Updated: Henrico to take back GreenCity property after developer misses final payment deadline

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

Note: This story has been updated since it first published Friday morning.

With no payment received from the project’s developers before a last-chance deadline that expired overnight, Henrico County is preparing to take back the former Best Products property that had been planned for the massive arena-anchored GreenCity development.

County officials confirmed to BizSense they did not receive the $5.2 million that was requested from Green City Partners, the development group responsible for the mixed-use portion of the 200-acre project, before a final deadline that expired Thursday at midnight.

The amount was officially due Feb. 28, though a purchase agreement between the developers and Henrico’s Economic Development Authority allowed a 10-day cure period for the payment to still be made.

The scheduled payment was to be the last and largest of three annual installments for the developers to secure the 93-acre Best Products site, where the arena and supporting commercial development was planned. The developers had made two prior payments that were considerably lower, at $500,000 each, according to the agreement’s latest payment plan.

With the final deadline for the $5.2 million missed, Henrico is now initiating a process to take back the property it first purchased a decade ago for $6.2 million. That’s the same price the GreenCity developers had agreed to pay in total.

According to the default notices to Green City Partners, the process could involve a repurchase option in which Henrico would essentially pay back to the developers what they have paid for the property so far. With the developers having made the two $500,000 payments, that could put the repurchase price for the county at $1 million, though the amount is said to be negotiable.

Once the purchase and development agreements are unwound, a process that could take several weeks, the property’s ownership would revert to the EDA, which could then re-market the site for economic development.

A rendering of the proposed $2.3 billion GreenCity development. (BizSense file images)

County Manager John Vithoulkas has said Henrico still believes in GreenCity as a project and wants to see it through with another developer. He said decisions on next steps would be made through conversations with the Board of Supervisors in future meetings.

Green City Partners and its land ownership entity, Green City Development Corp., are led by principals Susan Eastridge and Michael Hallmark, the same team behind the unsuccessful Navy Hill plan that would have replaced the Richmond Coliseum with a new arena. They also led the ill-fated redevelopment of Richmond’s Public Safety Building that was to include a high-rise office tower for VCU Health.

Eastridge and Hallmark have not responded to requests from BizSense for comment. Eastridge is CEO of Concord Eastridge, a Fairfax-based firm that focuses on public-private and mixed-use developments. Hallmark is a principal with Richmond-based Future Cities, a design and development firm that also is planning Clay Street Station, a mixed-use rehab of an old power substation in Carver.

Vithoulkas said Henrico did speak with the developers before the cure period ended and that the parties are mutually parting ways. He said the developers will work with the county to exercise its repurchase option.

A statement from Henrico released Friday morning said the process to complete the repurchase option and terminate the agreements would take about a month.

“We welcome this opportunity and believe it will ultimately set the stage for the Best Products site to thrive as a large, mixed-use development anchored by a privately funded arena,” the statement said. “Once the repurchase process is complete, the county looks forward to working with interested arena operators and developers to make the vision a reality.”

Other developers brought in

A conceptual rendering shows the arena in relation to other planned buildings at GreenCity.

Vithoulkas has said Henrico vetted Eastridge and Hallmark and the GreenCity project before announcing it and that the team had been vouched for and vetted by the late Tom Farrell and other Richmond business heavyweights who were behind Navy Hill, which Richmond City Council had voted down in early 2020.

Later that year, Henrico announced GreenCity with the developers as a $2.3 billion mixed-use development along Interstate 95 between I-295 and Parham Road. The so-called “ecodistrict” development would be anchored by a 17,000-seat arena and include office buildings, two hotels, 2,400 residential units, retail and green space, as well as a rehab of the former Best Products headquarters building.

Henrico agreed to sell the Best Products property for $6.2 million, the amount the county paid for the property in 2011, when it planned to convert the building into a government center.

A site plan of the GreenCity project.

Those plans didn’t go forward, and the county later worked with Riverstone Properties – the Bill Goodwin-led firm that owned the neighboring Scott Farm property – to market the 200-acre site for economic development through a potential joint request for proposals. A formal RFP never went out, as the county put the proposal on hold due to the pandemic.

Green City Partners had said it would buy the Scott Farm property from Riverstone, but a deal never got done. The lack of a deal is among the reasons the county listed in its default notice to Green City Partners for nonperformance under their development agreement.

In 2023, Henrico brought in another developer, locally based Markel | Eagle, to develop the residential portion of GreenCity and to go in with the county to buy the Scott Farm land. The $35 million purchase was split between Markel | Eagle and the county, with each paying $17 million and the EDA covering the remaining $1 million.

In a notice of nonperformance sent to Green City Partners in December, the county said that the developers’ “failure to place the Scott Farm Property under contract prior to rezoning dramatically increased the owner’s leverage and exposed Developers’ tenuous position.”

“To prevent the window from closing, the County and EDA partnered with a different developer and contributed over $18 million to the acquisition of the Scott Farm Property…” the notice states, later adding: “Developers did not contribute to this purchase, although Developers benefited from this purchase.”

Arena operator’s deal was with developers

Michael Hallmark of Green City Partners discussed the project during the ASM Global announcement in 2023. (BizSense file photo)

Earlier the same year, Green City Partners had brought in another developer, venue management company ASM Global, which signed on to develop and manage the arena and invest in other parts of GreenCity, including retail and hospitality uses that were planned to support the arena and overall development.

But construction of the arena, initially targeted for completion in 2024 and most recently 2026, never got underway. The December nonperformance notice to Green City Partners states that the developers repeatedly extended schedules and projections for the arena and the overall project, and that they tied a lack of financing “to their inability to account for a hypothetical third-party development on the Best Products Property first introduced in 2022.”

The notice also referenced an “entertainment company” that Green City Partners had said it was nearing a partnership with for development of the arena, but that that partnership did not occur. The notice states those discussions occurred in 2022, the year before ASM Global was announced as a partner in GreenCity.

It isn’t known who the third party or entertainment company were, or whether either was ASM or Churchill Downs Inc., which the Times-Dispatch reported had approached Henrico about developing a Rosie’s Gaming Emporium-anchored conference center and hotel at GreenCity.

Vithoulkas confirmed that the county referred Churchill Downs to Green City Partners and said Churchill Downs decided to not pursue the project. He said the unnamed parties referenced in the notice could not be identified because they are proprietary.

John Vithoulkas

Questions sent to ASM this week about its status with GreenCity were deferred to Henrico. Vithoulkas said ASM’s deal was with Green City Partners so its involvement in the project would end with the developers, though he said Henrico would welcome ASM’s participation going forward.

“The county’s dealings with ASM have been absolutely phenomenal,” Vithoulkas said. “They’re one of the largest owners of venues like this in the world, so I certainly hope that they would be part of anything going forward on this site.”

The default notice for nonperformance that was sent to Green City Partners on Feb. 15 required that senior-level negotiations start within seven days of the notice and conclude within 30 days. A second default for the missed payment was issued earlier this month and also followed a request last summer for an update on the project, which the county said had not progressed under the terms of the agreements.

With Friday’s announcement that the parties have mutually agreed to part ways, Vithoulkas said any negotiations about the project are over and the county is now focused on moving forward.

“Ultimately the goal is to have development partners that can absolutely crush this project.”

The post Updated: Henrico to take back GreenCity property after developer misses final payment deadline appeared first on Richmond BizSense.