If it wasn't for bad luck, Ruffin and Thompson wouldn't have any good luck at all
Edmund C. Ruffin and Bruce R. Thompson have to be among the luckiest businessmen in the world. They bought an old hotel on the oceanfront in 1997 for $2,321,000.
Despite the worst imagined string of bad luck, a 1998 hurricane and adjacent city construction that resulted in its demolition at taxpayer expanse, the duo ended up with net gain from damages totaling $179,452 more than they paid for the property, according to city records. Thompson said he couldn't dispute any of the figures.
And they are now building an all-new 90-room Boardwalk Inn hotel on the site. Thompson said the facility will be 50/50 timeshare/hotel rooms. He hopes to have it open for business by start of the season (generally considered to be Memorial Day), Thompson said.
Thompson said he didn't have a recollection of the specifics of the damage payments, but added the insurance settlement was sizeable.
After buying the hotel, he said, they spent $500,000 renovating it and "we had to carry the debt service against it for about 18 months while it was shut down." Thompson said, "It cost us $22M to replace it (the old building with the Boardwalk Inn).
Ruffin and Thompson bought the old Tradewinds Hotel at 16th & Atlantic in May 1997 for an addition and renovation into a new time share/hotel complex.
Along came Hurricane Bonnie in August '98, little more than a year after the purchase and closed the hotel for damages.
According to conflicting information in city records, they were paid $187,236 by Nationwide Insurance Co.
Bruce J. Tamin, Nationwide Insurance Services Inc., in a report to Linton Willis of the Chesapeake Nationwide office, wrote on 9/30/98:
Then less than two months after the hurricane, the Army Corps of Engineers began excavation beside the hotel, in the part of 16th Street between Atlantic Avenue and the boardwalk, for a storm water pumping station as part of the hurricane protection project.
Before work was started, city engineers 'walked by the Tradewinds' and made a 'visual inspection' of the building's exterior condition. Based on that cursory inspection, it was deemed sound and no problems reported.
City records document that engineer Steve Shirley called in a report of cracks in the Tradewinds, but there was no time or date on the record. But it was in early October, 1998. The cracks were attributed to vibrations of the construction from pile drivers being operated by Tidewater Construction and Middle East Builders (MEB), subcontractor, for the Army Corps. Work was stopped on the pump station.
Structural engineers were called in to assess the extent of the damage. Engineer Shelton Leavitt reported the building could be stabilized and restored.
GAB Robins North America, insurance adjusters, on 11/20/98 estimated the damage from the pile driving to be $8,230.47.
Built as a 55 room facility in 1972, R. T. Brown, regional general adjuster for GAB Robins North America Inc., said in a report dated November 30, 1998: "It was brought to my attention the north wall of this hotel gave way a number of years back and was in fact replaced with stucco."
But on March 31, 1999, Alfred E. Abiouness, a structural engineer, reported the damage was confined to the south 1/3 end of the building, but he wrote Karl Denison, CCPA, executive vice president, Hoodman-Gable-Gould Adjusters International of Rockville, MD that in order for the Tradewinds to be restored, it would have to be demolished.
Abiouness later was hired as the structural engineer for the new Boardwalk Inn. (See below for more information about Abiouness).
City records indicate that in a letter from Robert Tayloe Ross, a lawyer with the Richmond firm of Midkiff, Muncie, & Ross, representing Nationwide Insurance, Ruffin and Thompson were paid $763,216.60 for damages from the construction.
The City Council in April 1999 passed a resolution condemning the property so the building could be demolished, the workplace made safe, and construction could continue on the pump station project.
(VNS was originally told that city officials knew before construction started on the pump station that it would cause damage resulting in the demolition of the Tradewinds. Later that statement was withdrawn. Assistant City Attorney Richard Beaver who handled the case said construction of the pump station couldn't continue once damage was discovered due to unsafe workplace conditions without the city stepping in and condemning and demolishing the hotel.)
The city demolished the building, but left the piles. C. J. Smith III, vice president, W. M. Jordan Co. Inc. estimated the cost of removing the pilings that were left in the ground. The city paid $40,000 for removal of the piles. Smith's company, W. M. Jordan Co., was then hired as the primary contractor for the new Boardwalk Inn.
The city appointed viewers (viewers are supposed to help establish fair market value for property being condemned) in the condemnation case included Richard Maddox. Maddox was head of the Resort Leadership Council, a trade group with close ties to Ruffin and Thompson, which was found guilty in 2000 of making illegal campaign contributions in an effort to influence city council elections.
Maddox is currently a candidate for City Council from the Beach District. He was caught this week illegally running his political sign campaign out of a city trailer on property he leased the city for a city park (See: Signs in city trailer ; City says use inappropriate and orders use stopped and Candidates scolded for use of city property)
He is Ruffin & Thompson's adjacent business neighbor with his 17th Street Dairy Queen and he lives just a couple houses from Ruffin in Croatan. Maddox also anticipated having a business relationship in a deal to put one of his luxury Dairy Queen Restaurants on the site of the proposed 4-star hotel that Ruffin and Thompson are scheduled to build at 31st Street.
Another viewer was Vern Burlage. Burlage's family was involved in the public-private partnership that built the city's 9th Street Parking Garage. Construction of that facility was the first time in recent memory where the city closed a city street and gave the property in its entirety to one landowner. The property owners also got reserved parking in the facility for their properties on the beach side of Atlantic Avenue and the ground level portion for retail shops. In the first three (3) years of operation it was being subsidized by taxpayers for a loss of more than $800,000 per year for a loss of $2.4M.
John L. Gibson III, was another viewer. He was one of the owners and developers of the 9th Street Parking Garage which he leases back to the city.
But the condemnation case never had to go to court. The city settled. Virginia Beach paid Ruffin and Thompson $1,550,000 for the losses and damage to the Tradewinds, after demolishing and carting off the debris at taxpayer expense.
The amount of damages were based on an appraisal by Thomas Tye (See: Below for more information about Tye) who said he could only appraise the property from offsite because the owners (Ruffin and Thompson) refused to allow him on the property to inspect it and refused to give him access to income and expense data.
William E. Franczek, a lawyer with Vandeventer Black LLP, who represented Tidewater Construction Co. and MEB, wrote Evelyn Rowland, contracting agent for the Army Corps, that his clients would not accept blame for damaging the Tradewinds.
He wrote on Feb. 19, 1999:
The city calculated its losses as follows:
But Ruffin/Thompson, using the data they refused to provide Tye, wanted $1,804,039. After much haggling, and avoiding the courts, the city settled for $1,550,000. Thompson said he thought it was closer to $1.6M
According to city records, here is how Ruffin/Thompson made out on their $2,321,000 purchase of the Tradewinds:
For other information on Alfred E. Abiouness:
For other information on Alfred E. Abiouness:
For more information on Thomas (Tom) Tye: