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HomeMy Public PortalAbout1991_07_3183 SPECIAL MEETING MINUTES OF THE LEESBURG TOWN COUNCIL JULY 31, 1991 A special meeting of the Leesburg Town Council was held on July 31, 1991, at 7:00 p.m., in the Council Chambers, 25 West Market Street, Leesburg, Virginia, pursuant to notice thereof having been delivered to all Councilmembers prior thereto. The meeting was called to order by the Mayor. Present were; Mayor Robert E. Scylla, Councilmembers Georgia W. Bange, J~mes E. Clem, Christine M. Forester, Donald A. Kimball, Claxton E. Lovin and William F. Webb. Also present were; Town Manager Steven C. Brown and Current Planner Peter Stephenson, Town Attorney George Martin and Special Counsel Lynn Townsend. Mr. Stephenson, addressed the Council reviewing the st~ff report and the proposed legislation. If the alternative compromise is accepted and the Orchard Tract dedication was relinquished it is important to note that the Town would remain obligated to acquire an alternative high school site in the future, through either annexation and rezoning of other land or through the purchase using monies received in the school site acquisition fund. Under the worst case scenario the town would have to further supplement the fund balance as necessary. Mr. Edward Finnegan, representing the Stowers family, addressed the Council. The Stowers family owns the first deed of trust on a large portion of the tract. The first deed on the other portion of the tract is owned by Sovran Bank. This is a very simple situation - very complicated economy and very complicated financial problem associated with that tract. The Orchard tract has never been owned or in any way related to the Stowers f~mily/farm or to Sovran Bank. We have proposed a compromise with CPI an agreement of $425.00 per dwelling unit. We have gone more then half way in providing the necessary funding where we will only generate 10 percent of high school capacity need. We are in a free-fault situation when it comes to land value prices. There is no way that anybody would want to acquire a site that requires the acquisition of another site that they have no control over. We are headed towards a foreclosure sale on August 5. We are looking for a fair resolution that will allow somebody to properly put a value on the property. We believe that we have come up with a package that truly benefits the town and protects the value of this property. Mayor Sevila asked how the Orchard tract was currently titled. Mr. Finnegan stated Evergreen Mills. The Mayor raised concern with the property regarding its assessed value of $900,000 and a debt of $520,000 against the property under the current deed of trust - it seems there is a lot of equity that is going to go down the drain. Mr. Bill Moran, representing Evergreen Mills Investments, addressed the Council. He stated that EMI is the cause of the problem. Unfortunately, we are totally unable to get any financing partly due to the economic banking conditions. We are going to lose 370 of the 450 acres next week. I would assume we will loose the remaining 70 acres in the near future. EMI holds the contract on the Orchard property. The partnership does not have the funds nor can it borrow the funds to buy that property even if the assessed value is that high. If we were to sell the property, and I will make this a part of the proffer, and the Orchard property is sold for more then the debt on the property we will turn that money over to the fund. We have spent three years rezoning this property. Mayor Sevila asked if the Orchard tract was purchased in fee simple by EMI. Mr. Moran stated yes -the first trust is held by the sellers. The Mayor asked if the balance of the first trust was $520,000. Mr. Moran stated yes that is the first trust balance. The Mayor asked if there are any contracts to purchase the Orchard tract? Mr. Moran stated no. The Mayor asked if there has been any discussion between the owners of the Orchard tract and the parties in interest concerning the potential for the ex~nsion or modification of the deed of trust to enable it to be held. Mr. Moran stated that he personally has not talked to them. The Mayor asked ff there has been any consideration by EMI to dedicate that land as originally contemplated either to the town subject to the debt or to the Stowers subject to the debt or anyone else. Mr. Moran stated that he would be happy to do that and that there is a "due on fail clause." The Mayor asked if there has been any discussion with the holders of the trust to see if that can be modified? Mr. Moran stated no. The Mayor stated that a fairly easy way out of an of this, that gives everyone the protection that they need, is to convey the Orchard tract either to the Stowers or to the town or anyone subject to the debt. The town cannot accept it subject to the debt but the Stowers family can. It would be a shame to let $400,000 worth of equity go down the drain which is what will happen if that property is foreclosed against if it has a current value of $970,000 and a current debt against it of $500,000. Mr. Finnegan stated that there were and there continue to be negotiations on points such as the one the Mayor addressed. We are looking at all the alternatives. Mr. Bob Gordon, Mr. Finnegan's associate, addressed the Council stating that he has been in the process of negotiating with EMI and Sovran Bank in terms of what might be an acceptable deed in lieu of foreclosure and to try to modify the configuration of Sovran's 70 acre parcel. Sovran Bank stands to lose $18 million that they have on this property. They said they would not put another penny into this property - it is not worth even the debt that the Stowers have on it much less anything in excess of that. We proposed that Sovran Bank advance the money. They have the money, the Stowers do not. Sovran said they were not in a position to put another penny into this property even 84 Special meeting minutes of July 31, 1991 if saving the Orchard tract enhances the value of the property. We gave some thought to possibly entering into discussions with trust holders on the Orchard tract but Sovran Bank would not take the property subject to the debt, the Stowers cannot assume another $525,000 debt and the town could not take the property subject to the debt. The Stowers are faced with a situation where the back taxes alone are $300,000. This is a very unfortunate situation from a work-out perspective. There is no $400,000 in equity. If there was equity, somebody would be trying to find a way to save it. There is no one around who is going to buy or lend on the Orchard tract today. Mr. Clem asked where the difference was between the $500,000 and the $900,000? Is the $900,000 based on the full acreage. Mayor Sevila stated that the $900,000 is taken from the County assessment of the value of the land in 1991 for 62 acres. Mr. Kimball referred to page two of the staff report and asked if the "successors in interest" part was enforceable to a future or subsequent owner? Mr. Stephenson stated yes - it is standard language and proffers do run with the land. Mr. Clem asked what would happen if the town took no action at all and let this go to foreclosure? Mr. Finnegan stated that the value of the property is substantially decreased. There will be no developer who will pick up this property at a fair price who has no control over it with regard to the only market in town which apparently is residential. There will be no reason for anyone to purchase the property. Mayor Sevila stated that the theory behind the pro rata contribution is to give the town the assurance that the funds will be there to purchase the school site when it is needed. We don't have any control over when it is needed. That is a County issue and when the County makes demand on the town we have to be in a position to produce a school site. Is the theory behind the $452,000 to enable the town to purchase a site and is it at least of equivalent value to the Orchard proffer? Mr. Finnegan stated that the position we have taken is that we cannot give the town a school site and we have offered the town a school site acquisition fund which will be dedicated to the specific purpose of acquiring a school site. We have given a very good per unit amount for it. Mayor Sevila stated that his concern is that Mr. Finnegan is indicating that if the town does not modify the proffer we may be scaring prospective bidders. Mr. Finnegan stated prospective developers who will bring value to the property. Mayor Sevila stated, as Mr. Finnegan indicated to him, that the Stowers family will not develop this property, that it will ultimately be developed by a developer who acquires it either at the sale or as a successor from who ever does purchase it at the sale. Mr. Finnegan stated that he represents the Stowers f~mily who are a farm farni]y, who has lived in this county for generations and whose heritage and fate is tied to that land. My job is to try to protect the Stowers family. Mayor Sevila stated that his point is that the land is going to be developed by others which means that the proffer is going to be complied with by others whether it is the cash contribution or locating and dedicating a site that is acceptable to the town, County and School Board. Mr. Finnegan stated that the proposal is $425.00 CPI which is $14,000 CPI which is acceptable to the Stowers. Mr. Lovin asked, if the property goes to foreclosure and there is no new bidder for the property, will the property revert back to the Stowers family? Mr. Finnegan stated yes. Mr. Lovin stated that in about three years the School Board will come to the town for a school site. He asked if the Stowers family acquires the property back on Monday, wouldn't there be an opportunity for the Stowers to do something within that three years? Mr. Finnegan stated that this is not an acceptable alternative. There is no one who wants to begin the process until this issue is resolved. Mr. Clem stated that when the initial rezoning took place, the School Board was unhappy with that site and it ended up having to take 62 acres just to get a decent 40 acres to build on. Where is the difference between the $900,000 and the $500,000? Are we saying that the assessment for the 62 acres is equivalent to $900,0007 Mr. Finnegan stated that the current assessment is $15,000 per acre. Mayor Sevila stated that until the County assessments are challenged or changed that is the best value that we have for this property right now. That is the statutory 100 percent value of that property today. We must assume that the County has taken into account floodplain and wetland on the property. On the spirit of the annexation agreement and the desire to the town's commitment to dedicate a site it was preferable in 1986 when the property was zoned to have a high school site come from within the property. It was at the election of EMI that the property within this tract is far more valuable then the Orchard tract and they are the ones that proposed a tract other then on site which was submitted and approved by the School Board. The Mayor asked if the parties in interest in this proffer amendment has considered the possibility of dedicating a school site from the farm? Mr. Moran addressed Mayor Sevila stating that we are looking at something that basically took three years. The need for a school is going to be generated by the growth of the area. Mayor Sevila asked what EMI's interest in the proffer amendment process or in the outcome of the August 5th sale? Mr. Moran stated that EMI is trying to mitigate damage. We will agree to give the town any excess proceeds ff the Orchard tract sells. On motion of Mr. Webb, seconded by Mr. Kimball, the following ordinance was proposed. 85 Special meeting minutes of July 31, 1991 91-0-32 - ORDINANCE - APPROVING REZONING APPLICATION #ZM-130, AN AMENDMENT TO PROFFER #13 OF THE PREVIOUSLY APPROVED REZONING APPLICATION #ZM-116 STRATFORD IN LEESBURG BY EVERGREEN MILLS INVESTMENTS WHEREAS, on June 21, 1991 the representatives of Evergreen Mills Investments, the Stowers family, and Sovran Bank requested that the town initiate consideration of an amendment to approved rezoning proffer #13 regarding the Orchard Tract high school site to allow the option of providing non- refundable residential pro rata cash contributions into a "School Site Acquisition Fund" in lieu of the proffered 62-acre land dedication; and WHEREAS, on June 25, 1991 the Town Council initiated the proposed proffer amendment, referred the application to the Planning Commission and the Loudoun County School Board for recommendation, and established a joint public hearing date; and WHEREAS, on July 9, 1991 the Loudoun County School Board provided a recommendation to the Town Council; and WHEREAS, on July 23, 1991 the Leesburg Planning Commission and Town Council held a joint public hearing to consider the proposed amendment; and WHEREAS, on July 25, 1991 the Leesburg Planning Commission provided a recommendation to the Town Council; and WHEREAS, on July 31, 1991 the Leesburg Town Council held a special meeting to further consider the proposed amendment; and WHEREAS, the proposed amendment is deemed to be an equitable alternative to the existing, adopted proffer #13, and is in the public interest to adopt: THEREFORE, ORDAINED by the Council of the Town of Leesburg in Virginia as follows: SECTION I. Rezoning proffer amendment application #ZM-130 is hereby approved and Proffer #13 of the voluntary conditions proffered in writing by Evergreen Mills Investments and approved as part of the Stratford in Leesburg rezoning applicaflen #ZM-116 on September 26, 1990 by Town of Leesburg Ordinance No. 90-0-26 is hereby amended as follows: (13) The Applicant, or its successors-in-interest~ agrees that it will contribute to the acquisition of land for the purpose of a public school site by undertaking, at its option, the commitment contained in either oara~raph (13)(A) or the commit- ment contained in paragraph (13)(B). The Applicant, or its successors-in-interest, agrees that it will convey, free and clear of all liens, in fee simple to the Town a parcel of land composed of approximately 62 acres located and fronting on the west side of Route 621 (Loudoun County Tax Map 60, Parcel 1) which is known as the "Orchard Tract." The Applicant, or its successors-in-interest, will convey the Orchard Tract to the Town no later than September 26, 1994. The Orchard Tract is not currently served by public sewer and water. In the event that the Loudoun County School Board acquires title to the Orchard Tract for the purposes of a school site, and if by the time construction of a school has been commenced there is neither public sewer nor public water available to the Orchard Tract, then the Applicant or its successors-in-interest, agrees to (1) extend public water and sewer lines to the nearest boundary of the Orchard Tract; or (2) provide monies necessary to accomplish such extension of sewer and water service to the nearest boundary of the Orchard Tract, providing that there is a pro-rata reimbursement agreement in place which will provide for monetary reimbursements to the Applicant, or its successors-in-intere~ from private developments benefiting from said extension. This pro-rata reimbursement will be based on the linear front footage for sewer and on projected daily gallon usage for water. OR (B). The Applicant, or its successors-in-interest, agrees to contribute up to the aggregate sum of Six Hundred Thousand Seven Hundred Eight Dollars ($600,708.00) (based on a prqiection of 1,329 residential units), under the terms and conditions stated hereinafter, as its pro-rata share toward the acquisition of a school site serving the children of residents of the greater Leesburg area and the Property. This donation shall be in the form of non-refundable cash contributions, which shall be paid into an account established by the Town (referred to hereinafter Special meeting minutes of July 31, 1991 as the "School Site Acquisition Fund"). The Applicant, or its successors-in-interest~ shall make such payments to the Town immediately prior to issuance of each zoning permit in the amount of Four Hundred FiftT-Two Dollars ($452.00) for every residential zoning permit issued up to and until the aforementioned Six Hundred Thousand Seven Hundred Eight Dollars ($600,708.00) a~regate sum is reached. If the Applicant~ or its successors-in-interes~ acquires and conveys the Orchard Tract referred to in paragraph (13)(A) prior to September 26, 1994~ and complies with the provision of oaraaTaoh (13)(A) relating to the extension of sewer, any monies paid into the School Site Acquisition Fund will be returned to the party, who complied with paragraph (13)(A). SECTION Il. All monetary contributions stated above shall be subject to adjustment from the date of final rezoning amendment approval at a rate equal to any fluctuations in the Consumer Price Index (C.P.I.) from the date of final rezoning amendment approval for #ZM-130. Further, in accord with Mr. Moran's representation on July 31, 1991, regarding the anticipated foreclosure sale of the property known as the Orchard Tract (LCTM 60-1), EMI hereby represents to the Town of Leesburg that, in the event EMI, receives any proceeds from such sale which exceed the debt owned by EMI, EMI will give such excess proceeds to the Town of Leesburg for inclusion into the school site Acquisition Trust Fund contemplated by ZM-130. SECTION IH. This Ordinance shall be effective upon its passage. Ms. Bange made a motion to amend Section II of the proposed Ordinance. Mr. Clem seconded the motion. Mayor Sevila offered a suggestion on the amendment stating that he does not see how you can fix in these uncertain times a fixed price per lot and not attach a CPI to it if you are trying to protect the public interest when you act on this ordinance. Given the fluctuation in value of property these days and the uncertainties it would not surprise me to see the Orchard tract back at $970,000 and other properties far in excess of the $15,000 an acre that forms the basis of this proffer. Aye: Bange Nay: Clem, Forester, Kimball, Lovin, Webb and Mayor Sevila The amended motion to delete Section H is defeated by a vote of 6-1. Mr. Webb stated that there are quite a few important points to this application. The dedication of the land for the toll road and the clear zone and the Orchard tract. The annexation and AADP agreements state that the town shall furnish to the County land for a high school. This, in my opinion, is the County dictating to the town. I would be willing to go to court to defend that. If you have land for a County owned high school and once the land is given to the County and the school is built, the School Board has the right to use it to the best of their abilities. The school may be in the town or may not. It may have children from Middleburg, Aldie, Arcola and Ashburn. Why should the taxpayers of Leesburg be burdened to furnish a school for students from all over the County? Mayor Sevila stated that the annexation agreement is not the county dictating to the town. It is an agreement that was carefully negotiated between the town and county during a period of time when the annexation was a pending and contested litigation case in the Circuit Court. The agreement after having been reached was submitted to and approved by a special re-judge panel appointed by the Supreme Court. It is not likely that a board is going to reverse its own decree which in effect that agreement is part of a court decree. Therefore, we cannot negotiate it. Mr. Lovin stated that there is never any easy solutions. During the past year we have had some very searching decisions and votes to cast on this Council and this is one of them. I would like to commend the Stowers family for the dedication of the toll road without any strings. I cannot support Mr. Webb's motion. The reason is that I am afraid to put the citizens and Town of Leesburg at risk on what we would have to pay to acquire a school site whenever the need for the site arises. He commended Mr. Moran for his compromise to give the town any additional funds over what the debt is on the Orchard tract. Therefore, I cannot vote in favor of the proposed ordinance. Mr. Clem stated that the only likely way the town can get a school site would be to have the Stowers come in with a rezoning. The acquisition of the clear zone would far offset the cost of a school site. With the funds established we would have the best of both worlds. Not only could we look for land in future rezoning but we would also have the funds being built. In the best interest of Leesburg I would have to support the motion. Mayor Sevila stated that it is extremely difficult when you have known the Stowers family for as long as I have. I have known Henry for over 20 years and I regard him as a friend of mine. Our obligation is to serve what we deem to be the public interest. Sometimes the public and private interests don't necessarily go stride for stride and this case is one of those. We are in a difficult situation of trying to do something for some people who are worthy of it and at the same time honoring a public trust and commitment that we have made to the citizens of this community. We 87 Special meeting minutes of July 31, 1991 made that commitment in an annexation agreement and development policies adopted under that we would provide that school site. We were going to provide the school site because we asked the County to give the town the exclusive jurisdiction over the property in the annexation area and we will honor all of the commitments. We will go to Richmond and get the power to enforce the same covenants and go to the developers when they come before us and get the same school sites, road improvements, etc., that you intend to get. We went to Richmond and got that power and as the applications came in we negotiated with the developers and honored our commitment to the County and this is one way we did it. We got a school site through this property and the rezoning process. It was not our idea that it would come from the Orchard tract. The Orchard tract had to get a 62 acre parcel to find 45 acres that was acceptable to the School Board. But they found it and the town was willing to go along with it if that is what EMI wanted to do. In exchange for that we granted more development rights. In 1988 it was an extremely intense rezoning. When we finished with it this past year, it was more intense. I agree that the property has been encumbered by some fairly onerous proffers but in exchange for that the property has been granted development rights that are literally unprecedented at least in the town and with limited exception in the County. That piece of property as a result of those development rights is a far more piece of property as it comes back to the Stowers family on August 5 then it was when they sold it years ago. It is true that the economy leaves us all in a position of uncertainty right now and I sympathize with the desire that the Stowers family has expressed capably through their attorney to gain a little more certainty on what it is that will be coming back to them on August 5 if they wind up having to bid on their own property at this sale. I recognize the need to eliminate as many uncertainties in these grossly uncertain times but I cannot agree to do that when I know it is at the direct expense of the citizens of the Town of Leesburg and it has to be and can't be any place else. Under this agreement as we have it right now, the owner of that property in 1994 is going to have to come up with a school site. I hope that is not Henry or Mary Hope or their mother. I hope it is a "fat cat" somewhere who has got some high ideas about developing the property to his own use benefiting profit into the town as well. A lot has changed in the last three years and a lot more is going to change in the next three years. I hope it is for the good and I hope we are all in a better position to comply with or honor the contractual agreements that we have. As it stands right now, I commend the family for getting the issue of the Toll Road out of the way. It is in the best interests of the family, town, county and the region to get that issue resolved. That lets us look at this in terms of the issue of balancing the equities between the parties, balancing the risks and the risks involved right now is that the town has very little risk. The citizens of this community are not going to be looked to, to provide a 40 or 62 acre site in 1994 when it is needed. That risk is going to be born by the owners of this property. Hopefully it will be somebody capable of developing it. To amend this means, even under the worst case scenario presented to us by our planning staff, the citizens of this community are going to wind up paying a minimum of one half of that school site and that is saddling them of a burden that they do not deserve and we cannot rightfully put on them, particularly in a climate where we are already being accused of over taxing and over burdening those very taxpayers. A responsible vote on this is a vote that can be made without imposing any greater risks. We are not imposing, by this vote, any greater risk on the Stowers family then they already have. We are just saying live with it a little bit longer. When an applicant comes in or if the family's plans change with respect to the property the town will deal with the issue then. We are three years ahead of the question right now. Are we some how scaring away bidders on Monday, I don't really think so. If you tell me that you are trading me a proffer that is of the same value and expense to the property or owners of that property today as the burden of providing a school site under the existing proffer then I will ask you, why would either one of them be more scary or inhibiting to a developer. Both of them are imposing a burden on the owner of that property of equal weight of financial cost. The tax payers are picking up the difference between the two burdens. If we adopt this change we are putting the uncertainty on the shoulders of the citizens and we cannot do that and honor the commitment that we have to them. I will cast a vote against this ordinance. It is my understanding that the ordinance contains proffer language that has not been approved or submitted in writing and signed by the applicant, am I right? Mr. Brown stated yes that is correct. Mayor Sevila asked if the Council could approved a proffer or proffer amendment when that proffer is not before the Council in writing. Ms. Townsend stated that under the circumstances the Council would be able to do that with the understanding that we would be getting a letter of clarification from the applicant with all the proper signatures. They did submit, prior to the public hearing, the proffers that were originally proposed, therefore, it would be a modification to those proffers originally proposed. The Mayor stated that this is a town initiated amendment of proffers originally proposed. He asked if any kind of acknowledgement on the public record was needed. Ms. Townsend stated yes that a public acknowledgement was needed tonight. Mr. Moran requested the ability to replace the proffer to dedicate the Orchard Tract with a cash contribution of $452.00 per unit adjusted for the CPI. Also, if while EMI is the owner of the Orchard property it sells for anything in excess of the debt that is on the property and any dollars in excess of that will also be contributed to the school fund. Mayor Sevila stated that he hoped no one got the idea that he was saying that the town would get the Orchard site in 1994 no matter who owns it and that it is going to be someone's responsibility to find it and buy it. This proffer, as currently written and forcible would guarantee the town a school 88 Special meet/ng minutes of July 31, 1991 site. That is the guarantee we are giving up if we amend the proffer. Something that could have replaced the existing proffer without putting the town at greater risk would have been the dedication from the property itself of a school site if when the county demands a school site the then owner is incapable of doing it alternatively there could have been coupled a reduction in development rights that might have made it more palatable. Perhaps rather then reducing the density, the density rights could have been placed in escrow or held in some other alternative capacity so that they weren't exercisable until the proffer was complied with. This would have been a built in incentive to comply with that proffer by the then owner. Ed Finneean stated that the Stowers family present tonight have heard the proffer made by the current owner of the property and they do concur. Mr. Moran stated that a problem that they have been having is that Sovran Bank merged with C&S and are now in the process of merging with NC&B. It is at this time impossible to get a decision out of that institution on anything. EMI had given the bank additional collateral in the fall to allow this to be worked out. The additional collateral was accepted but with the change in the control of the bank everything just went right up into the air. Aye: Councilmembers Bange, Clem, Kimball, Webb Nay: Councilmembers Forester, Lovin, Mayor Sevila On motion of Mr. Webb, seconded by Ms. Bange, the meeting was adjourned. Robert E. Sevila, Mayor Clerk of Council