Norfolk Developer Buddy Gadams has put the Union Mission building near City Hall in the city’s downtown area under contract for $4 million. A South Carolina developer, US Development, previously had it under contract for $6 million but couldn’t get the financing together. The building is likely eligible to receive both state and federal historic tax credits.
US Development wanted to create 126 units and ground floor retail at a projected cost of $23 million. It’s unclear what plans Gadams has for the property, but the developer has been active in downtown Norfolk for years using historic tax credits. Gadams recently finished a 126-unit conversion at the Wainwright Building.
The Historic Tax Credit program has come under some scrutiny recently in the wake of three high-profile cases in Norfolk and Richmond, the two cities that have the largest stock of eligible buildings. In Richmond, Justin French and his long time associate Billy G. Jefferson were both arrested for falsifying documents. French was arrested in 2009 and Jefferson was arrested in April. In 2012, Eric Menden and George Hranowskyj were arrested in Norfolk and charged with a six-year, $11 million fraud scheme.
The Department of Historic Resources, which certifies the tax credits, has since tightened its rules and verification process for historic tax credit rehab projects but it remains to be seen if the General Assembly will take any actions to further restrict the program. For more on this story, stick with the Virginia Real Estate Blog.