Developer buys land state wants for Hampton Roads Bridge-Tunnel expansion
A waterfront Norfolk condominium project could face a roadblock from a state transportation project intended to ease congestion in Hampton Roads.
An affiliate of Alabama-based WeldenField Development, WF Willoughby Spit LLC, bought 14 acres at the end of Norfolk’s Willoughby neighborhood for $4 million on Sept. 4.
The site, which includes two parcels most recently assessed at $6.3 million, was purchased from REDUS VA Housing LLC, a Wells Fargo-controlled entity.
WeldenField’s Virginia partner, Brian Rowe, says the plan now is to develop a 333-unit condominium project that will be called Admiral’s Cove at Willoughby. He says the units at the more than $200 million project would likely start in the mid-$400,000s. If built, the condos would offer views of the Chesapeake and Willoughby bays and surrounding skylines.
“We always felt like it was a gateway project worthy of high-end development,” Rowe says.
WeldenField’s plans will sound familiar to veterans of Norfolk’s real estate scene.
They are roughly the same as a proposal from about 14 years ago for a development known as the Spectrum at Willoughby Point. Norfolk approved plans for that project in 2005 that allowed for up to 333 units and up to 35,000 square feet of commercial space. The project was to be condos in four-to six-story buildings. Site plan and building plan reviews were completed, and construction began on the foundation of one of the buildings before things went south.
The earlier plans faced hurdles with water and sewer that WeldenField says have since been addressed. Ultimately, the previous plans were shelved when the developer was beset by financial woes amidst the recession and the property went back to its lender, says Robert Thornton, a Cushman & Wakefield | Thalhimer broker, who represented Wells Fargo in the recent sale. Thornton says WeldenField sent its first letter of intent on the property around 2012.
“WeldenField has been working on this thing for a long time,” Thornton says. “There were lots of moving parts.”
State transportation planners have other ideas for the site.
To expand the Hampton Roads Bridge-Tunnel, the Virginia Department of Transportation plans to buy the two parcels that comprise the site for a construction staging area, according to Les Griggs of VDOT. Asked why VDOT couldn’t lease the property, Griggs says that isn’t an option since “the terrain of the property will likely be altered.”
In 2016, Virginia’s Commonwealth Transportation Board backed plans for expanding the Hampton Roads Bridge-Tunnel. VDOT notified Wells Fargo of its interest in the site in June 2018.
Virginia code says the state can’t try to buy an entire property with an offer lower than its appraised or assessed value, unless something has happened to make the property worth less than its assessment. That means if the state plans to buy the 14-acre site on Willoughby Spit, it would have to make an offer of at least $6.3 million, or $2.3 million more than what Wells Fargo sold the property for.
So why would Wells Fargo sell to WeldenField when it could have gotten more money from the state?
A Wells Fargo spokeswoman said in an email VDOT told the bank in 2017 it wasn’t interested in the property. VDOT says at the time the Hampton Roads Bridge-Tunnel expansion wasn’t funded.
By the time VDOT informed the bank in 2018 it was in fact interested, Wells Fargo was under contract with WeldenField, the bank spokeswoman said.
“We were under contract with WeldenField and legally required to honor the existing contract,” the Wells Fargo spokeswoman said.
Asked about VDOT’s plans, WeldenField lawyer Grady Palmer of Williams Mullen said no official offer from VDOT has been made, and the condo plans were still being pursued.
But it won’t be as simple as just picking up where the previous developer left off.
Norfolk says since 2004 it has adopted new flood maps and storm-water regulations.
“Essentially no one can build the original plan without it being fully reviewed under the new regulations, which will require modifications to the older approved site plan,” Norfolk spokeswoman Lori Crouch said in an email. “Therefore, it would have to be rezoned to modify the original site layout and conditions. So WeldenField cannot build the old plan.”
Palmer, the WeldenField lawyer, disagreed that the old site plan needs modification.
“Our position is that the site plan was approved and continues to be approved,” Palmer says.
Palmer says WeldenField plans to apply for building permits if no offer from VDOT comes.
Griggs of VDOT said on Tuesday the state agency hoped to make an offer on the land soon.