Two big Alexandria real estate deals — the sale of the city's largest home and the Kings Row redevelopment site in Old Town — could potentially end two court cases involving real estate investor and developer Peter Labovitz.
The developments come nearly 15 months after Labovitz, the former president and CEO of Connection Newspapers, filed for Chapter 11 bankruptcy protection less than 24 hours before a pretrial conference in a case brought by the Department of Justice in the U.S. District Court for the Eastern District of Virginia. The goal of that case, which has been stayed by the bankruptcy filing, is to collect $3 million in unpaid tax liabilities that date back to a June 2013 civil court order, according to the DOJ complaint.
Labovitz’s bankruptcy attorneys in July filed a reorganization plan that proposed using the proceeds from the sale of 510 Wolfe St., a 14,000-square-foot home at 510 Wolfe St. he owns with his wife, Sharon, to pay off various claims, including by the IRS. That plan was withdrawn earlier this month, but Labovitz told me he expects the eventual sale to end his ongoing court fight with the DOJ.
The home at 510 Wolfe, built in 1854 and widely believed to the largest in Old Town, has sat on the market for 200 days, most recently at an asking price of $8.5 million. Babs Beckwith of Corcoran McEnearney changed the listing from “for sale” to “contingent” on Friday. The contract price was not available.
Labovitz also controls Dechantal Associates LLC, owner of the Kings Row property near the King Street Metro station that is fully entitled for multifamily redevelopment. Dechantal last week enlisted brokerage Feldman Ruel to sell Kings Row, a half-dozen adjacent townhouses at 1604-1614 King St. and a small lot in the rear at 1604 Dechantal St. Labovitz said the sale is unrelated to the bankruptcy.
The site is approved for a new eight-story, 44-unit multifamily building, the conversion of five of the townhomes into 10 additional units and a 59-space subterranean garage.
“I think it’s a very attractive opportunity,” said Tanner Scales of Feldman Ruel. “There’s very limited supply of developable real estate along King Street anymore,” and the prices for townhomes and condos are sky high right now in Alexandria.
Dechantal has owned the 80-year-old townhouses — one of which, 1614 King, was destroyed by arson in 1999 — since 1986. The owner has pitched all manner of redevelopment options over the decades including hotel, office, condo and multifamily, finally landing the current plan in 2024.
The offering is unpriced and on a request-for-offers basis, per Feldman Ruel. The six townhomes, flanked on one side by a Hampton Inn and the other by the Archer Hotel Old Town Alexandria, have a combined assessed value of about $4.4 million, though that does not take into account the value of the entitlements.
In both U.S. District and U.S. Bankruptcy courts, DOJ attorneys have asked judges to order that the United States has valid and current liens on Labovitz’s interests in 510 Wolfe, DCI Publishing of Alexandria Inc., Dechantal and Station Center Associates — the latter is an office building at 1700 Diagonal Road that the partnership sold in 2019 for $20.85 million.
In September 2011, Labovitz was sentenced to six months in prison for failing to pay income and Federal Insurance Contribution Act taxes for Connections Newspapers LLC for a six-month period in 2007. The June 2013 civil judgment against Labovitz covered $2 million in unpaid federal taxes withheld from the wages of employees of DCI Publishing and Connection Publishing over multiple periods between 1998 and 2000, per court documents. With "statutory accruals," that judgment had climbed to $3.002 million as of June 30, 2023, according to court records.
DOJ lawyers have repeatedly argued in recent court filings that Labovitz “orchestrated a series of fraudulent conveyances and nominee transactions to obstruct, hinder, and delay the collection of his tax liabilities” and to “prevent the United States from foreclosing on his property interests to satisfy the tax liabilities underlying the judgment.”
The government has proposed converting the Chapter 11 bankruptcy to Chapter 7, though that motion has been stayed due to the federal shutdown. “Absent an appropriation, Department of Justice attorneys are prohibited from working, even on a voluntary basis, except in very limited circumstances,” the DOJ wrote in its Oct. 7 motion to stay the conversion.