Note: See correction at the bottom of the story.
A downtown development that had been planned to include a VCU Health-anchored tower appears to be dead, as the City of Richmond has taken back the Public Safety Building property it had sold to a private firm for the multimillion-dollar project.
VCU Health, meanwhile, is not done with the property, which it said it plans to see through as “a grand gateway” for its downtown medical center.
The 3-acre property at 500 N. 10th St. reverted back to city ownership Monday via a quitclaim deed dated Feb. 3. It said the project had not progressed according to an agreement between the city and Capital City Partners, the development entity led by Susan Eastridge and Michael Hallmark.
The agreement, which City Council approved in March 2021, was based on CCP’s plan for a three-building complex with a 20-story tower, and VCU Health signed on as the master tenant. The $325 million project was later scaled down, with a development plan filed a year later showing a seven-level tower.
The development plan had been required to be filed six months after the sale closed, according to the deed. The agreement also called for demolition to start two months after submission of the development plan.
While asbestos abatement and other site preparations had gotten underway on the property, such work apparently stopped in the past year. City offices were relocated from the 69-year-old building, and a demolition permit had been applied for in August 2021 but was never awarded pending a revision review, according to city records. Under the agreement, CCP was to assume responsibility for all demolition and public infrastructure costs.
The quitclaim deed states that the agreement’s requirements “were not satisfied” and “the city believes that the project cannot be constructed within the scope, budget and schedule set forth” in the development agreement, which had projected completion within 45 months of the sale closing.
The deed adds that CCP “hereby remises, releases and forever quitclaims” to the city “all right, title, and interest” it had in the property. The quitclaim was signed by Lincoln Saunders, the city’s chief administrative officer, and by Marc Zahr, the representative for the LLC that owned the property.
Zahr is founder and president of Oak Street Real Estate Capital, a Chicago-based investment advisory firm that was handling financing for the project.
Per the development agreement’s terms, the LLC purchased the Public Safety Building property in July 2021 for $3.5 million. The transfer back to the city involved zero dollars, according to property records.
Recorded the same day as the quitclaim were several documents terminating agreements related to VCU Health’s lease for the development.
It isn’t clear from the documents what led to the project not moving forward. The scaled-down development plan submitted last year made no mention of VCU Health still being involved, though a spokesperson at the time said the medical center remained committed to the project.
Hallmark, who with Eastridge is also leading the development of the massive GreenCity project in Henrico County, declined to comment on the Public Safety Building project when reached Thursday. A representative for Blue Owl Capital, which owns Oak Street Real Estate Capital, declined a request for comment from Zahr.
Requests to the city and VCU Health for comment resulted in a joint response provided by VCU. The statement referred to a “new plan” for the site that the university and the city would be pursuing in keeping with VCU’s master plan.
“VCU and the City are committed to making the Public Safety Building property at Clay Street a grand gateway for the state’s primary safety net academic medical center,” the statement said. “While the original use for the site is not moving forward, the proposed change is in keeping with VCU’s master plan and overall vision for this site.”
Describing the property as “designed to be a signature development for VCU and Richmond,” the statement added that the property’s development would involve a new facility for VCU’s School of Dentistry and potentially a new research building to replace the aging Sanger Hall a block away.
“The university is committed to working in partnership with the City to develop infrastructure that benefits students, patients, our communities and Virginia,” the statement read. “Additionally, the university and health system will uphold our obligations as they relate to prior real estate tax commitments, as well as the demolition of the existing Public Safety Building structure.”
The statement did not specify whether VCU would take the lead on the site’s development. A request for clarification did not generate a response.
It also wasn’t clear whether any new plan would involve The Doorways or Ronald McDonald House Charities of Richmond. The local nonprofits were planned to be subtenants for the two smaller buildings in CCP’s project, which also called for reconnecting Clay Street through the site.
CCP’s original plan had included 240,000 square feet of office space, 150,000 of which was to be used by VCU Health to support its nearby Children’s Hospital Pavilion and Adult Outpatient Pavilion. The plan did not refer to the School of Dentistry, a new building for which is specified in VCU’s capital plan.
CCP’s project sought to salvage part of Richmond’s failed Navy Hill plan, for which Hallmark and Eastridge were also the development team. Hallmark leads Richmond-based urban planning firm Future Cities, and Eastridge is president of Falls Church-based development firm Concord Eastridge.
CCP’s proposal for the Public Safety site was submitted to the city in May 2020, around the same time that Hallmark and Eastridge were said to be starting work on GreenCity, which Henrico announced that December.
The $2.3 billion GreenCity project is planned to fill 200 acres with an arena-anchored mixed-use development. An initial development phase is slated to start this year, with full buildout anticipated in 2033.
The 200-acre Henrico site includes land owned by Bill Goodwin’s Riverstone Properties, which recently filed a conceptual layout for development of that land. Goodwin, a prominent local businessman whose area holdings include The Jefferson Hotel, was among a group of Richmond business heavyweights involved in Navy Hill.
Hallmark’s Future Cities also is planning a mixed-use rehab of an old power substation in Richmond’s Carver neighborhood.
Correction: Oak Street Real Estate Capital was the financier on the Public Safety Building project. An earlier version of this story incorrectly referred to the firm as an investor.
The article cites the age of the Public Safety Building as 69 yrs. I believe it opened in 1964 and was a piece of the City’s 60’s public building boom that also produced “new” City Hall and the Virginia Centennial Center.
And so many people still have faith in the City Administration and its process for the Diamond District and City Center (or whatever they want to now call Navy Hill). This building was a “done deal”, it is proof that the people against NH where wrong as demand was strong for private development downtown in this part of downtown despite the pandemic and other factors. Amazing city was still touting this in numbers and visuals as part of the State of City Econ Dev projects just last month. Now it looks like a publicly paid for state (or foundation) owned… Read more »
Another way of saying this is, the opponents of NH were CORRECT not to trust unproven grifters.
They almost held our general fund hostage with the NH scheme. Then, the city allowed them to hold a prime piece of real estate hostage for 3 years with nothing to show for it.
I trust my own judgements far more than the people running the city’s economic development deals.
City Hall is filled with grifters.
This is further proof that city “planning” is not the solution to redeveloping Navy Hill. The city should sell the Navy Hill parcels to the highest bidders and then exercise very limited guidance through zoning and design review.
An intelligent comment? Impressed!
Am I the only one who is wondering if Capital City Partners is the problem here? Henrico has to be seeing this and hoping a similar fate doesn’t await for Green City.
Almost 70 years old?? Uh oh. Someone is going to declare this building “Historic” — it’s not Bauhaus or something is it? Good. This is why most development gets done OUTSIDE of cities like Richmond: The busy-bodies and do-gooders demand that others built to THEIR specs, and hence, since these people can never get anything done themselves, and those who can the things done won’t do it to not make a profit or even lose money — they do something somewhere else. What people who advocate for “low income” set asides don’t seem to realize is that this sort of… Read more »
No body I know demanded a thing on this (let alone called it historic) and they got the property for a steal. Some wanted homeless shelter or afford apt but it was not in the cards for this space per the City Econ staff. The developers were basically spec building an office tower with VCUs hospital entity general services staff going to use a good chunk of it. The City owned the site and and like most local governments if they sale at a discount they have a timeline (Henrico has one for GreenGate) with goals like financing, plan approve,… Read more »
Another embarrassment for the failed Navy Hill team. Maybe it’s time the City stop trying to sell off public properties to the highest bidder and start building housing and services for its own overworked, underpaid essential workers.