Authority determining how to address Vanguard Landing after city auditor finds loan is in default

Lyndon Remias [The Independent News]
Ed. — From the Sunday, May 25, print edition.


VIRGINIA BEACH — The Virginia Beach Development Authority will take a month to gather information about issues related to Vanguard Landing near Pungo after a loan to secure land for the planned project was determined by the city auditor to be in default because the nonprofit missed deadlines.

Members of the development authority on Tuesday, May 18, voted to continue forbearance of a $2.85 million loan – meaning the authority would, for now, refrain from enforcing its agreement – until its next meeting in June while the city staff evaluates the situation and gathers information. 

The nonprofit behind Vanguard Landing, a long-planned development north of Pungo that will help people with intellectual and developmental disabilities, had requested an 18-month extension on its loan after not meeting requirement of its agreement with the authority. The extension would give it time to gain site plan approval for the project and close on financing for the project.

In a memorandum written in March, City Auditor Lyndon Remias found the loan is in default and the charity may lack the resources to make a payment on it next year. 

In March, he recommended the authority determine whether to deal with the loan by forbearance or foreclosure, notify the charity of the outcome or any new terms and tell the City Council of any resolution. If terms of the promissory note are changed, Remias also asked for the inclusion of a standard audit clause that would let his office review financial records and for the authority to monitor the arrangement so terms are met “to protect the interests of the taxpayers.”

That said, Remias told The Independent News that he hopes this was a “wake-up call,” not a derailment for the project.

“I think it’s a great project,” he said on Wednesday, May 19. “It certainly would serve an underserved population. I certainly am not an opponent of the project. . … But when you have a note between the city and a nonprofit, we still have to do due diligence and bring attention to where there are issues and the current status of the project so necessary actions can be taken.”

Through an attorney who addressed the development authority, the nonprofit disputed the auditor’s summary of its resources and said it is making progress on its ambitious plan to build the community. It needs time to meet the terms of the agreement due to complications such as revised city stormwater management standards, which have affected the progress of other development projects, including in southern Virginia Beach.

Issues identified by the auditor related to the status of the loan, which is backed by public money, were first reported by The Virginian-Pilot and WAVY-TV.

Deputy City Manager Taylor Adams briefed the development authority about the project, noting that – though an initial window related to starting the development closed two years ago – Vanguard Landing was “close enough to the finish line to press on.” Then the pandemic hit in 2020.

After moving remarks by several supporters of the project, including some people who have disabilities, members of the authority expressed sympathy for the goals of Vanguard Landing, as well as a desire to better understand the situation.

“I think this is a beautiful project,” said Mike Standing, a VBDA commissioner, “and what can we do to help move them along?”

The City Council in 2013 appropriated $2.91 million for the development authority, which in turn signed a $2.85 million promissory note with Vanguard Landing to help it buy parcels totaling 75.5 acres off Princess Anne Road north of Pungo, near the Ashville park and Sherwood Lake subdivisions.

In his recent memorandum, Remias found Vanguard Landing to be in default of the loan agreement in two areas.

Vanguard Landing was to have constructed its first residence within five years of the original loan to avoid defaulting, according to a summary of the loan terms and issues raised in the auditor’s memorandum. Remias also found Vanguard Landing should have been sending annual progress reports, which it did for the first time in March.

“Once they were informed and we let them know, they submitted it,” Remias said during the authority meeting.

Remias wrote that the VBDA, which lent the money, had not notified Vanguard Landing that it was in default for either reason. 

He wrote that the repayment terms “essentially” are void, but, even if they were not, it was unlikely Vanguard Landing could meet its first payment on the interest-free loan in early 2022.

During an interview, Remias stressed that he has no desire to derail the project. “I accomplished what I intended to do — bring awareness to this situation and the status of this project. You can see the benefits that a project like this would have on our city.”

Site plans are now submitted.

Eddie Bourdon, attorney for the board of Vanguard Landing, said the nonprofit had not submitted site plans earlier – though it could have under former stormwater standards – to be responsible once flooding issues that plagued neighboring Ashville Park and Sherwood Lakes became clear and the city reconfigured its approach to stormwater standards finalized last year.

“So what did they do?” Bourdon said. “The only thing that made any sense to do. They waited. … They were prudent and did what they should have done, and now we have this tempest in a teapot.”

They sought the extension of 18 months to allow for their site plan to gain approval, which will help secure funding. Bourdon said the auditor’s assessment of the charity’s finances did not reflect its full resources or ability to realize the project.

He said its resources are “greater than seven figures in the bank” and there are “pledges greater than seven figures.”

Remias, during remarks to the authority, said the charity made its books open to him, and the nonprofit had about $274,000 on hand in February. 

In reviewing federal filings, Remias said expenses exceeded revenues in 2018 and 2019, and the charity made about $4,000 in 2020.

“Unless it’s in another account, I cannot attest to the fact that they’re close to seven figures,” Remias said during the meeting.

Several people spoke on behalf of the project prior to a closed session discussion about the loan and the eventual vote by members of the development authority.

Kara Moran, secretary of the board of directors at Vanguard Landing, said the project would help people with intellectual disabilities and lessen concerns for their families about their care and wellbeing. 

“Vanguard Landing would not only alleviate those concerns for over 100 fulltime residents and their families but would also compliment the lives of close to 50 additional day program participants, allowing more parents to go to work,” Moran said.

“You will be voting to support a viable, self-sustaining nonprofit organization which solves a problem for the commonwealth of Virginia while also displaying compassion and humanity for our most vulnerable community,” she added.

Laure Haddock, who said she has worked for decades with people who have intellectual disabilities, said options for people with such disabilities are limited after they leave the public schools – and those options are “desperately needed.” 

She said Vanguard Landing would address fears parents of people with intellectual disabilities have about what will happen to their child after the parent is gone.

“It’s their biggest fear, and, for so many, it’s been laid to rest,” Haddock told members of the authority.

© 2021 Pungo Publishing Co., LLC

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