PORTSMOUTH, Va. (WAVY) – A Portsmouth church is suing the city and city council, saying that a change to the land use designation on a property the church had permission to redevelop into apartment buildings caused the project to lose funding and the Church filing for bankruptcy.
New Bethel Development LLC, a company incorporated by New Bethel Baptist Church, has filed a complaint with the Portsmouth Circuit Court alleging that the land use of the property changed in 2018:
- created an unsecured liability for the bank
- caused an astronomical decline in market and finance value
- forced the property to foreclosure
- forced the involuntary sale of the property with considerable loss
- created an environment where bankruptcy was inevitable and a necessary safeguard.
In addition, after the church filing for bankruptcy and property foreclosureThe city council approved an application from another property developer to build an apartment building complex with 280 units on the same property.
The lawsuit seeks $ 5 million in damages and $ 350,000 in punitive damages.
The city declined to comment because the lawsuit had not been served on Tuesday.
Mark Whitaker, a councilor from Portsmouth, is one of four children of New Bethel Baptist Church pastor James M. Bishop. He is the deputy pastor.
According to the lawsuit, New Bethel Development bought 4358 Greenwood Drive in the Cavalier Manor neighborhood in 2005 with a $ 1.8 million loan from Bank of America that was then loaned to the Bank of the Commonwealth for $ 2 million. $ 6 million was refinanced. The church next door was the guarantor of the loan.
At the time of acquisition, the property was shown for residential use under the multi-family urban designation. It housed a 103-unit rental complex built in 1960.
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The property was acquired for redevelopment. It was criminal and devastated at the time, the ad says. By 2010, the city declared the property derelict by the Department of Codes and Compliance. In 2013 the city ordered the demolition.
However, the Church said that economic and real estate crises in 2009, as well as “neighborhood constraints, random and illegal dumping” made it difficult to maintain and develop the property.
Also in 2009, New Bethel Development submitted an application for residential use permits for the construction of six three-story residential buildings. The complex would be called The Evergreens of Bethel and consist of 234 units, an average of about 16.9 housing units per acre.
The plan was submitted to the City Planning Commission and included parking lots, a community clubhouse, fitness center, theater, game room, conference room in the business center, pool and offices.
According to the complaint, the development plan is compatible with the building density and other building standards. The planning commission and employees supported the application at the time. Portsmouth City Council granted housing permits for the 234 units in March 2009. The permit should be valid until March 2011, when it would expire for all parts of the project that had not yet been granted a building permit.
Days after the city council approved the housing permit, the Virginia General Assembly extended the housing use permits to July 2014 to help tackle the housing crisis. In 2012, the General Assembly decided on a further extension of the residential use permit to July 2017 and 2018 to July 2020. It has been renewed again and is now active until July 1, 2022.
In 2018, the city decided to change the land use designation of the Greenwood Drive property on the future land use map in the city’s comprehensive plan. It changed the name of apartment buildings in the city to “single-family houses”.
This happened even though the previously approved residential use permit for the property was still valid. The complaint alleges that no other property has been “targeted by the city council”.
The planning committee did not recommend the change. The type of project proposed by New Bethel Development was consistent with other developments in its area.
New Bethel Development said the city council’s change of ownership from an apartment building to a single family home had a negative impact on the property’s value. The property’s new value – $ 1.3 million, according to Southern Bank and Trust, compared to $ 2.2 million as an apartment building – was based on the expectation that the property would be rezoned to reflect single family land use, but the one rezoning was never carried out.
Foreclosure of the property was planned for September 24, 2019. On that day, the New Bethel Baptist Church also filed for Chapter 11 bankruptcy, which lifted the foreclosure.
In March 2021, the Church returned to Southern Bank with a new payment plan, but it was rejected. The property was then sold for $ 400,000.
Another development was also presented in March with a proposal for a multi-family and mixed-use development with 280 units, consisting of seven four-story residential buildings and a restaurant in a clubhouse.
The city council approved this proposal.
The Church said plaintiffs suffered $ 5 million in “revenue and damage” as a result of the city council’s actions.
The lawsuit calls for a jury trial.
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