HAMPTON — The condominiums at the east edge of Coliseum Lake near the Hampton Coliseum are under new ownership. An Atlanta-based lender won the property for pennies on the dollar at a public auction in March.
Those homes are a part of the H2O development, a multi-phase condominium and town house project planned for Freeman Drive in the Coliseum Central business district.
In 2007, when H20 was first proposed, the project represented an investment in Coliseum Central at a time when developers' plans for the area included a 2,000-seat entertainment venue, hotels and restaurants.
While the Peninsula Town Center and the Hampton Roads Convention Center projects moved forward, Crossroads never left the planning stage and H2O stalled after less than 10 percent of the development was completed.
H20's parent company L.M. Sandler & Sons Inc. reportedly halted numerous real estate projects in Virginia and North Carolina following the national economic decline of 2008.
After proposing the construction of H2O, Sandler agreed to give the city $436,596 to build an initial section of the 3.3-mile Newmarket Creek Park and Trail system, according to a resolution approved by the Hampton City Council in December 2007.
Those funds were never fully transferred to the city from the developer, even though the construction documents are in place, said Amy B. Jordan, the redevelopment manager for the Hampton Economic Development Department.
After H2O faltered, the city began looking for a new starting point for the trail project.
City officials now plan to begin construction in 2013 on the $11 million trail along Pine Chapel Road, just south of Power Plant of Hampton Roads.
Jordan said she still sees H2O's section of trail as a viable project, especially now that there is a new owner.
H2O's new owner
In March, H2O's main lender, Cygnus H20, foreclosed on an $11,654,080 loan given to Sandler at Coliseum LLC, according to records filed in Hampton District Court.
Cygnus H2O is an arm of Atlanta-based Cygnus Capital Inc. Messages left for Christopher Swann and Andy Cummings, of Cygnus H2O, were not returned.
Cygnus successfully bid on about 19 acres of the H2O project last spring that includes the condominiums for just $1.5 million, according to court records. At the time of the auction, the property held an assessed value of about $3.4 million.
Fewer than 30 of the proposed 481 units have been built in the development along Freeman Drive, even though Sandler at Coliseum Central received $9.4 million in bonds in 2007 from the Community Development Authority to complete various parts of the project's infrastructure. The bond money was used to install underground water and sewage pipes (some of which protrude from the ground unhooked to buildings) and to build roads for the project.
The Community Development Authority is working with Cygnus to restart the project, said Frank Edgar Jr., the authority's board of directors chairman.
"They want to make this thing go, and we do as well," Edgar said of the new owner. "They've been stalled a little bit, but we feel we want to head in a direction of trying to complete this thing."
Cygnus has made at least two presentations to the development authority's board of directors since taking ownership, he said.
"Anything that can push this toward completion is a good thing," Edgar said. "It's sat there long enough."
Real estate firm CBRE Hampton Roads continues to advertise a 10-acre property along Freeman Drive as "approved for 270 apartment units," according to the Norfolk-based agent.
The property represents about 40 percent of the project's acreage. CBRE is asking $4,590,000 for the land.
Three condominiums of the 31 built remain available to buy, according to Chesapeake Homes, the Virginia Beach-based company selling the spaces. The prices of each condo range from $209,900 to $215,000.
Last fall, H2O's original owner had shown some progress toward getting the project back on track financially.
Sandler at Coliseum Central and Bank of America restructured a loan agreement last August. The deal also included a receiver to manage the H2O property, according to a development activity and financial disclosure report created in 2011 by Municap Inc., a Maryland-based financial consultant.
In late November, Sandler paid $1.5 million in back taxes to the city. No tangible work has been done on the buildings' exterior since then.
Messages left at Sandler's Virginia Beach headquarters seeking comment were not returned.
Hampton spokeswoman Robin McCormick said the new owner has not contacted the city to redraft its plans for the development.
City Manager Mary Bunting said she sees the city-owned properties along Newmarket Creek and Coliseum Lake as being viable areas for developers.
At more than 20 acres, the city owns nearly all of the properties near Hampton Coliseum.
"We're going to wait for the highest and best use for the properties until the time a developer makes an offer," she said.
Vice Mayor George Wallace said he sees developers' pre-recession plans as still being viable, even if they're not moving forward at the moment.
"Right now it's a dream deferred, not a dream denied," he said. "Although if someone comes up with a better idea, then I'm sure we'll sit down and listen to it."
Wallace said developers are beginning to stir from their recession hibernation, although he elected not to elaborate on what those actions might be.
"Our vision is still a viable one," he said.Copyright © 2015, Los Angeles Times