Forest Lodge LLC—a venture that includes developer and Virginia National Bank Vice Chairman Hunter Craig* and Dave Matthews Band manager Coran Capshaw—have filed a civil case in Albemarle County Circuit Court to contest land preservation tax credits received after they sold Biscuit Run to the state.
Craig Bell, the McGuire Woods attorney representing Forest Lodge, told C-VILLE that he anticipates a response from Attorney General Ken Cuccinelli’s office sometime near Thanksgiving.
In the filing, Forest Lodge contends that Biscuit Run—which was rezoned Neighborhood Model District in 2007, and thus became eligible for up to 3,000 units and 150,000 square feet of commercial space—did not receive a fair market value appraisal. That rezoning, claims Forest Lodge, “substantially increased the fair market value of Biscuit Run.”
According to documents obtained by C-VILLE last year, Forest Lodge submitted an appraisal that valued the Biscuit Run tract at $87.7 million—a total that would have made investors eligible for $31.2 million in tax credits, and helped to cut losses on the 1,200-acre site that investors bought for $46 million in 2006. Coupled with the $9.8 million that Virginia paid for the 1,200-acre site, $31.2 million in tax credits—which may be sold at 80 cents on the dollar—would have brought Forest Lodge closer to breaking even.
Instead, the state accepted an appraisal from the Virginia Department of Transportation, which listed Biscuit Run’s fair market value at $12 million, and offered investors $11.7 million in tax credits. Court documents allege that state Assistant Tax Commissioner Larry Durbin “stated [to Forest Lodge members]…that he felt the appraised value as determined by the Piedmont Appraisal Company was simply ‘too high’ in his opinion.”
So, how did those appraisals differ by more than $70 million? In their filing, Forest Lodge compares its appraisal with that conducted by the Department of Transportation, as well as appraisals conducted by Richmond attorney and developer Randy Salzman, who pegged Biscuit Run’s value at $39 million, and Samuel Long, a Roanoke appraiser called in after Forest Lodge filed an administrative appeal. Forest Lodge alleges that the unfavorable appraisals compared Biscuit Run to other sales outside of the Charlottesville-Albemarle market, or used a different “absorption rate”—the pace at which all Biscuit Run units would be claimed.
Forest Lodge’s Piedmont appraisal “estimated Biscuit Run to be sold out in 10 to 11 years…[at an annual rate of] approximately 300 units, 50 of which are affordable units.” The Salzman appraisal, in comparison, “estimated that it would take 16 years.”
Two of the appraisals that placed Biscuit Run’s value above $80 million used sales comparisons from September 2008 or earlier. Asked about the applicability of sales prior to the financial crisis, Bell said such comparisons depend on multiple factors.
“You have to really look at what adjustments are made,” said Bell. “If a sale is three or four years before or after, [appraisers] have to make adjustments to the time factor, and explain that. They would make those adjustments, as well as those for topography, zoning.”
Not to mention size. As Bell also pointed out, there were not many other parcels the size of Biscuit Run changing hands in Albemarle.
“I don’t think there were a lot of 1,200-acre parcels being sold in Albemarle County,” Bell told C-VILLE. “That’s one of the areas of difficulty.”
*A previous version of this story stated that Hunter Craig was chairman of VNB. He is vice chairman.