Kennedy opts out of $2.3M Haymarket Town Center development deal
By Dan Roem
The $2.3 million deal to turn the Haymarket Town Center into a series of small retail stores has been terminated, forcing the town to put the property back on the market and creating severe budget problems.
Developer Gerry Kennedy officially opted out of the contract Feb. 19. The date fell in the midst of his company’s 90-day feasibility study to determine if all benchmarks could be achieved.
He had hoped to transform the property into 16 to 18 small businesses by Haymarket Day this September, but uncertainty about meeting deadlines forced him out of the deal.
Kennedy said he opted out of the contract because of a dispute with the Haymarket Planning Commission over a deceleration lane along Jefferson Street, which forced delays.
According to Kennedy, it turned out such a lane would not be necessary.
He repeatedly referred to "one particular individual" who sits on both the Town Council and Planning Commission that had been "dead-set against the project" and thus "has the ability to tie the thing up and delay it."
That person is council member Bob Weir. He voted against approving the project in January in his role as town councilman because he thought the council had not thoughts things through properly and that bringing in a series of small retail shops without a large anchor store would not draw enough people to town to support the businesses.
The Planning Commission, instead of recommending the council to approve or disapprove of the project, sent the project back to Kennedy who then opted out of the $2.3 million contract with the town.
"I think the ball's in our court," Kennedy said about whether to reconsider the project. "The options are leave it as it is or try to proceed. We're under some level of public support to consider proceeding."
“I think it was a perfect plan for us,” said Council Member Ozzie Vazquez, manager of the town’s Street Scape project.
The concept of having privately-owned, non-chain restaurants and retail stores in the area fit Vazquez’s definition of a walking town, which is what Haymarket is supposed to look like when the Street Scape is complete.
Now the council is back to square one with the Town Center property back on the market and no official bids attached to it.
Haymarket officials will now have to create a budget for the next fiscal year that does not include money for a new town hall.
That building, which was to be located at the Harrover property on the east end of town, is now on hold because the money simply is not there.
“Well, you know, one of the issues is going to be financial because we hadn’t counted on having to rent the space again, having to be landlords again,” Town Manager Gene Swearingen said of the fallout from the now-defunct, multi-million dollar deal.
“We’re going to have a lot of empty space, and we’re going to have to get back into the landlord business, which we were hoping not to do,” Swearingen said.
Had the deal with Kennedy worked, town officials and staff would have had to vacate Town Hall by summer.
About $1.1 million from the sale of the property would have then been used to build a new town hall at Harrover. The council is now considering renovating the house already on the property instead of constructing something new altogether.
“We’re really going to have to tighten our belts for the remainder of this year so we have a little bit to carry over” to next year’s budget, Swearingen said.
That budget, projected to be just under $1.3 million, will include no money left over in the town’s rainy-day fund and there will not be money available for staff salary increases.
That leaves the town with few options on how to raise revenue.
Raising the real estate tax rate is one option.
However, that would cover only about $30,000 out of the $120,000 extra the town needs to afford its expenditures, according to the town manager.
Because the meals tax is projected to bring in $60,000 more than originally anticipated over the course of one year, the town could dip into that money.
That may end up opening a Pandora’s box, though, as Swearingen noted.
“We really committed that it was going to go to a specific use,” he said. Money raised from the meals tax was to be spent on the Street Scape project. “And then once we had enough of that use, we were going to end it. And if we start doing other things with it, you know, it’s one of those things that never go away.”
Outside of raising taxes, the town may be able to take out a line of credit with one of its banks that would keep interest rates low. Bonding is another option for a short-term cash fix.
Money would have to be paid back in both cases, though.
What the town really needs is for the Town Center property to be sold.
Haymarket is asking $3.2 million for development rights to the parcel. During the last week, at least four individuals have shown interest in purchasing the property, according to Swearingen, though dollar figures have not been offered by any of them.