EDA, VDOT nearing deal on land swap

Published 6:17 pm Friday, March 25, 2022

The 87-acre property that served for more than 60 years as the Virginia Department of Transportation’s Hampton Roads District office is nearing a sale, and the state agency wants to move forward with its agreement to swap property with the city’s Economic Development Authority.

The deal would mean VDOT would pay $500,000 to buy the 37 acres the EDA owns off of Industrial Drive in Northgate Commerce Park so it could build a new district annex and share with the city to allow its Public Works Department to relocate its Zone C operations facilities it has at Lone Star Lakes Park.

In exchange, the EDA would buy 1.3 of VDOT’s 87 acres of land at 1700 N. Main St., near Obici Place for $300,000 so it could be converted into a parking lot for an entertainment venue, according to EDA attorney Darius Davenport, who briefed the authority’s commissioners during its March 17 meeting. The property to be acquired is next to a 3.4-acre property the authority already owns and is holding onto for a prospective movie theater.

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“To achieve this goal, we have endeavored to draft an agreement with VDOT to facilitate that transfer, that swap of those two parcels,” Davenport said.

In 2017, the General Assembly authorized VDOT to market, sell and convey its downtown Suffolk property and put the proceeds toward acquiring and building a new district office facility.

VDOT’s Hampton Roads District administrative and engineering staff had occupied the complex of buildings and trailers for more than 60 years. About 250 workers relocated in August 2018 to an 85,000-square-foot, three-story building on Burbage Drive in North Suffolk, the district’s current headquarters.

The EDA in March 2019 had entered into a sales agreement with Cinema Café for the company to build a movie theater, restaurant and bar. The incentives provided included $120,000 when Cinema Café reached its certificate of occupancy and $30,000 for each of the next three years through the Economic Development Investment Program.

However, the movie theater project has been on hold amid the coronavirus pandemic and its impact on that industry.

Davenport said there has been concern about the EDA transferring its property to VDOT and then the agency following through on the sale of the 1.3 acres to the authority.

The EDA and VDOT have worked on a new version of the agreement over the past several months, Davenport said, with the current version structured as an exchange agreement between the two parties.

“As we work through that agreement, we added some additional language to make sure that there was basically no way that VDOT could back out of the agreement,” Davenport said, “that both parties had to exchange those parcels to secure EDA’s interest in the (1.3 acres) as VDOT got the 37 acres. And so the agreement that we have now achieves that goal for us, basically.”

The EDA will pay the $300,000 at settlement for its share of the VDOT property, and in return, VDOT will give the city $500,000, Davenport said, for the construction of best management practices used to treat, reduce or help prevent water pollution – the terms to be referenced and memorialized in an exchange agreement between VDOT and the EDA.

The city will build the facility, but maintenance of it will be shared by the city and the EDA.

“So BMP construction and maintenance, in addition to space sharing between the city and VDOT, all of those things will be memorialized in separate agreements in (memorandums of understanding) between the city and VDOT,” Davenport said. “The EDA will not be a party to those agreements as of right now. So, big picture, the exchange agreement between the EDA and VDOT for the (1.3 acres) and the 37 acres is continuing to move forward.”

Davenport said in his conversations with VDOT over the past couple of weeks that “their developer is ready to move” on the larger part of its property on Main Street.

“They’re now pressing us to move forward as quickly as possible to finalize the agreement,” Davenport said. “I think the language for the agreement, we’ve pretty much ironed that out as best we can.”

Davenport said the EDA has asked VDOT for some warranties on the property the authority plans to acquire, but it will not do so. Language to the agreement, however, has been added that the authority will be able to buy title insurance, and any subsequent purchase of the property from the EDA, “we can give them as much assurance in that there are no issues with the land, as much as we can, basically.”