Changes are in the works yet again for the long-stalled Liberty Place mixed-use development project in downtown Fredericksburg.
Liberty Place Partners LLC, which is affiliated with developers Tom and Cathy Wack, and William Square LLC, a Vakos Companies affiliate, have reached a tentative agreement that's expected to finally kick progress into gear.
It's a contingent contract under which William Square would buy approximately an acre of land in the block between The Free Lance–Star's former headquarters and Sedona Taphouse from Liberty Place Partners for an undisclosed amount. The land is part of the Liberty Place 1.42-acre development in that block, which is bordered by Douglas, Winchester, Amelia and William streets.
Liberty Place Partners will keep approximately 0.42 acres on the William Street side of the property, where it plans to build a roughly 43,000-square-foot, three-story commercial building. It would be about half the size of the one previously proposed, which would allow Liberty Place Partners to get financing and break ground in a few months, according to a news release from the two companies.
“We have long had visionary plans for Liberty Place, and this approach allows us to live much of it,” said Cathy Wack, a member of Liberty Place Partners, in the release. “We are pleased with this outcome and delighted to be working with a fellow local business owner.”
She and her brother Tom Wack, along with a group of investors, first proposed the Liberty Place development in 2014.
It was to have had 50 residential condominiums, underground parking and an outdoor courtyard lined with restaurants, boutique stores and professional offices. Their plans went through several iterations before they settled on a version that eliminated the residences and put the parking above ground. A ceremonial groundbreaking for what was to be a $26 million Liberty Place project was held last June to explain the new plans over drinks and ice cream provided by a few of the signed tenants.
Then the project stalled.
"We could not get to a final agreement on financing with the bank," said Tom Wack in a phone interview Friday. "We decided to reach out to Vakos. Actually Bill Freehling [the Fredericksburg Department of Economic Development and Tourism's director] encouraged us because they were a little further along with their development scheme. This will yield a more substantial project for them."
Liberty Place Partners' latest vision calls for the commercial building to have restaurants on the lower level and office tenants on the two upper levels. Six tenants have already been announced: Burger Bach, Mellow Mushroom, Union Bank & Trust, Cary Street Partners, Pasta Fresca and Blue Cow Ice Cream. More are in the works.
William Square will build the parking garage on part of the land it is buying from Liberty Place Partners. A sky bridge will connect it to the commercial building. Liberty Place, under a parking agreement with the company, will have access to 124 spaces in the garage for the office workers and restaurant patrons.
William Square also owns the adjacent former Free Lance–Star headquarters property, which it has renamed William Square, as well as the parking lot across William Street, which is used for public parking. The company doesn't expect to detail its plans for developing those properties for months, but its potential collaboration with Liberty Place Partners has, from the outset, focused on a parking garage that could accommodate both developers' needs.
“We have long urged collaboration in these complementary projects and will achieve just that if this deal comes together," Fredericksburg City Manager Tim Baroody said in the news release. "Project synergy, major investment, new jobs, parking and more great food and office space will be excellent additions to our beautiful, historic downtown. We couldn’t be more pleased with this agreement between two first-class local developers.”
He said that the projects will be "dynamic additions to an already exciting and thriving downtown.”
Vakos Companies CEO Bill Vakos said that he's happy to be doing business with the Wacks, whom he called "pillars of our community," in the news release.
“We look forward to bringing two complementary developments to the City of Fredericksburg,” he said.
The potential collaboration, however, would affect Liberty Place's performance agreement and easement with the city. It called for the city to return to Liberty Place Partners 100 percent of the incremental real estate tax revenue from the project for 20 years. The amount was estimated at $240,000 a year, or $4.8 million total with a present value of $3.83 million, assuming no annual increases.
That was intended to both incentivize the project and provide for public parking.
Liberty Place Partners is now asking the city to change that to a 10-year incentive worth $375,000 a year ($3.75 million total with a present value of $3.36 million) in order to finance the project and make it viable. Its request is included in a proposed letter of intent that City Council will consider at its regular meeting at 7:30 p.m. Tuesday in City Hall, 715 Princess Anne St.
Liberty Place will need to subdivide the property, submit architectural designs and budgets for the 43,000-square-foot structure, obtain the 124 parking spaces and demonstrate the need for the financial assistance in order to achieve the incentive. In exchange, it will use parking data analytics to make its spaces available to the public when not required for use by Liberty Place patrons. It will also need to generate at least $400,000 in local tax revenue from the commercial building each year of the agreement in order to receive the $375,000 payment.
The Liberty Place property, home to the vacant William Street Executive Building, now generates less than $25,000 a year, so the payment would be from new revenue generated for the city. Preliminary projections estimate that the Liberty Place commercial building would generate about $850,000 a year in tax revenue for the city. If those projections occur, the city would be paying out $375,000 a year for 10 years and taking in $475,000 a year.
There would also be additional tax revenue from the acre of land being sold to William Square, and the garage could provide parking in that area of downtown, help spur development of William Square and boost amenities for tourists.
If City Council authorizes City Manager Tim Baroody to sign the letter of intent, staff will prepare documents to unwind the previous deal and facilitate the new performance agreement with Liberty Place Partners. Fredericksburg's Economic Development Authority will be asked to consider the letter of intent at its meeting Monday as well.
The request could come back before City Council and the EDA for approval in April.