Fort Monroe marina redevelopment paused indefinitely due to rising costs, developer says
A developer has indefinitely paused redevelopment plans at Fort Monroe, including a revamped marina, new restaurants, and a hotel, due to rising construction costs and interest rates impacting the project’s financial feasibility.
Pack Brothers Hospitality — run by principals Brian and Randy Pack — had intended to transform the Old Point Comfort Marina on McNair Drive into a development called 37 North at Fort Monroe. The multi-phase project involved replacing the existing marina with all-new docks and creating two restaurants — one of which would replace the existing Deadrise restaurant. Other project components included building a hotel and conference area, a new marina office, showers, and ship store, a dedicated new facility for the Old Point Comfort Yacht Club and a floating pool for boater and hotel guest use.
Last year, Randy Pack said construction of the first two phases should begin in 2025.
In an interview this week, he described the redevelopment plans as being “on pause” rather than canceled. He said construction costs had “risen through the roof” and that the 37 North at Fort Monroe Project — initially estimated to cost $50 million — had skyrocketed to about $75 million. He said the challenges of redeveloping Fort Monroe while preserving its history also add to the project’s cost.
“What we have designed and had planned has become financially unattainable,” Randy Pack said. “I mean, somebody could build it; it’s just not me; I don’t have enough money to float it; it doesn’t make money. And interest rates are higher, too.”
As a result of the change in status of the development, the Fort Monroe Authority announced this week it would be renegotiating the terms of an agreement it had with the Pack Brothers. The authority and Pack Brothers Hospitality announced they were transitioning from negotiating a “long-term development agreement” to a new “management agreement” for the marina’s operations.
The authority had previously approved a long-term ground lease for the development in 2021. The original agreement leased the property to Pack Brothers for $1 annually for a minimum of 40 years, with a provision to extend it another 20 years based on market value.
Fort Monroe Authority Executive Director Glenn Oder said the number of years on the new agreement and the cost is still to be determined. Oder said the new agreement won’t be $1 a year but he doesn’t know yet what the new cost will be, saying that the two parties are still “in negotiations.”
As a part of the management agreement transition, Pack Brothers will continue managing the marina under the terms of a revised letter agreement that became effective on December 29. The next goal for the two parties is to enter into a longer-term marina management agreement by February 29.
“What happens is that the lease that we have in place with them will come to an end when we sign a management agreement,” Randy Pack said. “So we will no longer have a lease in place. We will be managing the marina for them, and it will revert back to the property of the Fort.”
The Deadrise restaurant on McNair Drive — a leaseholder of the marina — was initially going to be replaced as part of the 37 North project. But with the change of plans, Randy Pack said the restaurant is now expected to remain where it is for the foreseeable future.
“It’s nice to have a restaurant on the Fort, and they do a great job,” he said. “So there’s no intention for them to go anywhere. Unless they choose to go somewhere.”
Randy Pack said his Smithfield-based hospitality business is “going back to the drawing board and seeing if there’s a different way to tackle this.” He said they had some timelines on the lease that they had to meet, and they weren’t going to meet them. He said Fort Monroe Authority had “wanted stuff done now,” but that wasn’t going to happen.
Pack said the authority “has been great” and that “there are no hard feelings on either side.”
Oder said Pack Brothers Hospitality has done “a great job” managing the marina, that’ they take care of the boaters renting from them. He said the authority intends “to continue to build upon the positive working relationship that we have with the Pack Brothers and they have with their tenants.”
Oder said the pause of the marina development is not expected to impact other Fort Monroe projects, including the authority’s efforts to build more parking spaces at Fort Monroe and Richmond-based Echelon Resources plans to begin transforming two historic Ingalls Road sites into one- and two-bedroom apartments later this year.
Oder said Fort Monroe is experiencing “rising visitation” and still needs more parking space. The authority wants to build a surface lot near non-historic buildings at 19 and 23 Tidball Road, with 96 spaces. The authority also hopes to build a parking structure at the corner of McNair Drive and Fenwick Road with 270 spots.
Josh Janney, joshua.janney@virginiamedia.com
