WINCHESTER — Construction of an anticipated residential and business complex in downtown Winchester has been canceled due to complications brought about by the COVID-19 pandemic.
“The purchase and sale agreement that had been in effect since last June expired on Saturday,” Winchester Development Services Director Shawn Hershberger said. “The developer that was party to that, Rob Seidel of Providence Capital Partners, had cleared a lot of hurdles and moved the project forward — he spent a lot of money on design work, got plans approved — and he reached the point where he was trying to secure financing.”
But the timing couldn’t have been worse. Hershberger said on Tuesday that Providence Capital, which is based in McLean, started seeking financing for the $10 million to $11 million project in March, just as the COVID-19 pandemic was beginning to wreak havoc on the American economy.
As a result, Hershberger said, “A lot of the economic assumptions [Seidel] was making became invalid. He tried to retool the project ... but the EDA [Winchester Economic Development Authority] board felt it was in their best interest and the community’s best interest to let the contract expire.
“None of us wanted to be in this situation right now,” Hershberger said.
EDA members decided last week to put the property at the northeast corner of North Kent and East Piccadilly streets back on the market rather than extend Seidel’s pact with the authority to purchase and develop the land.
Seidel and the EDA initially agreed in July 2018 to partner on a mixed-use development called EPicc Lofts that would include approximately 51,000 square feet of space for 44 apartments, two retail stores or restaurants and indoor parking for all tenants. Some of the apartments were expected to have discounted rents to meet Winchester’s need for affordable workforce housing.
To make way for the five-story complex, which was later renamed The Lofts at East Piccadilly, the EDA bought six properties at the corner of Kent and Piccadilly for about $1.3 million between December 2017 and February 2018. After the existing buildings were razed by the EDA in September 2019, the plan was for Seidel to buy the site from the authority for $1,062,000 plus an extra $150,000 to offset demolition expenses.
By the time Seidel was ready to finance construction of The Lofts at East Piccadilly, it was mid-March and COVID-19 was starting to create worldwide economic uncertainties, Hershberger said. Lenders were no longer eager to part with their money, and the prices of building supplies began to skyrocket.
Seidel sought contract extensions from the EDA, the most recent of which was granted in August. But when he asked the authority for another extension last week, members decided it was time to walk away from the project and sell the vacant property to someone else.
On Monday, the site was advertised as being available for development.
Hershberger said the EDA is still willing to work with Seidel on a new or revised development proposal because he has been a good partner, investing a great deal of time, money and resources into the now-defunct mixed-use complex.
“If he has an alternative project, we encourage him to respond with a proposal,” Hershberger said of Seidel. “I can’t say enough good things about the hard work and the money that Providence Capital put into trying to make this happen. ... Rob did everything that was asked of him trying to move the project forward.”
While the EDA may have had doubts about the future of The Lofts at East Piccadilly, its decision to end the contract with Seidel creates even more uncertainties. Now, no one can say when the site will be developed and start generating tax revenues for the city.
“There is interest in it already,” Hershberger said of the vacant property at Kent and Piccadilly. “There are people who have periodically inquired about it in the last six months.”
Hershberger said he would still like to see a mix of housing and retail shops at that location.
“From a community standpoint, I think it would be optimal for something to be built there that has an ownership structure as opposed to a rental structure,” he said. “Something that is attainable to middle-income buyers and can be an entry point into ownership and wealth accumulation.”
Hershberger said the cancellation of The Lofts at East Piccadilly should not be seen as a harbinger of local economic doom. Another high-profile downtown development project, Cameron Square, is proceeding.
“It’s still moving forward,” Hershberger said. “It’s an ambitious project. ... We hope their [financial] assumptions can hold.”
Cameron Square is a mixed-use residential and retail complex proposed by Glaize Apples of Winchester and Lynx Ventures Inc. of Richmond that would fill the vacant Winchester Towers site at 200-214 N. Cameron St., which is owned by the EDA, and extend north two blocks to Baker Street.
As envisioned, the $35.5 million complex would include an estimated 165 one- and two-bedroom apartments, a parking deck for tenants and the community, and 8,000 square feet of ground-floor space for retail and restaurant use. The proposal is still going through the city’s approval process, so no estimated start date for construction has been announced.