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In 1802, Congress granted the citizenry of the District of Columbia limited local government and James Hoban served on the twelve-member city council for the next two decades, except for the years during which he was rebuilding the White House.

Founder of Grand Lodge Number One of the Masonic Order, captain of a local militia company, a city councilman, and successful real estate developer, Hoban also initiated a private fund to employ schoolteachers, raise a volunteer fire brigade, and assist Irish construction workers in need.

What happened to James Hoban's first wife we do not know. There is no evidence of her being in Washington, D.C. and slight evidence of her in Charleston, and as such historians have assumed she died in Charleston. In 1799, James Hoban married Susana Sewall, sister of Clement Sewall, a Revolutionary War veteran and landholder of St. Mary's County, Maryland. With Susana he raised a family of ten children. Clement died in infancy, and his teenage daughters Helen and Catherine and wife Susana all died within the year of 1822-23. Edward and Francis became officers in the United States Navy, Henry a Jesuit priest, and James Jr. a noted orator and a respected attorney.

James Hoban died in 1831, leaving a substantial estate of both city and farm property and assets worth more than $60,000 (approximately $1.4 million in 2006). In 1828, Hoban signed a petition calling for the radial abolition of slavery in the District of Columbia. However, he stipulated in his will that his slaves were to be sold in the District of Columbia to prevent their relocation to plantations.