VIRGINIA BEACH
The price tag went up and so did the city's risk, but Virginia Beach is close to completing its five-year-plus effort to buy The Virginian-Pilot's property at Town Center.
The Virginia Beach City Council is scheduled to vote Tuesday on whether to spend $531,329 more than the $4.7 million it already approved to purchase the land and move the newspaper's staff into offices in the Westin Hotel & Residences.
The property has increased in value during the negotiations, according to city assessments. In July 2007, it was assessed at $2.24 million. It is currently assessed at $3.1 million.
"Hopefully, Tuesday we can pop a cork and celebrate," said Mark Wawner, the city's project manager for Town Center.
If approved, the deal will allow developer Armada Hoffler to start the next phase of Town Center. The company plans to build a 22-story office tower on the 1.3-acre property now occupied by The Pilot's Beacon office across Virginia Beach Boulevard from Pembroke Mall.
"We're excited to finally be at the doorstep," said Lou Haddad, the president and chief executive of Armada Hoffler.
The council initially voted to buy the property in July 2007, but the deal stalled over the costs of building out and furnishing The Pilot's space at the Westin. At that time, the Virginia Beach Development Authority planned to spend $945,000, but costs increased and the city agreed to pay an additional $531,329.
Landmark Media Enterprises LLC, which owns The Pilot, wanted a usable space, said Rusty Friddell, the company's general counsel.
"We started with an expectation that we would get a built-out facility to a certain standard," Friddell said. "It was never our responsibility to say how much that would cost."
To pay for the deal, the city will use $831,329 from the economic development incentive program and take out $4.26 million from the tax increment financing district account, Wawner said.
New real estate tax revenue generated by Town Center goes into the TIF fund and is used to pay off the city's debt service for improvements in the area. When Armada Hoffler gets ready to build the office tower, the company will buy the land and the city will get the TIF money back, Wawner said.
Under the initial deal, Armada Hoffler was going to take out a loan for the Development Authority to pay for the swap and move.
But the tightening credit market forced Armada Hoffler and the city to reconsider that plan, Haddad said.
"That kind of loan in today's market would be extremely pricey," Haddad said. "It doesn't make sense."
Virginia Beach officials expect Armada Hoffler to start construction on the office tower and buy the land soon after The Pilot's staff is moved into the Westin in March or April.
The city should get it s money back quickly, Wawner said.
"I don't think we'll get stuck with the land," Wawner said. "It's a critical piece of property. It's going to be a very, very valuable piece of property for the city to control."
Most of the other details of the deal have remained the same.
The paper will still get $1,635,000 in cash, $300,000 in moving expenses, and five dedicated parking spaces valued at $115,000.
Although The Pilot is for sale and many staffers have been moved out of the Beacon building this year, Friddell said, the company still thinks the deal will be worthwhile.
The paper stands to get better office space and about $1.7 million in cash, which is "good for our shareholders," Friddell said.
Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com
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Reason to Incent Special Projects
Most new commercial development is done the old fashioned way; that is, the developer pays for it. Period. And that is the way it should be. From a city and taxpayer perspective, however, other factors come into play. If public investment can stimulate and incent high quality development that would not take place if simple market forces were in play, then it may make sense to provide those incentives because of the public benefit. For example, left to market forces, the private sector at 31st Street would have produced another fun 'n the sun motel; no park, no public garage, no retail, no meeting nor convention space. Years ago the Urban Land Institute recommended a signature project there, and recommended public investment to bring a project that would create additional value. That is exactly what has happened, and this is the lens through which we should judge whether a TIF or other incentives should be used to create extra public value.
CC to Buy Beacon Bldg
I wish the V-P would conduct research on the percentage of TIF's VB has as compared to other cities with similar demographics. There are national organizations that have studied the over reliance of TIF's by localities and their budgetary impact.
TIF's do take money away from schools and other public services. Every time a new capital improvement project or other development project is mentioned, the first thing I hear out of any CC person's mouth is "We'll make it a TIF."
Great . . .
The city have a 22 million budget shortfall, may have to lay off city employees, can't even give a cost of living raise the its worker's, and they are going to shell out more money to buy property, what a great place to live and work. The city really needs to reevaluate the way they do business.
Economics 101 understated
Once a TIF is established it captures all new revenue from within its boundaries for the next 23 plus years depending on how much the TIF has expanded. The City should enlighten citizens and publish a time line that stipulates when the first real estate nickel would be returned to the General Fund? TIF revenues are retained in the area for other essential services – schools, parks,neighborhoods, libraries, and general government operations – frozen for more than two decades. The goal of the TIF was to bring in higher level jobs and shift the residential tax base which has retained a monumental tax burden of 87%.. The forecasts to increase per capita income and shift the tax base continues to head south. Jump starting a project is one thing but at some point the open market should take over and citizen subsidies should diminish and cease . The City and news coverage would be remiss if it failed to report on the economic impacts of the existing TIF within the immediate regional area as well as the other 29,000 small businesses within the City.
huh??
300 jobs from Elizabeth City?? What in the world are you talking about????
Econ 101
I think a few of you need to take a few economics classes. This is the sort of thing that happens in every metropolitan in America, it's normal for the city to help encourage development. It's even apart of its agenda. Commercial/financial jobs will become more and more monocentric as the population increases in this area. As such the value of land around town center will skyrocket. If the city council can bring 300 jobs, which are currently based in Elizabeth city and spread sporadically elsewhere in HR(Gateway Bank), into town center. Then virginia beach will reap its rewards of a shared labor pool, job specialization, highest and best land use, and yes tax revenue!
Total and complete nonsense.
Total and complete nonsense as well as a waste of money no matter what the source. If the project can not go forward under normal market forces, then the project is not meant to be at this time. Virginia Beach is crying poor mouth one day and the next it is spending 5 million. Seems like the old Council wants to force the issue before the new Council is seated. Virginia Beach needs to wait until the new Council members are seated and then take a vote. In the meantime, force Jim Spore to resign and table the vote for now.
Yesterday's Headlines reported $22 MILLION Shortfall
Yesterday we learn that the city is facing a possible $22 MILLION shortfall and city council is still considering the purchase of this land?? $ 5,231,329.00??? With the present state of our economy, does this make any sense??? Are there any responsible members of city council??? Let the developer, Armada Hoffler, buy the property!!!
Wait the Va Pilot Out
In another 3-4 years the new owners will be selling at fire sale prices. They will want to consolidate and cut expenses. And why does the City have to pay for Beacon offices in the Westin when the paper is laying off and selling off? What is worst is the paper staff is saying most of the current Beacon offices are vacant! What a waste of money. The paper is bleeding cash and the taxpayer has to bailout a billionaire who is selling out.
Budget Shortfall gone in one day?
Yesterday there was a big 20+ million budget shortfall and today we have the money for this purchase... You are either short in the budget or you are not... Seems to be more smoke and mirrors from Jim Spore & Co.
I'll bet the response from Mike will be "it's TIF Money so it isn't the same" but wait until services and employees come up for funding, then we'll be back to tens of millions in the hole again...
ghost-town
Had a friend stay @ the westin recently, said it was a ghost-town. This is a prime example of gluttonous real estate developers and brokers , co-conspiring with a city council broken to the whip by the real estate folks and a local paper beholden to those same rapacious forces. Guess whose turn it is to cash in now? Property was orig. assessed @ 2.2 mil and has increased to 3.1? Give me a break. Of course our leaders agreed to pay 4.7 mil and will now add on another half mil for good measure. The pilot is for sale and cutting jobs rapidly. Question: will any of this money help to create a single high paying job? VB taxpayers stand aside as the Landmark stockholders are coming through!
hooray !!
another successful looting of the VB city treasury! Appreciating real estate in a declining market! The value of the land is actually predicated upon a public private venture inflating it's value. Tell us Pilot what did it?? Was it the endorsement of the developers boy,willie sessoms or maybe your reluctance to tell the truth about VB "public private ventures" failures that do nothing more than enrich certain individuals?? Of course you're actually part of this deal, so we'll understand the silence..integrity is a lost cause....
Where is . . .
. . the "greedy developer" crowd? This is why developers need to get money from the city, because of the greedy landowners.