The Richmond Redevelopment and Housing Authority’s Board of Commissioners has ordered a probe into whether agency staff followed procurement rules after the collapse of a $35 million development deal in Jackson Ward.
The project would have brought a 115-room hotel, 63 apartments and retail space to a property owned by RRHA. Amid the COVID-19 pandemic and a spate of leadership changes, RRHA halted negotiations with the developer, The M Companies, last year. The firm has lobbied the board to intervene and re-examine what transpired.
“If you look at all the correspondence I sent prior to the termination notice and after, I clearly reached out and tried to negotiate in good faith to meet all the terms and conditions,” developer Mike Hopkins told board members Wednesday. “Throughout this time, there have been mischaracterizations of what our intentions were.”
The deal dates to a 2018 solicitation the housing authority issued under then-interim CEO Orlando Artze for a 3.4-acre property bounded by Interstate 95 and Jackson, Second and Third streets.
RRHA selected the proposal by Hopkins’ firm after reviewing other submissions, said Cory Wolfe, the housing authority’s general counsel.
“We interviewed Mr. Hopkins and then indicated our intent to award the contract to him pending successful negotiation of the outstanding business terms,” Wolfe said.
When negotiations began a few months later, the two sides were at odds about the number of apartments reserved for families making less than the region’s median income. They also disagreed on a sale price for the property.
RRHA said it wanted $4.1 million for it, according to a letter Hopkins sent board members earlier this month. The letter, obtained by the Richmond Times-Dispatch, did not specify what The M Companies countered with.
Wolfe said RRHA had an appraisal conducted and had sought to sell the property to Hopkins' firm at the appraised value. Hopkins said his firm never received a copy of the appraisal and that research into sale prices for similar properties in the area indicated that RRHA’s asking price was too high.
Hopkins said that a few months later, his firm received a letter from RRHA terminating the negotiations. The letter, sent last June, came shortly after former RRHA CEO Damon E. Duncan resigned his post and his deputy, Therese Walton, briefly led the housing authority as its interim CEO. A subsequent meeting with Walton and others to try and salvage the deal was unsuccessful, according to the letter Hopkins sent to the Board of Commissioners.
Wolfe said RRHA officials followed federal, state and agency rules. Existing RRHA policy “would not require the CEO to consult with the board before she terminated negotiations with a procurement offeror or candidate,” he said.
“Unfortunately, we were not able to meet terms that would fully compensate RRHA for the real estate that would be involved with the deal,” Wolfe said. “This is no commentary on Mr. Hopkins character or the strength of their proposal or anything like that. I don’t think the agency has made any representations in that manner. This is merely an inability to come to terms.”
In addition to the sale price, Wolfe said pandemic-related uncertainty gave RRHA leaders reason to reassess their plans for their real estate holdings. Another solicitation for the properties could be held at a future date, he said.
After hearing from Hopkins and Wolfe, five members of the board voted for a review of the agency’s handling of the deal, in what amounted to a rebuke of their own legal counsel.
“I am asking that the board send this procurement specifically to the Real Estate Committee for a full evaluation of everything that happened to determine if the procurement policy was followed and where there are failings in our policy,” said Commissioner Barrett Hardiman.
Joining Hardiman in supporting the review were Commissioners Basil Gooden, Bill Johnson, Robley Jones and Patrice Shelton.
Voting against the review were Chairwoman Veronica Blount and Commissioners Neil Kessler and Jonathan Coleman. Commissioner Charlene Pitchford abstained.
The issue had not been on the scheduled agenda for Wednesday's meeting, but arose from comments Hopkins gave during the board's public information period. Blount tried to table the matter, saying said she didn't want to keep other speakers waiting.
“If we as commissioners want to change the policy, we as commissioners can have a conversation about that when we do policy changes, but we are not part of the procurement process,” Blount said.
A timeline for the review is unclear. The board’s Real Estate Committee is scheduled to meet next in mid-February.