Rendering of the doomed project.
The Town of Herndon announced late Friday afternoon, July 11, that it, as the plaintiff, filed a lawsuit that same day in the Circuit Court of Fairfax County against Comstock Herndon Venture, L.C.
The lawsuit arises from a dispute revolving around Comstock’s refusal to reconvey approximately five acres of land located in the center of the downtown district back to Herndon, which it had intended for redevelopment. Herndon alleges that Comstock is wrongfully retaining the land to pressure Herndon into paying for Comstock's predevelopment fees, which Comstock claims, according to Herndon's suit, amount to "several million dollars."
Herndon seeks two actions. The first is the immediate return of the property to Herndon. The second is a Declaratory Judgment that Herndon owes no predevelopment costs to Comstock, and seeks recovery of its legal costs incurred in pursuing this action.
Herndon argues that the mutually signed Comprehensive Agreement does not obligate them to pay these costs if Comstock decides not to proceed, and that Comstock's actions constitute a breach of contract. According to court documents, the agreement's terms for such payments apply only if Herndon requests that Comstock transfer the plans and property to a new developer, which has not occurred.
After selecting Comstock as Herndon’s development partner, Herndon and Comstock entered into a Comprehensive Agreement dated Nov. 1, 2017. The lawsuit states, “The agreement gave Comstock the option to elect not to proceed with the construction by issuing a Notice Not to Proceed, and it provided to Herndon a corresponding right to repossess the land via its Right of Reentry.”
Comstock delivered a letter addressed to Herndon on Dec. 6, 2024, stating in part that Comstock “would not proceed with the construction project.” The letter read in part that under Section 8 of the First Amendment to the Comprehensive Agreement, “Comstock hereby elects to not proceed with the Commencement of Construction. … This letter shall be deemed a Notice Not to Proceed pursuant to the Comprehensive Agreement, which shall be deemed to expire and be of no further force and effect on the date hereof.”
On Jan. 23, 2025, Herndon exercised its Right of Reentry, demanding that Comstock execute documents to return the land to Herndon. Herndon stated that Comstock's rights to the property were being terminated due to their alleged failure to sign documents transferring ownership back to the town.
In turn, Comstock replied to Herndon, in a letter on Feb. 24, “acknowledging receipt of Herndon’s request that Comstock give the property back.” According to the July 11 complaint by Herndon, “Comstock’s Feb. 24 letter stated that it [Comstock] would transfer the Property to another developer upon payment of Comstock’s costs and expenses, which Comstock maintains is ‘several million dollars.’ This is a willful misreading of Comstock’s rights under the Agreement, which provides for no qualification of Herndon’s Right of Reentry. Comstock has thus breached the Agreement,” says Herndon in the suit.
“Accordingly, Herndon is entitled to judgment for Comstock’s breach of the Agreement by failing to reconvey the Property back to Herndon, an order for specific performance compelling Comstock to convey the Property back to Herndon, and a declaratory judgment that Comstock is not entitled to payment of the claimed predevelopment costs and expenses.”
Herndon argues in the lawsuit that Comstock explicitly agreed that the development of the “Final Project Plans, Construction Drawings and Site Plan” were to be at Comstock’s “sole cost and expense.”
Herndon says in the lawsuit that the agreement “provided that if Comstock abandoned the Project or there was an imminent foreclosure, Herndon was to have a Right of Re-entry … This right provided for reversion of Herndon’s right, title and interests in and to the Property back to Herndon.”
In June of 2018, the Fairfax County Board of Supervisors voted to contribute $1.2 million for the redevelopment of downtown Herndon. Estimates suggested that the project would generate $800,000 annually in new property and sales tax. The board accepted the Town of Herndon's request for an additional $5 million over five years in funding from the county's Economic Opportunity Reserve Fund, which was approved in October 2021.
Looking back at the the redevelopment project from 2020 through 2024, the original plan was for a new $85 million mixed-use, art-focused development on the 4.675 acre parcel to include 281 residential units, an unfinished 18,000 square foot space for a new arts center shell, an arts walk, public spaces, an eight-level parking garage with 761 spaces and 18,000 square feet of boutique, restaurant, and retail space. By the summer of 2024, the project had not commenced construction, although some older buildings had been demolished. Redevelopment plans reduced the art center to approximately 4,275 square feet, the lowest level of the parking garage was removed, and the number of residential units dropped to 273. In September, during his last session as town manager, Bill Ashton opined that the project could collapse if interest rates did not lower.
In December, Comstock sent Herndon the “Notice Not to Proceed” letter, thus initiating the correspondence between the parties. In June, Comstock and Herndon entered into mediation, according to a town spokesperson.
Clemente, manager of Comstock Herndon Venture, LLC, did not respond to a request for comment.
The full text of the filed lawsuit by Herndon demanding Comstock's return of the downtown redevelopment site to Herndon’s ownership, along with exhibits, can be found here.