More than a year later, Norfolk still hasn’t chosen Military Circle mall developer in ‘unusually long process’

Over a year ago, three development teams presented plans to revamp Military Circle mall as a vibrant mixed-use, entertainment district with a potential arena. If it comes to fruition, it will be Norfolk’s largest redevelopment effort in recent history.

More than a year later, city officials are still evaluating the proposals and no decision has been made. And some of the development teams are calling the delays unprecedented.

“This has been an unusually long process, with the (request for proposal) responses due May 14, 2021, which is well over a year ago,” said Chuck Steedman, a vice president for ASM Global, an arena developer partnering with S.B. Ballard Construction Company for one of the proposals.

“That length of time certainly is out of the ordinary for how these processes normally progress,” Steedman added.

City Council members say they’re taking time to make sure they pick the right proposal for the city. But officials also appeared to acknowledge the process is taking longer than usual in recent communications with the developers.

The Norfolk Economic Development Authority sent letters to all three development teams announcing the return of each team’s $100,000 deposit check on June 7, citing the length of time it has taken to select a winning bidder.

Norfolk’s economic development director, Jared Chalk, told The Pilot it was his decision to return the money to developers “given the timeframe that it’s taken.”

The returned checks came as a shock to the development team pitching The Well, a proposal being spearheaded by Virginia Beach developer Bruce Thompson.

“We were surprised to receive the check back without a selection made from the city. There has been little to no communication from the city since the RFP package was submitted in May 2021,” said Bryan Cuffee, vice president of development at Thompson’s firm, Gold Key PHR.

“In our experience the length of time for this selection process is unusual. We have never had a selection process for a project take this long, and to not award the project but instead return everyone’s checks without further explanation is atypical,” Cuffee added.

The holdup appears to be related to deliberations over how much money the city wants to contribute to the project, according to several council members.

Mayor Kenny Alexander said council members are still examining each proposal to determine which — if any — is a good fit for Norfolk. Who pays for things like public parking spaces, environmental work and the demolition of the mall are all questions that need to be addressed before they move forward, he said.

“The city’s doing their due diligence because we’re asking the tough questions,” Alexander said. “I’m not holding it up, but I’m also not racing to the finish line without having all of my ducks in a row.”

Councilman Tommy Smigiel said council members have been reluctant to select a project that could require a citywide tax increase or a major public investment.

“I think it’s been the general consensus and expectation from City Council that the developer, whoever is chosen, would have to bring some significant capital to the table of their own investment,” Smigiel said. “I just don’t think that there’s an appetite on council to stomach a huge expense.”

Councilwoman Mamie Johnson, however, wouldn’t rule out a tax increase.

“Decisions that we’re making now, we have to consider the citizens for years to come. Is it going to be the best decision for our citizens and our city especially when you get into talking about taxes and levies?” Johnson said. “If we go in the direction of tax increases, what in return are the citizens going to get for their money? Because that’s basically what the citizens want to know. How can they benefit?”

Each of the three proposals would remake the mall site with entertainment destinations, a hotel, office space, parks and hundreds of new homes.

Two of them, Wellness Circle, pitched by Virginia Beach native Pharrell Williams, and Crossroads, the proposal pitched by S.B. Ballard’s team, would be anchored by sports and entertainment arenas with more than 15,000 seats.

Both would require a significant investment of city government funds as well as a citywide increase in hospitality taxes to support the arena, according to a third-party city financial analysis obtained by The Pilot.

Wellness Circle would likely require upwards of $120 million in city funds, while Crossroads would require around $30 million.

The Well, pitched by Thompson’s team, features an 8,000-seat amphitheater instead of an arena and would require little to no city investment, according to the financial analysis.

Alexander, Johnson and Smigiel would not say whether City Council is leaning towards awarding the bid to a specific development team at this time.

City manager Chip Filer said in an emailed statement that “detailed negotiations” with the chosen developer will likely begin “sometime later this summer.”

Daniel Berti, daniel.berti@virginiamedia.com