THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, September 25, 1996 TAG: 9609250399
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MAC DANIEL, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 126 lines
The city of Chesapeake will pay a developer double the current assessed value for land at the planned Greenbrier conference center, according to a draft lease agreement with the builder and property owner, Armada/Hoffler Construction Company.
In addition, the pair of parcels involved are too small to build the complex and meet city parking guidelines.
The City Council is not looking for a different site or additional land. It is proposing a change in city code to reduce the number of spots required for such a facility.
The City Council spent nearly an hour in executive session at the end of Tuesday's meeting discussing whether to delay action on the convention center contract.
Councilman Alan P. Krasnoff, who was one of two council members to vote against the project two weeks ago, made a motion to indefinitely delay the deal rather than sign a contract on Oct. 3.
Mayor William E. Ward, who supported the convention center, objected to a delay.
``We've been over this several times,'' said Ward, ``and unless you have evidence of malfeasance, or misfeasance of the party involved. . . . I don't know why we continue to go back and forth on this.''
The council then voted 6-3 to proceed with the project. Krasnoff, John de Triquet and W. Joe Newman voted for the delay. Newman had earlier voted to approve the project.
Voting to continue were Ward, Vice Mayor John W. Butt, Dalton S. Edge, Elizabeth P. Thornton, Peter P. Duda Jr. and Dwight M. Parker.
The city will spend $1.2 million on the 5.64 acres for the center, should the city buy the property after it is built, according to city officials.
In addition, the higher land price is reflected in the cost of a long-term lease/purchase arrangement the city has negotiated for the center, both sides said.
The property is assessed at $607,700, according to Laurence Street, Chesapeake's real estate assessor.
Ward said on Tuesday he did not believe the city was paying double the value of the land because the property was recently valued at $1.2 million.
The property at Greenbrier Circle and Sara Drive has fluctuated drastically in its assessed value over the past five years, largely due to appeals to lower the tax assessments by Armada/Hoffler, which owns it.
In 1992-93, the property was assessed at $1,357,300. That assessment was appealed by Armada/Hoffler and reduced to $1,015,600.
In 1993-94, the property's assessment was appealed again by Armada/Hoffler and reduced to $696,500.
In 1994-95, the property's assessment was appealed again by Armada/Hoffler and reduced to $607,700. Armada/Hoffler has not contested the assessment since then.
On Aug. 12, 1996, one month before the City Council agreed to move forward with the conference center deal, an appraiser for Life Savings Bank assessed the property at $1.2 million, saying its most profitable use was a hotel, according to Armada/Hoffler and the city.
If reassessed today, Street said the city would likely appraise the property at $850,000, according to a memo he sent to City Attorney Ronald S. Hallman.
Both Street and Louis S. Haddad, president of the Armada/Hoffler Holding Company, said the different assessments reflected changes in the real estate market.
``What we agreed to was to value the property with a current appraisal,'' said Haddad. ``So I'm not sure what the old assessment has to do with anything.''
Haddad said the property's assessment was appealed because there was no sales activity in those years.
However, Haddad said, Armada/Hoffler received a $1.1 million offer for the property during the past nine months.
The conference center will be built under a lease-to-buy agreement with the city's Industrial Development Authority.
Chesapeake-based Armada/Hoffler was chosen to build and lease the center, city officials said, after no other company responded to a nationwide request for proposals.
The deal was approved by the council on a 7-2 vote two weeks ago with the expectation that a conference center in the city would help lure large businesses to Chesapeake.
An increase in local hotel and meals taxes, also approved by a 7-2 vote the same night, will go toward leasing and operating the center.
According to the plans, Armada/Hoffler will spend about $9 million to build the center.
The city, through the quasi-private Industrial Development Authority, will pay Armada/Hoffler $880,971 a year for 30 years to lease and purchase the complex.
The city has the option to buy the building and property within the first 12 months for $8,995,000. The city can also buy the complex at the beginning of every calendar year for a decreasing price until the lease expires.
If the city pays Armada/Hoffler the monthly payments through the full term of the 30-year lease, it will spend approximately $26.4 million to buy the land and building.
In addition, the city will have to pay operating costs, such as city staff to run the center and a food service to cater there.
One advantage of the lease arrangement, Hallman said, is that it does not increase the city's overall indebtedness. The rapidly growing city debt level is already high because of the need for new roads, schools and improvements to the water treatment plant.
Too much debt could cause lenders to balk at city bonds, driving up interest rates and, therefore, the cost of projects, city officials have warned.
The agreement is still a draft, with details to be worked out before the city and builder sign a contract, Hallman said. But no substantial changes are expected, and the contract should be signed by Oct. 3, Hallman said Tuesday.
Parking regulations have become a problem at the site.
Under the city code, the conference center would require 500 parking spaces. The parcel has room for 336.
Rather than buy more land for parking or ask Armada/Hoffler to donate it, the City Council has told planners to develop a change in the city code that would allow the current amount of spaces to stand.
The council asked for the text amendment to the city code on Sept. 10, the night it approved moving forward with the conference center's lease agreement.
City officials say that less parking is needed at the conference center because conventioneers would be using shuttle buses and taxis from nearby hotels and motels in the Greenbrier area.
The parking changes must first go before the Planning Commission. The council is expected to consider the change at its Oct. 15 meeting, according to assistant planning director Karen E. Shaffer.
The city's code requires that conference centers and other meeting halls where the largest room exceeds 50,000 square feet require one parking space for every 40 square feet. The revised code will reduce that number to one parking space for every 60 square feet.
No other Chesapeake facility would be affected by the changes. ILLUSTRATION: Map
KEYWORDS: CHESAPEAKE CITY COUNCIL CONVENTION CENTER by CNB