WINCHESTER — The city’s Economic Development Authority went back and forth during a virtual meeting Wednesday morning before deciding to extend sale contracts contracts on two projects.
The contention came during discussions about the Lofts at East Piccadilly, a $10 million to $11 million project that would include residential and commercial components in a five-story structure to be located at the northeast corner of North Kent and East Piccadilly streets. The project is a public-private partnership between the EDA and McLean-based Providence Capital Partners LLC.
Between December 2017 and February 2018, the EDA bought six properties there for $1,298,000, then agreed to sell the site to Providence Capital for $712,000 plus $150,000 for the reimbursement demolitions costs incurred by the EDA, with deferred payments of $370,000 forgivable based on project performance, plus an additional $350,000 due to the EDA in the event the property was sold after being completed.
A closing date on the sale was initially set for late March, with Providence Capital agreeing to reimburse the EDA $150,000 for demolition costs. There was also a recommendation to extend the contract through March 23, 2021.
On Wednesday, however, the EDA was told that Providence Capital was no longer willing to pay the $150,000 up front but would pay it only if the contract went to closing.
EDA members Addie Lingle and Doug Toan, who met with Providence Capital President Rob Seidel earlier this week as part of a development subcommittee for the project, relayed the information to the EDA on Wednesday.
EDA Chairman Jeff Buettner said he was under the impression that the payment of the $150,000 up front was agreed upon.
“It’s a big change from what he led us to believe,” Buettner said. “It doesn’t do a whole lot about my warm and fuzzies about his ability to do the project.”
Members went back in forth about their confidence in the project and the contract being ready to go to closing by March.
Toan was adamant that he believes Seidel is “all in” on the project, and Lingle said Seidel told her he’d invested roughly $600,000 into the project already.
“We went over his financials, and he explained where he was with the project and what he needed to make it all happen,” Lingle said. “I think we expressed previously that without a really solid Plan B in the works, him putting good faith effort to continue his progress toward making that development a reality is where we want to head.”
But other members expressed their doubts by reminding the EDA that Providence Capital had two years in a robust economy to secure investors and financing but has failed to do so.
EDA member Lauri Bridgeforth suggested it was “time to fish or cut bait.”
Winchester Development Services Director Shawn Hershberger said some investors had been lined up prior to the coronavirus pandemic, but they’ve backed out.
Toan eventually made a motion to extend the contract through Dec. 31, with a contingency that the EDA would be paid $75,000 now and then an additional $75,000 in November. Member James Imoh made a motion to amend the closing date to March 23, 2021, with the payment plan remaining in place. The motion also included that another extension could be possible.
The EDA voted 5-2 to approve, with Buettner and Tim Painter voting no.
Providence Capital must still agree to the terms. If it does, construction could move forward once the real estate deal closes.
In other business, a decision to extend the real estate sales contract on the Winchester Towers redevelopment project was less contentious and was approved unanimously, except for EDA member Cary Craig Jr. abstaining.
The contract was extended with a potential closing date of Aug. 25. It provides an investigation period, which expires June 31, 2021, and retains a section of the contract that could extend terms as necessary due to permits.
The approval also increased the escrow amount of the project from $25,000 to $35,000, which would only become refundable if the project failed to get city regulatory approvals.