Even while politicians added pressure to move forward with the project, City Hall and housing department staff kept asking questions. At one point, Frank noted that the Hoop City business model seemed to rely on optimistic membership figures. "Your proforma depends on 4,200 [gym] memberships paying $3.8 million," Frank wrote in February 2007. "The Druid Hill YMCA is about the same size and has just over 2,000 memberships."
Then-Assistant Housing Commissioner Michael Bainum assessed progress on the project in February 2007 and wrote a memo to City Hall: "The City needs to be mindful that it is effectively subsidizing a private fitness club. There may be future policy implications as a result of this transaction."
City attorneys approved a deal that would give Lipscomb and Ambridge the property for $1, giving them the site control they needed to go to banks for loans. The deal included a provision that would not allow the title for the property to be transferred until predevelopment work was done using city and state funds, Graziano said.
On Nov. 14, 2007, the city's Board of Estimates approved the deal. Dixon, a member of the board, voted for the measure.
But it never closed. Two weeks after the vote, the state prosecutor's office searched Lipscomb's offices looking for documents related to a number of projects, including 2101 E. Biddle St.
In the affidavit for that search and seizure warrant, the state prosecutor wrote that in December 2003 Lipscomb gave Dixon a $2,000 gift certificate for a city furrier, which she used to purchase a Persian lamb coat. Dixon never listed the coat on her city ethics form, although as council president she was required to report gifts from people who do business before the city.
The two have said they had a brief personal relationship in late 2003 to 2004, and both have denied that the relationship on any bearing on their professional roles.
Gerard P. Martin, Lipscomb's attorney, said that there were no criminal misdeeds connected to the Biddle Street project - or any others - and that he has no idea why the state prosecutor's office is interested in his client.
Martin said the failure of the project was due to increasing costs and not related to the state prosecutor's investigation. Other former housing officials interviewed for this article agreed. But housing officials said that the developers' interest in the project waned around this time.
