Waterside developer’s appeal of casino case is pending as Norfolk’s … – The Virginian-Pilot

As Norfolk slogs through negotiations with a developer over plans for a future casino next to Harbor Park, a legal battle brought by another city business partner over casino development rights is still being waged in court.

Cordish Companies, the Baltimore-based developer that revamped Waterside, sued the city in 2021, arguing Norfolk was in breach of its contract and had actively sought to exclude the location from being the site of a casino. A Richmond judge dismissed the lawsuit last year, but Cordish appealed.

At a July 12 hearing in the Court of Appeals of Virginia, representatives for the parties argued over the language of the 2013 Cordish contract with the city and the Norfolk Redevelopment and Housing Authority, and what that meant for a casino at Waterside.

Attorney John Lynch, who represents the Cordish-owned LLC, Norfolk District Associates, argued that the trial court did not take into account the scope of the Waterside lease language regarding a potential casino, according to a recording of the oral arguments. The company initially argued that it never would have agreed to do the expensive Waterside overhaul if the city had not also agreed to eventually support a casino bid from Cordish.

If were going to invest $43 million at Waterside we dont want the city of Norfolk subsidizing and competing with us on another project, which is exactly what theyre doing, Lynch said.

The Norfolk District Associates lease agreement for Waterside says neither the City nor NRHA will subsidize or provide a performance-based grant for a restaurant and entertainment development of over 75,000 square feet similar to the project, for 10 years.

In court filings, the city argued the lease with Waterside never allowed use as a casino, and therefore it could not be considered similar to the HeadWaters Resort and Casino project.

Waterside has no casino. The Lease prohibits Waterside from having a casino. And the Lease precludes the characterization of casinos as being similar to Waterside, attorneys wrote in the citys appeals brief.

Norfolk approved a land deal with the Pamunkey Indian Tribe in 2019 that set the stage for the development of the HeadWaters Resort and Casino located next to Harbor Park less than a mile from Waterside. City voters approved a referendum allowing gambling at the proposed location in 2020. But three years later, negotiations over the casino have hit numerous road bumps and plans for the project have not been approved.

The city argued in court filings that while the Waterside lease left open the possibility of negotiations to amend the lease if state law changed to allow gaming at the location, that didnt happen, therefore it was under no obligation to help the company obtain government approvals for a casino.

The citys legal representative, Ryan Frei, wrote in a July 19 brief that no amendment was ever made to the Waterside lease to allow a casino at the site even after the possibility of such was allowed by state law. Additionally, he reiterated that the government approvals in the contract referred to liquor licensing and permitting, but not a casino.

Lynch said the contract violation occurred between 2018 and 2020 when they allege the city worked via the General Assembly to oppose a mandatory request for proposal process for a casino and lined up the sale of the property slated for the HeadWaters casino at below market rate. The city still owns the land where the casino is planned, but has to sell it because the casino must be built on privately held land.

Lynch argued those actions amounted to a subsidy.

They had duty to the (Norfolk District Associates) not to subsidize the project that is similar to this project and couldnt subsidize it for 10 years any project that was 75,000 square-feet, that was a restaurant or entertainment venue, Lynch said. Thats exactly what they did.

In oral arguments, Frei said the city has not subsidized HeadWaters through its partnership with the tribe and by the definitions set out in the contract, a casino is not an entertainment venue.

Lynch said during arguments the citysown contract amendments around exclusivity for the Pamunkey Indian Tribe to operate a casino in Norfolk prove Cordishs case that the city knew it was violating the contract.

If they thought the exclusivity provision with Cordish as not enforceable, why would they have to exclude it in an amendment with the tribe? Lynch said. So we believe theyve admitted the enforceability.

Judges Richard Y. AtLee, Doris Henderson Causey and James W. Haley, Jr. heard the arguments and will issue a ruling. At the oral arguments, the judges focused on the language in the citys lease with Cordish, which was repeatedly referred to as the heartbeat of the case in briefs and the trial courts final order.

The lawsuit, which also names City Attorney Bernard Pishko as a defendant, seeks $100 million in damages. There is no deadline for the court to make a decision.

The city of Norfolk did not provide a response to an inquiry from The Virginian-Pilot about what, if any, potential impact the legal proceedings have had on the HeadWaters project.

But a city spokesperson said in the interim, the lease agreement at Waterside between the Norfolk Redevelopment and Housing Authority and Norfolk District Associates remains in full effect, as it has throughout the course of this litigation.

Cordish did not respond to inquires about the case and its potential impact on the HeadWaters development.

A spokesperson for the HeadWaters casino project also declined to discuss the case.

Ian Munro, 757-447-4097, ian.munro@virginiamedia.com, @iamIanMunro

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Waterside developer's appeal of casino case is pending as Norfolk's ... - The Virginian-Pilot