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Virginia Beach — A nonprofit is nowhere near its $10.8 million fundraising goal to break ground on a Pungo housing project for people with intellectual disabilities, according to an auditor memo.
In fact, the auditor has discovered Vanguard Landing is in default of a no-interest $2.9 million loan provided by the Virginia Beach Development Authority to jumpstart the development.
Vanguard Landing has not met key deadlines required, and the development authority failed to notify Vanguard Landing when it defaulted on the loan, City Auditor Lyndon Remias said.
As a condition of the loan, Vanguard Landing agreed to build at least one residential building by February 2019 and to submit annual written reports of its progress since 2014. No construction has begun. Remias said the development authority should have immediately told Vanguard Landing it had not met the terms of the loan, but that communication did not occur.
“The Development Authority should have been monitoring the status of the loan,” Remias said.
The development authority will meet on Tuesday at 8:30 a.m. to discuss the issue and will decide whether to give Vanguard Landing more time to get the project off of the ground.
Vanguard Landing Executive Director Debra Dear envisioned creating a $40 million residential community for 185 people — 18 and older — with intellectual disabilities. Preliminary plans show cottages, gardens, an equestrian center and other on-site businesses on 75 acres near Princess Anne and Sandbridge roads.
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The Virginia Beach City Council approved providing Vanguard Landing the $2.9 million loan in 2013, and the development authority made it official in February 2014. The city gave Vanguard Landing eight years to raise money before it would be expected to begin repaying the loan in February 2022.
Dear did not reply to multiple requests for comment.
Eddie Bourdon, an attorney hired by Vanguard Landing to respond to the auditor’s report, said the primary reason for the delay is hurdles the nonprofit has faced with the city’s new stormwater regulations, which were put in place after a neighborhood in Pungo flooded during Hurricane Matthew in 2016.
Bourdon said Vanguard Landing waited to submit its site plans until it had a better understanding of what the regulations would be because it didn’t want the new residences to flood.
Remias said Vanguard Landing did not mention the issue with stormwater compliance when he began his probe.
Bourdon said he will ask the development authority for an 18-month extension. The development site plans were submitted to the city a month ago, he said, and the project can’t get a major loan from Virginia Housing until the plans are approved, which could take more than one year.
Remias said he thinks it is highly unlikely that Vanguard Landing will be able to start making payments on the loan next year. Vanguard Landing has not provided the city “with any firm source of outside funding ... to fund all or part of the project,” Remias said in his memo.
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After reviewing the organization’s 2019 990 IRS tax return, Remias said Vanguard Landing cash and investments on hand was only $252,000, which is far short of more than $10 million needed to break ground. Remias also said the organization has lost revenue in 2018 and 2019. Most of the money has gone toward covering management fees and Dear’s $84,536 annual salary and benefits.
Bourdon said Vanguard Landing has received pledges totaling more than seven figures, but he declined to say the specific amount.
Remias said a pledge is not good enough.
“A pledge is not a firm obligation,” Remias said. “A bank is not going to loan you money based on pledges.”
City Councilwoman Barbara Henley, who represents the Princess Anne District where the development would be built, said she still thinks Vanguard Landing can accomplish the project if given the chance.
“I hope that the authority will allow them to move forward,” Henley said. “I still think it is a very worthy project.”
Alissa Skelton, 757-995-9043, alissa.skelton@pilotonline.com