West Broad Village Delay Possible

A financial dispute between the developer of West Broad Village and Henrico County is threatening to delay the completion of the project. At issue is the cost of connecting water and sewer service to the project’s 14 buildings. Officials from Unicorp, the developer of the 115-acre project at the I-64/West Broad Street interchange in Short Pump, believed the connections would cost $589,000 and budgeted that amount into their initial financing plans. But when they received a bill from the county for the connections, it totaled more than $3.5 million – a difference that shocked them.

“It is enough money, in essence, to shut this project down,” Unicorp’s West Broad Village development manager Mike Jackson said. “Three point five million dollars, in this market, is absolutely back-breaking to us in trying to finish this project.”

The difference in calculations is most significant for the three largest structures at West Broad Village – mixed-use buildings that front West Broad Street and will feature retail, office and residential uses.

During a work session Feb. 10, Jackson and Unicorp President Chuck Whittall told the Board of Supervisors and other county administrators that language in the county’s code had led them to their price calculation.

The code establishes different rates for the connection of water and sewer lines to various types of facilities (residential units, hotels and nursing homes among them) but does not, Whittall and Jackson argued, specifically establish a rate for buildings that contain several of those uses. Unicorp officials believed that West Broad Village’s three large mixed-use buildings would be calculated according to the code’s “other buildings” classification and billed at a lower rate.

But county officials have consistently interpreted the code differently and billed each use of a mixed-use facility according to its individual rate, Director of Public Utilities Art Petrini said. In the case of West Broad Village, officials determined the rate for each residential portion of the mixed-use buildings, each retail portion and each office portion and simply combined them to produce the final bill, Petrini said.

That difference in calculation methods resulted in a bill for one of the mixed-use buildings, for example, of $716,005 – compared with Unicorp’s estimate for the same building of $78,660.

Without resolution to the matter, the completion of West Broad Village’s three signature mixed-use towers could be severely delayed, Jackson said.

The delay “would be astronomical,” he told the Citizen this week, without revealing a specific timeline. The company has been targeting a fall open date for the majority of the center.

County officials sent three letters explaining how the charges would be calculated to Timmons, the Richmond-based civil engineering firm that has been working on the project with Unicorp, and copied Unicorp officials on each, between March 26 and July 3, 2007.

But Jackson and Whittall said that they never saw the letters – in part because Timmons officials never mentioned them and in part because the Unicorp copy was addressed, they said, to a marketing official and not a high-level project manager.

“None of us were aware of it,” Jackson said. “We didn’t see the letter. It became a huge issue when we had to go pay it. We did not budget the monumental amount of money that we’re being hit with today. We can’t go borrow more money to cover that.”

The two men argued that regardless of when they learned about the county’s fee calculation process, they would have objected to it on the basis that it was calculated incorrectly and that the delayed timing shouldn’t figure into the end result.

But Hazelett said that the county had fulfilled its notification responsibilities and implied that it shouldn’t be blamed for the failure of the developer or its engineer to read the information. Further, Hazelett said, Timmons is a locally based company and should be familiar with Henrico’s code.

“We feel that we informed all the necessary parties and engineers of what to calculate, how to calculate,” Hazelett said. “We give information to the engineers and developers and they’re supposed to use that to make their best business decision.”

West Broad Village, a $1 billion development, is expected to have about 540 townhomes, 340 apartments, 420,000 square feet of retail space and more than 600,000 square feet of office space, in addition to two hotels, when completed. It is the largest mixed-use project to take shape in Henrico to date. Portions of the center, including a Whole Foods grocery store and several other tenants, already are open.

About two dozen residents already are living in apartments in one of the mixed-use buildings – even though the water and sewer connection issue is unresolved.

That building is one of four owned by West Broad Village, LLC on the site for which the county already has made water and sewer connections, according to Petrini. Unicorp signed an installment contract for the connections to those buildings, which permitted it to acquire certificates of occupancy for each and begin leasing space. The plan requires Unicorp to makes monthly payments, but if it fails to do so, the county could disconnect the service and could remove the meters through a lien on the property, according to Petrini.

Similarly, Unicorp cannot receive certificates of occupancy for its other buildings until water and sewer connections are active, and that won’t happen unless the connection fees for each building have been paid in full or an installment plan has been signed, Petrini said. Connections for several other outparcels at West Broad Village have been made and paid for by other companies, he said.

Though county officials are anxious to see the project succeed, some seemed to take issue with the tone presented by Whittall and Jackson during last week’s meeting.

Brookland District Supervisor Dick Glover interrupted the two men at one point to say that he was offended by their repeated characterization of the county’s fee calculation as “cherry-picking.”

“To me, the word ‘cherry-pick’ is disrespectful,” he said. “We’re very interested in making sure that you’re successful out there. But you were told how [the calculation] was done, and Timmons was told how it was done.”

County Attorney Joe Rapisarda told the board that in his opinion, the county’s code does make clear how connection fees for mixed-use facilities should be calculated.

“We feel the county has a reasonable position,” he said.

Whittall and Jackson, however, urged the board to amend their code to create a more specific rate designation for mixed-use buildings.

“I think it’s clear that it’s unclear,” Whittall said.

Petrini disagreed and said that from the county’s perspective, the code was clear in how it separated mixed-use facilities.

“In our eyes, whether you have one or two uses or three or four uses, it’s immaterial,” Petrini said. “It’s multi-use.”

The Board of Supervisors could consider amending its code to specifically address mixed-use buildings and could make any changes to the code effective immediately (to include West Broad Village and all future mixed-use projects) or could make it retroactive to any date, Hazelett said, though he and Rapisarda advised the board against revisiting the code.

Jackson told the Citizen that Unicorp was unlikely to bring legal action against the county in an attempt to resolve the issue.

“The county’s been great working with us,” he said. “This is just a disagreement we have. We’re determining our options right now.”

The bill Unicorp received from Henrico for the connections could have been even costlier if not for the county’s decision to repeal (retroactive to Oct. 1, 2008) water and sewer price increases that it had earlier approved. Without that rollback, Petrini said, Unicorp’s bill would have totaled $4.6 million. He told the board that the company’s estimate of $589,000 also was incorrect and that if all buildings were categorized the way Unicorp officials believed, the bill would actually be $635,445.