Out of the Dark
No City Felt The Effects Of The Bank Of The Commonwealth Scandal As Much As Norfolk. But A Few Developers Are Investing In The Buildings Left To Die, Bringing Many Downtown Properties Back To Life
The Bank Of The Commonwealth Scandal left many Norfolk properties without ownership
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The F.A. Roethke Building was left to rot.
The former home of the region’s oldest car dealership, this two-story warehouse was once a thriving symbol of 20th-century progress and ingenuity. Originally constructed in 1915, it doesn’t fit the standard structural boilerplate; an expansion in 1938 made it look even more unusual.
“It’s basically like two triangles fused together,” says Nicole Turner, a project manager at Luna Development, which bought the Roethke last year at auction for $225,000, a fraction of its value several years ago. The company is in the process of renovating the Monticello Avenue structure and renaming it Fort Tar Lofts in a nod to one of the three Colonial-era battlements that saw action during the War of 1812. The plan is to convert the building into 19 apartments, all of them paying homage to this striking slab’s former use.
“The apartment names will stick to the car theme,” Turner says. “We plan to give them names like the DeSoto and The Plymouth, to retain some of the history of the building.”
The renovated lofts will have an industrial feel with exposed brick, she explains, and the units will revert back to the original windows and flourishes. “We haven’t seen too many of these types of buildings in this area,” she says. “You have a lot of them in Richmond with their tobacco warehouses, and we’re trying to do something similar here with this renovation. This is a historic building, and we’re trying to preserve it.”
Turner pauses. “It’s been a challenge.”
Before Luna purchased the property, it had been deteriorating for years, with foliage seeping through the cracks, birds squatting in the rafters and mounds and mounds of indoor trash. “Structurally it was pretty sound,” she says. “There were a lot of broken windows, and it had holes in the roof so the weather just kept getting in.”
The Roethke’s previous owners had bought the building in 1998 from the Norfolk-based Bank of the Commonwealth—for more than it was worth—and then left it to die. Funds appropriated for its renovation were used instead to pay off other loans and to cover other investments.
It was only one of many properties across the region that had been dark for years, entangled in an ongoing loan fraud scandal that eventually saw the Bank of the Commonwealth closed down, its top executives sent to prison and four local developers, including the Roethke’s owners, also sentenced to time in jail. The crime? Participating in a conspiracy to hide millions of dollars in losses from Federal regulators, shareholders and the BoC’s board of directors.
“The bad dealing really did hurt a lot of properties in downtown for quite a few years,” Frank “Buddy” Gadams, of the Norfolk-based Marathon Development Group, says.
For some, like Gadams, who now holds many of the more distinguished Norfolk properties once tied up in the bank fraud, the resale of these buildings has been a “perfect storm of good.”
“It has allowed someone to basically amass these different properties and buildings in one concentrated area,” he maintains, “and come back with something that can make a meaningful difference. Because if you are doing one project on one corner and there are five or six neighboring buildings that are vacant, that doesn’t do a lot of good.”
The kinds of properties that were intertwined with the BoC scandal ran the gamut, L. Taylor Harrell, vice president of the North Carolina-based Southern Bank and Trust, says. “There were office buildings, hotels, residential rental properties, apartment buildings, vacant land, commercial lots. It’s a little bit of everything.”
And no city felt the effects of this mess as much as Norfolk.
If you are one of those who think that banks have become “too big to fail,” the sordid tale of the Bank of the Commonwealth is a conspicuous anomaly.