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Introduction
- All aboard — Roanoke's
downtown renovation preserves its past
- Developer unsnarls traffic congestion
as part of deal
- Shipbuilding complex boosts
downtown Newport News
- Turning Basin project could
be turning point for Canal Walk
- Other Nominees
Sensitive
project tests broker's deal-making skills
Location:
5100 Marshall St., Newport News
Buyer: Correctional Services Corp., Sarasota,
Fla.
Tenant:
Youth Services International
Broker: Mark E. Douglas, Insignia Thalhimer,
Richmond.
by
Brett Lieberman
Click
to enlarge |
In
17 years as a commercial real estate broker, Mark E.
Douglas had never faced a more challenging deal. Confronting
him were skeptical residents of a low-income neighborhood,
myriad complex negotiations and funding problems. Any
flaw could kill the deal. The biggest challenge of all
was the project's sensitivity. Douglas, a broker with
Insignia Thalhimer in Richmond, was trying to turn the
former Newport News General Hospital into a privately
run treatment center for young sex offenders.
Douglas'
client was Youth Services International, a subsidiary
of Correctional Services Corp., based in Sarasota, Fla.
The builder of adult correctional facilities had been
scouring Virginia for three years for a place to erect
a service facility for sex offenders aged 12 to 21.
It was a tough go. YSI had looked at several sites but
opposition was intense. The clock was ticking because
one facility where young offenders were being housed
was about to close down. "Timing was intricate
because these people were being displaced from their
property in Richmond," says Douglas.
He
succeeded by turning the big deal into a series of mini-deals
that satisfied the aims of several parties. In Newport
News, for example, he found a partner in Rev. Lewis
Nicholson and his Holy Tabernacle Church of Deliverance
in the Denbigh district. At the time, the church was
interested in turning the vacant hospital into 200 assisted-living
apartments for low- to moderate-income seniors. Douglas
approached Rev. Nicholson about the juvenile offender
center and suggested they work together. One benefit:
48 new jobs in a distressed area and the possibility
of more later.
Before
the project could proceed, however, the church's economic
development group had to find funds to buy the hospital
The group had a contract to purchase the 89,000-square-foot
hospital on 26 acres from the U.S. Department of Housing
and Urban Development, but lacked the money to close
the sale.
A
little creative deal making cleared the way. Holy Tabernacle
allowed YSI to fund the HUD closing in exchange for
the simultaneous sale of the hospital to YSI. As part
of the deal, YSI sold the church 12 acres for $500,000
for the elder care center. To drum up more funds for
the project, YSI sold $1 million of leftover medical
equipment from the hospital, including an MRI machine.
It donated space for a free health clinic and leased
more space for a child-care center. A glitch in any
of these areas would have made the project's $5.3 million
cost prohibitive and possibly galvanized community opposition.
Douglas
wasn't out of the woods, however. Some area residents
opposed having sex offenders in their neighborhood and
unless their concerns were addressed, the project would
die. City officials looked into the matter, and found
no possible licensing problems. They noted that the
former hospital also had a psychiatric wing.
Taking
diplomatic efforts a step further, YSI promised to hire
most of its staff - which should eventually number 120
- from the area around the hospital, the city's East
End, where residents have long complained of being a
dumping ground of public-housing complexes, homeless
shelters and boarding houses. The approach worked. "Had
the neighborhood gotten together and picketed, could
they have killed this site? Probably," says Douglas.
YSI's
license allows up to 36 young men to reside at the center,
though it can increase the total to 69 with state permission.
About 25 juveniles - referred primarily by social workers,
not the courts - already live there. With the new jobs,
community opposition has faded, making this tricky deal
worth Douglas' effort.
Return
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