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City takes step to auction off former museum site

MORE: National Slavery Museum timeline and archives

A sculpture in the Freedom Garden is surrounded by overgrowth and weeds at site of the Slavery Museum. in Celebrate Virginia on Wednesday, January 18, 2012. (Reza A. Marvashti / The Free Lance-Star)

BY CHELYEN DAVIS

Fredericksburg’s officials are moving forward with efforts to sell the U.S. National Slavery Museum’s land at Central Park because the museum still has not paid its property taxes to the city.

But the museum’s largest creditor wants a judge to first remove restrictions put on the property when it was donated to the museum a decade ago.

The case will get its first hearing in Fredericksburg Circuit Court next Monday.

The museum was founded in Fredericksburg by former Gov. Doug Wilder, but  construction never began.  It filed for bankruptcy last year to stop the city from selling its 38 acres in Celebrate Virginia for taxes that have gone unpaid since 2008, when the museum essentially ceased operations. At the time of filing for bankruptcy, the museum had about $7 million in debts, and the land was valued at about $7.6 million.

The bankruptcy judge dismissed the case in mid-August, as the museum’s lawyer said the museum had reorganized and regained its ability to solicit donations, and promised an anonymous donor was prepared to pay off the city’s tax bill “within days.”

But no such payment has ever happened, said city treasurer Jim Haney. Haney has said the museum could pay off the tax bill—which was $320,692 as of mid-September—anytime before a gavel falls on an auction.

The city filed documents in Fredericksburg Circuit Court in September to restart proceedings to sell the land.

So far, no response has been filed by Wilder, the museum or any attorney representing either one.

Pei Partnership Architects —which is owed about $5 million by the museum—has filed documents asking the judge to remove restrictive use covenants attached to the land.

When the Silver Cos. donated the land to the museum in 2002, the agreement was that the land could not be used for any purpose other than an African–American history museum or an educational or charitable purpose.

The deed of the gift, filed in court that year, refers to that restrictive use covenant, but the covenant document itself was not filed until 2009.

During the bankruptcy case, the museum’s attorney, Sandra Robinson, had argued that the use covenants are invalid because of that delay in formally filing them. The museum argued that those covenants were not properly recorded, and that they can’t be enforced.

Robinson at the time had proposed selling off about half of the museum’s land to pay its debts.

Celebrate Virginia’s attorneys, as well as the company’s director of development Scott Little, had argued that the use covenants are legal and enforceable. The company objected to Robinson’s plan to sell part of the land.

In the circuit court filings, Pei’s attorney argues that the restrictions should not be enforceable against third-party purchasers of the land.

Enforcing them, Pei said, “will dramatically reduce the price of the property,” as will the fact that the issue is unresolved, creating what Pei called a “cloud on the title.”

Unless the restrictions are removed, Pei said, “the property cannot be used for commercial or residential purposes,” which will make it more difficult for the city to find a buyer.

The city has opposed Pei’s motion, saying that the case at hand concerns whether the city can sell the land for back taxes, and that the question of the legality of deed restrictions isn’t relevant to the case.

Celebrate Virginia has also filed paperwork to be involved in the case, arguing that the company “has substantial interest in the outcome” of the judge’s decision.

During the bankruptcy case, Celebrate Virginia’s attorneys and Little had testified that the Celebrate Virginia development had relied heavily on the museum becoming an anchor that lured other tenants.

The museum’s failure, Little said, had contributed to the development’s loss of other projects and hurt Celebrate Virginia’s standing in the community.

Celebrate Virginia doesn’t want the land parceled off to someone who might build things counter to Celebrate Virginia’s own development plans.

Chelyen Davis: 540/368-5028

cdavis@freelancestar.com

Permalink: http://news.fredericksburg.com/newsdesk/2012/12/06/city-takes-step-to-auction-off-former-museum-site/