Dewberry Living (formerly known as the Laramore, The Dewberry Hotel, The Landmark Hotel, The Beacon-Charlottesville and Hotel Charlottesville) is an unfinished hotel on Charlottesville's Downtown Mall on a site previously occupied by Central Fidelity Bank. Located at 201 East Water Street, the reinforced concrete structure remains incomplete -- lacking windows, elevators, balcony railings and most basic services -- since 2009. Currently owned by John Dewberry, the list of previous owners of the project include Lee Danielson, Oliver Kuttner and Halsey Minor.[1]

The city is seeking to inspect the structural integrity of the building and sent a certified letter to Dewberry in late 2019. [2]

History

Early History

The Landmark Hotel was envisioned as a nine-story, 100-room luxury boutique hotel. Lee Danielson originally purchased the property in 2000, and after several failed attempts to build a hotel partnered with Halsey Minor in 2007 to fund construction.[3] On March 11, 2008, a groundbreaking ceremony was held. At a cost of around $30 million, the initial plan was to have the hotel open by July 2009.[4][5]

Financial Trouble and Legal Dispute

However, the project's financing was called into question as early as November 2008. That's when project lender Silverton Bank failed.[6] Minor fired developer Lee Danielson in December 2008. [7] Construction stopped in January of 2009. The pair went to court. Donald H. Kent of Richmond-based arbitration firm The McCammon Group ruled that Danielson misrepresented the construction costs –- including hiding the fact that the restaurant wasn't included in the budget.[8] The arbitrator awarded $4.2 million in damages, and attorney's fees of $2.24 million.

On September 1, 2010, Minor filed for Chapter 11 bankruptcy. [9] The filing stayed all pending lawsuits which by then included the suit between Danielson and Minor, the FDIC lawsuit against Minor, and lawsuits against Minor filed by Merrill Lynch, Sotheby's, and Christies.[10] The welter of lawsuits that followed the collapse of the project included a Federal Deposit Insurance Corporation ("FDIC") suit against Silverton Bank (which the FDIC was forced to take over and later dissolve), and another FDIC lawsuit against Minor for having defaulted on a $10.5 million Silverton loan.[11]

Project taken from Minor

The Charlottesville government refused to provide financial assistance to complete the hotel, unlike the development assistance provided to the Omni Hotel in the 1970s.[12] In January 2011, a Georgia court awarded the project to Specialty Finance Group following the long legal dispute.[13] On December 5, 2011, a Charlottesville Circuit Court judge ruled that the first debt that Minor must repay is more than $128,000 in back taxes to the city of Charlottesville. Next, Minor must pay Clancy & Theys Construction, other construction firms and then Specialty Finance Group.[14]

Auction

On June 18, 2012, three companies bid on the property, each submitting an opening bid of at least $3 million and a $200,000 cash deposit.[15] Danielson submitted a bid but he was rejected because of an inability to guarantee to pay. Dewberry Capital, a John K. Dewberry firm associated with Deerfield Square Associates, won the building shell with a $6.25 million bid at auction with plans to complete the structure.[16] Planning was expected to continue on the site after a Dewberry hotel was opened in Charleston, South Carolina in the summer of 2016.[17][18]

Future Plans

No progress has been made on construction since the purchase. In 2017, Dewberry Capital of Atlanta, submitted design plans to resume construction and expanding the number of rooms to 112.[19] In 2019, Dewberry updated its website with new plans to turn the structure into a luxury apartment building called The Laramore.[20]

City Council Actions

The Charlottesville City Council directed staff in January 2016 to pursue legal action to either force construction or to force public acquisition through eminent domain, but no action has been taken as of as of September 15, 2019.[21][22]

In July of 2016, the Charleston’s Dewberry hotel opened.[23] The eight-story, 155-room property opened in a former federal office building in downtown Charleston, NC.[24] The question remains whether Dewberry is still seeking to develop the building. In 2018, his planners were working with city officials on the design, which includes activating Second Street. [25] The project is dormant as of September 15, 2019. [26]

Landmark Hotel performance agreement

Essentially, with the City Council's approval of this agreement, the developer would promise to expedite construction and abide by several other terms and the city would give the developer more than $1 million in annual tax rebates over the course of 10 years.[27][28]

The project was expected to exceed $20 million dollars in capital investment and create approximately 100 jobs. Once completed and operational the hotel project was expected to generate $800,000–$950,000 in annual City tax revenue, this included real property taxes, personal property taxes, sales taxes, meals taxes, lodging taxes, BPOL and utility taxes.

After discussion and considerable negotiation, (by the end of 2016) City staff and Dewberry Capital were in basic agreement on components of the proposed agreement:

City would agree to lease 75 City owned parking spaces in the Water Street Parking Garage for an initial term of 5 years.

(At that time, the project was expected to exceed $20 million dollars in capital investment and create approximately 100 jobs. Once completed and operational the hotel project was expected to generate $800,000 –$950,000 in annual City tax revenue.)

The City would agree to provide a performance grant (initial estimated amount was $110,000) to the developer, based on the real estate tax generated by the project for ten years. Base value in 2017 was $6,642,500.

(In order to trigger the performance grant the project must receive a certificate of occupancy and generate in year one a minimum of $150,000 in lodging tax receipts. In year two the minimum is increased to $225,000 and in years three–ten to $300,000. The developer was also required make a minimum capital investment of $20 million in the construction of the project.)

On March 6, 2017, during the City Council's regular meeting, City Staff sought direction from council as to whether to pursue this performance agreement by proceeding to draft the necessary agreements and schedule future Council action.

City approvals

The Charlottesville Board of Architectural Review approved construction plans on February 20, 2008[1]. BAR granted conditional permission to tear down the black granite façade in October 2008[29]. Because of a quirk in Virginia law these original 2008 approvals would remain in effect, and stay valid until 2017.[30]

(Since the city caps buildings at 101 feet, the height of the Wachovia Bank across the street, nine-stories was as tall as the developers could take the hotel by-right.)

Spot blight

After nearly four years of being abandoned, Charlottesville officials served Dewberry in the fall of 2013 with a letter requesting he secure the property against vandalism and grafitti. Dewberry responded by saying he had done enough.[31]

Dewberry has stated he will complete the project after another hotel is completed in Charleston, South Carolina.[32] That project is redevelopment of the former L. Mendel Rivers Federal Building into a 155-room hotel. That is expected to be open between December 2015 and February 2016. [33] However, the project may not open until spring 2016. [34]

The Dewberry Charleston and other projects

The Dewberry Charleston hotel opened in June of 2016. Atlanta-based real estate developer and part-time Charleston resident John K. Dewberry, purchased the abandoned seven-story structure in early 2008. The city of Charleston approved renovation plans in early 2010. In November 2014 construction started on redevelopment of the former L. Mendel Rivers Federal Building that built in 1964 to house various government agencies. The building closed in 1999 after sustaining damage from Hurricane Floyd. [35]

In 2003, after several years of negotiations, the GSA and City of Charleston developed a Memorandum of Understanding (MOU) in which that the city would construct a new building for GSA and, in exchange, the City of Charleston would take control of the Rives Building. The GSA building project was to proceed in the summer of 2003. The MOU was set to expire February 10, 2007 if the City of Charleston and the GSA could not reach an agreement. [36] In January 2008, Dewberry submitted the high bid for the vacant office property in an online auction for $15 million in a government auction. Dewberry's firm has developed the Dorchester Square retail center in North Charleston. It later bought Cross Creek Square at Folly Road and Maybank Highway on James Island and rebuilt the Bi-Lo shopping complex at Ben Sawyer Boulevard and Rifle Range Road in Mount Pleasant, North Carolina. [37] [38]

On January 14, 2014, the Charlottesville Planning Commission voted 7-0 to require Dewberry to secure the property and to require a structural integrity report to be completed within ninety days.[32] In response, Dewberry secured the building with plywood barriers, installed a taller fence and blocked open stairwells-- but no progress on new construction is expected until at least 2016 or even later. [40]

In 2018, it was reported that the site has become a major source of rats on the Downtown Mall [41]

Water Street Parking Garage lease

On November 20, 2017, City Council voted 3-2 to approve a 40-year lease of 75 spaces on the top floor of the Water Street Parking Garage.[42][43] Rent was to be $40,000 for the first year, equivalent to under $45/space/month, then rise to $60,000 in the second year, $80,000 in years 3-5, with adjustments every 5 years thereafter. The lease was terminated by Dewberry on March 1, 2019.[20]

Map

Coordinates:

image:https://www.openstreetmap.org/note/new#map=19/38.03000/-78.48082&layers=N

Timeline

November 15, 2007: Minor Family Hotels LLC and Hotel Charlottesville LLC enter into a development agreement

April 19-23, 2010: Parties hold arbitration meetings at which 8 witnesses testify and thousands of documents are introduced into the record [44]

August 25, 2010: Judge Hogshire signs the arbitration award

January 19, 2011: Fulton County State Court in Georgia awards assets of project to Specialty Finance Group [13]

June 18, 2012: Auction in U.S. District Court won by Dewberry Capital [16]

January 14, 2014: Planning Commission votes 7-0 to determine that the structure is blighted. Staff proposed two remediation plans: the first would add fencing & security cameras, authorize police entry, and remove graffiti, while the second would require demolition of the partially-constructed building. The commission recommended Option 1, adding requirements for structural evaluations within 90 days and then every four months thereafter. [32] [45]

February 18, 2014: Council votes to defer a decision on the blight remediation plan after Jim Tolbert reports a draft agreement is being negotiated. [46] [47]

April 7, 2014: Council appropriates $102,506.39 to new sidewalks. The funds were recovered earlier in 2014 from completion bonds posted to guarantee promised pedestrian improvements on 2nd St E. An additional $8,500 was paid to the bankruptcy trustee. [48]

January 19, 2016: Council directs staff to prepare for legal action to either force construction or to force public acquisition through eminent domain. [49]

June 20, 2017: Dewberry's plans go before the Board of Architectural Review

September 2017: Dewberry estimated that his new five-star hotel, which he plans to name The Charlottesville Dewberry , will generate $13 million for the city over the course of 10 years.

, will generate $13 million for the city over the course of 10 years. November 20, 2017: City Council votes 3-2 to approve a 40-year lease of 75 spaces on the top floor of the Water Street Parking Garage. [42] [43] Kristin Szakos and Wes Bellamy opposed the motion.

Kristin Szakos and Wes Bellamy opposed the motion. December 18, 2017: City Council votes 3-2 to deny a performance agreement for a tax abatement equal to 50% of the incremental real estate tax.[50] Bob Fenwick voted against the proposal, despite voting to approve the parking lease the previous month.[51]

March 20, 2018: BAR grants approval of new massing and height [25] [52]

March 1, 2019: Dewberry terminates its lease for spaces in the Water Street Parking Garage.

Sometime in 2019: Dewberry Capital's website is revised to name the project The Laramore and lists it as luxury apartments.

Images

2018 digital exhibit artwork by Frameworx

Exterior view (summer 2018): 201 E. Water Street