By Derek Kravitz
Wednesday, April 8, 2009
The Northern Virginia developers of a sprawling town center in Sterling used to boast about their financial backing from insurer American International Group. Now, that once-prized affiliation is causing a few headaches.
In 2005, when AIG was brought in on the planned development in Loudoun as an equity partner, developers of the Kincora project touted the financial giant's "ability to ride economic cycles."
Then came the company's starring role in the nation's economic collapse and the tarnishing of its once-sterling image.
"I don't think anyone, including us, saw this coming," said Michael W. Scott, a managing member of Norton Scott, the Great Falls developer that is helping plan the Kincora project.
As public anger over AIG's involvement in the Wall Street financial crisis swells, having the new face of corporate failure as a partner is creating problems for many companies that have teamed with the firm and its myriad subsidiaries.
In Loudoun County, the Kincora project has been ridiculed from all corners for its now-unseemly connection.
Asked whether Kincora stood a chance at being approved, Loudoun County Supervisor Lori L. Waters (R-Broad Run), a longtime supporter of the project, said with a laugh, "it depends if AIG continues to give out any bonuses."
Scott, the Loudoun developer, said AIG's financial woes have not substantially affected his project. "As far as this project goes, with the merits of it, I believe [AIG is] still supporting it," he said.
But the AIG connection could prove to be an obstacle for Scott, even though the subsidiary that invested in the Loudoun County project, AIG Global Investment Group, has some $26 billion in investments worldwide, many of them successful.
Similar to a $3 billion project in Atlanta called Atlantic Station, Kincora was originally proposed as a massive community, consisting of nearly 4 million square feet of office space, more than 1,300 multifamily homes and nearly 500,000 square feet of retail space at the corner of routes 28 and 7. A 5,500-seat minor league baseball park was also planned.
But county officials were skeptical about building a dense residential community with office high-rises amid the otherwise-barren Loudoun landscape. The deal fell through last May after the Board of Supervisors feared the project was too close to a similar development, the Dulles Town Center.
"Nothing is final," said Chris Flynn, a spokesman for Kincora. "But we want to make our case to the Board of Supervisors and follow the rules and see where it goes."
John Wood, chairman and chief executive of Telos, an information technology firm in Ashburn, and chairman of the Loudoun County Economic Development Commission, said AIG's brand name is "clearly tarnished" but was uncertain whether the insurer's bad publicity will affect its subsidiaries' projects, such as Kincora.
"It really depends on AIG's commitment to move forward with these types of projects," Wood said. "At some level, money is money. As long as the money is still good, it should be fine."
A spokesman for AIG Global Investment, Peter Tulupman, declined to comment on the company's position on Kincora project.
But Waters, the county official, said colleagues had told her that AIG had pressed its the developers to get the project approved. AIG said that if Kincora remained in limbo, it would divest its interest, Waters said.
"There was certainly some pressure from New York to get some sort of indication or answer," she said. "I think they're now trying to stick it out and see what happens."
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