VIRGINIA BEACH, Va. (WAVY) — 10 On Your Side is investigating the current status into Vanguard Landing, a nonprofit corporation that wants to build a $40 million housing community for those with intellectual and developmental disabilities.
Those that support Vanguard Landing agree it is a noble project for an underserved population here in Virginia.
However, Virginia Beach Auditor Lyndon Remias has determined Vanguard Landing is in default of a $2.85 million taxpayer backed, no interest loan approved unanimously by City Council in 2013 and signed in 2014. The reasons for the default are not financial ones, but for other requirements established by the Virginia Beach Development Authority (VBDA) in the promissory note.
The land in question is 75.5 acres along Princess Anne Road, and Vanguard Landing bought the land for the housing community with the loan from VBDA, which included a farmhouse now used as Vanguard’s headquarters office. That’s where WAVY met with Executive Director Debbie Dear.
“We have a solid business plan,” Dear said.
In the office is a sign that reads, “If you can dream it, you can do it.”
If any phrase fits Debbie Dear, it is that one. Her unbounding enthusiasm for the community is contagious and failure is not in her DNA.
“There is nothing failed that Vanguard Landing has done.”
Remias thinks otherwise, and sent a memorandum to the VBDA outlining why Vanguard Landing has been in default for two years.
We asked Dear to respond to skeptics who think the $40 million project is beyond the reach of achievability,
“They will be excited when they see it,” she said with complete confidence.
Remias found Vanguard had not completed one of the residential buildings by February 2019, which was required by terms of the loan.
“The reason for that, the city basically made it impossible with the moratorium on development,” Dear said.
Dear blames 2016 Hurricane Matthew, which caused massive flooding to Virginia Beach, including nearby Ashville Park, leading to stricter standards for permits and development.
Remias also noted Vanguard did not file the “annual written report of its progress towards obtaining the approvals … for licenses and permits.”
That was a requirement that was not met from 2014-2020. When it surfaced that the yearly updates had not been filed, Vanguard Landing filed one this year.
Remias is also troubled by Vanguard’s financial status, writing, “the ability for Vanguard Landing to meet any of the terms … highly unlikely.”
We asked Dear about this $40 million project. Will she be able to raise the money?
“A nonprofit to raise that it takes 12-15 years.”
But many are concerned, including Virginia Beach city council members that nothing has moved on the land. We pointed out Dear doesn’t have 12-15 years, and that she is in default on the loan.
“We are not in default for not paying our money,” she pointed out.
That is true.
According to the promissory note, Vanguard Landing has until next February to make its first loan payment of $114,000.
Remias, who declined to be interviewed, also found Vanguard Landing has had negative revenues two of the last three years.
- 2018: (-$31,710)
- 2019: (-$109,287)
- 2020: $4,029
On March 18, the VBDA gave Vanguard Landing 60 days “to give Borrower time to arrange replacement financing, and in an attempt to avoid a foreclosure on the property securing repayment of the Note,” wrote Alex Stiles, the Virginia Beach Senior City Attorney.
This was conditioned on Vanguard Landing’s agreement to give Remias full access to its financial books and records.
On May 11, Remias wrote back to the VBDA after reviewing the financial records for the period of January 1 to March 31 and said: “Overall, we determined that revenue and expenses were reasonable and properly supported. The financial records were complete, organized, and were easily accessible which led to an expeditious review. Minor issues noted were discussed with (Debbie Dear.)”
Remias still concluded there’s no evidence of financing in place to begin or finish the project.
“It has been mission impossible,” says Dear’s attorney Eddie Bourdon, who says of the loan requirement to build at least one residential building by 2019 was no longer practical because Virginia Beach went into stand-down for site approvals due to flood mitigation issues following Hurricane Matthew.
“They were between a rock and a hard place. There was nothing else they could be doing to get site plan approval for the vast majority of the time they have owned the property.”
Virginia Beach Councilwoman Barbara Henley agrees.
“I think that there would only be one house built was a little bit optimistic. You have to do the site work for the whole property, and that takes a lot of time especially with our new stormwater standards.”
Bourdon expects to get the construction loan to build the project from the Virginia Housing Development Authority, now known as Virginia Housing,
“$40 million is the amount. That is what is being sought and in the ballpark of what it will be.”
State Sen. Bill DeSteph agrees and has spoken with Virginia Housing. We asked DeSteph, is Virginia Housing making you believe they will be on board, and that the project is a go?
“I believe they will support the project and back the project,” DeSteph answered.
“You have to show me the money,” says Councilwoman Rosemary Wilson, who has serious concerns about the viability of the housing project and has lost confidence that it will happen. “Vanguard Landing has been in default for over two years. It’s not just last year or not because of the pandemic, and when you look at the financials it doesn’t seem possible, they have the money to build it.”
Councilman John Moss voted for the project in 2013, as did all council members including Henley, and Wilson and DeSteph when he was on council.
We asked Moss whether Vanguard Landing has satisfied his expectation. After a five-second pause, he said “in that they have given their best effort, and that’s what council said, and that they knew it was a risky business model, and it is highly capital intensive to get it started.”
Vanguard Landing’s future will play out at Tuesday’s Virginia Beach Development Authority meeting, where it is expected for Vanguard Landing to further explain their position and the viability of the project.