City finds Brookland Park developer in default, demands grant repayment

The former American National Bank Building as it appeared Tuesday. Plans to redevelop the property have dragged on for nearly four years. (Jonathan Spiers)

With its planned tenant bowed out of the project, the developer behind a much-scrutinized bank building rehab on Brookland Park Boulevard now must pay back $200,000 in grant funds it received from the City of Richmond, which has deemed it in default of the grant’s terms.

The city’s economic and community development department has directed LaMar Dixon of Dixon/Lee Development Group to pay back the funds that were awarded in 2015 and 2016 to assist its planned redevelopment of the former American National Bank Building at 201 W. Brookland Park Blvd. as a business accelerator.

The latest version of a performance agreement tied to those funds – an amendment the city approved in 2016 – required Dixon to begin construction that October and complete work by November 2017, create 30 jobs by that time and secure financing.

Three years later, none of those benchmarks have been met, according to a statement provided by the city on behalf of Doug Dunlap, the deputy chief administrator overseeing the department as interim director.

“Upon assessment of the terms of the performance agreement the City has determined that the project is in default,” the statement reads, adding that “Key milestones for construction and job creation have not been met.”

“At this time the City has met with the developer to make him aware of the default status and are in discussions about repayment.”

The statement goes on to say that the city considers the property “an important anchor for a historic corridor that (is) experiencing a revitalization.” It adds that the city is committed to the property’s redevelopment “by a credible development entity.”

A rendering of the planned business center includes a VUU logo.

The city’s decision first was reported by the Times-Dispatch and Richmond magazine, which both published articles quoting Dunlap the day after BizSense reported that Virginia Union University had pulled out of the project and terminated a memorandum of understanding with Dixon.

That memorandum, signed in 2017 by Dixon and VUU President Hakim Lucas, detailed framework for a potential binding contract and support that the university would provide in terms of resources and student participation.

The city’s decision was communicated to Dixon in a meeting with city officials last Thursday, around the same time that VUU informed Dixon of its withdrawal from the project.

While Dixon previously acknowledged the meeting to BizSense as having to do with the grant, he said Thursday that he didn’t mention the city’s directive because a timeline and other terms for repayment had not been finalized.

He said his attorney, Thomas Voekler with Kaplan Voekler Cunningham & Frank, remains in talks with the city about the repayment, details of which Dixon said could determine how he can proceed with the property.

“It was complicated because we’re trying to push the project forward,” Dixon said. “There were a lot of moving parts. We just wanted to give the city and my attorney a chance to go through it and say what’s the best path forward in terms of paying the money back.”

All to be paid back

Dixon, a commercial real estate broker with Capital RVA Realty, said Dixon/Lee would pay back the full $200,000, part of which – at least $75,000, according to Dixon – has been spent on planning and architectural design work.

In an interview in late January, Dixon said the funds were being used to leverage financing to cover construction costs, which he said were projected at $929,000. While he produced correspondence from 2015 from two potential lenders expressing interest in financing, Dixon said neither of those firms – Virginia Community Capital and Virginia Community Development Corp. – were ever signed on as lenders for the project.

“We were awarded the grant and we’re securing financing so we’re going to move forward,” Dixon said in January. “There’s nothing nefarious in our deal. We’re leveraging the money that was given to us to borrow $929,000. City investment is not usually larger than 20 percent. There’s nothing nefarious going on.”

Without the city grant and involvement from VUU, Dixon said he’ll need to reassess the project based on what’s decided with the city on repayment. Dixon said he’s received offers to sell the property, which he purchased in 2015 from the Richmond Redevelopment and Housing Authority for $20,000 – $33,000 after closing costs, he said. But he said he still wants to see his project through.

“I’ve always had to consider all options,” Dixon said. “The challenge is when you don’t anticipate the negative press coverage, some of that affects valuation, because if people perceive me to be in a certain position, that’s what they’re going to offer.

“That’s what my attorney was working on with the city, to figure out where we land and what our responsibilities are so we know what all of our options are,” he said. “It was like: What’s the solution, where are we at, what didn’t we do, what should we do, what’s the path forward? Because at the end of the day, it’s a real estate transaction.”

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5 Comments on "City finds Brookland Park developer in default, demands grant repayment"

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Andrew Green
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“The challenge is when you don’t anticipate the negative press coverage…”. How do you not expect negative press coverage when you have missed every major deadline outlined in your agreement with the city and have seemingly made ZERO progress in over 4 years? Get real, buddy. Time for a competent developer to take over.

Michael Dodson
Guest

I love the City’s press release line that ”key milestones for construction and job creation have mot been met.”.

Can someone tell what millestones were met ? Cashing the City’s check is not really a milestone.

It is very disturbing that it took “BizSense and RTD articles and citizen pressure to get the City to enforce the agreement.

Rob Caldwell
Guest
The expectations of this project weren’t thought out. If the City wanted a “business incubator” then what type of business would be incubated there? For instance technology. Well what type of technology? What would be the roles of the students? What would the final product be? The answers to these questions should have been established prior to the sale. Additionally wouldn’t it have been just as productive to get a commercial tenant who would employ a certain number of VUU students? Or since he’s a realtor, turn the building into mixed use with a realtor training program on the first… Read more »
Brett Hunnicutt
Guest

This sounds like a somewhat similar story from a few years back, except that one came to fruition, sort of. The owner of the building that housed the Street Car Cafe also received a large grant ($120,000). The businesses occupying it unfortunately did not last long. The property was sold last June. Not sure what has become of it, or if there is a future plan to foster more growth and impact.

http://richmondfreepress.com/news/2015/dec/05/coffee-shop-business-grinds-halt/

Mariam Sankoh
Guest

It’s prerty much has not really had a stable tenant since it was complete. Another two restaurants have been in there but didn’t last, now it’s a event venue.

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