Land banking: Mystery of Waterhouse revealed

Architect Bill Atwood says he lost “a ton” of money on Waterhouse, which has two vacant top floors. Photo by Stephen Barling Architect Bill Atwood says he lost “a ton” of money on Waterhouse, which has two vacant top floors. Photo by Stephen Barling

The reason prime real estate continues to sit empty on the top two floors of architect Bill Atwood’s eight-story mixed-use Water Street building is a topic of frequent speculation for downtown real estate watchers.

Were the top floor units too expensive? Is the building structurally sound? Is it the $272,000 mechanic’s lien?

No, yes and no, he tells C-VILLE Weekly. Atwood says he’s kept a low profile lately, but the garrulous architect spills the beans on the project, while wondering why there’s so much interest.

“The recession killed me,” he declares. And with nine units left, he says, “To recapture maximum value, you land bank ’em.”

More than two years ago, the condos on the top three floors with expansive views went on the market as the priciest offerings downtown at the time, with a 3,600-square-foot unit listed for $1.6 million. And then —nothing, at least to those peering up from down below.

“They were the most expensive per-square-foot units because of the debt,” Atwood says. “It wasn’t what we wanted.”

Atwood’s long and winding road in developing the former Downtown Tire site began with his purchase of it from Oliver Kuttner in 2006 for $4.5 million, and plans that included a mostly residential Waterhouse “village.” When the Board of Architectural Review nixed those plans, next up was a nine-story building with condos and underground parking.

Bad timing. The market collapsed and, along with it, his bank, Lehman Brothers.

The plans shifted in 2010 when educational travel agency WorldStrides expressed interest in moving from Pantops to downtown. “We designed it for WorldStrides because we had no bank,” says Atwood. “They became our equity.”

The city offered tax increment financing, a performance agreement similar to what it’s offered John Dewberry to finish the Landmark. For Waterhouse, after an investment of $20 million and 200 jobs, the project got a rebate on real estate taxes that Atwood says went to pay for 100 parking spaces in the Water Street Garage.

In 2011, WorldStrides moved in and now occupies around 65,000 square feet with 450 employees, says Atwood. That’s when Atwood added the eighth floor, something he’s vowed he’ll never do again.

When asked if structural problems contributed to the continued vacancies of the unfinished units, Atwood bristles. “It’s steel and concrete and it’s the best building in town. There’s nothing wrong with it. I kind of resent that question.”

Nor is the mechanic’s lien filed by Abrahamse & Company against Waterhouse LLC and HHII LLC a factor, he says. HHII principal Loren Driscoll paid more than $1 million for two units on the sixth floor in 2014.

Atwood maintains that Abrahamse did work for Driscoll and that he’s only an intermediary in that. “We did her units,” says Atwood. “She was upset about it.” He says there’s a mechanics lien on both Waterhouse and HHII, and that there’s money to pay the $272K balance in an escrow account. “She needs to release it,” he says.

Driscoll’s attorney, David Thomas, disagrees. “The suit is principally between Abrahamse and Waterhouse,” and he says there was no contract between his client and Abrahamse.

The vacant top floors continue to draw a lot of interest, says Atwood, both as business and residential units, and he sounds unsure which direction he’ll ultimately go.

He insists he envisioned Waterhouse as workforce housing. “I made a lot of mistakes,” he says. “It’s really been a struggle. I may have gone too far with the office complex.”

As for the delay in filling the building, says Atwood, “We paused. It was smart to pause.”

He also notes that he built Waterhouse around the Downtown Tire building, while across Water Street, “low historic buildings” like the Clock Shop and Escafé are slated for demolition, as well as the not-so-historic ice park. “We kept the building,” he says.

“In the end, we lost control of the cost of the building,” says Atwood. “Waterhouse is a rescue mission. We’ve got to get it out of the weeds.”

In other Water Street development news, the new home of City Market, Keith Woodard’s West2nd L-shaped complex that will house retail, office, deluxe condos and parking, was supposed to break ground this summer. “We’re looking for a way to move forward,” says Woodard, who says he’s seeking a construction company.

“The plans are pretty much good to go,” he says.

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