The troubled 192-acre Manchester Lakes development in southeast Fairfax is the target of a comprehensive review by Fairfax officials, who say they are worried that the project, which was to contain more than 1,300 residential units, might never be completed.
The review is being done by the county's legal staff and the Department of Environmental Management (DEM), which handles all bonding, building permits and site-plan approvals.
Manchester Lakes Associates, a Virginia limited partnership and the developer of the project, is the subject of bankruptcy proceedings and has filed suit against Dominion Federal Savings and Loan Association, the project's major financial backer and an original development partner.
Fairfax officials say they are worried that the financial status of the project and the legal problems connected with it could endanger major road networks and other public facilities promised by developers when the project was approved by Fairfax almost 18 months ago.
Construction on several hundred residential units is almost finished, but work is coming to a halt because homebuilders cannot buy additional land within the development because of legal problems.
In recent months, Dominion Federal constructed several lakes within the project that were needed "on an emergency basis" for storm-water management purposes, according to county officials.
County supervisors called for the review after Supervisor Joe Alexander asked for their support for a major status report on the project. Alexander and other county officials said they are worried that Manchester Lakes could lose its 200 nursing-home beds that have been approved by the state if construction delays continue.
Alexander, within whose magisterial district the project lies, has been a major supporter of the project, which is being built on a former gravel pit and dump. Original plans for Manchester Lakes combined single-family and multi-family homes with housing catering to the needs of the region's increasing number of senior citizens. Some commercial development is included in the project, which is off Beulah Road in the Franconia area. Manchester Lakes abuts the massive Kingstowne mixed-use project recently approved for construction by Fairfax County.
Alexander asked the "staff to review what has been transpiring at Manchester Lakes," charging that "the entire building season has been lost due to the fact that Dominion Federal, the lender who had indicated they were going to take over the project, has not done anything," according to county records.
Claude Cooper, chief of the DEM, said some "bonds involved in the project are in default" and that "there are problems with" unfinished roads and some sanitation facilities.
"What are they going to do about the proffers promised facilities that were made when the project was approved?" Cooper asked.
DEM Deputy Director William Rucker said his staff does not yet have a list of each section of the large project or what has been bonded for each section. The staff is compiling the information to report to Alexander and the board of supervisors, Rucker explained. Cooper said that developers had promised to complete certain roads by April 15 and their failure to meet the deadline raises questions about how development can proceed.
Cooper and Alexander said they are worried that a road leading from Manchester Lakes to the future Springfield Metrorail station might not be built. Planning commission records call that road the "Metro Connector Spur."
That connector and other roads in Manchester Lakes were supposed to tie in to roads now scheduled to be built in the new Kingstowne project.
In response to Alexander's request for the staff review of the project, attorney William Dorn, representing Dominion Federal, sent Alexander a three-page report, copies of which have been given to all members of the board of supervisors, the DEM staff and the county attorney's office.
After reviewing the document, Alexander called it "bizarre" and said it is a "smokescreen." He said the report "does not satisfy the county's concerns."
Cooper agreed. "There are still a lot of specific details [unanswered]. The county still has a lot of questions that must be answered before the project can start up again," he said.
Three major builders are finishing work on housing units on land purchased from Manchester Lakes before the project encountered financial and legal troubles. Spokesmen for Signature Communities and NVHomes said the companies would like to buy more land at the project but cannot now because it is tied up in lawsuits.
"I would love to have more land there," said Dwight Schar, head of NVHomes, which has sold all but 30 of its 200 town houses at Manchester Lakes. Pulte Co. has finished its development, and Signature Communities will finish its work this fall.
Gary Garczynski, head of Signature and president of the Northern Virginia Builders Association, said the location of the project south of Alexandria and within easy commuting time to the District made it a good seller for his company. He said he would like to build again at the site when all the legal problems are solved.
After surviving a major toxic waste scare last summer and eventually winning a clean bill of health from county officials, the development today faces major legal problems.
In December, Manchester Lakes Associates, headed by developer James Brehony, who conceived the idea of Manchester Lakes, was hit by lawsuits forcing it into involuntary bankruptcy.
Brehony, contacted this week while on vacation, said, "Dominion Federal caused the bankruptcy."
Dominion Federal is listed in county records for the rezoning as a partner in the development, and Brehony said that "Dominion Federal was a 50 percent partner" in the project. The legal problems between the two have piqued the curiosity of local land-use lawyers.
Manchester Lakes Associates and other limited partners have filed suit against Dominion Federal, and a fall trial date is expected to be set.
In the report sent to Alexander by Dominion Federal's attorney, Dorn said Dominion Federal is working to ensure that the project does not lose the certificates of need from Virginia "for the construction and operation of a 170 [bed] nursing and 30 personal-care-bed facility." Dorn said Dominion Federal would like to "recommence" construction of the project by Oct. 1. But Cooper said construction at that time might be difficult because of problems generated by failures on the part of the developer to meet deadlines for completion of promised projects.
Brehony was ruled bankrupt by the bankruptcy court in Alexandria in late March.
Dorn, in his report, told Fairfax officials that "since the developer would not file schedules of assets, liabilities and creditors, Dominion has undertaken this complex role."
Brehony said this week, "I gave them Dominion Federal permission to prepare a plan of reorganization." He said he was broke and did not have the money to pay for a reorganization plan.
Dorn's report said Dominion Federal would file a plan of reorganization this month.
"Even if further minor delays are encountered, it should be of no concern to you Alexander or to the board, because Dominion has determined that, in order to protect its several millions of dollars of loans for this project, the project must be built out," Dorn's report said.
The report said Dominion expects to live up to bond commitments already made on the project but that Fairfax officials have the right to seize those funds if the public facilities promised by the developer are not completed.
Dorn's report apparently is not enough to satisfy county officials, including Cooper and Alexander. "No, I don't think it satisfies the county," Alexander said. He said he expects the county legal staff and DEM to "look it over" and continue working on his requested status report.
Continuing his defense of the idea of the Manchester Lakes project, Alexander called it "an ideal place -- the most strategic location in this region of the county other than Kingstowne."
"It has been a good investment for" NVHomes, builder Schar said. He said he is sure investments made by those who bought homes in Manchester Lakes will prove to be good because of the prime location of the site and the quality of the overall planned development.