The city's decision to hire a team of consultants to study the feasibility of the $363 million ballpark proposal in Shockoe Bottom had opponents of the project worrying that it was sign of support from City Hall.
Instead, the move may be political cover for Mayor Dwight C. Jones' administration. If the consultants conclude that the project exposes the city to too much financial risk, it relieves the Jones administration from any real political liability — if there is any.
It's not exactly a leap in logic, even considering that the same consultants recommended moving the ballpark from the Boulevard to the Bottom in September 2008. The consultants — Davenport and Company, Chmura Economics and Analytics and Washington-based Economics Research Associates — concluded that of the two potential sites for a new or renovated baseball stadium, the Shockoe Bottom site offered the greatest potential economic impact for the city.
That study, however, was predicated on a host of assumptions — including a stadium financed at least in part by private investors. In addition, the consultants' market analysis of retail demand in Shockoe Bottom led to the their recommendation of 65,000 square feet of retail with gross sales of $26.5 million. In contrast, Highwoods Properties' proposal calls for 192,000 square feet of retail to generate more than $90 million in gross sales.
The retail is the keystone to the project because sales, admissions and meals taxes generate more than 73 percent of the revenues needed to pay off the bonds on the $70 million ballpark, according to the Highwoods proposal.
The new study will build on the existing analysis and hone in specifically on the current proposal, says David Rose, senior vice president and manager of public finance at Davenport. In the last study, the city didn't ask the consultants to study a specific project, or factor in what's known as the substitution effect, which takes into account a project's impact on other retail corridors in the city. This time they will.
“Here's the important point — that initial analysis was not based on any formal development proposal,” Rose says. “We will prepare a report that analyzes … the opportunities and the potential risk for following through on something that [Highwoods] has proposed. We're going to scrub it.”
Other issues also haven't been sufficiently addressed by the developers, a City Hall source says, such as the risk of floating $70 million in bonds over 30 years, as Highwoods proposes, for a ballpark with a lifespan of only 15 to 20 years.
“There are many other questions — that's just one example,” says the source, adding that using the Davenport group to crunch what many people see as implausible revenue projections takes pressure off the Jones administration. “We don't have the luxury of saying this is a Wilder setup.”