Who will pay for Wastewater Expansion?

The town received an unsolicited request for public utility service extension from the owner\developer of the unserviced Residential-3 lots. In part the proposed utilities extension project request reads as follows:

The sewer line extension would service this condominium project of the projected 100 units to be built at Harbour Green Condominium. There are permits issued to build the first 4 buildings in hand and the first construction site is under way. (16 units) This first phase would require 4 septic systems for this first phase and would not be an efficient use of the land. The cost of this extension would be carried by the fees charged for a single family home or unit of approx. $12,350 per unit paid by the builder in fees to hook up to this new sewer line. These fees would total over $1,230,000 (approx.) based upon fees paid to the town of cape Charles for this hook up. The fees to run this the property should cost approx. $400,000 (approx. cost).

The discussion by Council focused not just who would pay for the expansion, but also what that would do to the capacity of the wastewater plant. It was agreed that the project would provide much-needed housing options, but that the uses of well and septic were unacceptable.

Wastewater capacity is increasingly becoming an issue for the Town. As we continue to grow, we come closer to the trigger that will require us to expand the plant.

But who will pay for it? Once again, the history of ownership of Bay Creek and the Annexation orders and Agreements raise the issue of who is responsible for paying for the expansion.

A little history is in order.

In 1974, Thora Scott Ronalds McElroy and Donald A. McElroy, her husband (‘the McElroy’s”) conveyed by deed over 2,000+ acres to Brown & Root, Inc.  The McElroy Deed contained 195± acres in the Town of Cape Charles – the North Tract which included Kings Creek Farm; Kings Creek Marina; Northampton County Club – a leased 9-hole par 3 golf course; undeveloped acreage designated as available for agriculture; numerous vacant lots in and or adjoining the Town of Cape Charles, significant Chesapeake Bay frontage and mud flats of the Bay. 

“The golf course is a private nine-hole course on the northeastern corner of the town.  The Northampton Country Club was organized in 1928 and has been in continuous existence since then.  The property is now owned by Brown and Root and is in the process of being replanned.) 

“ONE OWNER OWNS ABOUT HALF OF THE VACANT LOTS THAT ARE AT LEAST STANDARD LOT SIZE (40′ BY 140′), IN ADDITION TO A MAJORITY OF THE OTHER VACANT ACREAGE, AND, THEREFORE, CONTROLS A LOT OF THE FUTURE DEVELOPMENT OF THE TOWN. (MAP 8).” 

A portion of the North Tract west of the dilapidated Kings Creek marina and silted-in harbor was used years ago as a town dump. A majority of this North Tract area along with the majority of the Town was within the flood plain and portions remain in designated wetlands.

“The town has approximately two and a half miles of low shoreline, which includes the Cape Charles beach.  There are approximately 30 acres of wetland areas in Cape Charles.  Most are in the northern part of the town limits around King’s Creek as well as a few places along the Cape Charles beach, the harbor, and along the edge of the golf course, including over three acres of Type I marshes which are the highest level of wetlands as determined by the Northampton County Tidal Marsh Inventory, 1977.”

The McElroy Deed contained 1,762± acres in the County, the South Tract, known as the Hollywood Farms.  The McElroy Deed contained specific language: “to Brown & Root, Inc., its successors and assigns forever”.

Brown & Root, Inc. purchased these combined significant properties in both the Municipality of Cape Charles and within Northampton County.  Local news publications reported, and other sources stated that Brown & Root’s intent was to use the majority of the undeveloped property in the South Tract, within the County, for commercial and industrial use following an OPEC imposed oil and petrochemical embargo against the U.S. in October 1973. The Nixon administration commenced Project Independence in November 1973 to boost U.S. energy production and independence from foreign oil and energy interests. 

Brown & Root’s planning attempts in later years, when the ‘oil crisis’ turned into an ‘oil glut’ beginning in March 1974, led Brown & Root to change this 1974 land acquisition into a proposed and significant residential, commercial and recreational development – a Planned Unit Development (PUD), named ACCAWMACKE PLANTATION sometime around the end of the 1980’s but before 1989, as Brown & Root had at first changed the land designation from undeveloped acreage to an industrial classification and then proceed to modify its intended use.

 “If the proposed resort/retirement development takes place as envisioned, approximately 2000 additional dwelling units may be built in and around the town with an undetermined number of other dwelling units required outside of the property to accommodate any public needs caused by development.”                                                                           

An Annexation Petition was filed by the Town on March 26, 1990, together with appropriate notice to adjoining counties and political entities.   In order for municipal services to be extended to the proposed development of houses, new professionally designed golf courses, commercial activities and other designated land uses, the property purchased by Brown & Root from the McElroy’s that was located in the County comprising a significant portion of the proposed PUD development 

The Town approved the use of Brown & Root’s counsel to be counsel to the Town for the legal proceedings regarding the annexation petition, subsequent defense of an agreement negotiated between the Town and Brown & Root prior to the Petition submission as well as subsequent negotiations and proceedings. This combined effort resulted in a successful annexation of the Brown & Root properties identified as South Tract parcels in the County into the Town’s jurisdiction effective January 1, 1992.

On March 13, 1990, Brown & Root and the Town of Cape Charles entered into an AGREEMENT. This initial agreement has been described as the “Prior (Town) Agreement” as it was amended in 1991 at the request of the Special Annexation Court empaneled by the Virginia Supreme Court, as part of the Annexation proceedings negotiations between the Town and the County with the expressed recommendations found in the Report of the Commission on Local Government Report on the Town of Cape Charles  – County of Northampton Annexation Action February 1991.

The original March 13, 1990 AGREEMENT specified certain future criteria, prior to the planned expansion of the Town’s jurisdiction. 

The Town agreed: 

1. To petition to have the property shown in an exhibit to the AGREEMENT, annexed as a part of the Town of Cape Charles pursuant to the applicable provisions of the Code of Virginia. The “Property” as shown on the exhibit included both the then current Town corporate limits and the Proposed Annexation Area.  The proposed annexation area was identified as the South Tract, known as Hollywood Farms, the current location of Bay Creek at Cape Charles’ private amenities, open to the general public such as the Palmer and Nicklas Signature golf courses, its Pro Shop, the Coach House Tavern, Bay Creek Beach Club, Bay Creek Community Pool, Bay Creek Community Beach, and only several of the planned scores of neighborhoods – villages or subdivisions located south of the historic Town. 
2. that the Town would not discriminate against any portion of the Property in the application and enforcement of any law, ordinance or regulations following annexation. 
3. the Town agreed that it would tax the Property according to Va. Code Section 15.1–1047.1, following annexation and it would provide to the Property all Town services furnished to other properties within the Town limits unless such services ‘are reduced or waived in writing by Brown & Root’. 
4. the Town further agreed that at such time as the Town assumed assessment responsibilities of Brown & Root’s property, it would ‘continue the then existing policy of maintaining (tax) assessed values of property until the issuance of occupancy permits for the parcel of property for which the permits are sought.’  
5. the Town agreed to fully comply with local ordinances and state statutes in the review and approval of Brown & Root’s site plans, subdivision plats, zoning applications, building and other permits associated with the use of Brown & Root’s property.
6. the Town agreed, contingent on available natural resources, to extend water and sewer treatment capabilities to Brown & Root’s properties and to reserve for Brown & Root water and sewer treatment capabilities in sufficient capacities to service the completed development on the Brown & Root property as depicted in Exhibit B in accordance with state regulations.
7. the Town agreed that the provisions in ¶10 ‘shall run with the land’ and be binding upon the Town or any entity that assumes the responsibility for sewer and/or sewer treatment systems. 
8. the Town expressly waived any defense available to it by statute such as sovereign immunity with respect to obligations made by the town in the AGREEMENT.  
9. the Town represented that it intended to fulfill its obligations in the AGREEMENT and would continue to use its best efforts to comply with all its obligations contained therein.

Brown & Root agreed: 

1. To pay the costs of physical expansion of water and sewer collection, distribution and treatment to accommodate demands of Brown and Root beyond permitted capabilities.
2. To construct the necessary physical improvements within its property to accommodate sewer and water services in a coordinated fashion with the Town’s proposed improvements to its existing sewer and water treatment facilities.
3.  To dedicate the treatment system improvements i.e. collection, distribution and treatment and the sewer and water lines within the Brown and Root property to the Town.  
4. That all vehicular access roads within its development, that are dedicated to the Town and/or State, would be constructed to state standards, except as modified to not require curb, gutter and/or sidewalks.  
5. That any sewer and water system improvements i.e. collection, distribution, treatment and lines that it is required to construct per this Agreement would-be built-in accordance with state standards. 
6. That the provisions in all of paragraph 10 ‘shall run with the land’ and be binding upon the Town or any entity that assumes the responsibility for sewer and/or water treatment services for the Brown & Root property.  
7. That in the AGREEMENT, to an additional paragraph which clearly states: “Brown & Root covenants and agrees that the obligations set forth herein shall run with the land and be binding upon the owners of its property, their successors and assigns.”

Thirteen (13) days after this AGREEMENT was signed, on March 26, 1990, The Town filed its Notice of Annexation Proceedings to the Commission on Local Government.  A year later, February 1991 The Commission on Local Government – Commonwealth of Virginia issued its: Report on the Town of Cape Charles County of Northampton Annexation Action.  As found throughout this Report there are many references and footnotes as to the interactions, correspondence, testimony and public hearings among the various interested parties.

“Brown & Root has predicated its development plans on the incorporation of all its property into the Town of Cape Charles and on the expansion and utilization of the Town’s utility systems.”  

“To this end, Brown & Root has entered into an agreement with the Town by which it has committed itself to supporting the proposed annexation and to investing its resources into an expansion and enhancement of municipal facilities.”

“Representatives of Brown & Root have indicated that the Northern Tract will only be developed in concert with the Southern Tract and that company officials now view the entire Accawmacke Planation proposal to be contingent upon annexation of the Southern Tract by the Town of Cape Charles.”

On April 30, 1991, The Town filed its Petition for Annexation Ordinance NO. 361 in the Circuit Court of Northampton County.  

On May 9, 1991, an Option and Purchase Agreement between Vernon and Betty Jean Martin and Brown & Root was entered for the sole purpose of purchasing land for a proposed ‘connector road’ for the PUD development South Tract as an anticipated and resulting in a provision found in the AGREEMENT that Brown & Root would construct a new access corridor from Route 184 across the Martin property.  

On November 1, 1991, the Town filed a Brief in Opposition to the County’s Motion to Dismiss the Annexation Suit.  The Town was successful in those proceedings in defense of the March 13, 1990 AGREEMENT as enforceable and valid.  Contained in the Town’s Brief in Opposition to the County’s Motion, the Town re-emphasized on page 16, the power and authority to provide a unique tax provision to Brown & Root as to maintaining assessed values of property owned by Brown & Root in the Town.  Specifically, the Town stated: “Likewise, nothing precludes the Town from determining when or how often it assesses property, so long as it does so at least every 4 to 6 years.” The Town continued in the same paragraph to include: “Similarly, localities around the state may differ on when they determine property to be “improved” or “unimproved”.  

On November 25, 1991, The Town and Brown & Root entered into an AMENDMENT TO AGREEMENT OF MARCH 13, 1990.  This Amended Agreement was a condition of the Special Annexation Court for Northampton County.  This Amended Agreement was to address specific concerns, recommendations and TERMS AND CONDITIONS OF ANNEXATION as found in the Commission’s report.   Paragraph 10 of the ‘Prior Agreement’, was amended to add details as to the Town and Brown & Root’s obligation and covenant to: ‘abide by the “Proposal for Water and Waste Water Treatment Plant Improvements” submitted to the Commission and referred to by the Commission in its report on the proposed annexation by the Town of Cape Charles, dated February 1990’.  The date should have read, February 1991.

Brown & Root and the Town agreed that any reservation of treatment capacity in or from the Town’s water or wastewater systems, as provided in the Prior Agreement, for the use of Accawmacke Plantation “shall be derived from the capacity created by investments in the Town’s water and/or waste water systems, made by Brown & Root”.

Most important is the addition of ratifying language that was included in this Amended Agreement: “Except as modified herein all of the terms and conditions of the Agreement of March 13, 1990, are ratified and incorporated herein by reference.”

Also, on November 25, 1991, the Town and the County entered into an ANNEXATION AGREEMENT.  These government parties acknowledged receipt of the “Report on the Town of Cape Charles-County of Northampton Annexation Action”.  These parties agreed to settle the pending Annexation Suit, whereby the County withdrew its objections to the pending Annexation Suit.  As a result, ¶ 5 of the AGREEMENT was no longer challenged as to the provision of the unique tax provision provided to Brown & Root, its successors or assigns.  The parties urged the Commission to recommend and/or the Special Annexation Court to approve the ANNEXATION AGREEMENT.

Subsequently and also on November 25, 1991, The Town, the County and Brown & Root entered in to an AGREEMENT, known as the Settlement Agreement.  This AGREEMENT identified the Brown & Root property in the Town and in the Area Proposed for Annexation as Accawmacke Plantation except for certain subdivided and platted lots existing in the Town at the time of this AGREEMENT.   This defined area became the PUD Development as identified in the 1993 Cape Charles Municipal Ordinance.  The PUD identified and defined in the PUD Document both the North Tract and South Tracts. This AGREEMENT contains precise language covering the Annexation Petition, the subsequent various agreements, covenants, terms and conditions negotiated among the parties.  This AGREEMENT restated clearly that those negotiated agreements, covenants, terms and conditions including the acceptance of the Commission’s Report, were “Subject to the approval of this Settlement Agreement by the Court, the representations and obligations contained herein shall be binding upon the respective parties, their successors and assigns.  Brown & Root’s obligations contained herein shall apply only to the property designated as Accawmacke Plantation.”   “Furthermore, the subsequent purchasers of individual lots or other incidents of individual ownership shall not incur the obligations of Brown & Root contained herein.  It is the intent of the parties not to impose the obligations of Brown & Root contained herein upon the consumers who purchase lots, condominiums, and/or memberships with Accawmacke Plantation.”   “The obligations of Brown & Root contained herein, except as provided above, shall run with the land and be binding upon the subsequent owners of Accawmacke Plantation, which owners shall assume all of those obligations and relieve the prior owner thereof.”

As a result of all of the negotiations and annexation proceedings, on November 26, 1991, both the Special Annexation Court for Northampton County and the Circuit Court of the County of Northampton issued The Annexation Order Law No. 27.  Therefore, by provision of the Virginia General Assembly, Public Law No. 27 was enacted as a ‘legislative act’ not subject to judicial proceedings, nor subject to any Statute of Limitations, unless specifically expressed in the Orders or by Agreement, such as the Bayshore Agreement’s ten-year tax relief.

This Law No. 27 was further confirmed at the request of the Town in the General Assembly’s 2002 Session on March 11, 2002.   The Motion and Petition of the Town of Cape Charles was granted upon certain terms and conditions.   The ANNEXATION AGREEMENT was incorporated by reference. The AGREEMENT of March 13, 1990 was incorporated by reference and that March 13, 1990 AGREEMENT was required to be amended “to accommodate all other recommendations specified in the Utilities portion of the proposed “Terms and Conditions of Annexation” in the Commission on Local Government’s report, which section of the report is specifically incorporated herein by reference.”   The Order included an additional condition: “The Town shall extend public services to the annexed area in an orderly fashion, as specified in the Annexation Agreement, the Bayshore Agreement, the Ordinance, the Town’s Notice to the Commission filed March 26, 1990, the provisions of which are incorporated herein by reference, and according to the needs of the property owners within the annexed areas.”   The AMENDMENT TO AGREEMENT OF MARCH 13, 1990, dated November 25, 1991, also included: “Brown & Root agrees that if it expands the Town’s Waste Water Treatment Plant as provide[sic] in the Prior Agreement, that such expansion may include having to pay for the cost of its share of capacity for increasing the Town’s treatment standards to tertiary treatment;”

On February 9, 1993, the Town enacted the PUD Development Document as a Municipal Ordinance, known as “ACCAWMACKE PLANTATION A PLANNED UNIT DEVELOPMENT (PUD). The PUD – Municipal Ordinance has been amended from time to time (1997, 2002, 2003, and 2006). Brown & Root, Inc., prepared the original PUD Document in concert with the Town.  This municipal ordinance contains specific reference to the properties purchased by Brown & Root from the McElroy’s in 1974. This municipal ordinance, amended from time to time, contains the details of land use classification, site plan ordinances and subdivision ordinances, all relative to the PUD development which directly impacts both the North Tract and South Tract Town approved platted parcels – Lots/Units and their required development or failures to develop thereof.  This municipal ordinance addresses and provides for the Virginia Code statutes regarding planned unit developments (e.g. requirements as to streets, roads, utilities, surety bonds, etc.). The Annexation Agreements requires the Town to enforce all local ordinances and state regulations as they related to the PUD Development – Accawmacke Plantation. The PUD Document provides for the assessment of penalties against developers who do not meet the requirements of the municipal ordinances.  The PUD Document sets procedures and deadlines for development activity within the PUD. The PUD Document is a direct extension of the annexation proceedings resulting in the Annexation Order of 1991 and remains as the Town’s compliance methodology and statutory mechanism for enforcement of the issues and concerns raised by the Commission on Local Government, the County, and as also found in the Town of Cape Charles Virginia Comprehensive Plan 1989.

On December 15, 1997, Brown and Root, Inc., entered into an installment Sale and Purchase Agreement, a Contract with Baymark Construction Corporation. The Contract, as amended from time to time included specific reference as to the Assumed Obligations and Rights of Brown & Root to the Town, the County, its successors and assigns.  Baymark agreed by Contract to assume the obligations and rights as identified in the Contract’s Exhibit J. Counsel for Baymark and former co-counsel to both Brown & Root and the Town of Cape Charles, R. J. Nutter, confirmed these obligations and rights by letter to the Town’s counsel on October 25, 1999, and cited: “that for the purposes of negotiating with the Town you (James J, Szablewicz, Town Counsel) should assume that Baymark is responsible for the terms of the annexation agreement.” 

In 2000 Baymark assigned its obligations and rights under the Contract to its wholly owned corporate entity, Bay Creek, L.L.C. By ASSIGNMENT OF SALE AND PURCHASE AGREEMENT, dated February 23, 2000, recorded by deed.  This assignment included reference to the obligations and rights under the Contract as they pertain to the Annexation Agreements.  Bay Creek joined therein to evidence its agreement to be bound by the terms and conditions of the Contract.

In 2001, By Assignment of Contract Rights by which Bay Creek executed, the Agreement to Assign and Convey the right to purchase the property described as the “North Tract” (178 acres more or less), the West Parcel, the East Parcel, the Marina Parcel and Parcel KK, delivered to its controlled subsidiary – Bay Creek Marina & Resort, LLC – BCMR, the rights to purchase North Tract parcels directly from Brown & Root.  Under the terms of the Brown & Root Contract, and as evidenced by the details contained in the Sale and Purchase Agreement: ¶4. Purchase Price (c) Marina. The consideration for the conveyance of the Marina shall be Purchaser’s performance of the dredging work specified in Permit No. 93-0149 issued by the Virginia Marine Resources Commission -VMRC, at Purchaser’ sole costs and expense.  BCMR assumed the rights to the VMRC permit. In 2001, BCMR acquired from Brown & Root parcel A in the North Tract. BCMR is a successor and an assign under the Brown & Root Contract. A DEED OF BARGAIN AND SALE between Kellogg Brown & Root, Inc., formerly Brown and Root I, Inc. and BCMR states: “IT BEING part of the property conveyed to Grantor from Thora Scott Ronalds McElroy and Donald A. McElroy, her husband, by deed dated January 10, 1974 and duly recorded January 16, 1974 in the Clerk’s Office in Deed Book 177, at page 431 Tax Parcel No.: 083A1 – ((OA))-00-00A (portion)”

Baymark Construction commenced site improvement work and North Beach Restoration and Kings Creek Marina restoration projects, prior to the purchase of the parcels from Brown & Root. Baymark, and its controlled real estate company Progressive Realty marketed and advertised the North Tract parcels – The Colony and collected cash deposits for identified lots in this first North Tract subdivision. Baymark, as Developer and Declarant to the Property Owner’s Association’s Declaration failed to post a surety bond for construction and land improvements in the North Tract.

• Beginning in 2002 “BAYCREEK THE COLONY” entered into Purchase Agreements for Improved Lot(s), in the North Tract.  In 2004, BCMR as Baymark and Bay Creek L.L.C.’s subdivider applied for Town of Cape Charles Plat approval of 118 residential lots in the proposed Marina Village East, MVE – subdivision.   Baymark and Bay Creek LLC as Developers and Declarants of Bay Creek at Cape Charles both failed to post a surety bond to complete MVE.
• Bay Creek as Successor Declarant and Developer to Baymark, filed and recorded on March 25, 2002 the first set of SUPPLEMENTS TO DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR BAY CREEK AT CAPE CHARLES (Supplement) declaring that “The Colony Units are deemed to be Units as defined in the Declaration and that the Declaration shall be fully and completely applicable thereto in all respects.”  

Beginning in 2005, BCMR, as an assign of Brown & Root, through Baymark and Bay Creek is identified as Seller of lots in Marina Village East, The Colony and Kings Bay.

In November 2006 Baymark, and Bay Creek through its controlled subdivider BCMR, discontinued completion of the MVE subdivision and repurposed its bank line of credit for other BCMR corporate or related corporate entity purposes.  Such repurposed funds were reportedly used for other purposes but were not used to complete the Marina Village East subdivision. South Tract developments were consuming projected and Town stated, ‘limited utility capacity’. In 2006 Baymark, Bay Creek and BCMR conveyed by deed, the common areas and unfinished streets and Town approved platted infrastructure obligations to the Property Owner’s Association.  Baymark, Bay Creek and BCMR were not assessed property taxes due to the County and to the Town at the time of these conveyances as required under Va. Code § 55-509.1., for planned communities.

In June 2007, Baymark, Bay Creek and BCMR conveyed Parcel T to a third-party developer.  Baymark and Bay Creek stated in the documents at closing of this sale, that Parcel T in the North Tract, located on Chesapeake Bay frontage, was not required to abide by the PUD Municipal Ordinance or the restrictions contained in the Property Owner’s Association’s Declaration and Supplements, all in apparent contravention of the Town’s PUD Municipal Ordinances and the Association’s Declaration, as filed in the Clerk’s Office on February 3, 2000 as Instrument #000000213.  The Parcel T conveyance established the lowest sale price per acre value in the North Tract.

On February 1, 2008; by published assignment from Bay Creek, the BCMR rights, duties, obligations and benefits are transferred from Bay Creek back to Baymark.

On March 8, 2008, Baymark and Bay Creek sold a controlling interest in Bay Creek South, LLC a controlled entity of Baymark, to Keyser-Sinclair.  Keyser-Sinclair is a controlled subsidiary of the public company Sinclair Broadcast Group Inc. No assets formerly owned by or subdivided by BCMR were a party to the sale of assets of Bay Creek South to Keyser-Sinclair.  Sinclair announced in March 2008 to its public shareholders that it controls Bay Creek South, and by recorded instrument in the Clerk’s Office of Northampton County, controlled the Property Owners’ Association as Developer and Second Successor Declarant of and for the Association, which includes the PUD development North Tract subdivisions of The Colony, Kings Bay and Marina Village East, the Bay Creek Marina and related businesses located in northern sector of the North Tract described as Marina Villages.

In 2012, Bay Creek Marina, controlled by Baymark as of February 2008, and its associated businesses located in the commercial district known as Marina Villages – together with significant vacant parcels and lots, failed to repay its 2005 Marina Village East completion loan, the 2005 North Tract Breakwaters loan and defaulted on the 2006 re-purposed BCMR loan from Gateway Bank & Trust Co.  The Bank foreclosed on BCMR’s pledged assets at a public auction in December 2012 to a third-party developer.  

This former private marina amenity to the Bay Creek development as advertised and promoted by Baymark as the Bay Creek Golf and Marina Resort along with the marina and restaurant business and rental villas are now known as the Kings Creek Marina and Oyster Farm restaurant and its associated businesses, remain part and parcel to the PUD Document restrictions, zoning requirements, land classifications, obligations and covenants established by the Annexation Agreements and therefor the Annexation Order.  

But Kings Creek Marina and its associated businesses, parcels. villas and lots were never subject to the Association’s Declarations and Supplements or defined as “Units” within the Declaration.  The purchaser at auction however must rely on the obligations of the Town to provide adequate utility connections, zoning and other municipal ordinances, water and wastewater treatment capacity as these properties were subject to the Annexation Agreements and proceedings as part of “ACCAWMACKE PLANTATION, defined as all of Brown and Root’s property within the Town, along with all of Brown and Root’s property in the Area Proposed for Annexation

A direct line can be drawn from the McElroy deed to Brown and Root, Inc., to Baymark Construction, to Bay Creek, L.L.C., to Bay Creek Marina and Resort, LLC, conveyed back to Baymark, and Bay Creek South, LLC and as third-party beneficiaries, directly to and thereby subsequent purchasers of parcels and lots by title and deeds of conveyance of Town approved platted parcels and lots in and throughout the PUD development “Bay Creek at Cape Charles”, formerly known as Accawmacke Plantation.

• Sufficient detail and recorded documents demonstrate the assignment of rights from Brown & Root to Baymark, to Bay Creek, to BCMR, BCMR back to Baymark, and to Bay Creek South, controlled by Keyser-Sinclair, establishing the acceptance of the rights and obligations of the parties and to the Annexation Agreements and Annexation Orders.
•      
• BCMR, subdivider of North Tract subdivisions was never a Declarant or Developer as defined in the Declaration and the Virginia Property Owners’ Association Act.  Baymark was the original Declarant as of February 1, 2000, followed immediately by Bay Creek, March 22, 2000, and subsequently Bay Creek South/Keyser- Sinclair as Second Successor Declarant, February 28, 2008. 

Considerations should be given to the reasonable expectations that the failure by the Town: to enforce is own Municipal Ordinances found in the PUD Development Document; failure by the County through the lack of established and County sought oversight of the conditions it required of the Town as part of the Settlement Agreement to enact the Annexation Orders; and the subsequent failure of both governmental agencies to oversee the Town’s utility and connector road improvements, present clear evidence that neither governmental functions protected the real property taxpayers in and throughout Bay Creek or the residents of Cape Charles and by extension, the taxpayers of Northampton County.

Without listing here, each and every published letter, e-mail communication or correspondence, there is more than adequate historical correspondence that flowed between the developers and declarants of Bay Creek and Town officials beginning in 1990 and proceeding into well after the year 2014, as they both addressed the well-known and publicized issue that the State of Virginia Department of Environmental Quality was concerned and issued violation fines as a result of the Town’s inadequate, sub-quality wastewater treatment utility plant.  This major concern and utility issue were promptly identified and addressed during the Annexation proceedings, public hearings and resulted in Annexation Agreements and Annexation Orders which failed to be enforced. Subsequent letters in March 2009 from Mayor Sullivan giving notice to builders, developers and individual lot owners of an impending utility capacity constraint was seeking cash deposits of $10,047.00 or in excess of 570% for the original $1,750 water and wastewater connection charge – even for lots with no building permits. Town Manager Heather Arcos in April 2009 notified by e-mail in answer to a posed question as to the Town’s position on the constrained utility capacity issue and recent letters from Mayor Sullivan to a property owner in Marina Village East: “As of right now, I don’t see the town approving anymore subdivisions without an approved plan to expand plant capacity.”  

Bay Creek was all the while, promoting its subdivision expansion efforts with Bay Creek’s Real Estate marketing and sales efforts coupled with its filed and Town approved platted new subdivisions.  The Town, addressing the well-known need to upgrade its aging and quality deficient wastewater treatment plant combined with the requirement to expand utilities to meet the forecast demands of Bay Creek acknowledged and addressed the reserve capacity requirements and obligations it had agreed to provide to both the North and South Tracts of the Bay Creek at Cape Charles development.  Plant capacity and plant replacement became a public dispute. Bay Creek appears to have timely reduced its forecasted capacity demands and needs by apparent abandonments of the Marina Village East subdivision and by curtailing the number of condominium units in the foreclosed The Fairways Condominium, perhaps therefore artificially reducing the time pressure on the expansion of the waste water treatment plant in 2006 as it sought a new financial partner, Keyser-Sinclair.  Keyser-Sinclair in an undated correspondence from its executive Oral Lambert, to owner of lots and homes in Bay Creek publicly acknowledged Keyser-Sinclair only had a financial interest in the South Tract and therefore its interests lie only in Keyser-Sinclair’s capacity needs and demands, perhaps at the expense of the North Tract subdivision, The Colony and Marina Village East and the Kings Creek Marina district.

• BCMR and Bay Creek filed and received approval for the Plats in Marina Village East in 2004.  These approved plats were subject to specific provisions of the PUD Municipal Ordinance and in particular “Town of Cape Charles Zoning Ordinance – Appendix B: Site Plan Ordinances” (See § 5, 6, 9, 10, 11 & 12) 
•  
• The PUD Site Plan Ordinances enacted by the Town and following state statutes, required the streets to be paved to a standard set by the VDOT.  Therefore, no legal or valid certifications of occupancy should have been issued by the Town. The streets in Marina Village East did not meet this requirement until the year 2015.  The PUD Site Plan Ordinances required approved plat infrastructure development and construction to certain timetable limitation and subsequent penalties. Failure to meet those time constraints – within 5 years or the year 2009, would restrict or limit any valid or legal issuance of certificates of occupancy until such time as the Town granted new construction approval after review and or appeal and the waiver of appropriate penalties provided for in the Ordinances.  Baymark would be a party to this action as a result of the February 2008 re-assignment of membership interests formerly held by BCMR, the subdivider, back to Baymark from Bay Creek to its sole member, Baymark. However, Bay Creek South (Keyser-Sinclair) accepted in March 2008 by recorded instrument, the acknowledgment as the Second Successor Declarant – and therefore as Developer, under Virginia’s POA Act for Bay Creek at Cape Charles Community Association, which includes all of the North Tract subdivisions.

• Bay Creek filed Supplements to the Declaration to include the Units in Marina Village East Phase I on January 20, 2005; May 3, 2005 the Units in Marina Village East Phase III; and May 20, 2005 the Units in Marina Village East Phase II comprising a combined total of 117 Units in Marina Village East – representing over 17% of the then total Bay Creek at Cape Charles development. As of May 20, 2005, Supplement filing, there were a total of 686 Units within Bay Creek at Cape Charles, subject to the Declaration.  
• By December 29, 2005 Bay Creek and Baymark had filed a Supplement to the Declaration to include an additional 78 Units of condominium Units (FAIRWAYS II CONDOMINIUM) ‘to be developed in the South Tract, followed by a March 21, 2006 filing for 72 Units in FAIRWAYS III CONDOMINIUM. 
• Subsequent parcels, Phases and additions to the number of Units subject to the Declarations followed in 2006 and 2007.  Overall, 873 Town of Cape Charles approved and platted Units, subject to the Declaration and subject by Title and Deed to the PUD Document had been listed on the Bay Creek Master Plan submitted by Bay Creek and maintained in the office of the Town Planner up and until 2012.

How will Keyser-Sinclair increase its shareholder values if it cannot grow and expand the South Tract previously planned subdivisions without an expanded utility plant?  Especially after paying Brown & Root on May 14, 2014, the remaining amount of $8,147,545.62 from the original installment sale Contract for the remaining tax assessed parcels in the South Tract containing planned but unused residential 1,983 Units?

With this growth, the expansion of the wastewater plant is inevitable. The historic trail once again leads us back to the agreements of 1991. The past is never the past.

About the Author

Wayne Creed

Administrator

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