Salem is considering legal action to recover nearly seven acres of land at its civic center that were sold for a hotel that was never built.
Salem hoped to recover the former city property at a real estate closing last month, but the developer did not show up and the closing could not occur, a city official said.
Salem spokesman Mike Stevens on Monday said the city is considering going to court, more than three weeks after being rebuffed. A law professor said the city could ask a judge to transfer ownership from the developer, Spartan Development LLC, to the city.
Dan Friesland of Roanoke County, a principal in Spartan who previously expressed confidence that the project would succeed, did not respond to messages requesting a comment. Alan Criss of Salem, also a principal, and Jeff Mitchell, a Blacksburg attorney who represented Spartan Development, also did not respond.
The city and Spartan Development were on the same page in 2016 when the project was hatched. Salem sold Spartan 6.75 acres of vacant land beside the civic center with an assessed value of $1.5 million. The city charged just $675, believing that Spartan’s proposed $15 million hotel and restaurant project would bolster the entertainment and sporting complex on Roanoke Boulevard and the local economy. Spartan announced that a Staybridge Suites would be built.
Neither Friesland nor Criss had prior hotel development experience.
The city gave Spartan two years to file plans, obtain permits and break ground. In October 2018, the city extended the deadline to April 30, 2019, but plans and permits for the project, much less a groundbreaking, didn’t materialize. On May 29, the city council voted to buy back the land.
Real estate papers state that the city retained “an option and right” to repurchase the land for $675 if the developers failed to meet the deadline. The papers also gave the city 60 days to close on the repurchase transaction. Stephen Yost, Salem’s attorney, proposed July 9 to Mitchell holding the real estate closing on July 19, 23 or 24.
“If we do not hear back from your client, the closing shall be set for July 24, 2019, at 2:00 p.m.,” according to a letter released by the city.
The city received no response to the letter and nobody showed up July 24, city spokesman Mike Stevens said.
“Our only recourse is to institute legal proceedings, which is what the city plans to do,” Stevens said.
Alex Johnson, a law professor at the University of Virginia, said the city could file a quiet title action, asking a judge to restore city ownership of the property. Johnson spoke without reviewing any documents or having any direct knowledge of the situation.
To try to prevent the possibility of Spartan selling the land before the city petitions the court, Johnson suggested the city amend property records to declare that legal action is pending. “The city of Salem is not out of options as long as they proceed before the property is transferred to a bona fide purchaser who has no notice of the city of Salem’s claims,” Johnson said.
Spartan Development already faces legal action from Balzer & Associates, a Roanoke engineering firm that brought suit in February for $98,085 for pre-construction services, court papers said.
In addition, in June, DLW Architects of Dunedin, Florida, filed a mechanic’s lien in Salem Circuit Court to secure payment of $350,349, court papers said.
Also, federal prosecutors last year attached a lien to the land, citing an unpaid restitution order of $532,000 pending against Friesland from a criminal case. Friesland served time in prison for a 2001 wire fraud conviction.