ECHELON COUSINS: Cape Charles, Meet Chatham
Echelon Resources has contracted to pay $10,000 for the former Chatham Elementary School and plans to convert it to luxury loft apartments. (Star-Tribune photo)
By GEORGE SOUTHERN
Cape Charles Wave
October 2, 2012
Most folks in Cape Charles probably have never heard of Chatham, Virginia — and vice versa.
The town has nothing to do with Machipongo’s Chatham Vineyards. The Town of Chatham is in south central Virginia, a little north of Danville. Its claim to fame is as the home of Hargrave Military Academy.
But residents of Cape Charles and Chatham have more in common than they might expect:
— Chatham’s population is 1,300. Cape Charles is about 1,100;
— Chatham hosts a new state prison, which has led to upgrades in their water services. Cape Charles Town Council sought a prison in the 1990s, with hopes of upgrading sewer service as a consequence.
— And, most recently, Chatham’s Pittsylvania County Board of Supervisors voted in May to sell the old Chatham Elementary School to Echelon Resources, Inc., for $10,000. Cape Charles Town Council voted in June to sell the old Cape Charles school to Echelon Resources for $10.
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Chatham’s Star-Tribune editor Tim Davis has given the Wave permission to reprint his September 19 story below. The Star-Tribune story appears in boldface type. The Wave has annotated the story in light face type.
September 19, 2012, Star-Tribune: Developer to Present Plans for Former Chatham School
By Tim Davis
Star-Tribune Editor
A Richmond real estate development company that hopes to turn the former Chatham elementary school building into luxury apartments will present plans and drawings at a public meeting next week. Echelon has never provided actual plans and drawings for Cape Charles School. At the July 21 public meeting at the Palace Theater, Echelon partner J. David McCormack presented plans and drawings of the company’s work in other locations in Virginia.
Chatham Planning Commission will host the informational meeting, which will be held Sept. 26 at 7 p.m. at Chatham Volunteer Fire Department. Cape Charles held a public hearing about the old school at the Volunteer Fire Hall.
Town council held a joint public hearing with the planning commission before voting in July to rezone the former school from A1 (single-family housing) to A3 (multifamily housing.) Cape Charles Town Council held a public hearing August 23 before voting to rezone the former school from Open Space to R-1 (single family residential) and then granting a variance for multifamily housing.
Echelon Resources Inc. plans to spend $3 million to turn the 27,000-square-foot building into 29 upscale apartments. Echelon plans to spend $2 million to turn the Cape Charles school into 17 upscale apartments.
The property on South Main Street across from the National Guard Armory includes about 10 acres. The property in Cape Charles is adjacent to Central Park and includes seven lots.
The Pittsylvania County Board of Supervisors voted 6-1 in May to sell the school for $10,000 to Echelon. The previous Cape Charles Town Council voted 6-0 on June 14 to sell the school for $10 to Echelon. The new Town Council assumed office 17 days later.
The school and property are appraised at about $225,000. The Cape Charles school and property are appraised at about $922,000.
The sales contract gave Echelon 180 days to perform “due diligence” on the property. The company can ask for an additional 180 days. The Cape Charles contract gives Echelon 180 days to perform due diligence.
The sale hinges on the Richmond developer receiving state and federal tax credits to renovate the former school. In Cape Charles, Echelon has the option of canceling the sale if it does not receive tax credits, but there is no performance bond. In other words, Echelon is not required to return the property to the Town if it is unable to carry out its plans.
The school, which opened in 1939, closed about 10 years ago when the county built four new middle schools. Cape Charles school opened in 1912 and closed in 1993 when Northampton County build Kiptopeke Elementary.
Supervisors offered the school to the town in 2008, but later rescinded the gift after town council said it didn’t have money to renovate the building. The Town of Cape Charles conveyed the school to the county in about 1987, and sued for its return in 1994 after the county vacated the building. The Town says it does not have money to renovate the building.
The school was headed for the auction block until supervisors reached an agreement with Echelon. In Cape Charles, there were plans to lease the building to the Cape Charles Christian School, but funding was insufficient. There was never a proposal for bids or an auction to the highest bidder.
As part of the deal, supervisors agreed to allow Chatham First, a nonprofit volunteer group, to serve as a “third-party facilitator.” In Cape Charles, Mayor Dora Sullivan rejected two proposals to purchase and one proposal to lease from a nonprofit volunteer group, Old School Cape Charles, LLC. Town Council never voted on any of the Old School Cape Charles proposals.
With financial backing from the town, Chatham First will pay $13,000 to remove two underground fuel tanks. The Town of Cape Charles is giving Echelon $41,000 received from insurance proceeds.
“None of the town’s money would be used until we are convinced the project is going through,” said Chatham First president Ron Brown. Cape Charles has no legal provision to recover the building and $41,000 if the project does not go through. Echelon developer McCormack told the Wave August 23 that if Echelon did not receive funding, it would not purchase the property.
Echelon’s one- and two-bedroom apartments would rent for $650 to $800 a month. Cape Charles Lofts one-bedroom apartments would rent for $650-$700 a month.
Construction would take about two years. Cape Charles construction would be completed within 12 months.
Echelon plans to preserve the façade of the historic building. In Cape Charles, Echelon plans to preserve the façade of the historic building. It does not plan to preserve the auditorium and stage open space — a possible violation of a condition for receiving historic tax credits and grants.
One final parallel: Plans to convey the Chatham school have not been without opposition. “Do we really need a luxury apartment building in Chatham?” asked one frustrated resident. Read his letter to the Star-Tribune here: http://www.wpcva.com/opinion/article_14bbcb60-d050-11e1-bcea-001a4bcf887a.html#.UGdSf4oHwU8.email
It seems to me that all Echelon does is run from town to town, county to county, looking for old buildings to “renovate” with the government’s money! It’s a shame our little town never even checked them out. All we were told is that “these men are men of honor.” But these men have figured out how to make a fat living on the backs of taxpayers. From all that I have read about their little business, Cape Charles has been the stupidest in that we have lowered the hookup fees by 3/4, given them the $41,000 in insurance money, given them the basketball court and the parking lot for the park & playground, and pretty well upset half the Historic District residents. We don’t want apartments overlooking the playground and park. There are 600 voters in this town and we have more that 300 signatures on the petition. NO APARTMENTS!
Outstanding job by the Wave and staff for both DIGGING and REPORTING. It seems that the Wave is the only serious news source on the Shore. It will be interesting to see if more Cape Charles residents become involved in the local government process now that they have additional background. How did the Echelon finances work out with the Chatham town government? Have local tax, utility bills and associated fees been paid by Echelon when due? What is the current project occupancy rate there? Did the hoped for demand meet expectations? And, bottom line, is life in Chatham more pleasant now and have Chatham finances improved as compared to before Echelon introduced themselves to the town? Maybe these are questions that Cape Charles should be asking itself, and documenting, as their path with Echelon merges.
Ms. Bender, you make a great point with your comment: “But these men have figured out how to make a fat living on the backs of taxpayers.” Please do not forget, it is the politicians for whom you vote that enable this “fat living”, aka transfer of our taxes to people who are smart enough or “in the know” to vacuum it up. This money does not come from local real estate or personal property taxes, it comes from those who actually pay taxes to Federal and State governments. If you don’t think this is a good way to use our tax money, consider carefully which candidate you support in each election, starting next month, AND VOTE!
Tax credits are in place for properties like this to try to revitalize older buildings and neighborhoods. I don’t see that Echelon is doing anything illegal, they are simply taking advantage of existing credits to make this a profitable venture.
The town tax rate is .1828 per $100 of value. Let’s assume that the 17 apartments are valued in the end at $100k a piece (that isn’t unrealistic given that my 1400 sq ft condo in CC was valued at a much higher amount until I fought the county). That gives an approximate tax base of $1.7 million, at a rate of .1828 per hundred. That means that the town receives $3,108 in RE taxes each year. The county would receive $9,180 in taxes each year. So instead of selling the property for $10k to a non-profit (who I assume would not pay RE taxes), the town recovers the difference in less than 4 years. Over a 30 year period, they are ahead by $83k assuming no value change at all. The county is ahead even further by nearly $300k over 30 years.
With that said, there are other issues such as the water hookups and insurance proceeds, but would the town have done this for the non-profit or any other bidder as well? I guess we won’t know that answer. However, the water hookups are irrelevant. Those fees earned by the town would not exist if the building wasn’t going to be renovated anyway. At least moving forward, the town will receive additional fees collected by 17 new apartments helping us all cover the existing cost.
The non-profit wanted a community center. Who would have staffed the center? What would the operating costs have been to staff a full-time person (or more than 1) and pay the bills? I can only assume this would have been at least $75k per year. Would the non-profit be able to fund this kind of ongoing expense?
I live in Va Beach full time and in Cape Charles part time. My neighborhood in Va Beach alone has more houses than all of Cape Charles and we don’t have our own community center. Va Beach has great rec centers, but also has the considerable tax base to support them. I don’t think Cape Charles has the size or economies of scale to support such a center, even if fees were charged.
How long would it have taken the non-profit to get the resources to actually renovate the old school? Would they ever have had enough funds to build a vibrant community center? Who knows?
I can say that Mr. Wendell owns a building on Mason Avenue that has been sitting empty for as long as I know. Perhaps some resources should be put there or in any number of other empty buildings in Cape Charles.
I can understand the emotional attachment to the Old School, but I don’t see where it makes any financial sense given these two choices. The council has to look at all sides, and perhaps the whole thing could have been handled better or differently. And while some Cape Charles residents may want a community center, I just don’t see where it is financially feasible, especially not in this current economic environment.
“Fat living” is not the point: I certainly hope that someone who has a great (or reasonably good) vision and the ability to make it work will be able to have a “fat” outcome, even on my tax dollars.
Sounds like Chatham got a good deal. Did anyone check on this company? Maybe even a google search? I am glad to see the building will be used, might be some neat apartments. If someone else was going to use the old school, why didn’t they? instead of talk about using it. If the citizens of Cape Charles feel the elected officials are not doing their job or are not doing their job correctly, then it is time to remove them. Tell you what, being that some of you have all the answers, why don’t you vote them out of office and get yourself elected.
I am sure there are no easy answers to why this happend or why that happened. I think in the end this will be a good thing for the town and citizens. Be kinda cool to have an apartment in the old school, be better if it was closer to the beach.
Mr. Zuidema, two points — and I must reiterate that as a very part-time resident I have no dog in this hunt one way or the other -:
In your comments regarding the ROI on Council’s Echelon “investment,” you fail to calculate the Service costs — one fire, an ambulance call a year, additional policing if necessary and your math gets turned on its head.
In regards to Mr. Wendell’s property, in America it matters not a whit what a PRIVATE property owner CHOOSES to do with his property.
Just so you know, I share your concerns regarding the viability of a Community Center. Equally, I question the viability of selling niche market condo’s (1.5 bedrooms??) in an incredibly DOWN market. Far too often have I seen these “private/public partnerships” turn into publicly funded/maintained housing after the developer fails to sell out.
IMHO, what Council SHOULD do is to shed itself of ALL Mason Avenue properties as this is CC’s SOLE business district.