PROPERTY MATTERS: Savannah fairground negotiations continue after local partner leaves development group, tax credit attempt postponed to 2023

A local partner in the development group approved to develop the city owned fairgrounds property is no longer involved in the project after raising concerns about one of the majority stakeholders.

The partner, Craig Gordon, raised concerns in a March 1 letter addressed to City Manager Jay Melder about the Arizona-based stakeholders, P3 Partners, involved in the project prior to his departure, according to documents obtained by Savannah Agenda. Those concerns included a state indictment in July 2021 against a P3 Partners founder that Gordon, a former state representative, said was not disclosed to himself or the city. In addition, Gordon raised concerns about the suspension of the tax exempt status of the nonprofit, Municipal Development Foundation, which was supposed to assist in the financing of the development project. Gordon also claimed P3 was unwilling to pay a local design firm, Gunn Meyerhoff and Shay, which he said was providing design assistance at no charge.

David Jones, a P3 Partners principal, wrote an email to Melder on March 18 that they did not intend to provide a point-by-point counter to Gordon’s letter.

“We believe that the issues being re-raised in the recent letter have already been satisfactorily addressed, and rehashing the same statements without any new substantiation would not be of value,” Jones said.

Jones also said that on March 10 the “75% majority ownership of the joint venture group answered a definitive yes to moving ahead with the plan outlined in the proposal approved by the city council.”

“P3JVG will continue to honor that commitment  and work within the guidelines of the procurement laws and DBE ordinances to achieve it” he said. “We look forward to our continued efforts alongside the City of Savannah, the MPC, and numerous local leaders and businesses to reach the successful transformation of the Coastal Empire Fairgrounds.”

The city declined to comment, via a spokesperson, regarding the matter.

Jones, who was first contacted about the pending article July 18, had been traveling out of country this week. He said via email on July 28, after receiving the article draft, that “upon cursory review, there are several points that are missing salient information and are not accurate. Due to existing schedule conflicts we can provide those clarifications in the very near future.”


Development negotiations continue

Despite Gordon’s concerns, Melder reported in a June 2 memo to Alderwoman Estella Shabazz that the city expected to have sale and development agreements in place with the development group by November. Melder also said the city is committed to breaking ground on the project by October 2023. Melder said that P3 Joint Venture Group is currently made up of principals David Jones, P3 Partners, and Robert Gould, Jr.,RG Media Affiliates, and ended the memo stating that Gordon had removed himself from the group. There was no explanation as to why Gordon had departed.

Gordon said on July 28 that he disagreed with the characterization that he “removed” himself. Rather, he was “dismissed” from the project after raising his concerns,” he said.


Low-income housing tax credit plan delayed

Melder also informed Shabazz that the developer did not move forward with plans to apply for state low-income housing tax credits this year, but he was confident an application would be approved next year. This information was conveyed a few weeks after the Savannah City Council voted on May 12 to enter into a land lease agreement with the Land Bank Authority to assist the developer in obtaining the tax credits, which were expected to assist in the financing of multi-family senior housing planned for a 3.8-acre portion of the fairgrounds property.

That transfer was presented to the Land Bank Authority for consideration at the meeting on May 25, but no vote was taken after the board was informed that the tax credit application would not be submitted, according to the meeting minutes. The reason stated in the minutes was that the developer was informed by his underwriters that the Georgia Department of Community Affairs (DCA) would not accept applications that included an option to lease with a reversionary clause as the city had proposed.


Indictment

The indictment Gordon referred to was filed by Arizona Attorney General Mark Brnovich on July 13, 2021 against four individuals, including P3 Partner’s founder Steve Nielsen, for their alleged role in the procurement for construction of the two middle schools. The indictment alleges that in 2012 the school district’s superintendent at the time was aware that Nielsen and another individual had participated in the pre-bid process, which provided a competitive advantage to a bidding company the two owned called Education Facilities Development Services. Nielsen was indicted on three felony counts related to fraudulent schemes and practices, fraudulent schemes and artifices, and conspiracy. The city of Loveland, Co. ended their involvement with P3 Partners as a result of the indictment, according to a press release issued by the city.

Nielsen’s Phoenix-based attorney, David Black, said in a statement that Nielsen is a long-time public servant who violated no laws.

The indictment was brought against Nielsen and his partners for political reasons after a decade-long witch hunt, Black said.

“Steve’s hands are clean and he will be vindicated,” the statement read. “He is looking forward to that day.”

Arizona Attorney General Mark Brnovich’s office did not respond to requests for comment.

The case is expected to go to trial on Sept. 8, according to Maricopa County Superior Court.

With regards to the fairground development, Nielsen participated when the P3 Joint Venture Group presented their proposal to the city council during a workshop on July 15, 2021 – two days after the indictment. Nielsen was also copied on an email Jones sent in February to Joseph Shearouse, the city’s director of policy and external affairs, with the first draft of a development and disposition agreement for the fairgrounds property.


Nonprofit status concerns

Gordon’s concerns included a nonprofit, Municipal Development Foundation, that was supposed to obtain the bonding for the project, as outlined in a development model included in a Q&A document the development group provided to the city council. The nonprofit corporation’s tax exempt status was dissolved due to a failure to meet annual reporting requirements, according to the Arizona’s Corporation Commission, which also lists Nielsen as the nonprofit’s chairman and Jones as the vice president.


Design standoff

Gunn Meyerhoff Shay Architects had been providing design assistance, including renderings featured on the project website, without receiving any pay, according to Gordon. In addition, Patrick Shay, the senior principal of the firm, had participated in some public outreach, according to documents. Correspondence with the city includes an email Shay sent on Feb. 25 to Melanie Wilson, executive director of the Chatham County-Savannah Metropolitan Planning Commission (MPC). In the email, Shay requested additional conditions to the new zoning proposed for the multi-family senior housing site. Shay said he had promised attendees at a meeting the day before that the senior housing buildings would be limited to two stories rather than allowing for three story buildings at the site.

Jones sent Shay an email later that day stating that he was opposed to the proposed changes, claiming that he and Melder mutually agreed during a meeting two days earlier to continue with the existing rezoning request. He said he was working with another architectural firm, Crogan Architects, to facilitate the rezoning for the tax credit application.

“The successful award of those tax credits will allow us to create the most cost-effective two and 3-story housing for the community’s senior citizens,” he said. “Any last-minute changes to the previously submitted rezoning application may result in delays and could jeopardize the timely approvals necessary to meet the application deadline.”

The rezoning request was approved by the planning commission on March 1. As passed, the rezoning allows for 100 units on the site and restricts building height along Meding Street to two stories, while allowing for up to three stories elsewhere on the site. The city council followed suit by approving the recommended rezoning on March 24.

Shay said on July 28, via email, that his firm participated in the “development of responses to the City’s original RFP, and subsequent rounds, on the team that was led by P3JVG, and prepared the Master Plan that won the design portion of the competition and ultimately won the opportunity for the team.

“After the award, we were told that we would not be paid for our work unless and until there was a future bond sale, and expected to do all work until then at our risk,” Shay said. “We subsequently discovered that the P3 Group’s leader had been indicted in Arizona for procurement fraud. At that point we stopped providing services.”


Fairgrounds timeline

• Aug. 5, 2016 – Savannah City Council approves the purchase of the 66.5-acre former fairgrounds property at 4701 Meding St.

• June 19, 2020 – A Request for Proposals (RFP) to develop the Fairgrounds property was issued on June 19, 2020

•  Aug. 18, 2020 – RFP closes after the city receives three private-sector groups submitted development proposals. their proposals included a range of economic and commercial activities, including a film studio, employment center, a hotel, a regional sports complex, extensive commercial development, and high-density residential development.

•  Oct. 28, 2021 – City Council votes to authorize the city manager to negotiate a purchase and sale agreement and development agreement of the fairgrounds property with P3 Joint Venture Group, for the development of their proposed concepts, which include

20.5 acres of conserved wetlands with public trails

2.4 acres of public central park with public off-street parking

18.3 acres of multi-purpose playing fields, basketball courts, community gardens and an indoor recreation facility

14.5 acres for sing and multi-family homes with a focus on senior housing and mixed-use retail

6.2 acres for a production studio and career development opportunities

11.4 acres for public streets, sidewalks, tree lawns and on-street parking

•  March 24, 2022 – City council votes to approve rezoning for 3.85 acres of the fairgrounds property to allow for the development of up to 100 units of affordable housing for seniors.

•  May 12, 2022 – City council votes to adopt an amendment to the Tatemville Neighborhood Redevelopment Plan to facilitate the improvement and retention of affordable housing. The council also votes to authorize the city manager to enter in to a land lease agreement with the Land Bank Authority to as part of the low-income housing tax credit application


P3 Venture Group development concept

The development group’s concept includes youth recreation facilities, a production studio, career center, single and multi-family housing options with a significant component for senior housing, neighborhood retail and public park space. The development group’s proposal also included the purchase of the fairgrounds site for $2 million.

Timeline and group description source: City of Savannah


Learn more about development and property matters at savannahagenda.com

About The Author

Eric Curl

When not wandering the streets with his canine companion, Eric Curl is probably reading building permits and meeting agendas. He writes Property Matters on to share what he finds. You can find the column, along with other stories, cartoons and quizzes about local matters at Savannahagenda.com.
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