Business news from the Fredericksburg region.
Celebrate Virginia South land may be sold
By Bill Freehling
Most of the undeveloped land in Celebrate Virginia South in Fredericksburg could be headed to tax sale.
Payments owed to bondholders on 14 separate undeveloped parcels totaling about 207 acres in the Silver Cos. development next to Central Park are now more than two years delinquent, meaning Fredericksburg’s treasurer’s office can today start the process of selling the properties to recoup the money.
The tax sale process takes some time, so it would likely be at least a year before the properties would be actually sold at auction. The owners could stave off the sale at any time during that process by paying the delinquencies.
The current home of the Celebrate Virginia Live concert series is included in the parcels, but any possible tax sale would not affect this year’s concerts because of the way the deal was structured with the series’ promoter. The venue might have to relocate next year if the matter is not resolved before then, however. Some of the delinquent land is part of the long-delayed Kalahari hotel-water park project.
The 38-acre property where the U.S. National Slavery Museum was supposed to be developed could also be heading to a separate tax sale, meaning the fate of most of the remaining undeveloped portions of Celebrate Virginia South is in question.
The 14 affected properties are all owned by entities of the Silver Cos., but the limited liability companies also include many investors unrelated to the developer and its owners. That has complicated the process of staying current with payments, as some of the LLC members have more financial resources than others, yet all bear the same financial burden. The money for the payments comes from project revenue such as land sales or leases, which have been hard to come by of late.
The 14 parcels are part of a Community Development Authority that comprises most of Celebrate Virginia South, including the parts that have already been developed. The CDA issued $25 million in bonds in 2006 to pay for the development’s infrastructure, such as its roads and sidewalks.
The bonds were sold during a far different economic climate. Silver has since struggled to attract businesses to Celebrate Virginia amid a severe recession, although it has brought in some companies including Wegmans, PNC Bank, Navy Federal Credit Union and apartment developer Johnson Development Associates. Silver officials say they will continue to court prospects as the tax sale process plays out.
Because the development has progressed more slowly than Silver expected in 2006, the owners of the undeveloped land have been saddled with the lion’s share of the special assessments collected to pay the CDA bondholders’ interest and principal payments twice a year. Those assessments are levied twice annually on top of city property taxes. Debt service on the bonds totals about $1.9 million a year.
The Celebrate Virginia CDA could default on its upcoming bond payments if revenue doesn’t come in from land sales or other means. Silver officials say they continue to work with the bondholders to discuss possible solutions until the development can regain its footing.
There are also significant tax delinquencies on Celebrate Virginia North in Stafford County, though that side of the development has fared slightly better.
The Silver entities that own the 14 parcels would need to pay Fredericksburg about $1.84 million—the amount that is more than two years delinquent—to stave off the tax sales in addition to any attorney fees and other related costs accrued during the process. All of that money is owed in CDA assessments rather than city taxes, but the treasurer’s office is required to initiate the tax sale on behalf of the CDA bondholders.
The tax sale process starts with the treasurer’s office sending the property owners written notice of the delinquency. The owners then have 30 days to pay the debt. After that, the process gets turned over to the city’s attorney. Ads are run informing potential bidders about the possible sale. City Treasurer G.M. Haney said he will begin the process shortly.
Bill Freehling: 540/374-5405