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City moved forward with Dewberry study despite concerns from officials

Charlottesville moved forward last year with a plan to conduct a structural integrity study of the incomplete Dewberry building — once known as the Landmark Hotel — despite an assertion from the head of the development office, backed by the city engineer, that it was a pointless waste of money.

Meanwhile, officials with the company say they have no interest in letting the city on the property for that assessment.

The standoff indicates that the city is interested in taking action on the hulking skeleton on the Downtown Mall — now known as Dewberry Living — while the owners want to let the market decide, leaving it as it is: vacant, unfinished and exposed to the elements since construction halted in 2008.

Emails show that at least three officials ignored Neighborhood Development Services Director Alex Ikefuna’s assertion that the assessment was pointless, a view that the city’s engineer expressed to Ikefuna.

The city wants to use the study as the basis for a legal action on the property.

City officials and Kimley-Horn visited the site in early October and noted that the building could be structurally sound because of its concrete frame, according to one of Ikefuna’s emails.

In an email to Deputy City Manager Paul Oberdorfer, Assistant City Attorney Sebastian Waisman, and Interim Public Works Director Marty Silman, Ikefuna wrote that “it is not cost-efficient for us to undertake the structural integrity analysis.” However, he still advocated for using eminent domain to claim the structure.

City engineer Jack Dawson, in an email to Ikefuna, also indicated that the study wouldn’t be worth the money because it likely wouldn’t “yield conclusive results that the building is structurally unsound.”

Despite Ikefuna’s assertion, Oberdorfer told him to proceed with a contract in late October.

The Daily Progress obtained hundreds of emails between city officials about the long-languishing structure on Charlottesville’s Downtown Mall through a request under the Virginia Freedom of Information Act.

The request produced documents that were provided last month to attorney Jason Hicks of Womble Bond Dickinson LLP, who filed a FOIA request six days after The Progress published a story on the city’s plans to conduct a structural integrity assessment of the building.

Hicks requested communications from several departments and among elected officials referring to the property, complaints about the structure and other mentions of the property.

The documents, some of which are partially redacted or withheld due to attorney-client privilege and criminal investigative exemptions, show that Charlottesville entered a contract to study the building’s integrity in November, but hasn’t moved forward because the owner and his representatives haven’t responded to requests to enter the property.

If the assessment ever occurs and it finds the structure unsound, the city could begin taking steps toward demolishing it under the blight ordinance.

The building is owned by Dewberry Capital, a company led by John Dewberry, a former football player and real estate developer. Dewberry says he is now planning luxury apartments for the structure, which was originally developed by CNet founder Halsey Minor as a hotel.

Reached by phone, Hicks declined to comment on the request or say if he’s been retained by Dewberry.

The Progress planned to work with city spokesman Brian Wheeler to conduct interviews with Ikefuna, Oberdorfer, Dawson, Economic Development Director Chris Engel and City Manager Tarron Richardson.

However, after consulting with top city officials, Wheeler sent a statement last month that said the city wants to “be certain that the building skeleton is structurally sound and in good condition,” officials are continuing efforts to work with Dewberry on the study. He said the city would have no further comment.

Given a second chance to comment, the city declined.

Dewberry did not return multiple requests for comment.

However, in a February interview, Lockie Brown, vice president of design for StudioDewberry, cited a 2017 structural report commissioned by the company that found “no issues, no design flaws, no anything.”

“We’re just not inclined to let them on the property,” Brown said of city officials. “It’s not needed. It’s the work we provided them in 2017.”

Structural report

After receiving several complaints throughout 2019, the city on Nov. 1 entered an $8,027 contract with Kimley-Horn to conduct a structural integrity assessment of the building. That same day, the city sent a certified letter to Dewberry’s attorney, David Groce, outlining issues with the property and requesting access to the building for the assessment.

After officials found out that Groce no longer worked with the company and did not receive a response from the November letter, the city sent a certified letter in December that was signed for and accepted.

The report would be coupled with a decision from the city attorney’s office about options to tackle the issue under the city’s blight ordinance or through eminent domain, according to the emails.

The blight ordinance follows state code requirements, which says a property must endanger the public’s “health, safety or welfare” by being “dilapidated, deteriorated or violat[ing] minimum health and safety standards.”

If the building were determined a blight or nuisance, the city could tear it down and bill the owner for the work.

Because the building isn’t in the way of a road or public utility project, the city could only seize the property through eminent domain under the parameters of the blight ordinance.

If the city did take the property, it would be required to pay fair market value for it. It was assessed at $7.4 million for tax purposes this year.

In August, in response to an inquiry from the Progress, Wheeler asked city staff for updates on the building. Ikefuna, who will be demoted this year under a department reorganization, responded that the city needs to seize the property through eminent domain.

“The City needs to take legal action on the property owner,” Ikefuna wrote. “This is an unpleasant eyesore on the downtown skyline. I think we have reached a point on this property where a major mitigation action needs to be considered.”

However, although Ikefuna wanted to “aggressively” deal with the building, by October he and Dawson were saying that conducting a study of the structure was not worth it.

The documents also include a copy of a structural condition report completed by KSi Structural Engineers in 2017.

Dewberry hired the firm to study the building ahead of a planned tax incentive deal and used it to say that the structure was sound.

The report indicates that engineers did a limited walk through and that “further investigation” of support structures was necessary. It does not appear any further study was conducted.

Last month, Dawson wrote in an email to Wheeler that Kimley-Horn was “on hold” until mid-January while the city attorney’s office mulled next steps. Wheeler confirmed that the firm remains on hold.

‘So many rats’ it looked like the ground was moving’

The emails also detail several complaints about the building over the past four years, including falling debris that damaged the neighboring CVS Pharmacy, and several graffiti complaints.

In 2018, Dewberry was notified that the structure violated building code because some boards used to close up the ground floor were missing. Rats had chewed holes through others.

Later that year, Matt Fichter, the city’s property maintenance and housing inspector, wrote a vivid email about the “rat problem.”

Fichter wrote that police officers entered the building and found a “serious rat problem” and homeless people living there. It is unclear why officers entered the building.

Officers apparently obtained surveillance footage of rodents coming out of the building and said there were “so many rats it looked like the ground was moving.” Other residents have mentioned that rats pour out of the building in the mornings.

Fichter wrote that he notified Dewberry’s attorney about the problem and the attorney “took issue” with the police entering the building. Fichter indicated that “at this time as far as I know we aren’t authorized to enter the building.”

In January 2019, Wheeler emailed an NBC29 reporter that there was no new public safety concern, but throughout last year city staff received several complaints about rats, debris, overgrown vegetation and broken panels.

Joan Fenton, chairwoman of the Downtown Business Association, said that it “behooves everybody to know that the building is safe.”

“I would want to know not even just as a business person, but somebody who walks by there everyday,” she said.

Parking lease

The emails also show that city officials didn’t want to extend a parking agreement because Dewberry didn’t have new plans for the project.

In January 2019, Dewberry emailed city officials and said he was planning a luxury apartment complex, which he initially named the Laramore. He called it a Dewberry Living project, the name given to his luxury apartment complexes. The complex’s name was eventually changed to Dewberry Living.

“The good news for city is size/scope of project will provide a significant boost to property tax roll … as well as sales tax rolls from the restaurants/retailers we will have on the 2 lobby levels as well as the rooftop venue,” Dewberry wrote.

Brown, of SocialDewberry, said the company is “still running economic models,” but a high-end apartment complex, rather than a hotel, “seems to make sense right now.”

”We don’t believe the Charlottesville market is the best market for us in terms of a hotel,” he said.

Brown said the units would be rentals, but wouldn’t specify the planned size or price of units.

A Dewberry complex outside of Charleston, South Carolina, lists studio, one- and two-bedroom apartments, with rents ranging from $1,250 to $2,155.

As part of his new vision for the property, Dewberry wanted to extend a parking agreement that guaranteed 75 spots in the Water Street parking garage.

Dewberry wanted to extend the termination date to April 2020 and start date to Jan. 1, 2021.

“We do want to do the project. We like Charlottesville. We think we can add value to the Mall,” Brown said. “It’s not going to do anybody any good if we can’t put anything out there that can’t be successful.”

Engel appears to have spoken with Groce about the parking arrangement and received a formal proposal for terms on Jan. 24, 2019.

“[F]ollowing the City’s reversal on its commitment to provide annual grants in connection with the development of our property … we have been evaluating various options,” Groce wrote.

Engel emailed Dewberry in February 2019 and said that any changes to the agreement would require council approval. Apparently, Dewberry asked to take it before the council, but city staff thought that wasn’t the right call.

“Without a clear plan of development and a realistic sense of timing we do not feel that this approach would be successful,” Engel wrote, advising Dewberry to cancel the agreement and begin talks when a development plan is confirmed.

History of troubles

The building, which is almost old enough to attend high school, has a long, rocky history of financial troubles and legal imbroglios that have irked city officials.

Entrepreneur Halsey Minor kicked off construction in March 2008, but a few months later said the project was on hold because of financial issues. By 2009, the project was neck deep in legal battles.

Dewberry purchased the building in a 2012 auction for $6.5 million, two years after Minor’s hotel business filed for bankruptcy.

Over the next four years, it was once declared a blight and the City Council explored an action plan for condemning it.

The city proposed an incentive package for construction in 2017 that provided more than $1 million in tax breaks for the property while requiring at least $20 million investment and substantial construction by fall 2020.

The framework for the deal was approved in March 2017, but nine months later a divided council voted it down.

Brown said that Dewberry has turned down “several offers” of $15 million for the property because he wants to build in the city.

It’s unclear what will happen next. The city could acquire an administrative inspection warrant to enter the property without Dewberry’s permission.

Even though the BAR approved four additional stories to the property in 2018, the certificate of appropriateness expired in September and the building permit also has expired, therefore Dewberry cannot conduct any work without city approval.

Brown said city officials have used the property as a political football.

“You have different regimes that have come in and they always seem to want to use our project as a catalyst for their platform, but nothing seems to really push forward in a positive way,” he said. “They’re not really coming back to us with any real positive ideas or influences it has been what have we not done or what are we not doing.”

Brown didn’t have an estimated timeline for construction.

“It’s all about the economy right now,” he said. “Construction prices are doing nothing but going up and it makes for a tough economic model when you’re not getting any help.”

Fenton said that the building negatively impacts the perception of the Downtown Mall. She referred to a situation several years ago where other locations were vacant as well.

“It always looked like the Mall was in decay because we had this space that was incomplete because it looked like nobody wanted to rent it,” she said. “I think when you have abandoned buildings or abandoned projects that it gives the wrong feeling that no one wants to be on the Mall.”

In 2009, a marketing coordinator for a downtown business told the Progress that the building makes “spooky sounds” when the wind blows and “sounds like a haunted house.”

“Nobody wants it sitting there unfinished,” she said. “It just doesn’t look good. And it sort of reflects poorly on the city.”

Source: www.dailyprogress.com

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