- Published on Wednesday, 02 May 2012 16:00
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Commendable project, but financials and fiscal impact on county needed
At an informal meeting of 20 residents this week on Monday, April 30, King George Supervisor John LoBuglio vowed he would seek to delay a vote scheduled for the county to give away 5.53 acres of land fronting on Route 3 (Kings Hwy.).
The land is located in the county’s new Government Center east of Route 205 (Ridge Road) and across from the Sheriff’s office building under construction. That vote is scheduled for this week on Tuesday, May 1 (following our press time).
LoBuglio had said on April 17 he was in favor of the land giveaway. That was following a public hearing
to provide the land to Project FAITH to develop and operate a building to house various community-based programs and services for low-to-moderate income individuals and families including those provided by the Department of Social Services, Virginia Probation and Parole, King George Free Clinic, and others.
This week, LoBuglio stated, “I didn’t do that flip-flop easily. Sometimes you have to listen to your constituents.” He added that he had not known the extent of opposition to the land giveaway nor the amount of unleased space available in the county.
The informal meeting of citizens had been announced by Ruth Herrink, editor of The Journal, in last week’s issue. Herrink had likewise spoken up as one of two residents at the April 17 public hearing against the giveaway, saying professionals in the business should be given the opportunity to offer their own plan for development of such a project.
Herrink had urged that “specific financials” be revealed that would include the amount of space the county is willing to provide each agency and the amount of rent it is willing to pay to Project FAITH for it.
VISION IS LAUDABLE BUT VIABILITY OF PROJECT IS MYSTERY
LoBuglio might be forgiven for changing his mind, because the concept of housing various government safety net services to eligible residents is a laudable one.
There is no model for such a center being successfully accomplished anywhere in the state, with Project FAITH’s executive director Froncé Wardlaw touting that it would be the first of its kind in Virginia.
There may be financial reasons for that. Development and long-term leasing of property is a risk-laden venture, successfully achieved by experienced businesses with the expertise and financial resources to weather the whims of the marketplace.
While the vision is commendable, the actual costs and long-term viability of this specific project have not been studied or publicly revealed. Both Supervisors Dale Sisson and Joe Grzeika have likewise said they support the concept.
But they have also said they have serious qualms about the viability of the proposed project.
Many businesses with proven records in property management find themselves with closed storefronts and empty spaces to rent with the ups and downs of the real estate market.
Project FAITH proposed the concept nearly three years ago but has been unable to come up with the funding to begin the project.
Wardlaw claimed at the April 17 meeting that half the funding has been identified, adding, “Although funding for the HELP center is not 100 percent known, we’re 50 percent there. If we get the land from King George County, it will enable all other funding sources to be realized in 2012.”
Yet, it was not the county that had postponed the project over the last few years. It was Project FAITH’s inability to commit and to find funding.
PERFORMANCE AGREEMENT SHROUDS FINANCIAL DETAILS
A performance agreement contains language that would deny transparency to the public.
It states, “The Performance Reports required prior to and during construction of the Facility shall document and establish that Company has obtained and maintained appropriate funding for the project; as well as construction deadlines and specifications.”
But the amounts of funding and its sources have not been publicly revealed. Further wording in the agreement guarantees that continued secrecy.
It states that performance reports shall be treated by the county as “proprietary and confidential and shall not disclose them except in the ordinary course of business and to those in positions of trust and who have need to know, including employees, constitutional officers, independent auditors, attorneys retained or employed by County or its departments.”
The performance agreement would require that construction be commenced with footings poured no later than February 28, 2013 and construction to be completed no later than August 1, 2014. It’s unclear whether Project FAITH could meet the timeline with only half the amount needed for the venture currently pledged.
New proposed wording added to the performance agreement since the April 17 meeting states, “Notwithstanding any other provision of this Agreement, any and all for-profit and/or commercial uses are prohibited.” That would appear to clarify that issue, but details in the proposed deed make reversion in case of Project FAITH’s default undesirable for the county.
DEED PUTS COUNTY AT-RISK FOR LIENS INCURRED IN CASE OF REVERSION
The performance agreement contains a reversion clause. But the reversion clause is made toothless, or worse, by wording in the proposed deed.
The performance agreement states, the county “retains the right to reclaim the property through reversion of the property and all structures, appurtenances and improvements of any kind, in the event that Company does not meet all of its obligations under this Agreement and as set forth in the Deed.”
But that reversion clause does not appear to protect the county. Instead, it could put the county at-risk to pay back loans incurred by Project FAITH and secured by the property, taken with the wording in the proposed deed.
That language has finally been provided publicly for the first time in this week’s meeting packet.
The language in the deed states, “County’s right of reversion shall be subject and subordinate to the lien, operation and effect of each mortgage, deed of trust, and/or other, similar instrument of encumbrance, including agreements restricting the use of the Property, heretofore or hereafter covering any or all of the Property (and each renewal, modification, consolidation, replacement or extension thereof), all automatically and without the necessity of any action by either party hereto.”
FISCAL IMPACT NOT KNOWN
On April 17, Sisson said prior to going forward he would want to know “the full fiscal impact” and that Project FAITH, “does have the funding plan in place to go forward.” Grzeika also questioned whether simply giving the land to Project FAITH would be “fair and equitable,” and also said he questioned whether it is “the best decision.”
With LoBuglio now seeking additional information, financial details of the proposal may yet come to light, prior to any action to give the land to Project FAITH.