South Virginia Town in Water Feud with Echelon Partner

Front page of Blackstone, VA, weekly Courier Record newspaper. The photo caption reads: “Developer On The Clock — Tenants in the new Blackstone Lofts luxury apartments on Lunenburg Avenue have been hoping that Town Council and developer Dave McCormack of Petersburg can resolve a dispute over $38,000 in unpaid water and sewer tap fees. Officials ‘upped the ante’ this past Monday night, giving McCormack 30 days (until Sept 27) to pay tap fees, or water will be shut off to the 25-unit building.”

Cape Charles Wave

September 4, 2012

Blackstone VA Town Council is threatening to turn off water to the tenants of newly developed Blackstone Lofts luxury apartments if the developer does not pay $38,000 in hookup fees by September 27.

The developer is J. David McCormack, who also is a partner with Edwin Gaskin at Echelon Resources, Inc. Echelon has a contract with the Town of Cape Charles to convert the old school at Central Park into an apartment building.

According to Blackstone Town Council minutes, the council voted March 26 to give McCormack 30 days to pay the tap fee.

McCormack told the Wave Monday night that “We were told there were no tap fees — then they initiated the tap fees. We’re negotiating it.”

McCormack noted that unlike in Cape Charles, where the Town owns the old school property, the old tobacco warehouse he converted in Blackstone was “a private deal.”

“We got taken by surprise — we’re still going to pay. That’s the way I am,” McCormack said.

Blackstone Town Council minutes of July 16 report that Town Manager Philip Vannoorbeeck “believed the Town had some culpability; the building permit should not have been issued.”

The minutes continue: “Mayor [Billy] Coleburn asked if Manager Vanoorbeeck believed in his heart that Mr. McCormack was unaware of Blackstone’s water/sewer tap fees. Manager Vannoorbeeck replied no because he had been told by reliable sources that he knew.”

When speaking to the Wave, McCormack stressed that this newspaper needed to talk to Vanoorbeeck before printing the story. However, Vanoorbeeck did not answer his phone, and his voice mailbox was full.

McCormack told the Wave that he had not read the news report in the Blackstone Courier Record because “the mayor runs the paper. Imagine that! That’s why I don’t read the paper. It’s a fluff BS piece. It’s meaningless,” he said.

McCormack added that if the Wave reprinted the story in the Courier Record, “I’ll understand that you’re inciting a riot down there . . . the fact that you’re reprinting that is really, really scary.”

[The Wave is not reprinting the Courier Record story, other than as a photo illustration. Information in this story comes from official minutes and from McCormack himself.]

In Cape Charles, Town Council voted May 10 to cut tap fees by 50 percent for all new 1-bedroom dwellings constructed in the Town.

Mayor Dora Sullivan signed a contract June 28 to convey the old school property to Echelon, with the proviso that the “normal” water and sewer hookup fees would be reduced by half. Since the normal fee had already just been reduced by half, the result is that Echelon will pay only one-fourth of the hookup fees charged prior to May.

The combined water/sewer hookup fee had been $12,350 per apartment, or $209,950 for a 17-unit dwelling. With the two reductions authorized by Cape Charles Town Council, the total hookup fee to be charged to Echelon is $52,487.50.

In an April 2 email from Cape Charles Town Manager Heather Arcos to Echelon Resources partners McCormack and Gaskin, she wrote: “Council will take action to revise the Town Code to reduce connection charges 50 percent for one-bedroom and smaller units. This brings them down to about $105,000 . . . . Council does not want to waive all of this amount. Could they offer paying 50 percent of it (about $52,000), or some other reasonable percentage either over several years or perhaps upon sale of the property?”

McCormack responded by email: “We’ve agreed that we will make the resultant payment in full by the time we receive the certificate of occupancy on the property.”

The emails between Town staff and the Echelon developers were obtained through the Virginia Freedom of Information Act.

Cape Charles Town Code states (Section 71-42): Connection charges “shall be paid to the Building Department at the time of building permit issuance, or to the Town Treasurer pursuant to any payment programs authorized by Town Council, prior to the initiation of connection related construction activities.”

The contract signed by Mayor Sullivan with Echelon states: “Connection charges shall be paid in full before issuance of a Certificate of Occupancy for the Project.”

The Blackstone Town Council minutes of July 16 state: “Councilman [Richard] Keller said we have been played by a professional. He knew everything and was told by the former town manager and a former council member. [Keller] believed a warrant of debt would be a good thing to do.”

A pdf of the Courier Record front page is available at the newspaper’s own website: http://www.courier-record.com/front_page_pdfs/fp_08_29_12.pdf



South Virginia Town in Water Feud with Echelon Partner”

  1. Deborah Bender on September 4th, 2012 4:48 am

    It seems to me that our little Town Council should have known more about J. David McCormack & Edwin Gaskin BEFORE they climbed into bed with them! I spoke at a Town Council meeting about my concerns, but nobody would listen. There is a saying, “All that glitters isn’t gold.” I think our mayor, both town managers, and Council have been played by professionals too. Greed has taken this town down before and greed is knocking on the door again. Maybe this will be a wake-up call, but this time it might be too late. NO PERFORMANCE BOND AND NO BUY-BACK OPTION? Smart, Mayor Sullivan — REAL SMART!

  2. Wayne Creed on September 4th, 2012 9:52 am

    I now understand why the developer refused to supply a Pro Forma to the Town. That kind of data would have allowed us to accurately model the projected net revenues and eventual cash flows the old school project might generate. Given what we have learned in Blackstone, it would have been rather embarrassing to have this sort of thing exposed just as you are courting prospective partners on the Eastern Shore. There have been numerous red flags popping up around the Echelon group, such as the Ginter Place bankruptcy in Richmond (http://www2.timesdispatch.com/business/2009/apr/22/b-gint22_20090421-213618-ar-45710/). Now that the Blackstone incident has finally exposed their financial situation, I have to agree with Mr. McCormack, this is “really, really scary”.

  3. Bob Panek on September 5th, 2012 8:29 am

    I need to correct a statement made by Mr. Creed in his comment. Echelon provided a ten year financial pro forma to the Town.

  4. Billy Coleburn on September 6th, 2012 4:40 pm

    I’m the Mayor of Blackstone, and yes my family and I run the local newspaper. We aggressively report what happens in local government, and that upsets some people from time to time, including apparently Dave McCormack. We are a HARD-HITTING local newspaper, and we applaud the Cape Charles Wave for its reporting on this issue. We’ve been called a lot of things, but a “fluff piece” is a first. Gotta laugh! Our paper photographed and wrote about Mr. McCormack’s impressive Mayton Transfer Lofts in Old Town Petersburg. The tap fee controversy here in Blackstone is most unfortunate but it is, nonetheless, newsworthy–particularly after it has been discussed, ahem, PUBLICLY during COUNCIL MEETINGS. We’d love to have Mr. McCormack join us. 3rd Monday of each month, Dave!

  5. David Gay on September 7th, 2012 9:34 am

    I agree with Billy Coleman, Mayor of Blackstone, VA. The WAVE is an exceptional addition to Cape Charles. I start my day reading the WAVE and getting caught up on all the local Cape Charles news. For this weekender it is a great way to stay connected to the town my wife and I love.

    Thank you for staying with the Echelon story. This issue has high interest among property owners in the Historic District. After reading all the comments on this subject I still can’t figure out why the Town Council gave Echelon such an incredibly sweet deal without any performance requirements. Maybe the answer will be revealed in the court case. Eventualy the truth will be known. Keep up the good work!