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Celebrate Virginia has fallen on hard times
Wegmans came into Celebrate Virginia South in June of 2009.
FILE/PETER CIHELKA/THE FREE LANCE-STAR
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BY BILL FREEHLING
The slumping real estate market has taken a heavy toll on the Celebrate Virginia developments, leading to millions in overdue payments and dwindling reserves to pay the bonds that financed roads and utilities.
Project developer the Silver Cos. and its more than 100 investment partners owe about $5 million in back taxes and special assessment payments in Fredericksburg and Stafford County. In addition, reserve funds to pay the project's bondholders have dropped below half their required levels. The situation, which involves perhaps the area's most prominent developer and one of its largest projects, shows the extent to which the recession has hit home.
Though some development has occurred at Celebrate Virginia South in Fredericksburg and Celebrate Virginia North in Stafford in the past few years, it's been less than what is necessary to cover the millions in annual property taxes and special assessments for bond payments.
That's forced Silver and its partners to delay tax payments to Fredericksburg and Stafford, leading to hefty penalties and interest charges. They have dipped into reserve funds to make the semi-annual payments on the $56 million in Community Development Authority bonds sold to institutional investors in 2003 and 2006.
Property owners within the Celebrate Virginia CDA boundaries pay special assessments on top of their regular local real estate taxes, and the money from the assessments goes to paying the bondholders. Local governments authorize CDAs as a way to finance infrastructure work such as roads and sidewalks to attract businesses, but the government itself isn't responsible for the bond payments.
Thus far, all bond payments have been made on time, and it would likely be more than two years before the developers would risk losing land in any tax sale. Silver has potential deals that could generate the revenue to get back on track.
But if the deals don't pan out, and the real estate market doesn't improve, the Celebrate Virginia CDAs could be at risk of missing bond payments, and the delinquent landowners could lose their property unless they raise money by putting up more cash, selling land or some other means.