The apparent collapse of a plan to build a $130 million Hampton Roads Transit bus operating facility in Virginia Beach came to light Tuesday, months after the city’s development authority cut off negotiations.
HRT warned it’s already put $5.5 million into the project and millions more are at risk.
“Let’s go back to the table with a new spirit of cooperation, knowing a little bit more now where everybody stands,” Mayor Bobby Dyer said Tuesday after a lengthy discussion about the impasse.
HRT and the Virginia Beach Development Authority should “take emotion out of the discussion” and find something that can work, he added during an interview.
Until late last year, the Southside Facility seemed to be in the works on 11 acres at the Corporate Landing Business Park controlled by VBDA. The center is supposed to improve transit within the city and region while employing eco-friendly buses.
HRT could efficiently serve Chesapeake and Virginia Beach by having buses maintained and garaged at Corporate Landing rather than in Norfolk, said Thomas Becher, a spokesperson for the transit provider.
In 2021, VBDA and HRT reached a deal for HRT to buy the parcel, though the parties never finalized a contract by an October 2022 deadline. An updated agreement seemed to be possible before VBDA decided during a closed session meeting in December to end negotiations.
Some funding is tied to the land, according to HRT.
“To say let’s not build it at Corporate Landing is to say let’s give back 48% of $130 million because we just don’t need that money,” Sibyl Pappas, chief engineering and facilities officer for HRT, told the City Council.
According to HRT, the facility would save Virginia Beach $650,000 annually by ending the need for buses to come from Norfolk. Route frequency would potentially increase from hourly to every 15 minutes, and the facility would maintain and operate up to 100 buses and 16 trolleys while creating 125 jobs.
On Tuesday, Virginia Beach officials said HRT didn’t hit a 2022 deadline to realize its 2021 agreement.
“Negotiations, discussions continued between HRT and economic development staff for several more months, but there was never a purchase agreement signed,” Lisa Murphy, chairperson of the VBDA, told the council.
Deputy City Manager Amanda Jarratt said the city told HRT that “VBDA does not have an interest in pursuing additional discussions with them” but offered help finding other sites.
Concerns about the parcel included large stormwater requirements for the facility and the lack of land available throughout Virginia Beach for economic development.
According to HRT, the city kept working with it on the Corporate Landing site, hammering out stormwater and permit issues related to the large surface area that needed to be paved. Discussions continued until late last year, when HRT was poised to present a new proposal.
It never got the chance.
“Are we your regional partner?” William Harrell, HRT’s president and CEO, said Tuesday. “Virginia Beach is a one-sixth local partner of HRT. The discussions we were having after 2021, we were told we didn’t have to worry about an option.”
In January, Harrell wrote a letter to Dyer to express “dissatisfaction and disappointment with the recent decision of the authority to renege on their commitment.”
Stephen Romine, an attorney for HRT, wrote at the time that the city had been slow to deliver needed information.
“HRT, in good faith, diligently and continuously worked with VBDA and the city for … three years to engineer the site waiting on stormwater models for calculations,” Romine said during a VBDA meeting Tuesday. “HRT could not buy a pig in the poke.”
After the 2022 deadline passed, Dyer wrote a letter of support so HRT could secure a grant for the project. According to Romine, there was an agreement as of October 2024 that “reflected years of negotiations between HRT and the authority.”
Last month, Senior City Attorney Alexander Stiles wrote to Romine reiterating that the VBDA and city staff “would be happy to assist HRT in identifying a suitable alternative location in Virginia Beach.”
It became clear HRT required more land and stormwater capacity than city policy or the 2021 agreement allowed, according to the letter. Virginia Beach kept negotiating, but that didn’t mean VBDA was bound to new terms presented by staff during a closed session in December, when commissioners “directed staff to cease negotiations.”
On Tuesday, some members of the council said they’re concerned about the future of the project and transit in the city.
“With all of the federal cuts that are happening, why are we going to give money back that’s already been allocated for us that’s address specific?” Councilmember Cash Jackson-Green asked.
Others discussed stormwater issues for a project that would require as much as 85% impervious surface of the property.
Vice Mayor Rosemary Wilson said VBDA needed to consider the impact of the HRT facility’s stormwater demands on limited remaining land in the park.
“We would love to help HRT and find them another parcel,” Wilson said.
VBDA is a separate entity from the city, but it works with Virginia Beach on economic development matters. The City Council appoints members of the authority board and can provide some direction, and some VBDA actions require the body’s approval.
Its relative independence allows it to respond quickly to opportunities, insulate discussions from politics and negotiate confidential aspects of potential deals, according to Councilmember Michael Berlucchi, one of the council liaisons to the VBDA.