The Big Lie
Council, public, victims of backroom dealing on 31st St. Hotel

It was the BIG LIE.  City staff lied to the City Council and lied to the public.  Raising the height of hotels to 200 feet was part of 'Operation Big Beach' and to provide more open space for the public.  

It was done to accommodate the city's two ex-federal convict partners  in a plan to build a controversial 4-star hotel on the oceanfront at 31st Street.  

Records obtained under the Virginia Freedom of Information Act  by attorney Kevin Martingayle document the hotel could not be built according to contract specifications without the change.  The city's two partners are Bruce Thompson and Edmund C. Ruffin.  Thompson is a convicted federal misdemeanant and Ruffin a convicted federal felon.

Martingayle said he represents a group of businessmen who are not happy with the way the deal has been handled.

Martingayle said, "One thing is for certain:  This project has been a mess. The public doesn't want it, the city and developers have been bickering, financing remains an unresolved issue, and there's still no announcement of a franchise award. This is about as stable as Enron stock."

Martingayle has represented a citizen group in the past which was opposed to the project.

Rather than acknowledge the real reason, city staff and at least three (3) members of council lied to the public and fellow council members.

Several members of council said they did not know to what extent the partners' influence had been nor that the proposal was wrapped around the 31st Street Hotel deal.  Instead they were told it was part of a new open space plan to make the oceanfront more attractive, yet allow larger hotels to be constructed.  The real reason for the proposal was quite different:  It threatened to torpedo the 31st Street Hotel deal.  

Councilwoman Nancy Parker said, "I did not know (failure to get the height change) could have been a deal breaker for the hotel."

Councilman Louis Jones, one of the original negotiators of the 31st Street deal who withdrew after the original concept was changed to benefit the partners by selling rather than leasing them the land, told the Virginian-Pilot, ``We were told it was for the purpose of open space at the Oceanfront,'' he said. ``I don't recall the 31st Street element being part of that discussion.''

City Attorney Les Lilley said Friday, "I knew this was going to happen.

"City Manager (Jim) Spore gave direction to (Planning Director Bob) Scott to meet with the Resort Advisory Council (RAC), the Planning Commission, and the media....I was there when he was told.  I don't know what happened.

"Had the plan been executed, this would have been made public right up front," Lilley said.  Asked why not, Lilley said, "You'll have to call Bob Scott."

Scott said he did not get involved in the height issue until the 26th of February when the council referred the ordinance to the Planning 

Commission.  "I discussed it," he said, "with members of the RAC, but I didn't go to one of their meetings.  I did discuss it with the Planning Commission and the media."

If it was part of a deal for 31st instead of the public good as publicly stated, he said, "If it was sold for one thing (instead of the other), it wasn't me doing to the selling."  Scott said he thinks the change is actually good for the future of the oceanfront hotel environment.

But he added he didn't know failure to get it could be a deal breaker for the 31st Street Hotel deal.  He said he is not in the loop for information and negotiation about 31st Street or with the city's partners.  His first involvement was after Feb. 26.  "I don't have any problems with what I've done or how I've done it," Scott said.

The council's first proposal was on February 26 and it would have allowed hotels to be built 250-feet high - 150-feet higher than currently allowed.  After a storm of protests the proposal was down graded to 200-feet. It was referred to the Planning Commission for study and a report back to council.  Council is set to take final action on, April 26.

Long before any of the information was given to the council or made public, Councilmen William Harrison, Linwood O. Branch III, and Vice Mayor William Sessoms Jr. were well in the loop of information and deal making.



 As early as January 4, Harrison, now considered the main power broker in the deal,  wrote Thompson, who was threatening to pull out of the deal:  "I have personally been over all the issues you raised and I have due diligenced [sic] with my attorneys to make certain that we have given in to your issues raised wherever possible (emphasis added). 

Harrison, in the same January 4 email,  guaranteed Thompson, "The height is not an issue as we will address that before I leave the council."  

That guarantee came just 30 minutes after Thompson wrote:  "I gave my response to Sam (his attorney) to the 'take it or leave it' I received this a.m....I am leaving it...We do not have a deal at this point and I am leaving here at 1 a.m."  Harrison then told Thompson if it is 'your decision to abort our efforts and not move forward, that is your decision."

In an angry email dated February 2, Thompson wrote Harrison, Sessoms,  Spore, and Branch after reviewing yet another revision of the city's latest document:

"I came to the conclusion that  it was and is the worse than any document since the Louis Jones land lease you offered and running a close second...there is no way I can perform under that agreement and even if I could I could not accept the level of risk that is suggested in that document.

"I will restate my feeling that it would be only fair that if I we do not get either the amended and restated document...then I believe the city should reimburse us for our costs in some manner as I believe the city had an obligation to give us an amendment consistent with the term sheet."


Two days later Thompson wrote Mayor Meyera Oberndorf, that his company had spent more than $1 million in legal fees amending and changing the contract.  He goes so far as to lay part of the blame on the World Trade Center disaster on Sept. 11. 

He said it was the city who changed the plans from 168 hotel units to 300 units and he wants the zoning change.  In fact, Thompson wrote, "Most recently we received confirmation from the largest landowner on an adjacent property that if our development moves forward, he is prepared to announce a $20 million project consisting of 40,0000 square feet of retail space and 16,000 square feet of office space....I am forwarding this letter to you to advise you I have requested that the 'Council take action.'"

The very next day, Feb. 5, in an email to Spore and Lilley, Thompson said: "...if you can not get the property in a condition whereby we could build the 300 OCEANFRONT/VIEW (Thompson's emphasis) units and we have to return to the original development agreement we do not want to be precluded from negotiating to build fewer units under the original agreement."

"The original...requires us to get the land use approvals and if unsuccessful we would enter into intensive negotiations to build what the bza (Board of Zoning) or other controlling bodies would allow.

"Considering that one of the failures of this new agreement could be as a result of the cities [sic] inability to provide us a site whereby we could build 300 OCEANFRONT/VIEW units one could argue that the old agreement therefore is moot...we do not see it that way."

However, in a 'Dear Bruce'  letter dated 2/21/02,  from Yours very truly 'Jim' wrote:

"Section VII of the Restated Development Agreement provides that the Authority shall recommend and support the adoption of the Text Amendment (as defined...) which serves to amend the applicable zoning ordinance to allow the construction of a hotel with a height of at least 200 feet.  Adoption of the Text Amendment is a necessary condition to the construction of a 300-room oceanfront hotel as contemplated in the current Master Plan."

Pure and simple, no change in height, no hotel as stated in the city's plan.

After almost five years, there is still is no finalized deal.  Its terms and conditions are constantly changing.

Currently, the deal in no way resembles the city's original RFP (request of proposals) that was put out to bid.

And Thompson made it clear in communications that he expects to be reimbursed for costs which he said are in excess of $1M at this point.