have done some very positive things for the residents."

Nora Faison was one of the first Fort Lincoln residents, buying a three-bedroom condominium in 1976.

"I moved in on mud," she said, noting that the streets weren’t finished then.

She said neither Theodore nor Michele Hagans ever mentioned the developers’ obligations to the residents.

In fact, she said, the offering statement Theodore Hagans gave to condo owners specified that if they wanted to form a condo association, they would have to pay for it themselves.

"So we’ve never had an association, because residents didn’t want to have to pay for that on top of their other costs," she said.

Pearson said the 1975 agreement still seems to be in force, based on an extensive analysis of city and federal documents obtained under the Freedom of Information Act by lawyers at Crowell and Moring, which Pearson said the civic association turned to because they specialize in FOIA-related law.

"These are things that condo owners were legally entitled to know about under the D.C. condo law," Pearson said. "We believe that a court could easily find this was fraud."

Edward Murray, a Crowell and Moring attorney, confirmed that the agreement still seems to stand. He said his firm did "multiple" FOIA filings, and that ultimately the government "said there are no further amendments" to the document, a finding he said had the legal weight of leaving the original contract intact.

But, Fort Lincoln residents say, the D.C. government has shown little interest in enforcing the agreement – whether over the past quarter century, or now.

Pearson said he and civic association president Lyons met last November with Deborah Linn, then head of the Redevelopment Land Agency, the D.C. agency that negotiated the original deal with Hagans.

Linn did not acknowledge any prior knowledge of the 1975 document, Pearson said. But, he reported, "She said it looks pretty bad from the city’s point of view – that the agreement still seems to be in force."

But Linn refused to take any action against the developer, Pearson said, and told the civic association members that the agency would only encourage the developer to meet with residents to talk.

"She said that the agency had to work with Hagans on other Fort Lincoln development issues, like a shopping center, so they didn’t want to do more than that," he said.

Linn, who recently left her job at the RLA, could not be reached for comment.

Jose Nunez, another former RLA official with past responsibility for Fort Lincoln matters who also recently left the agency and now works in the U.S. Department of Housing and Urban Development’s field office, did not respond to several messages left at his office.

Barbara Heineback, a spokeswoman for the National Capital Revitalization Corp., which recently became the RLA’s overseeing agency, said last week that the agency’s director, Lloyd Smith, was trying to talk to Hagans to urge her to meet with residents.

"I’m not sure if we’ve talked to her, but I know we’ve left a voicemail message for her," Heineback said.

(By apparent coincidence, recently appointed NCRC head Smith was the president of an earlier incarnation of the Fort Lincoln Civic Association in the early 1980s. Pearson said Smith told him, during a conversation before Smith was appointed to the NCRC job, that Smith had no knowledge of the RLA agreement until Pearson brought it to his attention. Heineback said she does not know if Smith, who no longer lives at Fort Lincoln, plans to recuse himself from Fort Lincoln matters.)

Fort Lincoln residents also have asked for help from Councilman Vincent Orange, D-Ward 5, who represents Fort Lincoln. But a spokesman for Orange said that though the councilman is aware of the residents’ complaints against Hagans, Orange does not plan to get involved in the matter.

Councilman Harold Brazil, D-At Large, whom residents also have asked for assistance since he heads a council committee with oversight power over the RLA, did query Linn about the Fort Lincoln situation at a hearing earlier this year, during which Linn reported her agency was trying to bring the parties together. But Brazil’s press secretary did not respond to a request for comment about whether the councilman plans to pursue action to see that the original RLA agreement is enforced.

Lyons said that the civic association has tried to meet with Michele Hagans several times, so far unsuccessfully.

He said that an initial letter, dated last Dec. 20, from the civic association advising Hagans that residents had learned of the 1975 agreement and asking her for a reply within a week to set up a meeting went unanswered.

He said Hagans then wrote on Feb. 26 proposing a meeting to be chaired by local Advisory Neighborhood Commissioner Robert King. But Lyons said Hagans then declined an invitation to schedule such a meeting for March 19 because that date fell during Lent, which, Hagans’ letter said, is "a very sacred time for my family."

She then promised to set up a meeting during April. But the group has heard nothing more from Hagans, Lyons said, and calls since March 12 have not been returned.

ANC Commissioner King said that Michele Hagans told him in a recent phone call that because her father had succeeded to the Fort Lincoln deal as a minority partner after the majority partner in the deal dropped out, the RLA agreement was not binding on Fort Lincoln New Town Corp.

But, said Pearson, who heads the civic association’s legal affairs committee, "That’s just wrong." He said documents show that after the originally designated developer dropped out, Theodore Hagans entered a renewed bidding process and won it largely on the basis of a stated willingness to adhere to the original land disposition agreement.

He cited a statement Theodore Hagans made at a public hearing on May 13, 1975, upon being granted the contract to develop Fort Lincoln New Town: "All members of the Board of Fort Lincoln New Town Corporation…are familiar with the provisions of the (Land Disposition Agreement), particularly Article VII (which contains the developer’s financial and other obligations to residents)," he said then. "I want to assure the Board of Directors of the Redevelopment Land Agency that (we) understand the nature and extent of this responsibility, accept it, and will do everything possible to carry forward this mandate."

And, Pearson said, "When Michele Hagans took her father’s place, she clearly learned about these obligations. At that time she had a choice, which was to disclose them or to continue to conceal them. And the evidence is that she chose to conceal them."

He cited as proof of Michele Hagans’ knowledge of her obligations to residents a copy of a mid-1990s business contract obtained by the civic association. In the document, Hagans explicitly excused a partner in a proposed deal at Fort Lincoln from having to meet the developers’ financial obligations to residents as laid out in the RLA agreement, saying that they "remain rights, interests and obligations of Fort Lincoln New Town Corporation" alone.

Lyons accused Hagans of illegally blocking the civic association’s efforts to educate other residents about the matter, especially Fort Lincoln’s large population of senior citizens, who total more than 2,000 of Fort Lincoln’s 3,500 residents.

Most of the senior residents live in three apartment buildings managed by Hagans, and Lyons said Hagans has ordered resident managers of those buildings to bar public meeting areas in the buildings to residents who want to meet with civic association members, or to discuss the Land Disposition Agreement.

Pearson reported that when he visited one Hagans-run senior building on May 3 to meet with a resident, he was told by the building’s resident manager, Geraldine Overton, that Juan Gaddis, the senior Hagans executive for Fort Lincoln, had the day before telephoned Overton and ordered her to bar Pearson from the building. Pearson said Overton also said Gaddis ordered her to bar residents from using the building’s meeting room to discuss the Land Disposition Agreement, or to meet with civic association members.

And resident Queenie Brown said Overton told residents that the agreement didn’t apply to the senior residents in any case.

"She told us that since we’re renters, not homeowners, the agreement doesn’t cover us," Brown said last week.

In a brief phone conversation last week, Overton said only, "I don’t know anything about (the civic association)" and referred inquiries to Gaddis. Gaddis did not respond to a phone message left last week.

Pearson said that senior residents are indeed covered by the agreement.

"The agreement clearly states that it applies to all residents of Fort Lincoln, not only homeowners," he said.

"That’s an especially pernicious thing to say, that the senior residents aren’t entitled to any of the benefits here," he said. "Because, in fact, most of the money that the company has collected over these 25 years, and they ought to be sharing with residents, is from seniors’ rentals. So they should really have a major voice in this."

Asked what the civic association plans to do next, Pearson observed, "The government is being passive. They’re not helping."

He said the civic association recently hired the public interest law firm Eisen and Rome and is weighing a possible lawsuit against Hagans’ company.

"Basically, the future looks like a long fight. She has deep pockets, and it doesn’t look like she’s interested in working anything out," Pearson said.

Copyright 2002, The Common Denominator