As more details of Mayor Levar Stoney's $1.5 billion Coliseum redevelopment plan are revealed, they seem to just create more questions instead of giving answers.
One of the master developers responsible for overseeing the entire Navy Hill project is Concord Eastridge from Fairfax.
The real estate development company is focused on academic facilities and hotels. For example, it developed the Hyatt Place hotel in Fredericksburg and the University of Mary Washington campus center. Based on the information on its website, it primarily conducts smaller projects with its largest completed project costing only $80 million. All of the listed completed projects combined cost less than $500 million.
Richmond's proposed Navy Hill redevelopment plan is almost 19 times larger monetarily than any project Concord Eastridge has ever completed and more than three times larger than all of its previous projects combined. The company has never come close to building something as large and complex as this.
Additionally, Concord Eastridge has had messy endings with two past projects that were bigger than what it normally does. According to Pittsburgh newspapers, the Pittsburgh Tribune-Review and the Pittsburgh Post-Gazette, in 2006 Concord Eastridge was chosen to develop a $460 million project for the Pittsburgh Cultural Trust. In 2008, the trust decided to scrap the project and broke off its relationship with the development group. It originally attributed the cancellation to the mortgage crisis, but in court filings said it "lost confidence in Concord Eastridge and in its willingness or ability to deliver an economically feasible development plan or to perform on terms acceptable to the Trust." Concord Eastridge countered that the trust backed out because its new head just didn't like the project. Concord Eastridge had spent $5 million on the project and it sued the trust demanding it be sold part of the development parcel and other damages totaling a value of $32 million. A six-year lawsuit ultimately ended in settlement.
In 2013, Concord Eastridge worked with Michael Hallmark of Future Cities to design and build a new $450 million home for the U.S. national basketball teams on Arizona State University's campus in Tempe. Hallmark is the co-master developer with Concord Eastridge for Richmond's proposed Coliseum replacement.
Much like the plans here in Richmond, the Tempe development was to have a hotel, office space, residential space, a conference center and an event space for basketball that was projected to bring hundreds of thousands of people annually. The Phoenix New Times and the Arizona Republic newspapers reported that a 99-year lease was signed and groundbreaking dates were set. Those groundbreaking dates came and went as Concord Eastridge and Hallmark struggled to plan and finance the project.
After Concord Eastridge and Hallmark repeatedly missed deadlines and failed to make deposits they had pledged to make, Arizona State parted ways with them. The final straw seemed to be that instead of placing a $4 million deposit in a neutral escrow account, the funds were placed by a potential equity partner of Eastridge and Hallmark into an account completely controlled by the partner.
Since sections of the Richmond city code and the city's request for proposal list past experiences with similar projects as an evaluation factor, it is more than appropriate to take a closer look at one of the project's main developers.
The mayor and his advisors are trying to say this project has no risk. That just isn't true.
It creates a tax financing district that encompasses most of downtown. That district will redirect the natural tax revenue growth from properties such as the new Dominion Energy tower, the potential second Dominion tower and several other downtown skyscrapers into a fund that will be combined with tax revenue from the project area to pay the cost of the new arena. Only after the project debt is paid and a rainy day fund for making debt payments is built up will any money be returned to the city. However, even then the city must use half of the money it gets to make extra payments on the debt. Bond holders will come first, second and third. Residents come last.
Between $308 and $515 million of tax revenue over the next 30 years from the most valuable buildings in Richmond is being used as collateral to make sure the debt is paid.
That means that if this project does not meet its wildly optimistic projections, then money that would otherwise go into the city's general fund for schools and roads will instead pay for the new coliseum, and one of the main developers running the whole thing has never completed a project anywhere close to this size.
Sure sounds like a risk to me.
Justin Griffin is a small business lawyer who lives and has his practice in Richmond. He earned his law degree from the University of Richmond and has an accounting degree with an economics minor from the University of Tennessee. He operates the website NoColiseum.com.
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