Town to Spend $100,000 on Welcome Sign Property

By GEORGE SOUTHERN
Cape Charles Wave

March 17, 2014

Cape Charles Town Council agreed in a closed-door meeting March 10 to spend $100,000 to buy seven empty lots on the corner of Randolph Avenue and Fig Street owned by developer Richard “Dickie” Foster’s Bay Creek LLC. According to Town Manager Heather Arcos, “the general consensus was for the Town to move forward with the acquisition.”

The town has no immediate plans for the property, which displays a “Welcome to Historic Cape Charles” sign. The town’s Comprehensive Plan and VDOT’s 2020 Transportation Plan call for a traffic circle at the intersection of Randolph and Fig, according to Arcos.

No formal vote is allowed during closed meetings, so Town Council will officially vote to buy the property during its regular meeting Thursday, March 20. Although the decision has already been made, 3-minute public comments may be expressed at the meeting (6 p.m. Thursday at St. Charles Parish Fellowship Hall, 550 Tazewell Avenue). CLICK to read the memo and draft resolution.

The town has leased the seven lots from Foster since 2010 with first right of refusal should the property be offered for sale. A similar number of commercial lots on the other side of Randolph Avenue (not owned by Foster) have been for sale for more than 10 years.

The lots the town plans to buy are valued on County tax rolls at $50,000 each, for a total of $350,000. However, since the real estate bubble burst in 2008, vacant lots in the Town of Cape Charles typically have sold for only a fraction of their assessed value.

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Foster’s offer to sell the Randoph Avenue lots follows a pattern of divesting his Cape Charles holdings which began with the sale of his Bay Creek mansion in Heron Pointe. Then in 2008 he sold half of Bay Creek South and another 25 percent the following year. In 2012 he lost Bay Creek Marina, Aqua Restaurant, shops, and various rental properties in Marina Village to foreclosure. A court settlement this year conveyed his ownership of the replica Old Plantation Flats lighthouse to a former partner. There is speculation that Foster is on his way to divesting 100 percent of his Cape Charles and Bay Creek holdings.

When a municipality purchases real estate, that property is removed from the tax rolls. In this case, the town will lose $935 annually in property tax, and Northampton County will lose an additional $2,355 annually.

Arcos proposes that the town pay for the lots with money reserved for the Community Trail Project. The town had budgeted $150,000 for the trail this year, but due to delays it now plans to spend only $50,000. “The remaining $100,000 will not be utilized in this fiscal year,” Arcos said, “and would be transferred . . . for the acquisition of these parcels.”

When construction of the community trail begins next year, the town will be obligated to spend the $100,000 that will have already been used to buy the Randolph Avenue lots. The funds are expected to come from the $1 million the town borrowed last December for capital projects. (CLICK for story)

The action parallels Town Council’s decision in 2012 to spend money allocated for new wells to instead purchase the Bank of America building for use as a library. Then in 2013 Town Council justified borrowing additional money, in part to fund the new wells. The town originally borrowed $2.5 million for the multi-use trail, new wells, and other improvements in 2010, before borrowing the additional $1 million in 2013.

The action also has parallels to Town Council’s decision in 2012 to sell seven lots originally part of Central Park. But whereas in the current land deal the town is buying seven lots for $100,000, in 2012 the town sold seven lots for $10. The 2012 land sale negotiations took place during the run-up to Town Council elections, and the 2014 land purchase is also occurring only weeks before elections for three new members of Council and a new mayor. In 2012, three members of Council were not re-elected. After the election but before leaving office they all voted to sell the lots.

The civic group Old School Cape Charles charged in 2012 that Town Council violated the Virginia Freedom of Information Act by negotiating in secret to sell the lots. The FOIA allows closed-door sessions only in very limited cases, such as personnel deliberations or, when buying or selling property, “where discussion in an open meeting would adversely affect the bargaining position or negotiating strategy of the public body.”

The town has never demonstrated how public awareness of its plans to buy or sell property would “adversely affect” its bargaining position. In the case of the Randolph Avenue lots, the existing contract grants the town first right of refusal, so even if word got out that the property was for sale, it could not affect the town’s ability to buy. In the case of the Central Park lots, the only party that could have been “adversely affected” was the purchaser, who was only offering $10. And in fact, when word of the land deal did get out, Old School Cape Charles offered $10,000 for the property, but Town Council refused to consider the offer.

Even when closed-door meetings are allowed, the law requires public notice that such a meeting will take place, and what the subject matter will be. The Act states: “A general reference to . . . the subject matter of the closed meeting shall not be sufficient to satisfy the requirements for holding a closed meeting.”

The public notice for the March 10 closed council meeting did not reveal that purchase of the Randolph Avenue lots would be discussed – only that the subject was “Real Property Acquisition Opportunity.” The public notice for the 2012 closed meeting to discuss selling the Central Park property was even more vague, making reference only to an “Unsolicited Confidential Proposal.”