NORFOLK
The developer of Granby Tower has filed legal documents claiming he does not owe anything to more than a dozen contractors who have filed more than $20 million of liens against him.
And he's behind on the property's taxes by thousands of dollars.
In a brief filed in Norfolk Circuit Court, Buddy Gadams, the president and chief executive officer of Marathon Development Group, states that he has never had financing for the $180 million condominium project. Turner Construction and nearly a dozen subcontractors want Gadams to repay them for work they did on the downtown project, which would be home to the city's tallest building.
A brief filed by Virginia Beach attorney Jonathan Hauser on behalf of Gadams stipulates that there "has not been any funding on any construction loan." Hauser said the contract with Turner Construction states that Gadams and his partners are not liable for construction costs until a loan is finalized.
A copy of the contract, also filed in court, states that Gadams "shall have no obligation or liability" to Turner "for any costs for the construction phase under this agreement unless such construction loan closing is completed."
Hauser, who specializes in the litigation of mechanics liens, said the clause is unusual.
"I haven't seen that in the context of my practice" in a construction contract, Hauser said.
The group headed by Gadams, 515 Granby LLC, also owes the city nearly $33,000 in real estate taxes on the Granby Tower site, according to records at the Norfolk treasurer's office.
Some of the 100 or so people who have put down deposits for condominiums also have started to ask for their money to be returned. In a letter mailed to prospective homeowners in May, Gadams said he might return deposits if he can't line up financing by late July.
Lenders elsewhere also are moving to foreclose on loans the developer and his partners took out against properties in Atlantic Beach, S.C. There, the developers owe about $50,000 in delinquent property taxes.
Reached by phone on Thursday, Gadams declined to comment. Turner Construction officials also would not comment.
Work began on Granby Tower last July, with construction workers pounding hundreds of 90-foot piles into the earth. In September, however, work halted after Gadams said he lost financing.
The 34-story project, which would have had 302 condominium and townhouse units, was proposed in 2004. It was delayed for nearly a year by threats from the federal government to take the site for a courthouse expansion.
By the time the project was designed, problems in the credit markets had begun. In spite of a $22 million subsidy from the city, which would not have been paid until the project was nearly finished, Gadams struggled to close on loans.
He initially said he had a verbal commitment from Stonington Capital to finance the project, and Stonington officials participated in the project's groundbreaking.
However, when contacted last September, a Stonington spokesman denied the company ever agreed to finance Granby Tower.
Gadams has since worked diligently to obtain financing, city officials said.
In February, during the State of the City address, Mayor Paul Fraim announced that Gadams and a group of new investors "reached agreement in principle with new lenders."
The site, located at Granby Street and Brambleton Avenue, now sits idle.
For the time being, Fraim said, the city still supports Gadams. "As of last week, there was some life in this project," he said of discussions he had with Gadams.
"This project is important to the city," Fraim said. "We're prepared to stay the course for the immediate future."
Vice Mayor Anthony L. Burfoot said city leaders need to have discussions with Gadams.
The property is a strategic site for the city because it sits adjacent to where light rail is being constructed, Burfoot said. It also is within yards of three new downtown projects - the $170 million Wachovia Center office tower, a Residence Inn by Marriott hotel and the Belmont at Freemason, a $42 million apartment complex.
"At the same time, I want to give him every opportunity," Burfoot said. "We've given others six or seven years to get deals done, so I don't want to act in haste."
Councilman Barclay C. Winn said that if the project is not built, Gadams will lose millions in spite of his contract with Turner because he's already paid to design and market the project.
Gadams has been relentless in pursuing financing, Winn said.
"But my gut tells me the project is just about done."
Staff writers Michael McNarney and Jaedda Armstrong contributed to this report.
Harry Minium, (757) 446-2371, harry.minium@pilotonline.com
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Movnup ... Wishful, sinful
Your point has no merit under the circumstances. Seemingly, to have been a scam to pull over on the federal government, The proportion of the failure by the old guard simply put, shows the shear provincial nature of the city and the so-called Norfolk elite who essentially are base and without skill and certainly ethics. There is simply nothing redeeming about anything in regards to this situation. There is no other side of merit, this is an example of the absolute disproportions and criminal fraud committed within city government and the old boys network
a lesson not learned
This will be another lesson our Mayor, City Manager and Council will not learn. That's the sad part!
Laughable!
The project never had backing? So he lied to they norfolk mayor and council backed him financially. Wasn't norfolk going to kick in around $20 million? Seems the norfolk council has been taking development advice from VB development controlled council. Close your eyes, no due diligence, and toss taxpayer money at it.
WHy keep touting the real-estate decline
This project seems to have had issue way prior to the real-estate downfall.
The trouble was actualized when the intention to impose eminent domain by the federal government was not furthered when they did not push what they said they would do with the property far before Gaddams purchased it. This is not hard to see insofar as it is clear if now we are to believe Gaddams, "The project never had backing." Then what the city and Gaddams were trying accomplish was to claim luxury condominiums would be built and the value be far more then a parking lot. The Federal government walked away and then the trouble began, it is just that the city council was so far vested and the behind the scene action was money changing hands, the kind that allow a city to work for an individuals benefit over the citizens who they were supposed to represent. Shameful all the way around
Granby Tower
I worked for Jonathan Corporation in the 80's so I know what it is like not getting paid but I do agree with Jason.
I am not sure if you had a chance to tour the Granby Tower model office but I am sure if you did, you would agree this would be a great thing for Norfolk. I am a Norfolk native who moved to Virginia Beach in my early 20's because I felt Norfolk was going downhill.
In four years, my high school went from 1 hall monitor to 6 security officers waving metal detectors. If the police were called, half the time they never showed. The housing was turn of the century or World War II. Service in the restaurants was poor in most cases except for a few. Many areas are drab. The direction of the city at the time was not up.
I still love many things about Norfolk and I am hopeful that one day it can be as great as I have envisioned it in my teens. Granby Tower would be a step in the right direction. What Norfolk needs is tax
A Shame
I hope the developer gets fried. I don't care what the contract says, Whatever happened to fair business dealings? These people (subcontractors & contractors) provided work. They should be paid for it.
In bed with B Winn
This is the kind of snake your developer loving city councilman says he is "committed" to continue passing our tax dollars to. The excuse about the courthouse hold up is a farce. That should have been the best luck Mr. Gadamns ever had. He had a chance to see the RE market spiraling into the ground and could have pulled out. Of course, he had already hung the taxpayers and everyone else with the risk so why pull out? Just think if this thing had started earlier. He would be on the hook for the loans with a vacant building instead of an empty hole, no loans, and able to pass the buck. Good job Barclay!!! Look at all the tax revenue this is generating!! What will you have the backs of the taxpayers financing next? Any of your developer buddies or girlfriends have a scheme they need us to fund? And Fraim......where are your "500 wealthy people" who want to live across from the gay bars and Greyhound station at
SURPRISE, SURPRISE, SURPRISE
"SURPRISE, SURPRISE, SURPRISE" Gomer Pyle, 1969
Move the courts
The courts should be in the most crime ridden part of the city. That would be convenient. The accused criminals could roll out of bed, walk across the street and go to court.
He does has a point
The contract does say that payment for the work is dependent on getting the financing. If you sign that contract, you either have to not start the work until the financing is done or accept the risk you might not get paid.
On the other hand, if he lied about having a loan agreement in order to keep the contractors working, that could be considered fraud.
Complaints Ira
Federal courts or any federal buildings should be in locations for easy access for all the people. If you move them to less desirable land, that would make them less accessable. I've heard many complaints from people who have to do federal jury duty about the 'long drive' from Virginia Beach or Suffolk to get to the Federal Court house in Norfolk as it is. Downtown Norfolk is as a good a place for it as any. We shouldn't just leave prime ground strictly to the developers.
Where did the idea come up to place court buildings on ...
prime peices of land?
Back in the days before cars, etc., such buildings needed to be centralized and accessible to citizens.
Say what?
"Besides, a nice Federal Court building wouldn't be so bad, and it might actually be useful to the locals."
First off, I do not see how a new courthouse is useful to citizens. Most of us avoid entering them. Where did the idea come up to place court buildings on prime pieces of land? It takes taxes to build it, and when it is done, the building comes off of the tax rolls. Why should citizens bear the cost so that judges and lawyers have a short walk for lunch? The court should be placed on Park or something.
I wonder....
Did Mike Barrett have any hands in this project? Just a thought ;-)
We keep re-electing them!
As long as we keep re-electing the same people to the Norfolk City Council, we will keep getting this type of "leadership!" My, how forgetful we all become on election day!
taken out of context and just in time...
Mr. Gadams and his attorneys are filing these documents in order to dodge the mechanics liens that are coming due - all the contractors - including Turner - have to file suit within 6 months after their initial filing of liens, unless the lien is satisfied. Smoke and Mirrors - 515 Granby owes this money to Turner and the subcontractors that did the initial work on the project and he knows it. Shame on Buddy - many people know how Turner has stood by him after years of negotiations then only to start in good faith and to be stopped several months into the work - sad situation for many - again - Turner is not to blame (it's not their first rodeo, seriously) - but many local subcontractors have been put in serious financial binds due to his "lack/loss of financing."
democrats
It's the democrats fault.
TAXES!
Oh well I guess I can expect a raise in property and sales tax to cover this fiasco!
I know, perhaps they should leave the big hole so they will have a place to bury all the light rail cars in 5 years!
Would this be the same Wachovia Bank
That the feds were taking a serious look at yesterday, that appears to be ready to follow Indymac into oblivion? Just one of those things that make you go hmmm.
front page -
i can hardly believe that the pilot didn't bury this revelation elsewhere in the paper. Wow. I am sorry for this failure to build the tower, it was just as feasible and reasonable as the towne center Westin. I can't fathom the future for this site, the current economic situation in the whole country stymies most new developments. Let's not let this set back pall norfolk's downtown and it's bright future. God speed Wachovia Center!
Lucas
Why doesnt Sen. Lucas build her fiasco in this spot? then we can keep all the failures/ripoffs in one easy to recognize spot. Heck, she already has a host of investors willing to put down $1,500 a piece, and almost has the rest of us to put up the other millions her project needs.
A WINN-WINN for everybody
Oh good grief.
Like we needed more luxury condos and townhouses anyways. Mr. Gaddams should just pay the contractors for their work and be done with it. Or perhaps the city could pay the contractors, and then do a court case against Gaddams. Our city seems to always be willing to give the developers 'a chance', so why not give the construction guys a chance? Then at least there would only have to be ONE court case clogging up our courts and costing time and money. Yes, Turner Construction should have read that contract with a magnifying glass. That 'unusual' clause was in the fine fine print. People should never just assume a contract is standard, just because it should be. Well...let the Federal Court have the freaking sight. The piles are already driven so it won't cost them as much! :) Besides, a nice Federal Court building wouldn't be so bad, and it might actually be useful to the locals.
Due Diligence
Before getting in bed with Mr. Gadams, did the city do a little bit of sniffing around to see if he was legit? Seems that his other troubles in South Carolina and Florida would have been pretty easy to ferret out. I can't believe this guy has even the semblance of a legitimate reputation -- but Norfolk committed wholeheartedly to him. Just another example of ridiculous city leadership in action. Every single day, something is revealed about these jokers that isn't very flattering. When the average man on the street has enough common sense to avoid the deals that our "leaders" make every day, that should signal to every voter that it's time to CLEAN HOUSE COMPLETELY! Norfolk and VB both need leadership overhaul. SPARE NO ONE.
Continued from other message
as was reported in pilotonline then they should be responsible.
Concerning the Granby Tower Project; we were one of the first companies on site. Again we found Turner Construction to be very organized and knowledgeable. We did have several start dates that were pushed back. I was told that Turner was waiting for contracts to be signed so that I could be released to start. I was told to start, completed our work and was paid in full. Turner Construction is one of the largest general contractors in the US. I would be very surprised is the technicality that was quoted on pilotonline was missed by their counsel. I am confident that Turner lost a great deal of money on this project as they opened an office next to the jobsite, moved much of their staff from the convention center to Granby Towers, and had a lot of money is start up costs
The majority of the contracts that subcontracting firm’s sign with Ge
Norfolk Government's Judgement
This is another fine example of the type of people the members of Norfolk's Government choose to ally themselves with.
Give these people millions in incentives to build luxery condos while the citizens of Norfolk struggle to make ends meet.
Meanwhile let us not forget the much hoped for Third Anchor for MacArthur Mall has not materialized and the Dollar Store continues to do well there. Oh, and the taxpayers in Norfolk still hold the note on the Mall, don't they? Since My home heating oil bill went up 95% I know that shot a big chunk of my disposable income. I don't go to MacArthur Mall anymore.
It's time those who govern out fair city start waking up to what life is like for us average citizens and stop following these Pied Piper developers who know how to play them like a fiddle.
where is the money
these contractor who did the work should get paid by turner and let turner get it back from the city...is this the same contractor(turner) that owes va beach a million dollars for being late on the convention center.IF YOU PLAY YOU PAY so brake out that wallet turner construction and pay what you owe to our citys and contractors.rich getting richer,poor getting poorer you sould be ashamed
Pave Paradice and put up a parking lot
They tore down Mr. Dogs for this hole in the ground?
Turner Construction
My company was a subcontractor for Turner Construction on both the Granby Towers Project and the Virginia Beach Convention Center Project.
My first comment is about the convention center and the cities desire to hold back $1,000,000.00 in back charges. I was told at the beginning of the project that Turner gave the city a firm fixed price to build the building with a hard completion date. I was told that if the project came in under budget that Turner would be allowed to keep any shortfall and conversely if the project costs went over budget that Turner would have to pay the additional amount. With this said – I never saw the contract that Turner had with the city so I can’t confirm this statement. I will say that I found Turner Construction very organized, knowledgeable and determined to get the job done efficiently. My contract was reduced by over 30% because some custom manufactured items in
This Buds for you!
SO what happen, Buddy, to the promises this was going to happen (when any idiot could know differently)? Then we have Fraim and friends STILL believing there is life in this project? They'd do the City more of a service if they would consult the city attorney on how to proceed. Yet another good decision by the incompetent city council; thanks!
Listen To City Council
Councilman Winn's comments hit the nail on the head. Even though many pro-Norfolk development folks would like to see this project happen - it does not look likely. With over $33,000. in back taxes and no financing lined up (not mentioning the numerous liens), pragmatic city fathers must be proactive and generate some deadlines. We can't have a huge hole in the ground forever!