Is This Embattled D.C. Hotel Sleazier Than Trump’s?
Sydell Group, which has recently taken heat for labor complaints in Los Angeles, finds itself in another legal quagmire in the nation’s capital.
Last spring, two real estate developers named Matt Wexler and Brian Friedman barreled into a local community meeting in the Adams Morgan neighborhood of Washington, D.C., for a board called the Business Improvement District. The two had just opened a new hotel in the area, and they wanted more cops on the street. Furious that the board had not complied, Wexler read a four-page letter, demanding the leaders’ resignation over what he called “unethical,” “blatantly outlandish,” and “disgusting hypocrisy,” according to a report in Current Newspapers. The performance left the room in shock. “To come in and run roughshod over everyone because of your size—that’s not right,” BID Vice President Arianne Bennett, who runs a local falafel shop, told the outlet at the time. “I got bullied by my own personal Adams Morgan Donald Trump.”
Wexler rejected the comparison, calling it “rich with irony.” He and Friedman have become key players in a development drama in the District over the construction of a boutique hotel called the LINE, just miles from Trump International. If the Trump, beleaguered by tense labor troubles, unpaid contractors, and recently, misuse of public funds, has come to represent mass-produced corporate opulence, the LINE aimed to be anything but. The development duo were working with the Sydell Group, a hospitality firm owned by hotelier Andrew Zobler and billionaire investor Ron Burkle, whose idiosyncratic venues—the Freehand, the Ned, and the NoMad—claim to take inspiration from local values. Zobler told Skift last year his spaces serve as the “living room for a neighborhood”; Friedman told The Daily Beast he’d envisioned a heartwarming community project, like a “60 Minutes story.”
But the LINE DC, which opened in January of 2018, has found itself at the center of an investigation and a tense community battle over its relationship with the neighborhood and a colossal $46 million tax cut. The hotel has been accused of failing to meet the terms of the tax abatement, fudging hiring numbers to cover up the error, and stretching the meaning of the word “construction” in a rhetorical move that would make Bill Clinton swoon. On a spreadsheet of their “construction” hires, for example, the LINE listed their real estate investor Brian Friedman (who told the Washington Post that he “does drywall”), 45,000 hours of work from AMYLA, a non-profit mentoring program focused on low-income youth, and James Beard award-nominated celebrity chef Erik Bruner-Yang, who runs two of the hotel’s restaurants.
“Listen,” Friedman, who apparently clocked 2,820 hours of construction work, told The Daily Beast in an energetic phone call. “This is my child, this is my baby. I created this thing... I’m like the executive producer of the movie. I’m not doing the makeup. So, if they listed me doing the makeup, that’s not right. But if you hired the person that did the makeup then, well, it’s something.”
Sydell Group, Friedman and Wexler maintain they followed the law. “There has been a lot of rhetoric, falsehoods, and spin around The LINE DC and its compliance with regulations set forth by the DC Council in 2010 in order to receive a real estate tax abatement,” the hotel wrote on “LineDCCommunity.com,” a website dedicated to saving their tax cut. (A LINE developer claimed that the youth group AMYLA had, in fact, done construction work, but did not explain why Friedman and Bruner-Yang were included in their documentation). To their credit, the hotel did list several real construction companies. Among them: a Florida-based company called Power Design, which is currently being sued by the D.C. Attorney General for allegations of wage theft, and Maryland’s Belfast Valley Construction, which sued LINE and its general contractor, Walsh Group, in 2017 over an unpaid $1.2 million lien (Sydell Group denied liability).
It’s not the first time Sydell properties have encountered local scandal. In December, hospitality workers at The LINE Los Angeles voted to authorize a strike over requests for fair pay, affordable healthcare, and sexual-harassment protections (the dispute was later settled). And last month, The Daily Beast reported that workers at Sydell’s other L.A. property, the Freehand, had filed numerous labor and OSHA complaints against their employers for homophobic comments, deportation threats, and unprotected exposure to sewage. But the story of the LINE DC paints an especially grim picture of developer oversight and the relationship between private sector and public interest.
The conflict centers around an old church building in the Adams Morgan neighborhood of D.C. It’s a neoclassical building from 1912, with giant stone columns, 60-foot ceilings and huge copper doors, once home to the First Church of Christ, Scientist. In 2010, after a years-long battle over historic preservation, the city passed a law authorizing development for a hotel, complete with a cushy tax cut of $46 million, paid out over 20 years. But it wasn’t free money. The legislation stipulated seven key provisions, each focused on reviving the local community. The hotel had to offer a jobs training program, an apprenticeship program, an independent audit, and a section dedicated to non-profit incubator space. Most importantly: they had to hire D.C. residents, ensuring that 51 percent of construction jobs, 51 percent of construction hours, and 51 percent of the permanent hotel jobs were filled by local citizens.
It was a deal made for Sydell, steward of the “neighborhood living room.” The jobs requirement, according to Bryan Weaver, the former Advisory Neighborhood Commissioner to Adams Morgan who helped write the abatement law, was conceived to mitigate the effects of gentrification in a neighborhood with a large low-income population. “In that ward, there’s a series of public housing units with chronic unemployment,” Weaver said. “Our hope was that they were going to help with job training, they were going to give out construction jobs, and this was going to turn into a career path for a generation of black and Latino young men that live in project housing.”
The developers were confident that they would meet the terms. But a few years into construction, Weaver claimed that they had done little by way of community outreach. (Asked about the concern, Friedman said Weaver was “just trying to be a politician”). “I just wanted to check on the numbers, and the numbers were nowhere near the construction numbers,” Weaver said. “Like not even close.”
When the hotel opened in January of 2018, the numbers were still foggy. The review process was delayed in part because the LINE kept applying for temporary occupancy permits—nine in total—instead of a permanent certificate, which would trigger an audit. “There was some concern at that time that they might be doing that to spread out the timeline and delay the completion date so they had more time to log construction hours,” said D.C. Councilmember Brianne Nadeau, who oversees the ward where the LINE sits. In June, Nadeau sent a letter to the City Administrator, accusing the hotel of “disingenuously extend[ing] the construction period.”
The letter kick-started the process: the hotel got its certificate and started an audit. But when the report, conducted by Pantera Management Group, a firm hired by the LINE, came out that fall, it irked local activists and officials. In a spreadsheet of their local hires, they reported a list of D.C. residents hired for “construction” jobs, with a loose definition of what, exactly, a construction job entailed. Alongside the celebrity chef and the nonprofit, AMYLA, the hotel also listed several restaurant workers, a wedding and corporate events planner, architects, historical preservation specialists, an interior designer, and the founder of a “content collective” and marketing website called Bright Young Things.
Still, the audit claimed the hotel had passed muster. The tax cut was in the clear. “Now, that doesn’t make any sense,” Councilmember Nadeau said. Nadeau contacted D.C.’s Department of Employment Services, and in early 2019, they conducted a second audit (“The hotel was upset about that,” she said; Sydell Group said in a statement that they had routinely worked with DOES, provided monthly reporting throughout the project, and never received complaints). When the investigation closed, the Department announced that the hotel fell short on two requirements: apprenticeships and construction jobs, hiring only 273 D.C. residents, short of the 342 minimum. Still, the agency said, the hotel had made a “good faith” effort. They proposed a solution: the LINE could keep the $46 million if they paid a $600,000 fine.
Nadeau thought this was strange. Either you follow the law or you don’t, she said, “and if you don’t, you aren’t getting the abatement.” She asked the D.C. Attorney General Karl Racine to review the audit to see if he agreed with her. He did. In a letter dated May 13, 2019, Racine pointed out that the law granted the LINE a tax cut, only if it met seven conditions. “You asked whether the Department of Employment Services may waive those conditions,” he wrote. “We conclude that it may not.”
In response to Racine’s letter, the Department of Employment Services resumed their investigation. The results have not yet been released. But the outcome has huge implications for the capital. The law was drafted with explicit consequences (“We had a carrot and a stick,” Weaver said). If the hotel keeps their tax cut, it sends a message to big business: you can break the law and get away with it. “We can’t indicate to people doing business with the District of Columbia that, if they don’t meet the requirements of our law, they’re just going to have to pay a fine,” Nadeau said.
It also speaks to a larger pattern in the city. Kathleen Patterson, the District’s Auditor, who is also investigating the LINE, wrote a report in 2018 looking at 27 businesses, including the LINE, which had received city money in exchange for hiring locals under what the city calls its “First Source” law. She found that less than 80 percent of the law’s provisions had not been implemented, or been implemented ineffectively. “It’s essentially pretty negative finding,” Patterson said. And for all the bad behavior, Patterson added, there had been barely any consequences. According to a 2016 report, only one private developer had been punished for failing to meet requirements. The single fine? It came from an individual homeowner who approached the city on their own, offering to pay.
Foggy numbers aren’t the only scandal the LINE has seen. In an explosive article from November, Washington City Paper reported that some 30 subcontractors had claims against the hotel for unpaid work. Ronald Hunt of Capitol Sprinkler Contracting told City Paper at that time he was still owed $100,000; Jason Glatt of Advanced Window Inc. claimed he was owed $130,000; and a third, unnamed executive cited an outstanding $40,000 bill. In 2017, another subcontractor, Belfast Valley Construction, sued the LINE for a $1.2 million lien. According to Sydell, which denies liability, two of the accounts remain open; one has been closed out. (Walsh Group, the hotel’s general contractor which was also sued by Belfast Valley, denied the debt in an answer to the complaint; the subcontractors did not respond to requests for comment).
The hotel has also received complaints from local unions. When the abatement law was first passed, the city had planned to make it a Marriott. John Boardman, the executive secretary treasurer of Unite Here Local 25, told The Daily Beast that the union had made a separate card check, or organizing agreement, with Marriott to offer its future employees the option of unionizing. That changed when LINE took over the deal. The hotel claimed to take no issue with the idea, Boardman said, but did not make an agreement. Since the hotel opened, no union has been proposed, and Local 25 has not made further attempts to work with them. “We just think what’s going on is bad public policy and a horrible precedent to be set,” Boardman said. “We are not interested in dealing with these guys.”
Sydell disputed the criticism. “At the LINE DC, there is a unique and distressing situation where the local hotel union are unjustly attacking the hotel tax abatement in an effort to exhort influence,” a spokesperson wrote. “They are jeopardizing District and Ward 1 jobs with a misleading campaign regarding the tax abatement in an effort to advance their own agenda.”
In the past month, the situation has only grown more heated. The LINE has started lobbying to keep their tax cut—launching a website, a petition, and a thorough social media campaign which intimate that, without the public funds, hotel workers will be laid off. On June 17, the LINE held a press conference on the steps of the hotel. Dozens of employees sat across the steps, holding signs with slogans like, “Nadeau: Do your job and protect mine!” The hotel was safeguarding work, speakers told the crowd, and activists were harming it. “It was almost like a hostage video,” Weaver said. “They put their employees in front of the hotel, saying save our jobs.”
An earlier version of this article stated Erik Bruner Yang had won a James Beard Award. He was a nominee in 2015, and a semi-finalist in 2016.