On September 9, 2016, the Cape Charles Mirror contacted the Virginia Department of Transportation regarding the Route 642 connecter road project in Cape Charles, sometimes referred to as the “Harbor Access Road”. The Mirror submitted a series of questions, and on November 21, 2016, VDOT sent the following responses (VDOT responses are in italics):
I.Have VDOT attorneys reviewed the Annexation Agreement between the Town of Cape Charles and then developer Brown and Root?
VDOT attorneys neither reviewed the Annexation Agreement nor were they aware of any obligations thereto, prior to or at the time of the project. As a result of this inquiry, our attorney obtained and reviewed the Annexation Agreement.
II.Does Bay Creek South, LLC, as successor in interest to Brown & Root, Inc., Brown & Root I, Inc. and Kellogg, Brown & Root, Inc. as developer and primary owner of Bay Creek, have an obligation to construct VDOT Project No. 0642-065-577 (UPC103391) at its sole expense?
VDOT believes that Bay Creek South, LLC has a legal obligation to construct VDOT Project No. 0642-065-577 (the “Project”) at its sole expense.
The Annexation Order entered by the Circuit Court of Northampton County on November 26, 1991 and recorded among the land records of Northampton County on December 9, 1991 in Deed Book 252 at page 649, obligates Brown & Root I, Inc. to “construct or have constructed a new two-lane access road into its development to accommodate traffic from [Bay Creek, formerly known as Accawmacke Plantation], provided the necessary land and easements are acquired and providing all necessary permits are obtained.”
The Report of the Commission on Local Government on the Town of Cape Charles – County of Northampton Annexation Action dated February, 1991 (the “Report”), which was incorporated into the Annexation Order by reference, contains strong language providing the justification for placing the burden to construct and pay for the Project on the developer of Bay Creek. There is also a referenced Agreement between Brown & Root I, Inc. and the Town of Cape Charles (the “Town”) dated March 13, 1990 (the “Developer’s Agreement”), an Amendment to the Developer’s Agreement dated November 25, 1991 (the “Amendment”) and an Agreement between the Town, Northampton County (the “County”) and Brown & Root I, Inc. dated November 25, 1991 (the “Town-County-Developer Agreement”), all of which are incorporated by reference into the Annexation Order or Amendment.
III.Why didn’t VDOT know about the Annexation Agreement between the Town of Cape Charles and then developer Brown and Root?
There are 3 project parcels at issue, Parcels 004, 006 and 010.
Parcels 004 and 006 were handled by Northampton County. Acquisitions activity on these parcels, including Title research, was not performed by VDOT and the title report reviewed by VDOT did not reference the existence of any proffers.
Although VDOT did handle Parcel 010, in searching for the existence of proffers, VDOT must rely on the responses from localities where any such proffers might be present. We ask for written responses from Planning Departments as part of our diligence. VDOT asked the County to provide any information regarding zoning restrictions, special use permits, unrecorded proffers and open zoning cases concerning parcel 010 and we were told that none of those were applicable to Parcel 010. As a result, any related Annexation Agreements were not known to us.
On November 22, 2016, The Mirror responded (italics):
Thank you so much for the response, it is much appreciated. Given VDOT attorneys feel the developer has a legal obligation to construct VDOT Project No. 0642-065-577, what are the next steps? Will there be a stop work order while this is hashed out? One question the attorneys should ask is why VDOT was not made aware of the annexation agreement by the Mayor and Town Council of Cape Charles, as well as Northampton County, and was allowed to fund this project using taxpayer funds when they were fully aware of the agreement between the town and then developer Brown and Root. I can provide correspondence going to back to 2004 which can verify this. Also, the current County Attorney should have been aware since he was the person that signed the annexation agreement in 1991.
VDOT contacted the Mirror on January 12, 2017 at 9:00 AM per Paula Miller, Communications Manager for VDOT Hampton Roads. While VDOT attorneys agree that the developer Bay Creek South should be funding this project in whole, since they were not party to the agreement, their hands are tied in terms of enforcing it. According VDOT, only the Town or the County can enforce it. The Mirror asked how VDOT came to its determination, as well as whether it was their decision not to attempt to find out why they were not made aware of the Annexation Agreement during planning phases. This information was not available at the time.
Who will finally enforce Law No. 27, the Annexation Agreement between Cape Charles and Northampton?
Right now, the taxpayers are on the hook to pay close to $11 million for a roadway that, according VDOT attorneys and a legislative act of the state of Virginia, the developer, Bay Creek South, LLC is responsible for (as well as a $20 million wastewater treatment plant that was also part of the agreement).
Note: The Annexation Agreement “runs with the land”. That is, when Sinclair Communications purchased Bay Creek South, they also assumed responsibility for the agreement between the Town and the County. Bay Creek South changed hands and control on March 8, 2008 into Sinclair. Sinclair even had an Earning Conference call along with their earning release announcing the great deal they had made in Cape Charles. At the time, Sinclair seemed pleased that for $50m they acquired a 50% controlling interest in a property appraised at over $200m. While the purchase may have at first appeared to be a good deal, it may turn out to be more a “pig in a poke”.
Over the past 18 months, the Cape Charles Mirror has contacted current Mayor George Proto, Town Council, as well former County Administrator Katie Nunez and County Attorney Bruce Jones regarding this matter. While responses ranged from the vague to the “that was a long time ago’s”, a cursory review should have revealed that the original agreement signed by Brown&Root and the County was still valid and required enforcement (the Annexation Agreement resides in the Northampton County Courthouse). Former Mayor Dora Sullivan as well as Vice Mayor Chris Bannon, Councilwoman Joan Natail and Assistant Town Manager Bob Panek have been aware of their obligations to protect the citizens of Cape Charles and enforce the agreement since the early 2000s.
In conversations with VDOT, it was noted that the 642 connector road was a priority project for both the County and the Town. Hints as to why can be gleaned from comments by Councilman Andy Buchholz who has stated on numerous occasions that the road was being funded and constructed for better access to the harbor.
There are two main reasons why better access to the harbor is required: the Cape Charles Yacht Center and the new Marine Terminal at the harbor parcel 83A3 – 11 – 2 . Both of these enterprises will need an expanded roadway to accomplish what they want to achieve.
It should be noted that the Cape Charles Yacht Center opened in May 2014, not long after the “Harbor Access Road” project was approved by VDOT in 2013. With construction of 642 in full swing, Cherrystone moved to have the zoning map amended for parcel 83A3-11-2 from Harbor District to Industrial M-2, paving the way for the new Marine Terminal. Town Council quickly green lighted this project in August 2016.
Why did local officials allow VDOT to move forward without alerting them to the fact that the cost of the project was to fall on the developer, not the taxpayer?
Shouldn’t VDOT attorneys be more curious about why information regarding Law No. 27 was withheld from the agency?
How much did the Cape Charles’ town attorney Mike Sterling of Vandeventer Black, LLP understand of the agreement which clearly states that Bay Creek South, LLC is responsible for funding the entirety of the project?
Northampton County Attorney Bruce Jones represented Northampton during annexation negotiations. He is also the person that signed the agreement–shouldn’t he have had some recollection that VDOT should not be funding the project?
While the harbor access road will certainly bring with it some benefits, it is yet to be determined whether the ends justify the means. Relative to the rule of law, who then at the state level is going to defend the interests of the Virginia taxpayer?
More on the Annexation Agreement, Law No. 27: