Granby Tower should refund deposits, Norfolk leaders say

NORFOLK

In a sign that they have given up on a major downtown project, a majority of the City Council says it's time for developer Buddy Gadams to return tens of millions of dollars to those who reserved condominiums at Granby Tower.

"In light of this economy, I would certainly think it's time to refund the deposits," Councilman Barclay C. Winn said. "It's not really city business. This is a private development. But I personally think it's time to let these people move on."

Work halted nearly 14 months ago on Granby Tower when Gadams lost his financing. The $180 million development would have been downtown's tallest building. It was to include more than 300 condominiums and retail and office space.

Before Turner Construction began work on the project in June 2007, Gadams said that he had deposits for about 40 percent of the condos. Construction ceased on Sept. 18, 2007, after he lost his financing.

City officials said Gadams has worked hard in the past year to find new loans for the project. But as housing prices have fallen, the economy has worsened and obtaining financing has become more difficult, city officials have begun to doubt that the project can be saved.

"The way financing has tightened up, I don't see how this project can go forward," Councilman W. Randy Wright said.

"I'm sure Buddy has lost millions of dollars, but those deposits need to be returned to those people."

Wright acknowledges that Gadams has no legal obligation to listen to council members. "But if he wants to do anything in the city in the future, he needs to keep faith with the council," Wright said.

Gadams responded to a phone call with an e-mail saying he and his fellow investors "remain committed to building Granby Tower."

"We are confident that one of the investor/lenders we are working with will close our deal soon," he wrote. "Granby Tower is a very viable project even in a tough global credit market."

Mayor Paul Fraim said several deposit holders have written him to ask for his help in getting their money back. Some paid their deposits more than three years ago.

So far, Fraim has not intervened.

Gadams' company, Marathon Development, has been telling deposit holders that they have binding contracts and that the project eventually will be built.

At least four deposit holders have taken their refund requests to court. Two lawsuits, filed by Pieter Reidy of Virginia Beach and Jon and Jennifer Crockford of Norfolk, were settled out of court. No terms were disclosed.

A third was filed during the summer by Paul, Barbara and Peter Walker of Norfolk. Their attorney, Chester Smith of Virginia Beach, did not return phone calls.

Judy B. Newsome recently filed suit in Norfolk Circuit Court against Granby Tower, seeking the return of her $33,890 deposit for a $338,900 condominium. Her attorney, Richard Shurtz of Virginia Beach, could not be reached for comment.

However, Shurtz submitted a letter to the court from R. Craig Burns, a vice president in Gadams' development company, in which Burns wrote: "Please note that the purchase agreement executed by Ms. Newsome is a binding contract which the seller will vigorously defend if necessary."

Steven Carter, a naval officer from Annapolis who put $70,000 down for a condo now says he wants the deposit returned but doesn't want to hire an attorney to get it. But without that money, he says, he is unable to purchase another home.

Given the drop in condominium prices, Carter says he is not sure he wants a condo in Granby Tower at the price he agreed to.

Vice Mayor Anthony L. Burfoot said many deposit holders would probably buy in other downtown locations if Gadams released them from their contracts.

"I think a lot of them would look at Harbor Heights," he said of a downtown Norfolk high-rise development in which New York Mets star David Wright owns a condo. "We have other units vacant down there. This would help fill them."

Fraim points out that Granby Tower is a private development that to date has not received any city subsidy, adding, "There will come a moment, and I'm not sure when that will be, when we will try to make sure everyone is made whole, in the event this project doesn't come together."

Councilmen Don Williams and Paul R. Riddick cautioned against too much pressure from the city.

"I don't believe we should tell Buddy how to run his business," Riddick said. "Sometimes I believe government is too intrusive."

Williams agreed but added: "I think the city should express to the developer our unhappiness on his actions regarding the deposits."

Burfoot said, regardless, the city needs to press Gadams to begin clearing up the Granby Tower site. Located at Granby Street and Brambleton Avenue, it has two large holes filled with water.

"The reality is, he shouldn't reasonably expect to have that hole in the ground for the next two years," he said. "That's just not acceptable."

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com