Douglas Jemal speaks out: ‘It’s an opportunity of a lifetime for Richmond’

Earlier this year, Douglas Jemal’s company had offered to purchase 15 acres of the Navy Hill area. (BizSense file and Douglas Development photos)

This week’s news about an offer on a portion of the land previously planned for the failed Navy Hill project got the attention of one interested party in particular: real estate developer Douglas Jemal.

The founder and president of D.C.-based Douglas Development had made his own bid for the bulk of the city-owned properties shortly after Navy Hill was voted down in February. That was months before this latest proposal from the Navy Hill project’s development team to buy and redevelop a 3-acre portion of the site.

After BizSense broke the news of the offer this week, Jemal, who has rarely commented about his local projects, spoke out about the offer – and the status of his own.

Douglas Jemal

“It’s very interesting if you read through the lines,” Jemal said Wednesday in a call with BizSense.

“If that group is offering up ($3.17 million) for that, I would offer them $4 million,” Jemal said. “Obviously they have a lease with VCU to build that site, and why all of a sudden now don’t they need any public money or tax-increment financing? Why has that changed?”

Jemal in February offered the city $15 million in cash for nearly 15 acres of the Navy Hill project area, stressing in his offer letter that his development would not require tax-increment financing or other public funding, as Navy Hill had. The $1.5 billion project from NH District Corp. had relied on a TIF district to help fund a new arena to replace the Richmond Coliseum, which Jemal proposes to refurbish instead.

The recent offer from Capital City Partners, the development group that NHDC enlisted for Navy Hill, seeks to purchase only what was known as “Block D” in the project, part of a city block that houses the city’s Public Safety Building between Ninth and 10th streets and between East Leigh Street and the Department of Social Services building on Marshall Street.

A rendering of CCP’s proposed office tower and complex that would replace the Public Safety Building.

CCP’s offer does not ask for city funds or include the Richmond Coliseum, which was the part of the Navy Hill plan that would have involved TIF funding, in which a portion of real estate tax revenues from a section of the city would have gone toward paying off bonds that the city would have issued to fund the new arena.

While Jemal’s proposal did not call for TIF, it also did not include certain project details that city administrators said were needed before City Council could formally consider it. Officials said they would follow up with Douglas to acknowledge receipt of the proposal and request the missing information, but Jemal said he never heard from the city.

“I never heard anything from the municipality other than what they answered in the (press), that it has to go through an RFP process and be voted on,” Jemal said, referring to a city code rule that officials had cited in which council is required to solicit additional offers, either through an invitation for bids or a request for proposals, before it can act on an unsolicited offer.

The city mentioned the rule in the letter it sent Feb. 24 to Jemal’s broker, John Boland of Newmark Knight Frank, who had submitted Jemal’s offer letter to the city. An email thread provided by the city shows that Boland responded the same day to the email from Leonard Sledge, the city’s economic development director, stating that he and Jemal “will respond accordingly.”

Reached Thursday, Boland said they never responded with the requested information because he and Jemal read the rule to mean that an RFP would be forthcoming. Boland said they were waiting to respond to the RFP so as to provide all of the needed information at one time.

Sledge said an RFP is put out at council’s discretion and is not automatically triggered by receipt of an offer. He said further action wasn’t taken because the city never heard back from Douglas, which he said could still respond to a subsequent RFP.

Sledge also noted that council had requested that the city complete a small area plan for the Navy Hill area before going forward with any RFP.

‘You can’t do pieces and parts’

Nonetheless, Jemal said his offer for the 15 acres still stands. His letter from February said the offer would expire May 18, a week from this coming Monday, but Jemal and Boland said they’re willing to extend it.

Jemal took issue with the prospect of the city selling off parts of the project area, contending that it needs to be developed all at once as a master-planned project.

“It needs to involve the whole thing. You’ve got to look at the whole picture,” he said. “What I offered was that the city is not spending any money. You can’t do pieces and parts. Navy Hill, for it to make a great impact, needs to be done as a total project, not hopscotch-jump stuff.

“It’s an opportunity of a lifetime for Richmond,” he said. “Whether I get it or somebody else gets it, it needs to be master-planned.”

In addition to renovating the Coliseum, Jemal’s offer letter described a mixed-use development with similar components to Navy Hill, including a “high occupancy” hotel to support the Greater Richmond Convention Center, retail and Class A office space, a grocery store, and a transit center to be leased back to the city.

It also referred to an unspecified number of apartments and condos with varying price ranges, with 10 percent designated for low-income housing. That percentage is below the city’s required 15 percent threshold for new multifamily residential development.

City administrators said the proposal was lacking specific addresses of property to be purchased, as well as economic benefits to the city such as projected investment value, tax revenue and job creation. It also did not mention minority business participation, which was one of several requirements the city made for Navy Hill.

CCP’s proposal for the Block D parcel is to replace the Public Safety Building with a $350 million mixed-use development with a 20-story VCU Health-anchored office tower. CCP, led by Michael Hallmark of Richmond-based Future Cities and Susan Eastridge of Fairfax-based Concord Eastridge, is offering $3.17 million for the 3-acre parcel, based on an appraisal by CBRE that put the parcel’s land value at $8.5 million.

Hallmark declined to comment when told of Jemal’s remarks. He said CCP’s offer is based on the Block D site being made “shovel-ready,” meaning it includes the cost of demolishing the 66-year-old building and infrastructure costs related to a planned extension of Clay Street through the property.

Plans for Broad Street buildings

Some of the Douglas Development-owned properties in the area of East Broad and Second streets. (Photos by Jonathan Spiers)

While his offer remains in limbo, Jemal said he is not dissuaded from investing further in Richmond, where his company has been ramping up activity with several projects underway. It’s in the process of converting the former Stumpf Hotel at 728 E. Main St. into apartments, and earlier this year filed plans for a Hyatt hotel in the former Virginia DEQ building at 629 E. Main St.

The company also owns dozens of properties in the area of East Broad and Second streets, near the Central National Bank building that Douglas bought in 2005 and redeveloped as apartments several years ago.

While some local observers have been critical of Jemal for apparently sitting on those properties, arguing that not developing them is holding the corridor back from reaching its potential, Jemal said he does have plans for the buildings.

“We have an opportunity there to do something really great,” he said of his Broad Street holdings. “I want to focus on something bigger than just a pawn shop and just street retail. I’m looking to upgrade it and do some residential over there.

“You’re talking about service retail along Broad Street and some density of residential in there, so it becomes a living downtown. And it’s working, but it’s not something that happens overnight,” he said. “The restaurant industry right now has been rocked big time with this virus. Retail in itself has changed dramatically, as we all know. And Broad Street, needless to say, is a retail corridor.”

Despite the economic downturn caused by the coronavirus, which has impacted the retail and restaurant industries that Douglas’s developments often cater to, Jemal said he’s not looking to unload any of his holdings along Broad Street or elsewhere in Richmond.

“I’m very bullish on the Richmond market. I think it’s going to be a great market,” he said. “I think people are going to move out of urban areas and move into cities like Richmond where it’s not that densely populated. I think at the end of the day, there’s going to be a big opportunity for a resurgence of population in Richmond from this coronavirus.”

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Ashley Smith
Ashley Smith
5 months ago

Let me start by saying it is incredibly disigenuous for bizsense to report that Mr. Jemal bought properties along E Broad St in 2005 and they have been rennovated as apartments. His corporation is sitting on about a dozen blighted untouched buildings in the 200 E Broad/2nd St/Marshall St area that violate code and have been rotting away. There was (maybe still current) an attempt to rent these rotting buildings through Divaris, but when contacted, Divaris said they are looking for National tennants only. These building have been boarded up if we’re lucky, or simply rotting away since 2005! He… Read more »

Justin Fritch
Justin Fritch
5 months ago
Reply to  Ashley Smith

Perhaps the article has been updated since your comment but they were referring to the CNB tower being converted and may have done a sloppy job with the wording in order to get the referenced article linked. They do note the neglected properties but I do wish they focused more on it. According to city records, the property CCP put the offer on is only assessed $4,327,000. As the article states, their offer of $3,170,000 includes them handling demolition and street improvements rather than the city having to pay for them. I imagine that cost has to be well over… Read more »

Sam Nelson
Sam Nelson
5 months ago
Reply to  Ashley Smith

The tax assessed value is irrelevant when it comes to what the market will bear.

Ali McCrickard
Ali McCrickard
5 months ago
Reply to  Ashley Smith

Hi Ashley – Divaris is considering and eager to work with local operators as well. We have had a number of interested parties to open small businesses in this area, and have willingly worked with them. While we are focused on helping the neighborhood by bringing larger national retailers such as grocers in big blocks of space on Broad Street, we are certainly not looking for national tenants only. We are also committed to seeing this area flourish.

Cortne Lanier
Cortne Lanier
5 months ago
Reply to  Ashley Smith

Ashley thanks for saying this! He claims to have “plans” but he has been sitting on the East Broad properties for 15 years. It’s embarrassing that we would consider letting this DC crook have more RVA real estate.

Bruce Milam
Bruce Milam
5 months ago

The phrase “shovel ready” means different things to different people. If in fact CCPs offer is contingent on the City taxpayers clearing the block and extending Clay Street, then it needs to be countered.

Jamal’s offer requires revisiting as well. I dont agree with him that Navy Hill cannot be developed in parts, organically, as the market demands. Development will inspire more development, as it has in Scott’s Addition and in Manchester.

The removal of that rust bucket of an arena will be addition through subtraction, though, and I look forward to its demolition.

Justin Fritch
Justin Fritch
5 months ago
Reply to  Bruce Milam

Both recent articles have stated that CCP would perform the work needed to make the site “shovel-ready”, so the offer reflects that.

Jemal being very dishonest in his commentary.

Charles Frankenhoff
Charles Frankenhoff
5 months ago

I don’t trust Jemal to build things though, after how he has let his properties sit, to the detriment of downtown.

Richmond benefits from things being built, and taxed. Not from empty lots and boarded up buildings.

Selling minor pieces of this to someone who isn’t Jemal makes a lot of sense

Matt Klaman
Matt Klaman
5 months ago

Anyone who thinks that “refurbishing” the current coliseum is the way to go needs to be politely laughed at and pushed away.

Doing any sort of work on the existing structure will just set Richmond back 10-20 years when it just ends up a shuttered, heap of garbage once again. Richmond needs a NEW venue similar to what the NH project proposed. This is a fact if Richmond is to grow at the rate it should be. How it’s paid for is another story.

Charles Frankenhoff
Charles Frankenhoff
5 months ago
Reply to  Matt Klaman

I agree we shouldn’t rehab the current. But do we even need a new one?

Ed Christina
Ed Christina
5 months ago

There is no reasonable objective reason for public funding of one, and many many many studies proving it’s a bad deal for cities, but if Tom Farrell wants one so bad, he should pay for it.
https://www.heartland.org/publications-resources/publications/research–commentary-bad-stadium-deals-hurt-cities-large-and-small

Marcus Squires
Marcus Squires
5 months ago

He has held back the broad street area for years. He should fix up his broad street properties with that 4 million.

Charlie Anteby
Charlie Anteby
4 months ago

I agree with the Jemal guy, its not the type of thing that anyone would want to do pieces and parts, it needs to be done as a total project, not hopscotch-jump stuff. This needs to be master planned for the best outcome.