Delinquent taxes owed by developer involved in Ferrell Parkway lease judge called a 'sham' turned over to collection lawyer

The partnership that owns the swampy Lotus Creek subdivision development, valued at less than $650,000, that it is trying to sell to the public for $3M, now has a city real estate tax bill in excess of $211,995, according to a spokesperson in the city treasurer's office.

The delinquent taxes, with penalty, interest, and legal fees, have been turned over to a lawyer representing City Treasurer John Atkinson for collection.

The property is involved in a city scheme to bilk taxpayers out of $3M that a Circuit Court judge last week called illegal and a 'sham.'

City Manager James K. Spore, in a deal designed to bail the city out of a previous bungled decision that gave developers approval to build in what is now being termed too swampy for development, first proposed the city link the property to the sale of city right of way to a federal agency. The deal would give the Fish and Wildlife Service (FWS) virtual control of all development of the city's southern area and beaches and bilk taxpayers out of $3M to cover bad decision making earlier.

To cover previous city errors, Spore originally designed a scheme whereby the city would sell the public's right-of-way in the planned Ferrell Parkway to the city's southern beaches to the FWS for $2.86M, with the city kicking in another $140,000, providing FWS would purchase the Lotus Creek Development property.

The council approved the scheme, but it was ruled illegal by Circuit Court Judge Patricia West. The city appealed the ruling and it is now pending before the Virginia Supreme Court.

Spore then contrived a second scheme to circumvent the court's ruling by proposing the city lease FWS the right of way for 40 years at $1/year, providing FWS would buy the privately-owned Lotus Creek development for $2.86M and the city kicking in $140,000 to bring the deal to Lotus Creek Associates a total of $3M - the amount of the original sale scheme.

The same group that challenged the city's proposed sale, Friends of Ferrell Parkway and Andrea Kilmer, challenged the lease scheme.  Judge West ruled last week that the lease plan was likewise illegal and unconstitutional. The city is contemplating an appeal of that ruling.

Lotus Creek Associates, owners of the property, prior to Dec. 1, had an unpaid back tax bill of $134,700 for the past three (3) years.  When the unpaid taxes entered the 4th year earlier this month and grew to $211,995.72, City Treas. Atkinson turned the bill over to his lawyer for collection. Atkinson said that the city seldom loses any money from unpaid taxes because his lawyer will put the property up for sale if necessary to collect what is owed the city.  In this case, where the property has a sales price to the city of $3M, but is only assessed for little more than $600,000, a sale would pay the $211,995.72 plus legal fees owed the city.

The deal involves a complex, convoluted linkage of conflicting public/private interests between City Councilman Louis Jones, the partners, and Resource Bank's board of directors. See chart showing web of characters.

(Persons noting errors of facts in VNS news stories are requested to email the editor at: or call 757-340-4686)

See also:
City's bid process called 'sham' by judge
City to pay $3M for property only worth $607,194
Land Grab, Political Payoff, or Bureaucratic Blunder?
Chart showing web of characters
Chart of land assessments  
An illegal deal city couldn't refuse
VB will buy Brooklyn Bridge, criminals only apply