The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
Slavery museum wants to sell some Celebrate land
BY CHELYEN DAVIS
The bankrupt U.S. National Slavery Museum is now proposing to sell part of its 38 acres at Celebrate Virginia to help pay off its debts.
In a new version of its reorganization plan, the museum—founded by former Gov. L. Douglas Wilder—says it could sell at least 20 acres to help pay nearly $300,000 in back taxes to Fredericksburg and a $5 million judgement to an architectural firm.
The proposal to sell the land comes after Fredericksburg and Celebrate Virginia—which donated the land—filed documents with the bankruptcy court expressing doubt about the museum’s ability to reorganize and repay its creditors with donations alone.
The new reorganization plan doesn’t back off the original fundraising predictions, but adds the sale of the land as another way the museum could repay its creditors. The land is now valued about $7.6 million.
“The debtor does not need 38 acres to build and operate a world-class museum,” wrote museum attorney Sandra Robinson in the new filing. “The debtor estimates that it can successfully build a museum and provide for reasonable parking and outdoor space for its patrons with 15–18 acres of land or less.”
Selling some of the land would also lessen the museum’s real estate tax debt, she said.
The land, however, came with deed restrictions. It must be used for an African–American history museum or educational purpose.
Robinson’s new filing now objects to those restrictions, because they’ll make it harder to sell the land.
Celebrate Virginia will protest any effort to remove those covenants, said Jud Honaker, president of commercial development for the Silver Cos., which is developing Celebrate Virginia.
Honaker said his company vetted the covenants with a number of legal experts, all of whom concluded that the covenants were legal and valid.
Removing them, he said, “certainly would be inconsistent with the gift, because we gave that valuable donation with the benefit of getting a first-quality museum.”
Recently, Celebrate Virginia filed documents urging the bankruptcy judge to convert the museum’s bankruptcy from reorganization to liquidation.
Celebrate Virginia argued that by never building a museum, failing to keep up the property, falling into debt and allowing creditors to have liens on the property, the museum is greatly diminishing the property’s value.
The land is the museum’s only real asset, and its $7.6 million value is down from about $19 million when it was donated a decade ago.
The museum responded this week that Celebrate Virginia isn’t a creditor and thus has no standing in the case.
Honaker said his company has been patient, but he believes it’s time for Wilder to let the museum go. It’s clear, Honaker said, that the museum isn’t likely to happen.
“Why kick this bad story down the road over and over again? Let’s just wrap it up and call it a day,” he said.
Honaker also said that several years ago, actual construction of the museum was estimated to cost about $250 million. With increases in materials and construction costs since then, he said, it would probably be more like $450 million now.
“The hurdle to make it happen is a lot bigger now,” Honaker said.
Fredericksburg also backed Celebrate Virginia’s push for liquidation and has expressed serious doubts about the feasibility of the museum’s reorganization plan.
Originally that plan relied solely on a return to fundraising. The museum has regained its authority, both from the state and the IRS, to solicit charitable donations, and Robinson’s plan to reorganize and repay creditors was built on an expectation that the museum could raise $900,000 in its first year of fundraising, and more after that.
Fredericksburg’s attorney, Jeffrey Scharf of Taxing Authority Consulting Services, said in documents recently that he thinks that’s not feasible
Scharf wrote that the museum’s history shows an inability to raise even half of the money it needs to make the reorganization plan work, and that the current climate—a tighter economy and similar museums competing for donations—make it unlikely that the museum could raise the money it needs.
The next hearing in the museum bankruptcy case is scheduled for next Wednesday in Richmond.
Chelyen Davis: 540/368-5028