This online extra accompanies a feature in our October issue about burgeoning development in Scott's Addition.
When the nonprofit Better Housing Coalition (BHC) acquired 3200 W. Broad St. in September 2016, a hotel with the most recent branding of the Quality Inn chain, its plan was to address two issues.
There is precious little affordable housing in Scott’s Addition, where more people are working but cannot necessarily afford present rents, and the potential convenience of its location a block away from a stop on the Bus Rapid Transit (“Pulse”) system would be a boon to those who wanted to ride to work.
BHC bought the hotel for $5.9 million with the intention of transforming the entire block with more than 200 units to rent for $700 to $1,000 — the BHC’s largest undertaking since its 1988 founding.
Henrico County-based Dominion Diversified Real Estate Group, however, claimed that BHC stole their idea and filed a lawsuit, which was withdrawn in September. The company can refile the lawsuit.
From various reports, Dominion Diversified sought control of the building from late 2015, but wanted to partner with BHC. The nonprofit claims that after numerous discussions the two groups didn’t agree on approaches and parted ways in December 2015, though BHC was still bound by a confidentiality agreement with Dominion Diversified to run through Nov. 25, 2016. In the meantime, the real estate company’s contract on the building expired.
In July, City Councilwoman Kim Gray says she was blindsided by the lawsuit news. She abstained from a July 24 vote to allocate block grant money to the project. Council voted to allocate the project $400,000 as part of a large bundle of community development block grants, “but [BHC] did say they were going to come back and ask for more in the next budget,” Gray says. The state has allocated $2.25 million to the project. That month, BHC's request for a special-use permit request also was withdrawn.
Due to recent re-zoning by the city, BHC won't need to renew the special use permissions.
President and CEO Greta J. Harris says that the group's board and staff are reevaluating a path forward. "We are happy there is a lull in the legal controversy, but it is not completely cleared up," she says, and adds that at this point, she couldn't elaborate on the issue. "Analysis is ongoing," she says. She cited the BHC board's varieties of expertise about development that will "go a long way to provide affordable housing to this amazing neighborhood of Scott’s Addition."
Spillman Short, founder and managing member of Dominion Diversified, describes the 3200 W. Broad endeavor as "a $30 million project on hold."
The firm's case against the BHC is "non-suited," meaning Diversified can return to legal proceedings, and, says Spillman, the group has every intention of doing so, "unless the matter can be satisfactorily resolved." That is, either by settlement or sale of the building to the company. In that case, Diversified would remodel the former hotel for market-rate residency. "It's absolutely not over," he states, "and we're not going anywhere."