The Richmond Flying Squirrels playing their opening game at CarMax Park on April 7. (BizSense file photos)
While one legal dispute surrounding CarMax Park and the Diamond District winds down via a court settlement, another between the owners of the Flying Squirrels and the City of Richmond appears to be just heating up.
The September lawsuit from ownership group Navigators Baseball against the city and the Richmond Economic Development Authority remains active, with notices of subpoenas served on city and EDA officials filed in recent weeks in Richmond Circuit Court.
And, in the latest correspondence between lawyers in that case, the Navigators are pushing back against a notice of potential tenant default that the EDA sent the group in late September, while placing some of the blame on Virginia Commonwealth University.
The lawsuit alleges that the city and EDA have failed to deliver on the mixed-use development envisioned for the Diamond District where, years after they selected a developer for the public-private project, only CarMax Park currently stands. It also alleges that the development team and project schedule have changed significantly from when the Diamond District was first announced.
The city and the EDA, which oversees the Diamond District and leases CarMax Park to the Squirrels, maintain that the Navigators have contributed to the delays due to prolonged negotiations with VCU over the Rams’ baseball team’s use of CarMax Park – an agreement for which has yet to be finalized and is tied to the Squirrels’ lease for the ballpark.
In late September, two weeks after the lawsuit was filed, the EDA sent the Navigators notice that it would be in default of the lease if it did not re-enter negotiations with VCU, as the lease requires that the Navigators negotiate “in good faith” with VCU on the use agreement. The Sept. 21 notice gave the group 30 days to resume talks with VCU before risking a tenant default.
But in a response to that notice sent Oct. 30, an attorney for the Navigators put the blame on VCU, which it said has refused to close a deal and continuously moved the goalposts of previously agreed-to terms in talks that have been on and off over the past two years.
An aerial view from June of CarMax Park and the former VCU-owned Sports Backers Stadium, the track-and-field facility that’s since been razed to make way for the Diamond District. The old Diamond ballpark is also shown. (File image courtesy Richmond EDA)
The letter from attorney Luke Nikas, obtained from the city through a Freedom of Information Act request, also says that the Navigators have continued discussing terms with VCU since June, when the university signed its separate lease with the EDA for its use of CarMax Park, and that those talks culminated in a proposal that Squirrels owner Lou DiBella, the Navigators’ president and managing partner, sent to VCU Athletics Director Ed McLaughlin on Sept. 27 – four days after the EDA sent its warning of a potential default.
“Do you want to know how VCU responded? It didn’t,” wrote Nikas, who said the proposal offered VCU a 10-year agreement beginning in January with a $575,000 annual fee and a 3.5% annual escalator, along with operational details and other logistics for sharing the stadium.
That would be on top of VCU’s lease with the EDA that calls for annual payments of $410,000 over 30 years, or over $12 million in total.
“It did not make a counterproposal. It did not comment on the Navigators’ terms. It did not seek to reach a deal. Silence,” Nikas said of VCU, adding that the EDA’s characterization of the negotiations “is false” and calling the default warning letter “frivolous.”
Nikas concluded the letter with an offer to the EDA’s legal counsel to schedule a call to discuss the matters. The correspondence is the latest in a monthslong back-and-forth that started with a letter from Nikas in June that laid out the Navigators’ grievances with the city and EDA and requested a meeting about a “path forward” for the Diamond District.
This latest letter was also sent days after attorneys for DiBella and Diamond District developer Jason Guillot reached a settlement in their separate defamation case, which centered on a heated exchange between them during the Squirrels’ opening game at CarMax Park in April.
The Oct. 30 letter also was sent a day after the subpoena notices were filed in the circuit court case against the city and EDA. The notices show that subpoenas were served in early September at the EDA and city attorney’s offices, as well as offices for development group Diamond District Partners and its lead firm, Thalhimer Realty Partners. The notices do not name the individuals targeted with the subpoenas.
Nikas, a Quinn Emanuel attorney based in New York, is one of four attorneys with the law firm representing the Navigators in the case. Meghan Gosline with Hancock Daniel’s Innsbrook office is serving as local counsel for the Navigators in the case.
The city and EDA are represented by McGuireWoods attorneys Matthew Fender, Carson Bartlett and Deirdre McDonough. Fender, who wrote the default warning notice and other correspondence with Nikas, could not be reached for comment late Tuesday afternoon.
Reached for comment about the letter, McLaughlin, the VCU AD, said in a prepared statement: “We continue to work with all parties to secure VCU Baseball’s long-term home.”
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