#17 Story
Old School Developer Gets Another Lucky Break
Town gave Petersburg developer J. David McCormack $41,000 to repair damage to old school wall, but McCormack did the job for an estimated $1,000. (All photos Cape Charles Wave)
By GEORGE SOUTHERN
Cape Charles Wave
December 15, 2014
J. David McCormack of Petersburg, who is converting the old Cape Charles High School in Central Park into a 17-unit apartment building, has enjoyed one lucky break after another over the past four years. Most recently, he saved as much as $200,000 in repairs to a crumbling back wall.
It was that same wall that town officials claimed made the old school impossibly expensive to repair for use as a community center. When Northampton County offered to chip in, then-Mayor Dora Sullivan turned the County Board of Supervisors down flat.
“The cost to provide a historic restoration is prohibitive at $2-4 million,” she wrote to then-Supervisor Willie Randall, noting that “one exterior wall collapsed as a result of the earthquake last year and the estimate to repair that wall alone was approximately $200,000.”
The actual estimate was $228,000 and came from FEMA, who was willing to pay to repair the earthquake damage so long as the town retained ownership of the building. FEMA refused, however, to compensate the town unless the money was used to repair the wall.
The FEMA report also contained the question, “Was this site previously damaged?” The answer given was “No.” But the damage had been documented years earlier in the 2006 Shriver Holland report: “The exterior wall along the west side of the east wing has pulled away from the floor framing. . . . Geotechnical investigation should be provided to determine cause of wall movement. Wall may need to be re-anchored and additional foundation support provided,” the report stated.
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Two masons + two days’ work = repaired wall.
Town officials were not interested in seeing the wall repaired. Instead, they were looking for money to pass to developer McCormack. So they turned down FEMA’s offer and went instead to the Virginia Municipal League, which insures town assets. The VML estimated an actual loss of $66,000. Subtracting a $25,000 deductible left $41,000, and the town cashed the check.
Meanwhile, then-Assistant Town Manager Bob Panek had struck a no-bid deal with McCormack and his sometime partner, Edwin Gaskin, to convey the school plus the $41,000 insurance proceeds in return for the nominal sum of $10. The deal was agreed to by Town Council in a series of closed-door discussions initially concealed from public scrutiny.
Fast forward to late 2014, when McCormack began construction on the school building. Two masons spent the better part of two days repairing the wall. Typical of construction at the time (1912), the wall consists of three courses of brick. Only the outer course had fallen down (see top photo), and the masons simply bricked it back.
If each mason was paid $25/hour, and worked 16 hours, the total cost of labor was $800. Throw in another $200 for mortar and some new bricks (most were simply reused) and the estimated cost for actual repair was $1,000 – a remarkable saving over the $200,000 figure named by the former mayor, and a $40,000 profit for McCormack over what the town gave him.
Most of the brick for wall repair was simply reused; foundation was not touched.
But the wall is only the latest “lucky break” for McCormack. He also enjoys a remarkable (if illegal) business relationship with the town by which he receives free water. Town Council has granted several water concessions to McCormack, but they never passed any ordinance giving him free water. That decision was made by acting Town Manager Panek, by fiat.
Town code requires payment of a sizable utility connection fee when a building permit is issued. But the town agreed not to charge McCormack a connection fee until issuance of a Certificate of Occupancy, which comes only after construction is complete.
Existing water connection at old school. Town is not billing McCormack for water used by contractors.
Meanwhile, the school has always had a water connection. Anyone else purchasing property with a water meter is required to pay a monthly charge, whether any water is used or not. In fact, the town code goes further, requiring monthly water payment even where a structure has been razed. For example, the town billed the developer of the Cape Charles Yacht Center for water and sewer for several years after the only building on the property had been demolished.
In McCormack’s case, Panek ordered town staff to ignore the existing water hookup to the school, which otherwise would have been billed a minimum of $108/month even if no water were used. McCormack has now owned the building for two years, which amounts to over $2,500 in utility charges that any other owner would have been billed. Meanwhile, builders at the school are enjoying the use of free town water (see photo).
After McCormack bought the school and basketball court, Town Manager Bob Panek removed the hoops for “safekeeping.” McCormack subsequently argued to county tax officials that he should not have to pay property tax on the court since it was unusable.
Another “lucky break” came in the form of two sizable tax reductions. When McCormack bought the old school, it was valued on the tax rolls at $921,000. A 2014 reassessment lowered that value to $510,900. But McCormack was not satisfied, and appealed the reassessment to county officials. In a series of clever, if not outlandish, arguments, McCormack maintained that the seven lots on which the school is built in a residential district should be valued below that of adjoining lots, because the presence of the school building is a liability. He further argued that the basketball court adjoining the school should have a value of zero, because “the basketball hoops have been dismantled by the Town of Cape Charles, and the courts are no longer in use.” The county bought his argument and reduced the total property assessment value to $285,000.
But McCormack’s luck didn’t stop there. Last May, the county approved his application for “Tax Assessment Rehabilitation,” which locks in the $285,000 assessment for 10 years, no matter how valuable the property may become. That means McCormack will pay only about $1,900 county tax and $786 town tax annually on his 17-unit apartment building for the next 10 years – less than most other town property owners pay for a single family residence.
McCormack appears confident that his luck will hold with the Virginia Department of Historic Resources, which decides whether he qualifies for historic tax credits totaling 45 percent of his expenses. He has always conceded that his only reason for taking on the school project was to get the tax credits (which also apply to the “administrative fees” that he charges himself).
But an official at the Department of Historic Resources initially denied McCormack’s application, listing a litany of requirements that would have to be satisfied. For example, McCormack was supposed to build a full scale mockup of the proposed roof-mounted heating/air conditioning system and skylights. McCormack has ignored all the DHR’s requirements, but he did hire a former DHR official, Page Pollard, to handle the application process. (The Wave has learned that DHR has never denied any of McCormack’s previous applications for historic tax credits.)
McCormack also lucked out on asbestos in the school. Scare stories had been circulated to the effect that asbestos abatement would cost thousand of dollars — another reason for the town to unload the school. But in the event, little to no asbestos abatement was performed, and inspectors have not reported a problem.
McCormack also enjoyed amazing luck with the town’s own Historic District Review Board, which under the leadership of Russ Dunton found that “converting the old school to apartments is not an appropriate use of the building.” But then, in a wholly unrelated matter, the entire Historic Review Board resigned after Town Council overruled it on granting an occupancy permit to the new Hotel Cape Charles. (The hotel developer, David Gammino, admitted that he made significant changes to the design without obtaining permission from the Review Board.) Town Council appointed a new Review Board, which has approved all of McCormack’s requests.
McCormack also learned that, like Gammino, it is better simply to act without requesting approval from the Review Board. For example, Historic District guidelines do not allow a parking lot in front of a building in a residential district. McCormack is building a parking lot across the entire front of the school, but he never requested permission, and consequently obtained a building permit. McCormack maintains that the school actually fronts on Plum Street (where there is no door), and the front of the building with the main entrance is actually the side. As the Wave has reported, the former town planner, the former mayor, and several members of Town Council have simply refused to answer Town Councilman Frank Wendell’s question, “Which direction does the school building face?”
J. David McCormack: A lucky man
McCormack was also quite fortunate to have a wife who “just by sheer coincidence realized that she had a relationship with Heather” [Arcos, former town manager], to use McCormack’s own words, which the Wave has on video (CLICK). No one knew that the town was even interested in selling the school to a developer, although there was a plan to lease it to the Cape Charles Christian School. Without ever advertising the property, Town Council agreed to in effect pay McCormack to take it, meanwhile refusing to consider an offer from local residents to buy it for $10,000 for use as a public community center.
But McCormack’s luck has not always been so remarkable. Back in 2009 he proposed that he be given the old armory building in Blackstone, Virginia, for conversion to apartments, with the assistance of historic tax credits. Local landlords objected that McCormack was getting an unfair competitive advantage, and the request was denied.
But earlier this year McCormack offered $5 to buy the armory and turn it into an organic tomato processing facility. This time he thought he had the votes needed in the town council to win — and he would have, were it not for Blackstone town resident Cindy Taylor-Longest. Council member Eric Nash had already stated that he intended to vote to give away the armory, but just as the town clerk was recording the votes, Taylor-Longest called out from the audience, reminding Nash that his landscaping service had a contract with McCormack. Nash responded that he was already receiving a lot of personal criticism on Facebook, and therefore would abstain from voting. The result was a tie vote, which Mayor Billy Coleburn broke by voting No. And so, in that case at least, McCormack’s luck failed to hold by a thread.
UPDATE: On December 15, Blackstone Town Council voted 6-1 to convert the old armory into a community center, working in conjunction with a community support group.
Dora and her crew have certainly left a legacy. If FEMA had paid for repairs as stated above, and the civic group had bought the building, we could have had a wonderful town center. What Dora and crew got us was a tenement on central park. Sullivan, Panek, and co. deserve a big thanks for their clever maneuverings.
And the county, assessing seven lots with the building on them for about half what many one family homes in CC are assessed at – simply brilliant.
Brilliant, in-depth reporting. Thank you. But man, this is just cray-cray. Of course, the optimal phrase is, “He also enjoys a remarkable (if illegal) business relationship with the town by which he receives free water.” That further begs the bigger question: what kind of person would actively lobby and fight to deprive the underserved kids of a place to play sports, and why? As we speak, the 112-year-old stage and Jean Collins’ gymnasium is being cut up into low-rent apartments. Nothing we can do about that, but I would urge the Wave to keep digging. There’s still a lot more that we don’t know.
The Wave is the Washington Post of the Eastern Shore – impressive investigative journalism. The Cape Charles Yacht Center and any business or residence that has not had a similar preferential treatment should feel entitled to demand the same deal, retroactively.
Can anyone tell me who the brick masons are? I have work to be done.
The Cape Charles School east wIng, west wall receives little or no sunlight. If winter moisture on this area results in freeze/thaw action over the decades, a likely result would be spalling of the mortar and subsequent degradation of the outer wall. Existing brick layers don’t show any evidence of earthly subsidence.
Malfeasance, misfeasance and nonfeasance, there is something for everyone in the Great School Give-Away Tax-Credit, Tap- Fee, Insurance Proceeds, Flim-Flam, Carpetbagging-styled Boondoggle that would make Bernie Madoff proud. That our mayor, Council, town managers, and planner and other enablers at the time promoted the interests of an apartment house developer repeatedly by over-estimating and fabricating falsehoods to serve as scare tactics to a gullible citizenry while concealing the true costs of retaining and preserving our publicly owned 100-year-old historic Cape Charles High School property will go down in local history as the most blatant act of collective stupidity and deceit that has ever been witnessed in our municipality. There are many more equally appalling aspects of this dirty fruitcake of a deal than those contained in the above article. So as we as a community contemplate a PSA sewer project and Northampton County zoning ordinance that promotes Route 13 highway commercial development over the interests and viability of the historic Cape Charles commercial district, remember — while some politicians promise increased economic activity if we just believe their propaganda, we instead might just end up with a lousy load of overpriced bricks. Be careful what you wish for, Cape Charles — you just might get it.
THE REST OF THE STORY (added today): On December 15, Blackstone Town Council voted 6-1 to convert the old armory into a community center, working in conjunction with a community support group.
“If wishes were horses, then beggars would ride” is an old English expression that may apply here. If the Town had done this, if the Town had not done this — then that. Wow. In all the writing about these “wishes,” nobody has ever proffered a budget for acquisition, development, and operation of a community center. One conclusion is that “if” the Town had taken no actions, nothing but further deterioration of the building would have occurred.
Well Steve I may be just a “come here” but hows about using the money the Town used to buy the bank, and instead have put the library in — oh, I don’t know — the COMMUNITY CENTER?
But hey, I am just some guy from someplace else.
The comment by Mr. Fox is indicative of just how successful the Town has been in its propaganda campaign. The old adage “If you can’t dazzle them with brilliance, baffle them with BS” certainly holds true here. The level of ignorance involved in the old school affair, I still find mind boggling. “If” the Town had taken no actions, nothing but further deterioration of the building would have occurred.”
Actually, the fact that the town did nothing is the reason the structure deteriorated in the first place. Also, the same millions in tax credits the developer is poised to gorge himself on were also available to the Town. Just ask the DHR [Department of Historic Resources], they’ll tell you. In other words, had the Town worked with the community, millions could have been spent on rehabilitating the school, creating a pretty nice athletic multiplex for our kids. Old School Cape Charles knew this, and this is why we fought so hard to keep the building public.
As far as budgets, we have monies for new libraries, floating docks, advertising space, et.al. It seems budgeting for athletics, probably a nominal sum, would seem like an unselfish, worthwhile thing to do. Jen Lewis is awesome, and I believe given the opportunity, she could have done some pretty fantastic things with the old school.
Notes from the Dark Side: In Blackstone, it was found that this very same developer was actually paying one of the Council members for services. There are also allegations that a quid pro quo was also proffered. Did that happen here?
Notes from the Light Side: Mr. Wendell is completely on point.
It doesn’t have to be over. Mr. McCormick walked away with millions in property for just $10, usurped $40 grand in insurance funds, and will eventually abscond with millions more in tax credits (our taxes). The key is to derail the tax credit gravy train. Call or email the DHR and voice your concerns here:
Julie Langan
DHR Director & State Historic Preservaton Officer
[email protected]
(804) 482-6087
MILLIONS in property for $10 and millions in tax credits? I won’t say that is false, but please show me the math. Thanks!
I am baffled by the scenarios played out in the minds of all over this issue. A call for shifting priorities among various budget items or “would be” budget items is one thing, but where is the budget for operating a community center is the issue I put forth, and how does it compare to the other possible choices for public expenditures, and at what sacrifice in other public needs. It does not matter where you’re from or how you got to where you are, these are realities you’d have to wrestle with. There are many empty buildings in CCVA which could serve the purpose……give the Town a proposed budget for leasing and operating it, and demonstrate how it would be funded. It can’t be run on rhetoric alone.
Mr. Fox — Don’t be baffled about citizens’ concern about the loss of the old school for a community center. A fact that may be of interest to you is that under Cape Charles’ current zoning the Cape Charles School is defined as the Municipal Community Center. In case you are unaware, the Town owned the old school free and clear. There was no need to acquire the building. The expense of fixing it up for public use could have been largely paid with the money spent to write a contract to give it away and the related lawsuits. Estimates are that the Town spent up to a quarter of a million dollars to give away the school.
Tax credits can be used by public entities for community improvements through public-private partnership. Old School Cape Charles was willing to take on that work.
Town Council recently spent $100,000 to buy seven lots at the entrance to the Historic District that hold nothing but a welcome sign. The town paid over $200,000 for the bank building to turn it into a library, removing it from the tax rolls forever. There may well be many empty buildings around town, but there was only one that belonged to town citizens. It was in the park. It had basketball courts inside and outside. It was a town asset.
It is interesting that you note no concern about the insurance scam and the use of town water without paying for it. It seems somewhat fishy that Mr. McCormack has gotten so much from our town for so little.
Perhaps I am not communicating my thoughts clearly. It was never my intent to request that others agree with my concepts. What seems to be clear is that there is a prevailing sense that the existence of the old school building would allow it to be easily and inexpensively transformed into a community center. Where is the budget for doing that?
The building was publicly owned; it had considerable deferred maintenance; it was probably not up to current Codes in many respects It most likely contains asbestos. And “if” operated as a community center, how much would it cost to refurbish it? How much would it cost to operate it (heat, a/c, lights, staff)? Would it be “free” to users, or would it be subject to user fees? If, during its operation, a major repair was required (e.g. the roof, window replacement, heating and a/c system), how would that be funded? The list is endless.
I seem to recall that “Old School” is not a legal entity, and only came together after the challenged transaction had occurred. I understand fully the sentiment and attachment to old/historical property, and my purpose in writing is solely to focus attention on major issues that seem to be glossed over. I have no “dog” in the fight, and the ultimate result is immaterial to me personally. But let’s conjure a scenario in which the new owner decides he bought a white elephant and desires to return its ownership to the Town, as many wish. Then what is the “plan”? What does it cost? How will it be funded? These are the considerations whether the building had been retained by the Town, or whether ownership reverts. Ask Northampton County about the cost of maintaining old school buildings.
In the end, I hope those who want a community center get it, and the matter is put to rest and the Town can move forward to its next “major” issue in relative peace and harmony, and that discord is only a vehicle to bring focus to issues that require deliberation and decision, not taking on a life of its own.
Mr. Fox, I’ll moot all your objections regarding funding, etc., by telling you what I proposed at the time: Move ALL Cape Charles government offices to the Old School, sell the main street [Plum Street] assets since highest and best use DEMANDS that the commercial area generate tax revenue as opposed to off-sheet buildings, and then the EXISTING budget would transfer to a newly resurrected historic gem — with a Community Center and Library. We would have saved the insurance money, the Library/Bank acquisition money, and have tax-generating property ON MAIN STREET to offset future obligations. Capisce?
Mr. Fox is indeed very fond of facts, and as a Good Samaritan, Mr. Kuzma has offered him one, which he may hopefully use to alleviate some of his (historical) ignorance in regards to the Old School. Mike’s idea of moving all services to the Old School and freeing up commercial (revenue generating) real estate was at the time the best, simplest, and most frugal approach. However, the idea’s simplicity and elegance was intellectually too much to grasp for that particular collection of humanity residing at Plum Street (and others); rather than even entertaining it, the Town stupidly did what it always does when confronted with beauty and quality (“what can be done with less is done in vain with more.”). They put the kibosh on it.
What’s that on the horizon? Why, new offices, in town and at the harbor, to handle the expanding role of government for the 600 people that live in Cape Charles.
Regarding the present plans for the Old School, I am curious as to the actual MARKET for 1 bedroom condos. What is the expected return on investment? What was the project cap rated at? Will this turn into a public housing project when sales projections fall flat? I bet that in regards to development, Mr. Fox and I sit a LOT closer than he thinks. But I stand by my objection to this usage.
One can only hope that the Old School will turn into a “public housing project.” Safe, quality and affordable housing for low income residents is in great demand in the area and should be considered an asset in any town. I continue to be dismayed at the disdain for poor people in Cape Charles.
Mrs. Bauer, my concern for the poor is unmatched. Sadly, we are discussing the differences in eradicating poverty that exist between left and right.
I am in the midst of preparing a report on the disparate impact the Mt. Laurel decision has had in NJ, and the direct connection between that Judicial Fiat and the necessity of “Abbott District School funding”.
As we draw down the population of employed, lower income individuals in our cities, we leave behind those who now lack the role models of those who get up and go to work, get involved in the local politics of their city, look to keep those areas safe and crime free and generally make up the ‘holistic’ community that is a City, Town or Municipality.
I have a child. I do not just GIVE to her, I expect her to EARN. Why does the opposite apply to those who we are NOT related to?
Does a child respect what is given with no expectations of responsibility? No. They destroy it because they know there will be no reprecussions and can expect it to be replaced.
I am personally appalled at the disheveled state of the “Social Justice” housing project across Rt. 13.
NEVER ONCE did I go there and toss trash, rip down the fence surrounding the retention pond or preform NO maintenance on the lawns or surrounding areas.
Nor do I support the increasing of taxes on those who paid full price, pay full taxes and utility costs to subsidize others.
But please do not ever EVER call me cold towards poor people. I was born in south Trenton, NJ a very very poor person. Hard work and effort by myself, and more importantly my Parents got us out of that economic position.