GreenCity debt dispute delaying planned property transfer, developer solicitation

The former Best Products headquarters building, which was to be repurposed as part of the GreenCity development. (Henrico County images)

Legal wrangling over funds at the center of the stalled GreenCity development in Henrico is delaying the county from not only reclaiming the property but also initiating the process to find a new developer for the project.

ASM Global, which had signed on to manage GreenCity’s anchor arena, is requesting a court hearing to determine whether $1 million that the project’s former developers had paid the county for the site can be collected to help satisfy a $1.5 million debt that ASM says the developers owe it.

The venue management company recently filed a garnishment summons against Henrico’s Economic Development Authority in an attempt to collect the funds ahead of a planned repurchase of the 93-acre property, in which the EDA would pay the $1 million back to the developers in exchange for the property.

But in its response to the summons, the EDA maintained that it “holds no money or other property of the judgment debtor” – referring to Green City Development Corp., the land ownership entity of former project developers Green City Partners, which were subject to a confessed judgment from ASM for the debt.

In a filing last week in Henrico Circuit Court, ASM says the EDA’s response “is legally and factually incorrect,” contending that the EDA in March delivered a formal notice to the developers exercising the repurchase option in their development agreement and setting a closing date of April 15 and a repurchase price of $1 million.

“Upon issuing the Notice, Henrico EDA unconditionally bound itself to pay GCDC the $1 million repurchase price…upon conveyance of the property,” ASM says in the filing, adding that the EDA “presently holds a contractual debt in favor of GCDC…which is property subject to ASM’s judgment lien.”

The filing requests an evidentiary hearing to determine the amount of funds due to the developers and if the EDA has exercised or is exercising the repurchase option – or, as an alternative, a judgment against the EDA to pay the $1 million deposit to ASM upon the repurchase closing.

An aerial rendering of the GreenCity development.

The filings have thrown a wrench into the agreed-to process for the EDA to reclaim ownership of the former Best Products property at Interstate 95 and Parham Road that makes up about half of the roughly 200-acre GreenCity project site, the rest of which consists of residential development.

The disputes between the parties are also delaying a request-for-interest solicitation that Henrico had planned to put out by the end of last month, in hopes of finding a new developer to pick up the project. The county said in March it would issue the RFI in late April, but it had yet to do so as of this week.

In a prepared statement, Henrico Chief of Staff Cari Tretina said the county still intends to move forward with the project once the legal issues are cleared up.

“Green City Development Corporation is in breach of our contract as they have failed to convey the property back as outlined in the Purchase and Sale Agreement. Taking matters to court is the next step for the EDA to repurchase the property,” Tretina said in the statement.

“The County remains confident we will regain ownership, and we will issue a Request for Interest once we have clarity.”

The RFI was to follow the repurchase and transfer of the Best Products site, a process the EDA had anticipated completing on April 15. ASM’s confessed judgment and garnishment summons were filed four days earlier.

Two weeks after the closing date had passed, the EDA filed a lawsuit to force the developers to convey the property, alleging that the developers now refuse to do so in light of ASM’s filings.

The $1.5 million that ASM is seeking stems from a loan it provided to the developers when it signed on to develop and manage the arena. ASM is seeking to collect at least part of that debt – the $1 million – before those funds can be used in the property repurchase.

The $1 million makes up the first two installments of a three-year payment plan that the developers and the EDA agreed to in 2022, two years after the $2.3 billion project was announced. A final $5.2 million payment due in February was missed, and Henrico deemed the developers in default of their agreements.

A conceptual rendering shows the arena in relation to other buildings in the proposed GreenCity mixed-use development.

According to the EDA’s lawsuit, the developers have “refused to convey” the property unless ASM agrees that the EDA may pay “some or all” of the $1 million to the developers rather than to ASM via the garnishment summons. The developers have asked that the summons be quashed and that ASM’s confessed judgment be vacated, arguing that they are invalid.

Green City Partners and GCDC are both led by Susan Eastridge and Michael Hallmark, the development team that was also behind the unsuccessful Navy Hill plan to replace the Richmond Coliseum with a new arena and the ill-fated VCU Health-anchored redevelopment of Richmond’s Public Safety Building. They are represented by O’Hagan Meyer attorneys Thomas Wolf and Joseph Rainsbury.

Tyler Brown of Hunton Andrews Kurth is representing the EDA in its suit. Henrico County Attorney Andrew Newby filed the garnishment summons response for the EDA.

ASM is represented locally by Gentry Locke attorneys Jeff Miller and Ryan Starks. Miller declined to comment on the case.

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