Skyland.

A new deal between Safeway and the District government will clear a major hurdle for the long-delayed $265 million Skyland Town Center project to move forward, Mayor Muriel Bowser announced today.

The project was a centerpiece for former mayor and former Ward 7 Councilmember Vincent Gray, who went so far as to demolish a wall at the site. “Folks have been waiting for three decades for something to be done at Skyland,” Gray said at a 2014 groundbreaking.

When Wal-Mart threatened to cancel plans for three stores, including Skyland, over the Large Retailer Accountability Act, Gray vetoed the minimum wage bill and Wal-Mart said the plans would move forward. At the groundbreaking last March, a Wal-Mart representative said the company was “pleased to be the anchor” of the shopping center, but a lease was not actually signed until December of 2014.

Even with the lease in hand, a long-standing city covenant with Safeway stood in the way. The Washington Business Journal explains:

The final hurdle centered around a nearly two decade old restrictive covenant, held by Safeway, that limited competition around its store at 2845 Alabama Ave. SE. While the Skyland Wal-Mart was purposefully located outside of the restrictive zone, the Wal-Mart parking lot was not. And Wal-Mart’s legal team was concerned that Safeway could launch a court challenge.

In early June, the District used its eminent domain power to condemn the covenant, and Safeway had a decision to make: Let it go, challenge the District’s valuation of the covenant (it was worth nothing, per D.C.), or fight in court, potentially scuttling Skyland entirely. The two sides ultimately talked it out and reached what Kenner called a “good deal.”

Bowser reached a deal to pay Safeway $3.6 million over four years to release the covenant, she announced this afternoon.

“With this agreement, we will bring much-needed amenities to an area that has long been underserved, put hundreds of District residents to work, and create more pathways to the middle class,” Bowser said.

The new agreement comes on top of nearly $60 million of city investments in the project, which include land acquisition, tenant relocation, property management, and legal fees.

Once it is complete, the Skyland Town Center at 2650 Naylor Road SE will be the first pedestrian-oriented mixed-use project in Ward 7 or 8. The administration hopes it will help catalyze economic growth in an area that sorely needs it. They estimate that the project will bring 300 construction and 300 permanent jobs and nearly $65 million in sales and real-property taxes to the District over 10 years. It will also create approximately 450-500 residential units, nearly 150 of which will be affordable, according to the administration.

Construction is slated to begin later this month, and the project’s first phase is scheduled to be done in mid-2018.

“We have all worked so hard, and will continue to work hard, until Skyland is complete,” said Councilmember Yvette Alexander. “This is a major victory for Ward 7.”