The Watergate

by Joseph Rodota

  “No! No! No!” Mitten shouted from the dais, banging her gavel. “There will be no expressions from the audience!”

  She turned back to Olender.

  “I just want you to understand what we do here, okay?” She sighed. “Some of these legal machinations that go on, they go on outside this hearing room. What we’re interested in is the zoning case that’s before us, which is what we do the testimony about, and that’s where I’d like you to focus your attention in the cross-examination.”

  “Yes.” Olender nodded.

  “And desperation or no desperation, or whatever goes on to convince people to support something or to not support something, is really not relevant for us. As long as people are making arguments that are relevant for us, that’s what we want to hear.”

  Olender suggested Mitten and her fellow commissioners should be interested in the character of Michael Darby.

  “You’re not going to get Mr. Darby to admit that he’s some sort of, you know, a bad guy,” replied Mitten.

  “I don’t want him to, “said Olender. “I just want him to give the facts. The facts are that he put—he and his company paid for six board members to be sued.”

  “I renew my objection, Madam Chair,” said Glasgow.

  “Mr. Olender,” said Mitten, “you’re just going to have to move on to another subject.”

  Opponents of the hotel conversion introduced into the record a letter from Plácido Domingo, general director of the Washington Opera, opposing the plan. “The elimination of the Hotel would not only diminish the lifestyle of the residents, but would adversely affect the position of the Watergate Complex in the District as an acclaimed example of urban living,” he wrote. If the hotel conversion were to proceed, Watergate East resident Sol S. Shalit wrote the zoning commission, “there will never again be a Watergate Hotel. This may not sound like much, if you think of it merely as a sum of physical entities like square footage, people, restaurant, health club, etc. But you will have eliminated not just a hotel, but a mental concept. You will have wiped out forever from our vocabulary a living cultural icon, part of history, and part of the nation’s cultural landscape. It’s like making the Plaza Hotel in NYC disappear forever into just another hi-rise apartment building. These are cultural monuments—and you can see the irony—they have a history, and you will have turned it into archaeology.”

  Mitten invited everyone back in three days to hear from the opposition.

  “Hope it’s a little cooler in here,” she sighed.

  On March 4, 2004, the District Zoning Commission resumed its hearing on the conversion. Richard Aguglia, the attorney representing Watergate West, led off the roster of witnesses against the proposal and zeroed in immediately on an assertion made repeatedly during the first session: that the Watergate Hotel was losing money. Under the District’s zoning laws, Aguglia said, “economic hardship is not a standard of evaluation.” In other words, the Watergate Hotel’s financial condition was irrelevant. Even if it were relevant, he continued, the owners of the hotel—Blackstone’s real estate arm—had failed to produce anything in support of their claims and had failed to demonstrate that no other entity, other than Darby’s Monument Realty, was interested in purchasing the hotel, or operating the property as a hotel.

  Geoffrey Fritzger, a Watergate West resident, testified it was “absolutely incomprehensible” for the owners to suggest the hotel was losing money. Every night, he said, “I almost get blinded by all the TV sets that are still open at 11:30 and 12:00 o’clock.”

  Alvin R. McNeal, a planning consultant, testified the Watergate complex was a “cultural institution” and “part of the folklore of the District of Columbia.” The hotel, he said, was an important “branding element” of the complex and provided “vitality” to the development twenty-four hours a day. George Oberlander, another planning consultant, advised the zoning commission that Foggy Bottom had already lost four hundred hotel rooms near the Kennedy Center when GWU was granted permission to convert the Howard Johnson Motor Lodge, directly across the street from the Watergate Office Building, to student housing.

  Liz Thorne, president of the Hotel and Restaurant Employees Local 25 union from the AFL-CIO—the same union to which Roxie Herbekian and Sherwood Dameron had belonged—also testified against the conversion. Thorne dismissed the “ludicrous and heartless” claims made during the first zoning commission hearing that employees of the Watergate Hotel could find work elsewhere in the District. “These workers and the others at the Watergate will not be absorbed,” she said. “They will be unemployed and, candidly, because of their age, they will likely never work again.”

  Dr. Maurizio Ragazzi, a resident of Watergate West, quoted from the writings of Luigi Moretti: “To seek clearly and then be lost means to be enchanted.” That may be true for art and architecture, Ragazzi said, but not for real estate development. His wife followed him to the podium, demanding preservation of the Watergate intact as a “world class monument throughout the world.” She denounced proposed changes to the hotel’s exterior, especially the “awful, awful carports.”

  Clarence Booker, an employee at the Watergate for thirty-seven years, including twenty years as a resident and manager of Watergate West, said the average age of residents in the building was “about 70.” Many of them, he said, were lonely and had nothing to do each day but walk over to the hotel.

  “Watergate represents more than just a roof over our heads, which is why we are so personally offended by the prospect of it being altered,” testified another self-described “very content resident,” Ellen Cooper, a member of the group that met regularly in Jack Olender’s study. “We regard it as a landmark which has not yet been given its due.”

  Jack Olender rose from his seat. Rather than present his arguments from a witness table, he walked across the room to where a podium was standing in a corner. He slowly wheeled the podium into place in the middle of the hearing room.

  Darby shook his head in disbelief. He knew Olender’s style wouldn’t work with Mitten and her colleagues. “It was just silly,” he recalled thinking. “This wasn’t a case of law.”

  Olender asked Darby whether Monument Residential LLC was legally registered to do business in the District of Columbia.

  “Everything we do is completely aboveboard,” Darby snapped. “If you’re implying that it isn’t, I resent that.”

  “I’m trying to get the facts, sir,” Olender replied.

  Mitten interrupted from the dais. “What’s the relevance?” she asked Olender.

  “Because he tells three and four different things on different occasions, that’s the relevance,” Olender replied, “and I think you’re entitled—and I would think required—to assess the veracity of these witnesses.”

  “I’d like you to pick another subject,” Mitten responded.

  “That’s all I have.” Olender smiled, and sat down.

  Mitten asked Darby and his colleagues if they had a closing statement—Norman Glasgow said they would submit a written statement for the record—and announced comments could continue to be received until April 29 at 3:00 P.M., in order to allow for the results of the April 12, 2004, vote by the owners of Watergate East to be included in the record.

  At 9:39 P.M., the meeting was adjourned.

  AS THE WATERGATE EAST VOTE ON THE CONVERSION neared, each side campaigned furiously. A flyer in favor of the sale listed the names and phone numbers of the “six antidemocratic and recalcitrant Directors” who opposed the sale and urged residents: “Call them and insist on democracy. This is America, under the rule of law. It is not Afghanistan, under the rule of the Taliban.”

  Opponents of the conversion responded with a flyer titled “THE CHOICE IS SIMPLE” which warned against “accepting 155 new luxury hi-rise co-ops next door directly competing with our own apartments, depressing our market values, and turning us into the ‘has been’ ‘Old Watergate.’”

  “This issue has been so emotional,” said Audrey Wolf. “You se
e people in the lobbies and you don’t want to get in the same elevator with them. . . . They give the cold shoulder. They won’t speak.”

  “There was definitely ill will,” Olender later recalled. “The climate in the building turned very nasty.”

  On April 12, the Watergate Hotel’s Monticello Room was packed with Watergate East residents. Bruce B. Drury, a partner with a prominent accounting firm, was on hand to audit the vote. As residents handed in their paper ballots, Drury and an assistant used the building manager’s laptop computer to count the votes and assign them an appropriate weight, based on their shares in the cooperative—which in turn reflected the size of their apartments.

  The first item issue on the ballot was an election to fill the expired terms of three members of the Watergate East board of directors. Drury reported that three pro-sale directors had been elected, tipping the balance of the board from six to five against the hotel conversion to six to five in favor.

  The next vote was on Monument’s offer to purchase the parking spaces and other property beneath the Watergate Hotel for $4.25 million.

  Drury announced the result. The proposed sale was approved by a narrow margin: 35,040 shares in favor and 34,548 against—a margin of just 492 voting shares.

  The new Watergate East board—which was now narrowly dominated by a pro-conversion majority—cheered the result. But the matter was far from settled.

  Over the next two days, many residents—primarily those opposed to the conversion—pressured Drury for more detail about the ballots, including the votes of individual owners. On April 14, 2004, Jack Olender wrote Bill Condrell, the outgoing president of Watergate East, and asked how many apartments voted each way. Drury turned to Kioumars Aghazadeh, the general manager of Watergate East, for advice. Aghazadeh, known in the building as “Mr. Que,” deleted from his laptop the electronic copy of the April 12 vote. Drury later testified he had been instructed to destroy paper copies of the ballots and proxy instructions, but refused to name the person who gave the order. By April 15, all records of the vote had been destroyed.

  On April 19, Olender wrote to Daniel Sheehan, the newly elected president of Watergate East, demanding the number of owners and apartments who voted for and against the sale, so he could include that information in his submission to the District Zoning Commission. “If you do not provide it timely [sic],” Olender wrote, “I will reference it in my file and argue the inference that the majority of apartments and individuals voting against the sale was considerably larger than the majority who voted against the sale at the previous meeting.” That night, board members heard rumors the ballots had been destroyed. Bill Condrell immediately called Dan Sheehan, who denied it. The next morning, Dr. Judith Eaton, a Watergate East resident, asked Drury for additional information about the membership vote. Drury replied that he had destroyed all paper ballots and proxies, and had deleted the software program from the laptop “at the direction of the board.” She asked Drury who exactly had ordered the destruction of the records. Drury replied that he had been ordered by Sheehan and Mr. Que, and he did so despite his personal “angst and fear” about doing it. Drury also told Dr. Eaton he was “muzzled” by the board and building management. Neither Bill Wolf nor Dan Sheehan said they ordered the destruction of the ballots and proxies.

  “Why would anyone want to destroy the ballots, proxies and software program for one of the most important votes that WEI has ever held and a vote that was decided by fewer than 1% of total shares?” asked Eaton, in a memorandum circulated to owners.

  “It’s a second Watergate cover-up,” Olender fumed.

  On April 22, owners of Watergate East found a two-page letter in their mailboxes headlined: AN OUTRAGE HAS BEEN COMMITTED—OUR VOTING RECORDS DESTROYED! “We’re shocked to hear,” wrote six owners of Watergate East, “that the first action of our new [Watergate East] President was to order the destruction of our April 12 voting records.” Preserving records of the election, they wrote, constituted “elementary considerations of fairness and respect” for the owners of Watergate East as well as the voting process itself.

  The destruction of the paper and computer record of the vote has raised serious doubts on the very outcome of the vote. In light of these new circumstances, as the April 12 vote record has been irremediably destroyed, we have no other option than to request that a new vote be taken, without delay, at a special meeting of [Watergate East] members. We trust that you will join us in this request, irrespective of your vote on the sale of [Watergate East’s] properties, because we all have a common interest in preserving the integrity of the deliberation process by the [Watergate East] membership.

  On April 22, former board president William Condrell, in an open letter to residents of Watergate East, made note of the “disturbing” development. “Apparently,” Condrell wrote, “within a few days after the vote, the auditor, who had kept the voting records in his possession, destroyed them and did so in spite of questions being raised at the time from members concerned about the recording of their vote.” Condrell promised to seek a special meeting of the Watergate East board “to determine the full circumstances.”

  The next day, Dan Sheehan wrote to the owners of Watergate East. He had hoped that his first message to them would be “focused on reconciliation, reconstruction, and moving forward.” Instead, he was writing to them about the destruction of records. Sheehan declared “categorically and unequivocally” he did not order the destruction of the ballots. Nor did he order anyone else to tell Drury to destroy any ballots. Sheehan said his instructions were limited to declining requests to know “how certain apartments voted.” Sheehan wrote there was “no question” in his mind that the results of the April 12 election were final. He called the controversy around the destruction of ballot and other records a “red herring” and expressed his hope that Watergate residents could move on. “I know that this will not be the end of the issue,” Sheehan wrote, “and truly the only folks happy about this continuing are the owners of the small copy shop down on the plaza.”

  In response to Jack Olender’s pending request for the number of owners and apartments on each side of the Monument sale, Sheehan replied the board no longer had those records, and in any event the only relevant results of the April 12 membership vote were based on the number of shares, not on the number of apartments.

  Residents opposed to the conversion immediately began collecting signatures to demand another vote. One resident hung out in the lobby of Watergate East to corner neighbors as they returned from work. “Sour grapes,” sniffed Michael Darby. Enough signatures were gathered to force yet another vote, which the board scheduled for early June. To make sure there would be no accusations of ballot fraud, the board paid the League of Women Voters more than $1,500 to monitor the election.

  On April 29, 2004, the final day allowed for submitting comments to the District Zoning Commission, the Watergate East Committee Against Hotel Conversion to Co-op Apartments filed an eleven-page “rebuttal, closing remarks and submission” and a three-page “findings of fact,” each signed by Jack Olender, which argued that the destruction of the April 12 ballots required a “re-vote” by the owners, and that Bill Stein, representing Blackstone, had misled the zoning commission when he said no other luxury hotel operators were interested in the property. In response to an assertion by Monument that the Watergate Hotel was originally conceived as “an apartment-style hotel, contemplating stays of a month or more,” Olender argued that was irrelevant—the equivalent of asserting the hotel was conceived as “a rest and recreation stop for visiting Martians.”

  On May 10, 2004, at 6:30 P.M., Carol Mitten called the zoning commission to order. The commission, she said, must balance the impact of preserving existing amenities at the hotel against the changes sought by the developers. She said the developers, by offering to retain access to a restaurant and the Watergate Hotel health club, had retained two aspects of the property that seemed to be most important to current residents of the comple
x.

  Vice Chairman Anthony J. Hood said he was “perplexed” by the case. Opponents of the conversion to apartments, he said, had raised issues that made him “stop and think.” But the developer’s offer to provide $300,000 in affordable housing elsewhere in the District—in exchange for permission to build and sell $3 million apartments—was unacceptable. The developers should be forced to include affordable housing at the Watergate as a condition for converting the hotel.

  “I think we have to look at Washington in a broad context,” said Commissioner Kevin Hildebrand. “We are a tourist city and we want to attract the tourist market to Washington.” Hildebrand appeared to be leaning against the conversion.

  Commissioner John G. Parsons echoed Mitten’s observation about retaining access to the health club and restaurant. The fifth and final commissioner, Gregory Jeffries, remained silent.

  Mitten called for a vote.

  Hood voted against revising the Watergate’s original zoning to allow for the hotel conversion. Jeffries abstained. Hildebrand joined Mitten and Parsons in support, and the zoning change was approved by a vote of three to one.

  AS THE THIRD AND FINAL VOTE OF THE WATERGATE EAST membership on the conversion approached, Dan Sheehan said the $4.25 million offered by Monument could protect residents against future fee increases. But another resident, retired diplomat William S. Diedrich, said the loss of the hotel bar lounge would be tragic. “It’s a decent place to go have a $15 hamburger,” he said.

  Michael Darby was optimistic. The hotel conversion was a “done deal,” he told the Washington Post. He announced Lehman Brothers had agreed to be a major investor in his deal to buy the Watergate Hotel from Blackstone.

  On the night of June 9, hundreds of Watergate East residents once again filled the Monticello Room in the Watergate Hotel to cast their ballots, which were then collected, locked up and transported to the offices of the District of Columbia League of Women Voters. The next day, on June 10, 2004, the League of Women Voters announced the results: The Monument offer was voted down, by a margin of just 0.7 percent.