Developer Q&A: Telesis Corp. President Marilyn Melkonian

Marilyn Melkonian has been a leader in the housing industry for decades, and today she is bringing that expertise to a major redevelopment effort in Southwest D.C.

She founded the National Housing Trust, a nonprofit dedicated to preserving affordable housing. She served as deputy assistant secretary of the U.S. Department of Housing and Urban Development during President Jimmy Carter's administration. And in 1985 she founded Telesis Corp., a real estate company that has been involved in 25 neighborhood transformation projects around the country totaling more than 17,000 units and $2.8B in investment. 

Telesis Corp.'s latest project is the redevelopment of the Randall School at the corner of First and I streets in Southwest D.C. In partnership with the Rubell family and Lowe, formerly Lowe Enterprises, the company is restoring the historic school buildings to create an art museum and constructing a new 500-unit apartment building on the site. 

Additionally, the firm submitted a bid last year on a request for proposals to redevelop a public housing community in Southwest D.C. Bisnow caught up with Melkonian, who will speak March 11 at Bisnow's Southwest D.C. Surge event, to discuss the Randall School project and her thoughts on Southwest D.C.'s ongoing transformation. This interview has been lightly edited for clarity.

Bisnow: When did you first get involved in the Randall School project?

Melkonian: Almost a decade ago. We got involved because the city sold the site to the Corcoran Gallery of Art, and the idea was to bring an art use to the community. That was its primary objective in addition to other mixed-use elements that would be in the development.

Corcoran had previously engaged with Monument as a developer to take it through a plan for development. The initial business arrangement between Corcoran and Monument was mixed-use residential, commercial and school of art. Then they reached out to others after the meltdown of financial markets, and the principal financing source for Monument at the time was Lehman Brothers, so they were not able to continue the project.

Corcoran then went out with a new RFP for ideas and developers. So Telesis teamed up with the Rubell family, who owned the Skyline Hotel, and they were already active in a development sense. The site is almost adjacent across the street from that hotel. And, of course, the Rubell family has a tremendous connection to the arts, especially contemporary art since the mid-'50s. So we teamed up as a developer, and our idea was to bring a contemporary art museum to the Randall School site.

Bisnow: And I understand that Lowe is also a partner on the project?

Melkonian: Well, now they are. So to flash-forward, there was rezoning done, there was a modification to the PUD, we had Bing Thom, the architect for the Arena Stage, as the architect for the project to design the early stages. The design of it was U-shaped residential around a central park, with the historic buildings providing a location for the museum and art-related activities in the historic building, and approximately 500 apartments.

So that concept developed and we went through hearings and zoning, and then we looked for a financial partner and a development partner toward the end of that. We then brought in Lowe Enterprises to work with us on finishing the development and to find the financial partners needed to carry it forward. That was about three years ago. And then we concluded that process of the financing of the project last year.

Bisnow: Has it broken ground yet or are you planning to break ground soon?

Melkonian: Well, it broke ground, technically, we started at the end of 2017 to actually begin the construction of the project on the interior, because there was a lot of remediation and other work that needed to be done. So that actually started in the last quarter of 2017. That work is now continuing, of course, since the closing of the financing. There’s no ground to be broken until the vertical construction on the residential part.

By the way, it is Beyer Blinder Belle who was also the architect of record during the time we started initially with Bing Thom. Bing died a few years ago. He should be remembered well for what he did for Southwest. He was able to create that concept and Beyer Blinder Belle as architect took it through the development process and has done a wonderful job, they’re a wonderful firm. Hany Hassan, he’s terrific.

Bisnow: Can you describe what the project will look like? The historic buildings will be an art museum and I saw there is an office component as well?

Melkonian: Yes, the west wing will be something other than the museum. The museum is located in both the center building and the east building. The west wing I think will be related to art. The three buildings are owned by a nonprofit related to the contemporary art museum. Those three historic buildings will be completely restored and preserved. The public benefits here are the preservation of three very important historic buildings in Southwest D.C. history. And then the museum itself and, of course, the housing is mixed-income: 20% workforce, 80% market.

Bisnow: How important was it for you to have a mixed-income community to provide that affordable housing in Southwest?

Melkonian: So that’s what we do at Telesis, we’re involved in neighborhood regeneration for affordability across the spectrum. Communities are based on many different people living in the same place. That makes the best kind of community. It’s very important. It is essential not to lose affordable housing that exists and to add to it.

The mayor has a goal of 36,000 units and that should be premised on not losing anything we have. This mayor is trying very hard to make sure people have shelter and have affordability for all different income ranges that make up the city and the great diversity of the city.  

Bisnow: Your project at the Randall School is one of several throughout D.C. that are utilizing the sites of former schools that are in neighborhoods close to the community and building housing on these sites. As you think about the mayor's goal of building 36,000 housing units, are these types of infill sites a big opportunity?

Melkonian: All of the sites that no longer are doing what they were originally designed to do have the potential to be residential. All these sites need to be looked at for mixed-use residential opportunities. And even real small infill sites. The Randall site is almost 3 acres so that’s a big site, and 500 units is a lot of units. And 20% affordable is part of that. We need to have affordability for everyone who needs housing, which is everybody. So it’s about how do you accommodate that in a place that is growing, which our town is.

Bisnow: Southwest D.C. has obviously been growing quite a bit, and the biggest development in the area is The Wharf, which is not too far from your site. How do you think that has changed the neighborhood over the last few years?

Melkonian: It adds more residents. It develops a part of Southwest that was not previously developed. I know there was an emphasis on having diversity and affordability. Certainly, it didn’t displace anybody, it has only added more housing to the Southwest neighborhood as well as other uses.

Bisnow: With the amenities it created and the activating of the waterfront, do you think The Wharf has led to more development in the nearby area? Do you think it has been a catalyst for other projects?

Melkonian: I think it has attracted other developers to other sites in the neighborhood, which have been developed. The success of The Wharf because of the scale of The Wharf is very inspirational to other developers trying their own developments on other sites that were available. They imagined that these other developments could be done and that the market was there, and it was there, and it still is there, and it is growing.

Bisnow: Do you have any other projects in Southwest, or are you looking at any other opportunities?

Melkonian: Well, we’re very interested in the Greenleaf neighborhood and being part of a solution there and not a problem. It’s one of the oldest developments in the city, it was designed many years ago at a different scale and a different density than what the current circumstances would really call for, but also the ability to add density does not mean the loss of affordable housing. You don’t have to keep the older housing, but you have to make sure there’s more than enough replacement housing. It takes real commitment to the public policy to making sure that doesn’t happen and developers gladly follow that course. We would like to be one of them.

Bisnow: I saw there was a request for proposals last year, so you submitted a bid?

Melkonian: Yes, we did. But I’m not sure where all that stands. We did put our hat in the ring, yeah.

Bisnow: Can you tell me what your proposal looked like? You said you have market-rate units in addition to the replacement public housing units?

Melkonian: Yeah, when you do a replacement of existing public housing, you have mixed-income housing. I think there was a separate building for seniors, which was done in a high-rise or mid-rise fashion, and then integrated development throughout all income levels. It’s a big site.

Bisnow: Do you have any other thoughts you would like to share on the Randall School project or Southwest D.C. as a whole?

Melkonian: I think the history of Southwest is both tragic and promising, and we hope to be part of the promising. We think Randall is a great result from over a decade of working on it, not just ourselves but others in the city working on it, and the council working on it, and the planning office and the Zoning Commission, all of this. The amount of interaction between citizens and the public and private sector was phenomenal. It took a decade to do it. The Corcoran kept alive the idea of an arts center in the Randall School. The people in the community wanted to make sure those buildings were preserved and for good reason. They embody so much history. And then the investors and others brought the final pieces to the puzzle so it could be done. It’s something the whole community should be proud of.

Melkonian will discuss the Randall School project March 11 at Bisnow's Southwest D.C. Surge event, held at Arena Stage.