Beset by woes, Norfolk condo owners left in lurch

NORFOLK

Bill Law bought his Harbor Walk condo for $525,000 near the height of the housing boom in 2005.

Today, the home is on the market for $379,900, and Law's phone isn't ringing with interested buyers, despite the three bedrooms, personal boat slip and picturesque view of Pretty Lake.

Law, a real estate agent and investor, purchased the property with intentions of living there for three years while the rest of the 237-unit project took shape, then selling.

"The pricing was supposed to be in the $700,000s for the later units," said Law, 39. "So naturally you would think that your unit you bought at $525,000, if you put it back on the market, you could easily get $600,000 or more."

But the vibrant East Ocean View community that developers envisioned six years ago has not materialized. To date, just 81 units have been built, and a series of hitches have plagued Harbor Walk. The most recent was the discovery in April that some condos were built with Chinese-made drywall, which homeowners say emits a corrosive gas that damages household electrical systems and may cause respiratory problems.

Then, in May, after three home-owners filed suit over the drywall, the Florida-based developer The Henin Group abandoned the project.

"It is a muddled mess," W. Randy Wright, the Norfolk City Council representative for that area, said of Harbor Walk. "Everybody's property is being devalued right now, whether they have the Chinese drywall or not."

Wright said the developer failed to deliver on its promise to finish the project, and now homeowners are left trying to figure out who's responsible for fixing Harbor Walk.

"To say I'm distraught is an understatement," Wright said. "No person would buy in a community that has so many dark clouds hanging over it."

In the open tracts reserved for future condos, weeds recently stood 5 feet high in places. Manhole covers protruded out of unfinished asphalt streets. One building clearly was vacant, abandoned by the homeowners after they learned that several units had been constructed with Chinese-made drywall. Nearly a dozen units are for sale, with prices ranging from $200,000 to $459,900.

Law listed his property more than year ago starting at $599,950. He knew he had his work cut out for him, offering a high-end condo in a housing market downturn. During the course of the year, he steadily lowered his asking price.

"It becomes one of those things out of curiosity to see how low you have to go before someone bites," Law said.

Harbor Walk was originally developed by Genesis Group, a firm led by Lyle G. Wermers of Virginia Beach-based Wermers Development. It was touted as a $50 million project that would help redevelop Ocean View into a community of upscale homes. Construction began in 2003, replacing a mobile home park that had long been the target of the city's redevelopment efforts.

By September 2006, the housing boom had started to soften and condo sales at Harbor Walk slowed. With less than half of the project complete, the developer proposed building smaller, more affordable units. The idea angered many of the residents who feared the less expensive units would hurt their home value, but construction never went forward.

The housing market continued to worsen in the final months of 2007, and Wermers gave up on Harbor Walk, handing the reins to The Henin Group, a Florida-based developer that planned to ramp up marketing efforts and move ahead with the less expensive units.

In January 2008, Jerome Henin, the president of The Henin Group, met with Councilman Wright to discuss his firm's plans.

"I was really pleased to hear they were planning to finish the development," Wright said.

Many residents were happy, too.

"We wanted to see development of the community continue," said homeowner Brian Hodson, 62. "They also came in and tried to address a lot of our current concerns, like the traffic that would race through the streets."

Henin persuaded the city to erect blockades to prevent cars from entering the community from an adjacent neighborhood.

Last summer, as Henin continued its efforts to appease residents and market its plans for new units, home-owner complaints began to grow about another problem: water damage.

Among those homeowners was Al Henry, who purchased his Harbor Walk condo in 2004. Henry and his wife, Mary Ann, had wanted to downsize after their children moved out. They sold their six-bedroom Edgewater home and purchased a four-bedroom condo at Harbor Walk for $500,000, moving in just in time to enjoy Thanksgiving dinner in their new unit.

Nearly two years later, after remnants of Hurricane Ernesto dumped heavy rains in the area, Henry, 66, noticed water accumulating inside his home. "There was apparently some sort of building flaw causing it to happen," he said.

He complained to the then-developer, Wermers, but the problem was not addressed.

By the middle of last year, Henin had hired contractors to rip out walls in some units and begin a restoration.

Then, Henin abandoned Harbor Walk in May, and Henry and other homeowners were left with the damage.

"It's a very nice community," Henry said. "And it was a great decision for us to move here, until all this stuff happened. I can't really say what the future holds, and we're concerned about it."

The biggest questions facing residents is who is responsible for paying for the repairs, said Tom Johnson, a resident and a member of the condo association's board of directors.

In a letter to Wright in May, The Henin Group said it no longer is responsible for Harbor Walk.

Henin's lawyer directed complaints about the Chinese drywall to Wermers Development.

Henin did not return calls made by The Virginian-Pilot.

Jeffrey Wermers, president of Wermers Development, said his company transferred ownership to Henin in 2007. He would not address concerns about Harbor Walk, either.

An attorney for the condo association is working with home-owners to try to determine responsibility and get problems fixed.

One thing homeowners were surprised to learn is that Henin paid contractors more than $170,000 from the condo association's coffers for the renovation work that took place last fall, according to Atkinson Management Group LLC, the firm hired to handle the day-to-day affairs of the condo association.

"Our first response is, 'Let's have our attorney find out where the money went, and let's find out what's wrong with our buildings and get them fixed,' " said Johnson, 62.

Henin also left town with an unpaid bill of about $93,000 in restoration work, according to Atkinson, which sent a letter last month to Harbor Walk Development LLC, the entity that, according to paperwork, owns the community. Atkinson has threatened legal action if the developer doesn't rectify the problems.

"The bottom line is that anything that was a construction defect that caused damage, the developer is responsible for it, and it should not have been paid for by the association," said Paul E. Thomas, the condo association's attorney.

Thomas said the association is giving the developer six months to address the concerns before filing suit.

In the meantime, homeowners at Harbor Walk are asking the City Council to offer assistance in finding a new developer who will finish the project, and, at the very least, send out city workers to mow the fields of weeds.

"We have a great place to live here, and most people love it," Johnson said. "But we have a developer who left us in the lurch with unfinished business."

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com