VIRGINIA BEACH, Va. (WAVY) — Virginia Beach has purchased the Oceanfront Dairy Queen and adjacent 17th Street stage just off the boardwalk for $12.8 million.
The sale closed Thursday, according to the city. It’s news that may come as a surprise to some as no purchase contract was ever voted on by City Council, nor was any public input ever requested.
But WAVY-TV reported in April that the site being looked at as part of the city’s 2023 fiscal year budget proposal. The city attorney’s office said that vote was sufficient to move forward with a purchase.
The DQ and the more than 900-square-foot stage and lawn on the other side of the city’s 17th Street park were sold by longtime owner Richard Maddox.
The boardwalk DQ is one of the chain’s top-grossing locations in the U.S., Maddox said previously. His father John Maddox opened up the resort’s first Dairy Queen at 27th Street back in 1949.
However Maddox, 67, has been looking toward the future, according to Councilman Guy Tower. Tower, along with Councilman John Moss, both said they didn’t want the public to lose control of the property. Since the 1990s, the stage on site was only leased to the city.
“It’s a great strategic acquisition if we can pull it off,” Tower said in April. “But it depends on price, depends on lots of things.”
The final sale price, which was $8.3 million more than the city’s assessed value for the site, used nearly all the money City Council set aside for “Resort Area Site Acquisition.”
Initially $45 million was going to be set aside to buy several resort properties with funds from the city’s tourism investment program (TIP). $12.9 million for the project ended up making it into the final version of the budget.
The original proposal listed in the city’s capital improvement project (CIP) budget document didn’t have much in terms of a description. That and the use of TIP funds raised eyebrows, particularly from frequent critics of the city using public funds in the tourism industry.
The money was to “provide flexibility to purchase land within the Resort Area” and that “targeted purchases include preservation of the 17th Street park and improvements adjacent thereto.”
Mayor Bobby Dyer released a statement the next day after WAVY’s story broke. He spoke about preserving the area’s history and the need to acquire property for longtime investment so “City Council should be in a position to ACT should the opportunities arise.” He said that parking and preservation of open space were two of the top public demands for the area, and that “public input will be key on any project.”
Taxpayers never did see a contract or final purchase price before the city moved to act to purchase the property. Is that legal?
Per Mark Stiles, the city attorney, it is “if language in CIP was broad enough to accomplish scope of obtaining a particular property, it doesn’t have to have a separate vote.”
For now under the agreement, Maddox will continue to operate the store, with the city leasing the land back to him for $100,000 a year.
Maddox didn’t immediately respond to request for comment.