SPECIAL FEATURE: Good Government. Virginia Beach-Style.
Note from Kerry: This is the first of what I hope will be a series of investigative reports - with commentary - by John Holland. Otto von Bismarck famously said, “If you like laws and sausages, you should never watch either one being made.” Seems that also applies to behind-the-scene deals involving public land.
INVESTIGATIVE COMMENTARY BY JOHN HOLLAND
Bear with me a bit, because we’re going to look at what passes for good government in Virginia Beach. Specifically, at the Virginia Beach Development Authority. So, when you’re reading along and thinking, “There is no way they would have done this,” rest assured, they did.
And we have the documents to prove it.
Nobody’s saying what you’re about to read is illegal. This is simply how deals are done in Virginia Beach.
First, some history. The 11-member Virginia Beach Development Authority, according to its own website, was created by the General Assembly in 1964 “as a component, but legally separate unit, of the City of Virginia Beach.” The members are appointed by the city council to staggered four-year terms.
The VBDA’s stated mission is simple: To expand the city’s tax base through increased business investment.
That was the intention during a closed session on August 21, 2012 when VBDA Secretary Jerry Miller and his colleagues met behind closed doors to hear a plan to induce a small California beer maker to open a place on the East Coast. The authority had spent three months negotiating a package of incentives designed to get Green Flash Brewing Company up and running in Virginia Beach.
Nothing wrong with that, and in fact that is exactly what they are supposed to do.
Then, on May 21, 2013, the VBDA voted to sell nine acres of land to “Green Flash Brewing Company.” The agency also agreed to give Green Flash an incentive package worth $275,000.
Again, the authority doing its job.
But the VBDA never sold the land to Green Flash Brewing Company, despite what they said and voted on publicly. Instead, according to the official deed of sale, the authority later sold the parcel along General Booth Boulevard to “GF of Virginia, LLC.”
GF of Virginia sounds similar to Green Flash. Anyone not paying attention would assume the sale was to Green Flash Brewing, exactly as voted.
GF of Virginia is managed by VBDA member Jerry Miller. Yes, the same Jerry Miller who served as authority secretary during the three months in 2012 when it was negotiating to bring Green Flash Brewing Company to Virginia Beach.
Records show that Miller’s company, The Miller Group, was negotiating with Green Flash to build their brewery at the same exact time the VBDA was dangling taxpayer incentives to lure the brewer to Virginia Beach.
How do we know that?
Because earlier this month the city attorney’s office released, for the first time, a presentation delivered behind closed doors to Miller and his colleagues at the VBDA. The August 21, 2012 Powerpoint presentation states clearly that Green Flash “is negotiating a build-to-suit option with the Miller Group for a site in Corporate Landing.”
It also said the talks between the brewer and the VBDA had been going on for at least three months, and it outlined plans to give Green Flash an Economic Development grant as an incentive to relocate. That meeting was Miller’s last – his term expired – until he was reappointed to the authority in 2016.
A couple things jump out.
First, on March 9, 2013, the same Green Flash Brewing plan was presented in a public forum for the first time, again with a Powerpoint. The public version is nearly identical to the secret one with one glaring difference: No mention of the Miller Group.
“Company is negotiating a build-to-suit option for a site in Corporate Landing,” the Powerpoint said this time.
After Miller left the board, he formed GF of Virginia LLC, bought the property from the VBDA and built Green Flash’s brewery.
According to hundreds of pages of documents supplied by the city in response to a FOIA request, at no point did the authority vote publicly to authorize any sale of property to GF of Virginia.
And, in the official minutes, there is no record of the VBDA ever conducting an appraisal of the property’s value before the sale in the official minutes.
GF of Virginia bought the nine acres at Corporate Landing Park from the VBDA for $1.35 million, according to the deed filed on June 17, 2015. One month later, that company got an $8.3 million line of credit from Union Bank, using the same land and future construction as collateral, according to the loan records.
Miller’s signature is on both documents. There is no mention of Green Flash Brewing in either document.
City Attorney Mark Stiles said there was nothing wrong with selling the land to GF of Virginia, despite the VBDA resolution to sell it to Green Flash Brewing. But he did say that the situation could have been handled with more clarity.
“Looking at it in hindsight,” Stiles told me by phone. “I wish we had been clearer in the resolution authorizing the sale.
“I would have gone back and clarified it,” Stiles added. “And I accept the blame. I can’t allow the board to take the blame for not closing the transaction in the way they authorized.”
Miller did not respond to an email or phonecalls left with Miller Group staff and on his company voice mail.
Serious questions must be answered about the VBDA, its actions behind closed doors and the fact that in the past decade it has never required members to disclose the nature of their conflicts in writing, as required by state law.
Green Flash opened in 2016, and when it went out of business earlier this year, Green Flash kept the taxpayers’ $275,000. Miller kept the land and the building. Oh, and the $500,000 road around the brewery built with state grant money? That stays.
What doesn’t stay are the 45 people who had jobs until the brewery went down the drain.
Your tax dollars at work.
So to recap, Miller worked with the VBDA as it tried to bring Green Flash to Virginia Beach, and eventually became its landlord. Green Flash, according to its November, 2012 grant application, promised to buy land but never bought land. It promised to build on that land, but never built on it, although it did stock Miller’s land and structure with very expensive brewing equipment.
It appears that Miller the landlord won’t have to absorb the vacancy any longer. New Realm Brewing of Atlanta has signed a lease for the 58,000 square foot center, the Virginian-Pilot reported on June 26. And city records show that New Realm filed naming documents in May.
The authority’s records are sketchy and incomplete at best and there are many more angles to explore.
Miller is founder and CEO of the Miller Group, a major real estate development and construction company that has ties to several companies doing business with the VBDA. Records show Miller dutifully recuses himself from all votes in which he has a financial interest, although there is no record of him filing a written conflict of interest disclosure.
He’s not alone. A review of every vote for nearly a decade shows that not once has any member abstained from voting and explained, in writing, the nature of the conflict. In June, after I spent weeks haggling over public records requests, the city attorney’s office apparently changed the way VBDA does business and began to require members to state their conflicts in writing.
The city may argue that there is nothing wrong with VBDA projects benefitting its members, because they almost always abstain from votes to enrich themselves. Yet invariably, their colleagues vote to approve the deals.
That’s the ultimate back scratch. With taxpayers footing the bills.
In fact, every vote since 2010 has been unanimous. No dissent of any kind. With one notable exception:
In September of 2010 the VBDA voted 7-3 to give a prominent local developer $55,000 to maintain elevators at one of his hotels.
But that’s a story for another day.
I’ve spent two months looking at every VBDA vote. I spent several uncomfortable days in the authority’s offices with a portable scanner copying minutes and supporting documentation of every VBDA meeting since Jan. 1, 2010.
There are more stories to come, as long as Kerry and her audience are willing to indulge my fledgling attempt at investigative commentary.
John Holland is an award-winning investigative reporter. He worked for The Virginian-Pilot from 2013 to 2015. In 2015 he was named the Virginia Press Association’s “Journalist of the Year.”