Biscuit Run “Donation” Price Soars by $20M

Judge Paul Peatross has awarded Biscuit Run’s investors another $20M in state tax credits, K. Burnell Evans writes for The Daily Progress, bringing the price of the “donation” of the 1,200 acres to the state to a grand total of $40.5M.

The land was sold to the state for $9.8M, after the investors were left holding the bag on the worthless parcel when the real estate bubble collapsed, having paid $46.2M for the land at the height of the real estate craze. The project’s investors were banking on getting a lot of state tax credits (which can then be sold) in order to avoid personal financial ruin, since they presumably took out some big loans to cover that $46M, which they’d have to make payments on until they’d repaid the balance. But they didn’t get the money they needed—the state awarded them just $11.7M in conservation tax credits, because what land was worth in 2005 was rather more than what it was worth in . So they sued the state, demanding $19.48M, which is precisely what they just got. The investors’ appraiser claimed that the land was worth a stunning $87.7M—almost twice what they’d paid for it at the height of the bubble—and their attorney today says that the appraisal was vindicated by today’s court ruling, crowing that it “pretty much body slams” The Hook for their critical coverage of the appraisal.

I suppose it’s possible that the state appeals this ruling, but short of that, this now puts the taxpayer cost of this “donated” land at $33,750 an acre. For comparison, Rivanna Farm is on the market for $22,500/acre right now, and they’ll toss in a 10,000 square foot Georgian mansion at no extra charge.

10 thoughts on “Biscuit Run “Donation” Price Soars by $20M”

  1. Would this case have been handled by Ken Cucinelli’s office? How much of a fight did they put up? This seems, on its face, unbelievable.

    An appeal would have to focus on any errors in the trial itself. I’m curious who the attorneys were from the state and what, if any, instructions they received from their superiors. I mean, how could this have happened?

    Hunter Craig was one of the biggest investors, correct?


    “In July 2010, Craig was named to the University of Virginia Board of Visitors by Governor Bob McDonnell[3]. Craig gave $25,000 to McDonnell’s Opportunity Virginia PAC in 2010[4] and made $33,301 in contributions to McDonnell’s 2009 gubernatorial campaign[5]. “

  2. Stinks to high heaven:

    “Christy Monolo and Pat Griffin, who argued the case on behalf of the commonwealth, declined to say whether the verdict would be appealed and referred all questions to Brian Gottstein, spokesman for the Virginia Attorney General’s Office. Gottstein did not respond to a request for comment.”

  3. Maybe now we know why Cooch didn’t step down when he announced his run for Governor? Bunch of big spenders tells you “stick around and let this slide through and we’ll do what we can to help make you Governor…”? If Cooch does finally step down just after the expiration of the period when an appeal could be filed it’ll look pretty convincing to me.

  4. Well, this gives a new meaning to “Maximum Mac” (Peatross’ nickname due to his sentences in criminal cases)

  5. It’s a little hyperbolic to call 1200 acres in Albemarle County a “worthless parcel.”

    Also, the proper way to look at the values would be to look at the number of *approved” building lots there were (along with approvals for required roads etc). There were probably very few when they bought it and a lot when they were done entitling it. Just comparing to what they paid for it, or to an un-entitled farm that is for sale, is not very relevant.

  6. Bill, that’s a very good point and the only explanation I’ve heard that has made sense and is germane.

    It still seems like a scam. You can buy a piece of property, get it rezoned, and then “give” it to the state for a huge tax windfall after it becomes obvious that the real estate investment was a loser. And it is relevant that the real estate market was cratering at the time of this “gift”. There is no way they could have sold anywhere near that many lots at full market price with the glut of inventory that was available.

    The taxpayer got fleeced, but your point is making me realize that it’s not Cuccinelli’s fault, but rather Tim Kaine’s for agreeing to this fiasco.

  7. How many lots it was zoned for is practically irrelevant when, to be able to sell those lots you have to make ginormous infrastructure investments in grading, utilities, roads, proffers like a school, firehouse, parks… Developers got the benefit of the rezoning under their appraisals without having to incur any of the REAL associated costs which would have run into the tens of millions. If 2007-09 had just seen a real estate melt-down they might have held onto it and seen it through but with the banking/lending fiasco I don’t think they saw a way forward for financing the significant expenses on the horizon and decided to unload it on the state.

  8. If someone buys a piece of land at a largely inflated price in Albemarle County, then you can bet that the county is going to assess the property (and everything around it) at the largely inflated price. Sometimes you get the bear, and sometimes the bear gets you.

  9. It’s a little hyperbolic to call 1200 acres in Albemarle County a “worthless parcel.”

    I think it’s not unreasonable to describe the lot as being worthless in 2009. Obviously, it wasn’t literally worthless—somebody have would paid something for it—but given that there was no liquidity in the market, it would have been terribly difficult to get a loan for it. Somebody would have had to have actually laid out cash for it, and it would have been very little money indeed. The amount that they could have gotten was a very, very small percentage of what they had paid for it, because they were in an environment not conducive to the sale of any real estate whatsoever to anybody at all.

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