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Salem hotel developer speaks out after city announces lawsuit, city responds

Misunderstanding about "Opportunity Zone" partially to blame

SALEM, Va. – As the City of Salem plans to take the developers of a proposed hotel and restaurant near the Civic Center to court to get back that land, those developers are speaking exclusively with 10 News.

Spartan Development, LLC and its joint venture partners tell 10 News in a statement that Salem City Council rejected a request to include nearby opportunity zone land in the proposed development, which is the only way they'd be able to afford to develop the site.

According to the Virginia's Department of Housing and Community Development, an opportunity zone is land designated by President Trump's 2017 Tax Cuts and Jobs Act to provide incentives to investors to promote economic development.

Developers said the city told them the site was within an opportunity zone, but it turns out the zone is across the street.

After learning this, developers told WSLS in a statement, "...our team scrambled to find a path forward. We identified the ability to incorporate land across the street, within the opportunity zone, in our development ... Council chose to deny the request effectively killing the project."

CLICK HERE TO READ THE FULL STATEMENT

A Salem spokesperson said the city did not believe the development site was inside an opportunity zone, releasing a statement to 10 News that reads in part: "We contacted the Commonwealth of Virginia and asked about adjusting the Opportunity Zone boundary. The response we received from the state was not encouraging."

The city's attorney sent a letter to Spartan's attorney in July to set a date to buy back the deed, writing in that letter, "If we do not hear back from your client, the closing shall be set for July 24, 2019 at 2:00 p.m."

A Salem spokesperson said the city never heard back.

In their statement, developers said, "No one asked if we were even in town. The date was simply set."

A Spartan representative says the company and its partners have invested more than half a million dollars, adding that they had "the financial wherewithal ... and the ability to proceed to accomplish the city's stated goal of a hotel on the property."

In a statement, a city spokesperson said the developers "have not complied with the contract, in which they agreed to reconvey the land to the city. Now, our only recourse is to institute legal proceedings, which is what the city plans to do."

The city and the developers have hired attorneys to handle the city's lawsuit to reacquire the land for $675, an option allowed in the deed when the property was first sold in 2016.


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