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West Broad Village gets in a little hot water

Michael Schwartz April 16, 2012 0

A dispute over a water agreement at the area’s biggest mixed-use development has spilled over into the courts.

Henrico County is trying to collect more than $1 million from the owner of parts of West Broad Village after the developer defaulted on a water and sewer agreement that came due in January.

The county has sued West Broad Village III LLC, an entity tied to Florida-based Unicorp, which was the original developer of the high-profile Western Henrico project.

The legal issue does not affect the entire West Broad Village development, according to Unicorp President Chuck Whittall.

The dispute pertains to an agreement the sides had for the financing of water and sewer service to three buildings that contain apartments and ground floor commercial space.

It does not affect any of the other pieces of the massive development, which include stores such as Whole Foods and REI or the adjacent hotel.

“It’s a $300 million project,” Whittall said. “This is a minor issue that will be resolved. We’re talking to the county. We’re going to come to a resolution on it.”

A three-year payment plan allowed the developer to pay for the costly build-out of connecting to the county system in 36 installments, the last of which was a balloon payment of about $1 million due Jan. 5.

Arthur Petrini, Henrico County’s director of public utilities, wouldn’t comment specifically on West Broad Village or the dispute.

He explained that there is a county ordinance that allows some large developments such as West Broad Village to enter into such payment plan agreements.

Whittall said the two sides have had trouble over the years calculating water and sewer fees.

Whittall asked for an extension for a payment on the fees and to amend the calculation, but the two sides couldn’t agree. Then the big payment came due, and Unicorp stood firm.

“We made payments to them every month for the last three years and never missed a payment,” Whittall said. “We’re a good taxpayer. We’ve improved [the county’s] property value significantly and generated a lot of revenue for the county.”

Unicorp conceived and developed the 115-acre West Broad Village last decade. The development almost collapsed with the rest of the real estate market around 2008 but was saved by Markel|Eagle Partners, a local private equity fund.

The fund is part of the Eagle Companies, a residential and commercial developer headquartered in West Broad Village. Eagle Commercial Realty manages the commercial space that is subject to the suit.

“We need the public to know [the dispute] does not affect the ongoing operations of the center,” said Markel|Eagle executive Bryan Kornblau.

The agreement allows for the county to place a lien on the properties or to potentially cut off service to those parts of the development. But all sides say the dispute is largely a formality the county is taking to make sure it gets paid.

“We’re a tenant — we don’t think our water is going to get shut down,” Kornblau said. “In our opinion, the county is just following the terms of the agreement they had.”

The dispute also comes as Unicorp is in the midst of trying to sell the 339-unit apartment portion of the development known as the Flats at West Broad Village.

Unicorp put the apartments on the market late last year for an unknown asking price.

Whittall said delaying the payment to the county is not related to the potential sale of the Flats.

Despite Markel|Eagle taking over ownership and operation of much of West Broad Village, Unicorp still owns about 95 percent of the apartments.

Unicorp is represented in the case by John Walk, an attorney at Hirschler Fleischer.

The county is represented by Michael Ballato of the Ballato Law Firm.

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