There's one question the developers pitching a $1 billion-plus downtown revitalization want asked of anyone who criticizes their plan.
Do you have a better idea?
If so, they say, have at it.
Till then, their nonprofit group, the NH District Corp., stands ready to transform a mostly desolate area north of Broad Street into Richmond's biggest economic development project in more than half a century.
The idea is to summon forth a bustling, mixed-use neighborhood called Navy Hill, now a brown and grayish urban island where the biggest signs of life are people entering and leaving the John Marshall Courts Building.
The 10-block section starts in the west behind the Richmond Marriott, at Fifth Street, where the Richmond Coliseum sits. From there, it extends east to 10th Street, behind City Hall. Its eastern border includes the Valentine and Virginia Commonwealth University's medical campus. Its boundary to the north is East Leigh Street.
- Scott Elmquist
- The chairman, president and chief executive of Dominion Energy, Thomas F. Farrell II, leads a nonprofit development group that has been pitching the redevelopment of a 10-block area of downtown that includes the Richmond Coliseum.
On these 20-some acres of city-owned land, NH District envisions a new $220 million, 17,500-seat Coliseum that would be the largest arena in Virginia, a $10 million restoration of the historic Blues Armory — which once held part of 6th Street Marketplace — a 527-room hotel, restaurants, retail stores, office space, a bus transfer station, a midsize performance venue, a restored street grid that has been closed off for decades, thousands of new jobs, including 12,000 of them for construction, and apartments for an estimated 2,800 people, including areas designated for affordable housing.
There's more, they say:
It won't cost you a dime.
The city faces no financial risk.
The time is now.
Do you have a better idea?
Before you answer, critics, the private developers are aware of the No. 1 thing they must explain: How can they possibly pay for something like this?
"A 100-percent, completely legitimate question," says Grant Neely, a former chief of staff for Mayor Dwight Jones. In his role as director of strategic communications at Dominion Energy, Neely represents the utility's chairman, president and chief executive Thomas F. Farrell.
NH District and its Navy Hill project are the brainchilds of Farrell. And now it's become a signature goal for Mayor Levar Stoney.
Neely and members of the NH District team gathered with Style last week in the Urban Hang Suite RVA, a coffee shop at Third and Broad streets soon to be opened by radio personality, podcast host and social media influencer Kelli Lemon.
The developers have signed on Lemon, among others, to help spread the word about the project. Lemon says that if the project becomes a reality, she'd be likely to look to the area as the site of a second business venture to pursue after her coffee shop.
- Capital City Partners LLC
- A rendering of the proposed project offers an idea of what the neighborhood would look like, with the circular building to the northwest as a 17,500-seat arena.
Also attending the meeting is real estate lawyer Jennifer Mullen, a partner at Roth Jackson, alongside firm partner Mark Kronenthal, who worked with Neely in Jones' administration as chief of staff and senior policy adviser.
There's project spokesman Jeff Kelley, who oversees public relations and community outreach. Beside him is former City Council member and 2016 mayoral candidate Michelle Mosby, a businesswoman.
Mosby says she's here as an adviser to the team on workforce issues.
"Today an opportunity is before us," Mosby says. "It's time to revitalize this neighborhood."
They walk through a presentation that starts with the days of the electric streetcar system, which helped form what is now Dominion Energy, and the construction of Interstate 95, which broke up Jackson Ward and other parts of Richmond, and, along with the Downtown Expressway, decimated mostly black neighborhoods.
Why begin with these early days of the neighborhood? "Because it's fundamentally broken," Neely says, "and it has been for 60 years."
Along with that history as a backdrop, there are maps, an animated video, vivid renderings, a Beyoncé name-drop that has been heard in other presentations of the proposal — as in, imagine the superstar performing here — and impassioned rationale about why Richmond needs their development solution now.
By now, they probably mean yesterday.
When is this happening?
A Freedom of Information Act request filed by Richmond Times-Dispatch reporter Mark Robinson revealed an early timeline of the project.
It showed goals that loom large: City Council approving the project by Dec. 1, selling bonds in January, beginning construction in February, demolishing the Coliseum in March and breaking ground on the new Coliseum by the summer.
That assumes a lot about the city's legislative process.
The ultimate scenario would have been for Stoney to have wrapped up his administration's negotiations and vetting by now, handing off the needed legislation to City Council for consideration — and to the public for debate.
As of Monday, no public agendas appeared to include the introduction of such legislation.
Stoney's last official update on the project came Sept. 11, when the city reported "significant progress" on negotiations with the developers, saying consensus had been reached on several aspects of the plan.
But officials were continuing to analyze finances and waiting on a report from Hunden Strategic Partners.
No matter what becomes of those private talks, it all hinges on City Council, which could launch this development into reality — or sock it into oblivion like former Mayor Dwight Jones' controversial Shockoe Bottom ballpark proposal four years ago.
With this type of deal, developers must convince seven of the nine council members to vote their way. That means three council members could bring it all to a halt.
Councilwoman Reva Trammel said last week that she's not supporting the project.
Councilwoman Kim Gray cites issues with the risk, scope and burden of the plan, misplaced priorities, and frustration with the process.
"You probably know more than me," says Gray, citing an "embargo" on information from city staff and administrators.
That doesn't sound accurate, says Stoney's press secretary, Jim Nolan.
"The administration has been keeping Council members updated on the status of the negotiations and has asked them not to disclose confidential information so we can negotiate the best possible agreement for the city," Nolan says in an email.
Once they're given details, City Council members also have said they would want to pursue their own third-party study of the project, independent of whatever analysis the mayor provides.
Even if legislation were delivered to council this week, it's difficult to imagine a decision-making process compressed into a time frame that allows for public hearings and a decision by December.
But we aren't there yet, because as of Monday the financial details of the project remain in no-comment, private-negotiation mode.
Which brings us back to the biggest question developers get asked.
How can they pay for such a massive project?
Without the financial details of the project, there's no way to know.
The public can't crunch numbers it doesn't have. And anyone who's publicly endorsed the project outside of NH District — Chamber RVA, the Times-Dispatch editorial board and others — has done so without knowing whether the figures add up.
Officials ask for patience and faith.
In a February news release, Stoney said he would move forward with a proposal only if it "does not negatively impact the city's finances and debt capacity."
Dominion and Altria have pored over the finances, says Neely, of Dominion and the NH District, and the city also expects analysis from its financial adviser, Davenport & Co.
What's known is how the financing plan will generally be structured — using a creative yet controversial technique that's led to successes and failures across the country. It's how Short Pump Town Center was built west of Richmond, and it's called tax increment financing, or TIF.
If City Council approves, this would be the city's first such district.
The financing model has been on Virginia's books for decades. It's a tool developed for use at the local level. Cities and counties can establish the districts to tackle areas designated as blighted using the Virginia statute, or set them up through their own agreements between the municipality and the development group.
In this case, Kelley says, this district would be established by agreement.
Private developers would pay for the part of the project that includes housing, hotel, office space, retail and restaurant.
Bonds issued by NH District Corp. would pay for the public part of the project, the $220 million arena and $10 million Blues Armory restoration.
It goes like this:
• The city draws a boundary around the area to be developed. That area becomes the TIF district.
• The city determines how much in property taxes came from that area as of Jan. 1 in the previous year, or the current value — whatever is lower.
• As developers begin to make improvements to the district, the expectation is that the value of the property increases, along with property taxes.
• The city takes out property taxes on the base amount, and puts the tax revenue from the increase into a separate fund.
• That fund is used to pay down the principal and interest on the bonds, and perhaps other costs incurred by the developer.
In essence, the argument goes, the district pays for itself. Taxpayers get an amenity like the Coliseum without having to shoulder the risk, proponents say.
There's an asterisk attached to the district, because its boundary would extend beyond that 10-block area of development.
"That allows for us to get to taxable properties," Mullen says.
Developers confirmed last week that their deal with the city will work only by including an existing, taxable property: Dominion's downtown headquarters — at One James River Plaza, and an under-construction skyscraper at 600 Canal Place."It's the closest taxable property to this area," Neely says.
It means that millions of dollars from the increase on tax revenue from Dominion's downtown towers — from the starting date of the district's establishment — will move from the city's general fund into the TIF district fund.
Kronenthal stresses that the city gets those taxes either way, whether it's to the general fund or to the district.
But that element of the deal worries some members of council, including its president, Chris Hilbert, who told the Times-Dispatch in July that using tax revenue from Dominion's towers "would not be palatable for me."
And this week, Kelley confirms that the TIF district may need to include downtown property beyond the Dominion towers. He wouldn't elaborate, citing negotiations underway.
- Capital City Partners LLC
- The plan includes an estimated 2,800 apartments, shown in a rendering of the intersection at Clay and Eighth streets. The mayor has said he negotiated for more affordable housing as an element of the plan.
What is there to worry about?
Again and again, developers say, the city won't be at risk.
If development stalls, if the economy takes a turn, if revenue doesn't roll in as projected, or if something unforeseen happens, the developers say, bondholders will be the ones at risk — not the city.
"The investors are the ones on the hook here," Kelley says.
There are two things to keep in mind, says David Merriman, a professor at the Institute of Government and Public Affairs at the University of Illinois at Chicago, whose area of study has included tax-increment financing.
Merriman recently studied 30 such projects, and in a report last month from the Lincoln Institute of Land Policy, found that "in most cases, TIF has not accomplished the goal of promoting economic development."
If bonds have no deep backing, he says, then investors will seek a high interest rate unless revenue projections from the developer are high. And that's on top of whatever the Federal Reserve may do with interest rates.
If the bonds default, even if Richmond isn't backing or issuing them, Merriman says, it would be a black mark against the city. "The rating agencies are not going to like that," he says, and the credit rating would be hurt.
But bonds rarely default, he says: "What often happens is, the city finds other ways to subsidize the project so the revenue bonds don't default."
Future mayors or City Council members would work with the developers, corporations or other private sources to find a way to keep the bonds from defaulting. "You can bet they would work really hard to try to avoid that situation," he says.
What else is at risk?
• Money, time and energy that city officials put into exploring and analyzing the project.
• There's also the risk that infrastructure costs exceed estimates, as Hunton & Williams lawyer John D. O'Neill Jr. outlines in a presentation on TIFs, posted online.
• Interference in the free market — one that by many accounts is drawing development to the Richmond area. What if businesses would have located and prospered there anyway, asks the Government Finance Officers Association. Are taxpayers subsidizing something that doesn't need to be subsidized? As Merriman puts it, "Is this stimulating development that wouldn't have occurred otherwise?"
It's unclear how much the city's economic development team has marketed this 10-block area to private developers. But what's clear now is that it's empty, say representatives of the NH District, and that Richmond needs a new Coliseum.
- Scott Elmquist
- A spokesman for NH District Corp. says Dominion Energy Chief Executive Thomas F. Farrell envisions this land as a way to solve some of Richmond’s pressing needs. Farrell originally told the Times-Dispatch that including existing, taxable property downtown was an option for the TIF district, but developers now say the deal won’t work without it.
How did we get here?
Short answer: Dominion Energy's Farrell.
For several years, he's been interested in how a city arena could serve as a catalyst for development. He and other business leaders commissioned a study in 2011 on replacing the arena.
It went nowhere, and the Coliseum, which opened in 1971, has been operating at a loss to the city. Physically, it's ailing, and is way past a patch-up that a previous City Council approved years ago. And now there's competition from bigger arenas, most notably the John Paul Jones Arena in Charlottesville.
"We're not competitive today," says Jack Berry, president and chief executive of Richmond Region Tourism, which uses the Coliseum to hold 10 to 12 conventions a year. "We've got to have the new facility."
In June 2017, Richmond BizSense first reported that Farrell and his powerful coalition of local business leaders were pitching their development project. Then Stoney took up the cause, announcing that he would open a request for proposals to develop the North of Broad area. NH District was the only developer to respond.
There had been no widespread public clamoring for a new arena. An underlying theme of the recent mayoral campaign was to shy away from shiny projects in favor of buckling down, fixing schools and improving the core services of the city.
The NH District says that the city's master plan shows that the area is ripe for development, and a recent Broad Street Rapid Transit Study called for the same. But there was nothing that called for a mixed-use development plan to be taken up by a sole developer.
Stewart Schwartz, of the Partnership for Smarter Growth, writes in a Times-Dispatch editorial that he supports the plan but wonders if there's been a level playing field in getting to this idea. He also asks whether the city has weighed this against other investments it could make.
In June 2010, former City Council member Bill Pantele suggested tearing down the Coliseum altogether, freeing up that area for broader development and what then he estimated could be $8 million a year in real estate taxes.
Other people wonder why the project isn't being approached as a region.
"I would not want to take this on as a single locality," Councilwoman Gray says. "These things need to have regional investment."
After all, the entire region uses, and would benefit, from the development.
But that's not for the NH District Corp. to decide.
"There is nothing in this project that we made up out of thin air," Kronenthal says.
All roads have led to this project, developers say, on this piece of land. It's smart and ready to go — and they're ready for the public debate to begin.
"A city can't stand still," says John R. Lombard, an associate professor in the School of Public Service at Old Dominion University. "It's grow or die."
He and his colleagues studied the successful use of a TIF district in the Virginia Beach Town Center project. Lombard isn't familiar with the Richmond plan, and the Virginia Beach project was structured somewhat differently. But he says the public should take a close look at TIF numbers.
"It's taking a risk," he says. "One of the hallmarks of TIFs is the structure of the deal. And the devil's in the details."
What should the public watch for?
People should consider the alternate uses of the funds that would be tied up for the project, he says: "So it becomes a resource-allocation issue for the city."
As for the numbers that go into the financial scenario, Lombard says, "I would suggest that they carefully scrutinize all the assumptions." S