The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
Judge wants Wilder to testify
By Chelyen Davis
RICHMOND —A federal bankruptcy court judge hearing the U.S. National Slavery Museum case said Wednesday that he wants former Gov. Doug Wilder to testify at a hearing Friday.
Judge Douglas O. Tice Jr., also said Wednesday that he’ll allow Celebrate Virginia to be a party to the museum’s bankruptcy case.
Tice’s ruling came after two hours of testimony from a Silver Cos. official about how development plans at Celebrate Virginia South have been severely damaged by the museum’s failure to get off the ground. That harm has included the loss of high-profile tenants such as Kalahari, which intended to build a water park and hotel there but never did.
Wednesday’s hearing will be followed by the one Friday in which Celebrate Virginia’s lawyers will push for the museum to be liquidated and will argue that Wilder—who founded the museum project—has shown a “reluctance to raise funds” necessary to revive the project.
Tice scheduled that hearing for Friday morning, rather than hearing more testimony Wednesday, because he wants Wilder to be present to testify. If he can’t come, Tice said, he’ll have to give a deposition.
Wednesday’s hearing centered on whether Celebrate Virginia has standing to be involved in the bankruptcy case.
Celebrate Virginia donated 38 acres of prime real estate to Wilder’s slavery museum project a decade ago, with the idea that donating the land would reap benefits after the museum was built and attracted other development around it.
The entire development was based around the museum as an anchor for a new tourism district, said Scott Little, Celebrate Virginia’s director of development.
The museum’s failure to ever start construction led to the loss of several other tenants and development deals, Little said, including the deal with Kalahari to build a water park.
Kalahari and others—including an aquarium—wanted to be part of a tourism-based development but didn’t want to be the first tenant, Little testified. The museum—with prime land visible from the interstate—was to be the anchor, the attraction that drew traffic. Little said Celebrate Virginia was in talks with companies to create an entertainment district, an extreme sports facility and other attractions.
But as time went on and the museum lay dormant, letters of intent expired and those potential tenants went elsewhere.
“We had an international-branded aquarium project ready to roll,” Little said. “That deal has since gone up in flames.”
The aquarium went to Canada, he said; Kalahari is building in Pennsylvania.
The impact on Celebrate Virginia has been large, Little said; in addition to the lost deals, the company took out $25 million in bonds and now can’t pay for them. He said it has also damaged Celebrate Virginia’s reputation in the community.
“Every day that it’s prolonged is another day of death sentence for our development,” Little said. “It has hurt our business badly, we have been tremendously damaged because of it. We lose money every day of our lives because of the failure of the slavery museum to perform.”
Little said it is difficult for Celebrate Virginia to find another anchor for the development, since it’s looking specifically for a tourism-related anchor.
He also said that the neglect of the museum’s property hurts the development, since potential tenants are turned off by the property’s unkempt appearance. Little said it’s overgrown with briars and weeds, and has some fallen trees.
Little said Celebrate Virginia has tried to contact Wilder about keeping up the property, but haven’t heard back from him.
Little’s testimony also touched on the restrictive use covenants on the 38 acres. At the time it was given to the museum, Celebrate Virginia required that the land be used for an African–American history museum or educational use.
Now the museum is proposing to sell off part of its land to help pay its debts, while reorganizing and raising funds to resume operations. Museum attorney Sandra Robinson has argued that the covenants should be invalidated and that the land was a gift, which means Celebrate Virginia no longer has any say in its use.
That is exactly why the covenants were put on the land in the first place, Little said.
“We didn’t give [Wilder] $19 million worth of land so he could turn around and sell off the pieces,” Little said.
He said the company “would fight with every last breath” an attempt to remove the restrictions, because a buyer could use the land in ways that might run counter to Celebrate Virginia’s own development plans and the promises it has made to city leaders about a tourism-based development.
The covenants were signed in 2002, but Little said the company decided to “restate” them in 2009 after Wilder appeared at a City Council meeting and it became clear that the project was on shaky ground.
A meeting with former museum director Vonita Foster, in which she explained why she was resigning, also concerned Little.
“Gov. Wilder wasn’t returning her phone calls and would not give her money to pay bills, despite months of requests,” Little said. “Gov. Wilder refused to fund the project in any way.”
Little said Foster asked Celebrate Virginia to help with payroll; the company refused. Foster resigned and the museum has had no staff since.
Little’s testimony was intended to show that Celebrate Virginia has been financially affected by the museum project’s decline. The company had to prove to Tice that it had a financial and legal interest in the museum’s bankruptcy case in order to be involved in the case.
Tice said that coming into court Wednesday, he doubted Celebrate Virginia could make that case. But after Little’s testimony, he agreed that the company has an interest in the case, especially as it pertains to potentially removing the use covenants on the property.
That means that Celebrate Virginia’s motion to convert the case to liquidation or dismiss it can go forward. Those arguments are what Tice will hear Friday.
Chelyen Davis: 540/368-5028