In a city where tax revenues are nearly flat, City Council members see a glimmer of hope in a developer's plans to build luxury apartments on two city-owned properties in downtown.
For nearly three years, Breeden Investment Properties Inc. has been working on a contract with Portsmouth's Economic Development Authority. Breeden says it will close on a deal during the next two weeks to purchase 2.5 acres at 800 Crawford St., near City Hall, for a little more than $1 million. Breeden plans to start construction a week after that.
Breeden also has plans to pay nearly $2 million for 2.5 acres at the North Pier, formerly owned by the U.S. Coast Guard, a waterfront site next to the nTelos Pavilion.
To help secure the deal, the city has agreed to put the purchase price of the Crawford Street site toward preparing the North Pier site for development if Breeden agrees to buy it. Breeden is considering making the North Pier purchase in the summer of 2017. If that happens, the city would also return money from the sale of the North Pier site to Breeden to put toward development, along with several years' worth of real estate taxes.
The total reimbursement to the Virginia Beach-based development firm would be capped at $6.3 million.
Council members said Breeden's proposal would inject life into their vision of redevelopment on the city's waterfront. Representatives from Breeden said the apartments would bring needed housing for people who work in Portsmouth to stay there to live and shop - and avoid tolls.
Tim Faulkner is chief operating officer for The Breeden Co. and president of Breeden Property Management.
"They have a huge job base in Portsmouth with the shipyard and Portsmouth Naval Hospital and the Coast Guard and downtown," Faulkner said. "If you look at connectivity to downtown and High Street, we think there is an under-served market for Class A, high-end residence. We see there is a need for that because of tolls."
Breeden plans a five-story, 134-unit complex at the Crawford Street site, called Harbor Vista, for rental by the summer of 2016. It estimates average rent of $1,150 for a one-bedroom apartment and $1,450 for a two-bedroom unit.
Parking will occupy the ground floor. Apartments will have 9-foot ceilings, pendant and recessed lighting, granite countertops, and a combination of carpet and wood floors. The building will feature a fitness center and a rooftop overlooking the marina near City Hall, Faulkner said.
Breeden plans similar apartments at the North Pier site, which would overlook the Elizabeth River and nTelos Pavilion.
Breeden plans to invest about $17 million at Harbor Vista and $25 million into the property at the North Pier, said Barry W. Tomlin, vice president of Breeden Property Management.
Company representatives said they waited for U.S. Department of Housing and Urban Development financing to close the deal. HUD financing gives the company a 40-year fixed interest rate and 40 years to pay back the loan; a conventional commercial loan typically offers a 10-year fixed interest rate and varying repayment times.
Councilman Bill Moody said he would prefer that a developer pay for site work at the North Pier, but getting it onto the city's tax rolls required a "creative solution."
"At the end of the day, to get a project there... the property at the site has to be made developable," Moody said.
Real estate taxes on the properties would eventually add $475,707 in annual revenue to city coffers.
A 2011 engineering study showed that repairs to the pier could cost from $3.5 million to $5.4 million. The current pilings cannot hold an apartment complex. The site is fenced off, according to interim Economic Development Director Mallory Kahler.
Tomlin said the company doesn't anticipate investing anything into preparing the North Pier for development.
Mayor Kenny Wright has often expressed a desire to develop the city's waterfront, including adding about 1,200 housing units. He has suggested selling about six government-owned properties, including the City Jail, to lure developers to the area.
"It's a huge deal," Wright said of Breeden's purchase. "This is a long time coming and we are looking forward to breaking ground here. Hopefully, we will close here in a couple of weeks and we can start turning dirt."
Councilman Danny Meeks said seeing a company spend that kind of money in Portsmouth makes him hopeful.
"It definitely is great for our economic growth because you need feet on the street for tax dollars, for your businesses," Meeks said. "It definitely is a blessing that Breeden is finally doing it. It's a first-class company. They do everything first class."
Councilman Mark Whitaker noted the private investment in the waterfront, rather than public ownership through the city.
"I think developing the waterfront with private development will have an impact in several areas as far as business and tourism - also increasing dollars available for education," he said.
It would also give minority contractors more opportunities in Portsmouth, Whitaker said.
Councilwoman Elizabeth Psimas welcomed the news.
"It's certainly a shot in the arm for the city to have continued development of that stature," she said.
Johanna Somers, 757-446-2478,
ABOUT THE BREEDEN COMPANY:
The Breeden Company is a nationally recognized real estate services company with over 50 years of expertise in every facet of the industry. Breeden Property Management, Breeden Realty and Breeden Construction are the three major subsidiaries of The Breeden Company, with a combined portfolio of nearly 10,000 apartments, over 2 million square feet of retail and office space and an additional 1,700 residential homes. Both Breeden Property Management and Breeden Construction are national award winners on their own merit and provide third party services to select clients. Family-owned and operated since 1961, The Breeden Company has grown into one of the most valued real estate development firms on the East Coast.
DANA E. WILSON
PUBLIC RELATIONS MANAGER