Belvedere owner loses line of credit. County may have to finish upgrades

The owner of the Belvedere development has lost his credit line to build $3.68 million worth of infrastructure improvements, possibly leaving Albemarle County with little choice but to finish the work itself, county officials say.

Wachovia Bank notified the county in November that it would not renew six letters of credit for the project’s owner, Belvedere Station Land Trust, which is led by homebuilder Bob Hauser.

Hauser’s firm had provided performance bonds to the county, guaranteeing that numerous infrastructure improvements would be made at the 207-acre neighborhood off East Rio Road that may eventually feature up to 400 homes and 275 apartments.

The improvements included tasks such as erosion control, storm water management, road construction, drainage, and water and sewer work.

“This, in very simple terms, has come about because the developer was not in a position to meet the bonding requirements,” said Albemarle County spokeswoman Lee Catlin. “We may have to step in and do it ourselves.”

In January, the county demanded payment on Hauser’s six lines of credit from Wachovia that were securing the performance bonds. Wachovia complied and Albemarle County now has the roughly $3.68 million sitting in its bank account.

On Wednesday, the Albemarle County Board of Supervisors will vote on a proposal to move that money into an expenditure account. Once that happens, the county will be able to either use the funds to complete the improvements or return the money to Wachovia if new letters of credit are issued to Hauser’s company, or possibly a combination of both.

If the county performs the work itself, Catlin said, Albemarle County taxpayers would not be footing the bill. Even if the cost of construction ran over the $3.68 million, she said, the county would seek any additional money from the developer.

“Right now, I believe it’s the developer who is on the hook,” she said.

According to the Board of Supervisors’ agenda, the county’s engineer is reviewing the project to determine if the county should complete some of the work rather than allowing the developer to re-bond all of the incomplete improvements.

Hauser could not be reached for comment Monday, as he is on vacation.

Mike Ball, chief financial officer of Bondstone Ventures — which is the parent company of several entities, including Hauser Homes and Belvedere developer Stonehaus — said in an interview that the situation at Belvedere is hardly dire.

Wachovia has indicated that it intends to extend credit to Hauser for the infrastructure improvements, Ball said, and the county will simply return the money it seized.

“The county is going through the steps it needs to go through,” Ball said. “My anticipation is that this will go back to the way it was.”

Ball added that many of the infrastructure improvements are not actually required for another year or two down the road. The only current requirements, he said, are erosion and sediment control. These improvements, he said, are already under way.

“We don’t anticipate any further infrastructure requirements through the end of this year and potentially into 2010,” he said.

Ball added that sales at Belvedere have been on the rise lately, with 10 sales and four closings so far this year. Most of the sales that have not yet closed are for homes that are still being built, he said. Thirteen homes are currently under construction at the development.

“We are really proud of Belvedere and the headway it’s made in a challenging environment,” Ball said.

Ball said that the situation with the county does not portend bad things for the Belvedere project.

“This doesn’t represent anything that would be harmful to Belvedere,” he said.

The development has seen some difficult times as the Charlottesville region’s real estate market has slowed significantly. One of the project’s two original builders, Church Hill Homes, went out of business and saw many of its properties go into foreclosure. That company’s principals joined Eagle Construction of Virginia,  a Richmond company that essentially took Church Hill’s place at Belvedere.

Albemarle County Board of Supervisors Chairman David L. Slutzky said the situation with Belvedere Station Land Trust might be only the first of several such cases.

“These difficult economic times are going to result in a number of challenges when we’ve approved a re-zoning and the developer then falls on hard times,” he said.