Henrico sends default notices to $2.3B GreenCity project developers

The $2.3 billion GreenCity development in Henrico County appears to be in jeopardy.

Henrico County has sent two notices of default — one in regard to the property purchase agreement and one relating to the development agreement — to the developers of the planned 220-acre GreenCity mixed-use development, which was proposed in 2020 as an environmentally friendly development that would be anchored by a 17,000-seat sports and entertainment arena. It was expected to include two hotels with 600 rooms, about 2.2 million square feet of office space, 280,000 square feet of retail space, 2,100 residential units, and green space and plazas.

The developers, Michael Hallmark of Los Angeles-based Future Cities and Susan Eastridge of Falls Church-based Concord Eastridge, head development entities Green City Partners and Green City Development Corp. LLC.

According to a March 3 default notice, Green City Development Corp. failed to make the final payment on the roughly 93-acre land, the site of the former Best Products headquarters, for the planned arena: more than $5.22 million was due Feb. 28.

Henrico County Manager John Vithoulkas on Feb. 15 sent the developers a notice of default on the development agreement between the county, the EDA and the developers, following a nonperformance notice sent in December 2024. Under the development agreement, Green City Partners had a 60-day cure period to address the nonperformance.

The real estate purchase agreement between the county’s economic development authority and the developers included an initial payment of $500,000 due on Feb. 28, 2023, and a second payment of the same amount due Feb. 28, 2024.

GCDC has a 10-day cure period for the remaining payment from receipt of the March 3 notice. Should the developers fail to make the payment, the EDA has the right to repurchase undeveloped property and has “all rights and remedies available at law and in equity.”

According to the notice, if the developers fail to cure the default within the time limit, “the EDA will exercise the rights available to it under the purchase agreement, including, without limitation, the right to exercise the repurchase option.”

The repurchase option remains in effect for 12 months and requires the EDA to provide a 30-day prior notice to the developers. The EDA would pay the per acre price that the developers paid on the number of acres of the property it repurchases, minus the balance the developers owe.

The development agreement also allows the county to repurchase the property following the nonperformance default notice, although it requires negotiations to start within seven days of the notice and conclude within 30 days.

“We included extensive provisions to protect the interests of Henrico County and our taxpayers when we entered into agreements with Green City Partners and Green City Development Corporation,” Vithoulkas said in a statement. “Simply put, the GreenCity developers have not performed to the terms of the agreements.

“We believe it’s time to move forward and return the Best Products property to the county, as stipulated in the agreements,” he added. “As a county, we remain bullish on the concept of a large, mixed-use development at this extraordinary location and believe it is perfectly suited to a privately funded arena for sporting events, concerts and other entertainment.”

Eastridge declined to comment due to the ongoing cure period. Hallmark did not respond to a request for comment.

In the Dec. 16, 2024, nonperformance notice from Vithoulkas, he alleged that the developers had failed to perform obligations under the development agreement by failing to schedule or finance the project “in a good faith manner using commercially reasonable efforts to advance the development of the project in a timely fashion.”

The notice lists several projected development schedules from the developers that have passed or that progress has not been made on. In November 2022, the EDA and Green City Partners renegotiated the real estate purchase and sale agreement for the Best Products site, creating the three-payment schedule.

“At the end of 2023, Developers had not secured financing, completed any designs, or begun any construction for the project. This year (2024) has also been bereft of progress on the project,” the notice states.

Green City Partners also originally “intended to purchase the Scott Farm property [to the north] and include it in the overall development of GreenCity,” when the county approved the rezoning and provisional use permit for the Best Products and Scott Farm sites in October 2021, according to the notice.

Progress on residences

Henrico County and the EDA partnered with a different developer — Markel|Eagle Partners — and contributed more than $18 million to the $35.1 million Scott Farm property purchase that closed on August 31, 2023. The agreement included a leaseback on part of the property for the EDA to use as additional parking for GreenCity.

In mid-February, the county had started sewer work for the residential portion and was working on road infrastructure improvements along Magellan Parkway, and Markel|Eagle hoped to begin construction in 2025, Cari Tretina, the county manager’s chief of staff, told Virginia Business then.

The county, EDA and Henrico Sports and Entertainment Authority also purchased the neighboring St. Gertrude’s property in 2023 “for additional land that could be developed in coordination with he project.”

The county also created in January 2023 a community development authority to support public infrastructure for GreenCity, including issuing up to $295 million in bonds supported by taxes and assessments on development within the Best Products property, but because no development has begun, the CDA’s funding is currently limited to funding from the property’s sale.

The county also created a second CDA in December 2023 to provide public infrastructure and included the Best Products, Scott Farm and St. Gertrude’s properties.

“In sum,” the notice states, “Developers have not used commercially reasonable efforts to advance the project in good faith over the past four years, despite continued extraordinary support from the County. This failure is inexcusable and cannot be ascribed to external market forces, as many other commercial, residential and multifamily developments have begun and been completed in the County during this same timeframe.”

Problem-plagued projects

Hallmark, who designed the Crypto.com Arena (formerly the Staples Center), and Eastridge have been the lead developers for several failed projects in the Richmond region. Hallmark was set to be lead developer for the $1.4 billion Navy Hill project to replace the shuttered Richmond Coliseum that was voted down by Richmond City Council in early 2020 following major pushback by city residents.

Hallmark and Eastridge were also part of the team that proposed a second project in downtown Richmond in 2021 — a $325 million VCU Health System medical office tower with other mixed-use development — but VCU Health backed out of the deal in 2023.

Future Cities, of which Hallmark is a founding partner, also has proposed turning a historic electric substation in Richmond’s Carver neighborhood into a mixed-use development called Carver Station with a food hall, coworking space and micro-retail. Future Cities purchased the property in 2021. Richmond Planning Commission recommended the special use authorization for approval in August 2023 and the City Council adopted it in September 2023, but as of March, there has been no visible progress.