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Model Tobacco developer fires back in investor lawsuit

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A model tobacco building on Route 1 in South Richmond. (Pictures of BizSense files)

As he moves toward finalizing a deal to pull out of a controversial Petersburg hotel project, developer Chris Harrison is an investor in another high-profile project of his at the Model Tobacco complex in South Richmond. We are fighting back a federal lawsuit filed by

Last month, Harrison accused him of committing fraud and money laundering to wrest control of a multi-million dollar model cigarette apartment conversion from investors Steven Snyder and R. Michael Kuhn. filed a response to the lawsuit.

the lawsuit alleges Harrison violated the group’s operating agreements in multiple financial transactions requiring investor approval, misrepresented project readiness and timelines, and ultimately, following delays in funding and property closures. He induced an additional $2.2 million to be invested in the project.

Harrison denied the allegations, arguing that “there are risks associated with all investments, including the timing of funding and the completion of the project itself.” He also claims the case belongs to state court and is requesting a hearing on the issue of filings in federal court.

The response said Snyder and Kuhn’s refusal to sign an equity guarantee for the project caused delays in funding and closure of the property. It holds investors accountable for the historic loss of state and federal tax credits.

Harrison argues that the refusal violated the terms of the development group’s operating agreement and that the lawsuit was an effort by investors to increase their stake in the group and give Harrison a negative view. The included counterclaim seeks a court ruling on the validity of the operating contract, alleges breach of contract that incurred costs in excess of $75,000, and seeks the dissolution of Snyder and Kuhn from the group.

A voicemail left for Harrison on Wednesday was not returned.

Harrison’s attorney in the lawsuit is Todd Fiorella of Norfolk law firm Fraim & Fiorella. He did not return any calls or emails on Wednesday.

Snyder and Kuhn filed answers to Harrison’s counterclaims this week. They are represented by a team in his DC office of Quinn Emanuel Urquhart & Sullivan, led by lead attorney Keith Forst.

Harrison cut the ribbon for a South Side apartment called the Model Tobacco Loft in June. The 203 apartments form the first phase of a mixed-use project that includes plans for an entertainment complex with a beer garden and restaurant space. Harrison said in 2020 that the cost of the first phase is estimated at about $59 million.

Settlement reached to sell dilapidated hotel to Petersburg

The run-down hotel greets interstate commuters at the end of the off-ramp at Exit 52, the main entrance to downtown St. Petersburg. (Photo by Jonathan Spiers)

In Petersburg, a settlement was reached in a legal dispute between Harrison and the city, who agreed to sell the former Ramada Inn property, once slated for $20 million in rehabilitation, back to the city.

Two lawsuits against Harrison and his development company were dismissed at the city’s request in late June in light of the settlement, and the city would pay Harrison $1.25 million, which he paid four years earlier. $500,000 more than the original amount.

The sale, which is subject to a due diligence period, will allow Harrison and the city to pursue demolition of the dilapidated nine-story building along Interstate 95, which has become a more eyesore than it was in 2015. announced the project.

According to the purchase agreement contained in the legal documents, the city will have 120 days to access the property and conduct technical surveys, soil tests and other due diligence work. If the city determines the purchase is unfeasible, it may cancel the contract by paying Harrison her $112,500, or his 9% of the purchase contract price.

The 120-day period began on April 26, the day after the effective date of the purchase agreement. The transaction must be completed within he 60 days from completion of the due diligence period.

Developer Chris Harrison at the 2015 redevelopment announcement. (Pictures of BizSense files)

The agreement saw the city file a lawsuit against Harrison, his Maryland-based CA Harrison Cos., and his Virginia Hotel Development Group LLC, which owns a 2.3-acre property at 380 E. Washington St. It took place about a year later.

The LLC purchased this property from the City for $750,000 in 2018 when the City valued it at $1.2 million. The property is currently valued at $1.9 million.

A lawsuit seeking to declare the entire building a dangerous structure and public nuisance was scheduled to go to trial in mid-July. The city planned to call as an expert witness Kenneth Payne Her Jr. of Richmond-based Moseley Architects, who conducted a building review for the city’s lawsuit.

In late May, the city filed a draft order suspending further litigation and continuing the trial through November in light of the purchase agreement signed on April 25.

In announcing its intention To take legal action against Harrison, Petersburg Mayor Sam Parham said last year that the city would seek to demolish buildings it deemed a public nuisance and a danger to the public. The demolition was expected to cost about $1 million.

In December, the city of Harrison was granted a court order requiring Harrison to eliminate exterior building code violations by June of this year. According to Parham, Harrison “refused or ignored the city’s violation notices and property seizure orders” to avoid serving criminal subpoenas related to the violation.

The nine-story building is a prominent sight along Interstate 95. (Photo of Jonathan Spiers)

In responding to the lawsuit, Harrison claimed his company responded to the city’s concerns about the condition of the property, secured the site, and took steps to address those concerns. posed no imminent threat to public safety and was not a public nuisance or dangerous structure as defined by state law.

An inspection of the building earlier last year found more than 140 violations, resulting in multiple criminal subpoenas and tens of thousands of dollars in civil penalties, according to the city. After receiving permission from Harrison to enter the property, where evidence of vandalism and squatters had increased, the city hired a consultant to conduct an investigation.

It is not clear what will happen to the property after demolition. Parham said last year that the city had been interested in the property from other developers, but had been unable to act on it.

City We also do lobbying It will become the host site for a casino in the area after Richmond voters rejected a casino proposal.At a press conference earlier this year, Parham said the site he is considering building a casino would include Interstate 95. Said it would include places along. He did not say whether the Ramada Inn site would be an option.

Attempts to contact Parham for this story were unsuccessful. City Attorney Anthony Williams did not respond to a request for comment.

Fiorella also represents Harrison in the Petersburg case.

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