Herndon is officially taking legal action against Comstock Companies after the developer backed out of its long-stalled downtown redevelopment project last year.
The town filed a lawsuit in Fairfax County Circuit Court this afternoon (Friday) demanding that Comstock return the nearly 5-acre site that it planned to transform into a mixed-use block with an arts center, apartments, retail space and a parking garage.
The Town of Herndon transferred the property to Comstock in 2020 as part of an agreement for the redevelopment originally signed in 2017. The agreement included a condition that the property be returned to the town if Comstock ultimately doesn’t proceed with the project, Herndon says.
Located in the northeast quadrant of the Elden and Center street intersection, the site is now largely occupied by surface parking and one commercial building at 750 Center Street that Arts Herndon was forced to vacate at the end of March.
Herndon officials filed a declaration in circuit court in February, stating that it was terminating Comstock’s rights to the property after the real estate company allegedly failed to sign documents transferring ownership back to the town. The new lawsuit suggests those steps still haven’t been taken.
In its complaint, the Town of Herndon alleges that Comstock is refusing to hand back the downtown redevelopment site in order “to exert pressure on Herndon to pay for Comstock’s predevelopment fees,” which the developer claimed totaled “several million dollars.”
The lawsuit calls Comstock’s condition a “willful misreading” of their comprehensive agreement for the project, which was amended five times before the developer withdrew last December.
A provision in the contract obligated Herndon to cover some of Comstock’s fees and expenses only if it’s asked by the town to transfer the project to another developer, the complaint says.
More from the complaint:
Comstock is refusing to uphold its end of the bargain by failing to reconvey the Property to Herndon, and by demanding payment of its predevelopment costs. This turns the deal the parties struck on its head, whereby Comstock can issue a Notice Not to Proceed, avoid the consequences of a default, and keep the property in perpetuity, undeveloped, at its own discretion while demanding to be protected from economic risk that it expressly assumed. In other words, “heads I win, tails you lose.” This was not the Parties’ intent, and it is not what the contract documents provide.
Comstock CEO Chris Clemenete said in a statement shared with FFXnow on July 15 that many allegations in the town’s complaint “are inaccurate and without merit.”
Before withdrawing from the development agreement in December, Comstock leaders “spent countless hours” working with town officials and the project’s design team to find ways to reduce costs “without negatively impacting the design and quality of the planned development,” Clemente said.
The developer maintains that it sincerely believed the project would be able to start construction in 2025, noting that it paid all required costs, including real estate taxes.
“However, deadlines imposed by Town officials in 2024 could not be met due to the significant documentation requirements, leaving us with no choice but to issue the Notice Not To Proceed and proceeding with mediation as required under the Comprehensive Agreement,” Clemente said.
Comstock says it’s still interested in ultimately developing the project itself or transferring the downtown land to another developer selected by the Town of Herndon. According to Clemente:
We have communicated with Town officials our continued desire to develop the project as designed, or in the alternative transfer the land to another developer once the Town selects a new developer and the timing of the cost reimbursements pursuant to the Comprehensive Agreement is determined. We recognize the importance of the planned redevelopment of the property to the Town and we do not wish to impede the Town’s ability to achieve its long-standing goal of enhancing the Historic Downtown while providing much needed additional parking in the downtown area. We remain hopeful that an amicable solution can be reached in the near-term rather than delaying further the redevelopment with litigation proceedings.
Herndon’s long-awaited downtown redevelopment has been stymied by obstacles ranging from objections from neighboring property owners to rising construction costs and other economic concerns resulting from the COVID-19 pandemic. After years of delays, Comstock notified the town on Dec. 6, 2024 that it was withdrawing from the project.
The redevelopment would’ve brought 273 apartments, a 4,265-square-foot arts center and plaza, and a 761-space parking garage to Herndon’s downtown. Originally proposed to be 18,000 square feet in 2017, the arts center was significantly downsized in what now appears to have been a final bid by Comstock to make the development viable.
At public meetings last year, Comstock leaders and town officials said construction costs and supply chain disruptions, plus high interest rates, were making it difficult to convince lenders to back the project.