Norfolk's lease would pave way for construction of office building

NORFOLK

To ensure that a new office building is constructed, city leaders are set to agree today to spend about $2 million to lease new digs for its Human Services Department.

The seven-story Midtown Office Building, to be developed by Tivest Holdings LLC, would be located at Tidewater Drive and Virginia Beach Boulevard on the former site of a hotel demolished in 2002. City officials said it was a haven for drug dealers.

Tivest needed more office space leased in order to obtain financing for the $32.7 million project, Mayor Paul Fraim said. Banks and other lending institutions are hesitant to finance speculative office buildings, he said.

If the City Council approves the deal today as expected, the 180,500-square-foot office building would have 165,000 square feet already leased before construction begins. The city would lease about 60,000 square feet.

The agreement would increase the cost of housing the city's Human Services Department by about $2 million over seven years over rent the city is currently paying. But officials say the agreement could eventually be a break-even deal.

Developer Tivest Holdings LLC would pay $1.2 million for the land. The city had previously offered the land for free.

Tivest also agreed to an option to sell the city the 60,000 square feet of space in the future as a condominium at fair market value. Tivest would give the city a $1 million credit against rent paid for that purchase, according to documents provided by City Manager Regina V.K. Williams.

The council informally agreed to the deal, which amends a previous agreement with Tivest, two weeks ago behind closed doors.

Councilman Barclay C. Winn said even if the deal costs the city some money, it is worth it to bring African American development to the city and to move Human Services employees into new office space. The department is currently located in an office building on Monticello Avenue.

"We're going to be jump-starting development in an area that sorely needs it," he said.

Tivest is headed by Dwight Etheridge, a Norfolk native who grew up a few blocks from the site of the proposed building in the Tidewater Gardens public housing project.

The Southeastern Tidewater Opportunity Project, an anti-poverty agency funded largely with government money, would consolidate all of its offices, including its job-training facilities, into 100,000 square feet in the proposed office building. Tivest would move its

headquarters from Chesapeake into 5,000 square feet.

Fraim said the office building would bring 150 jobs to Norfolk from other cities and create $2.6 million in tax revenue over a decade.

The city has agreed to spend $500,000 to relocate utilities and provide a rebate of taxes paid to the city of $490,000 over the first five years of the project.

Tivest won out over Norfolk businessman Jim Baylor and former NFL star Bruce Smith, who both proposed constructing office buildings on the site.

Baylor owns the building Human Services currently leases on Monticello Avenue. The council agreed several months ago to extend its lease in Baylor's building for five years, but Williams never signed it. City leaders are currently negotiating a short-term lease with Baylor, she said.

Vice Mayor Anthony L. Burfoot said the Tivest building would be a better site for the anti-poverty agency and for Human Services.

"It's on the bus line and it's adjacent" to several public housing projects, he said. "It's an area where people need those core services."

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