Beach authority set to vote on site for possible light-rail stop

By Deirdre Fernandes
The Virginian-Pilot
© July 18, 2009

VIRGINIA BEACH

The city’s development authority will vote Tuesday on whether to buy the vacant Circuit City property next to Town Center for $5 million, setting the groundwork for a potential light-rail line and station.

The City Council likely will make the final decision when it meets in August.

“I’ll support that… I think it’s a fair price,” said Mayor Will Sessoms. “I think you have a lot of opportunities for that piece of property.”

The 3.74-acre Circuit City property is assessed at a total of $5.8 million, according to the Beach’s latest tax records. It backs the Norfolk Southern right of way, the probable path of a light-rail line from Newtown Road to Birdneck Road.

Virginia Beach officials are in final negotiations to buy the right of way from the Norfolk-based freight railroad for $40 million.

Hampton Roads Transit has just started a $1.5 million study on the feasibility of light rail along the right of way.

Some city officials argue that Virginia Beach is jumping ahead, considering purchasing land for a possible station, when the City Council hasn’t decided whether to extend light rail from the Norfolk border into Virginia Beach.

“Well, right now I think there’s better uses for the money,” Councilman Bill DeSteph said of the proposed Circuit City land purchase.

The city could face budget shortfalls next year if the economy doesn’t rebound, he said.

It is likely the Beach would get the money to buy the land from bond sales, said Mark Wawner, the city’s Town Center project manager.

Whether the property is used for a park-and-ride stop, a light-rail station, or to expand the development of Town Center, it’s land that the city should control, Wawner said.

“It’s an opportunity to take advantage of a distressed property,” he said. “It’s an opportunity that we can’t pass up on.”

City officials expressed interest in the property in April, soon after the electronics store went out of business.

Commercial real estate manager Gerald Divaris, who also helped develop Town Center, brought the deal to city staff and asked for a fee.

Several council members balked at the fee, which would have forced the city to pay the property owner more later if the value of the land increased.

That fee is no longer part of the deal, Wawner said.

Divaris will be paid a commission, but that’s the responsibility of the seller, Wawner said.

Cardinal Capital Partners of Dallas owns more than three acres of the Circuit City property and got permission from a bankruptcy court on Thursday to purchase the adjacent half-acre – part of the parking lot – from Circuit City.

That allowed Virginia Beach officials to move forward with the deal with Cardinal Capital, Wawner said.

“We wanted to control all the property,” Wawner said.

Scott Riley, managing director of Cardinal Capital, said the next move is the city’s.

“We’re waiting for them to get back to us with definitive interest.”