On Monday the City of Richmond finally announced its plans for Shockoe Bottom and North Boulevard: Tear down the Diamond, and build a new stadium downtown. Throw in an ample mix of retail, office and residential development at both sites. Just $765 million later, fans will have a new baseball team, the city will once again be a major shopping destination, and peace and prosperity will reign over the area for 1,000 years as a choir of heavenly angels sings.
If the pitch sounds vaguely familiar, it isn’t déjà vu. The year was 2005, and baseball was coming to the Bottom.
This time around, Mayor L. Douglas Wilder has anointed Raleigh-based Highwoods Properties to be master developer of the proposed Shockoe Center and Boulevard Gateway projects. One look at the comment section on the Times-Dispatch’s coverage of the proposal shows residents are already taking sides and offering an even mix of praise and scorn for the project details.
BizSense has five pros and five cons of the new plan:
PROS
Transit trade-ups:
Plans for Shockoe Center include upgrades to Main Street Station, conditions established in the city’s request for proposals. This will be a step toward making the station a hub for local and statewide transit via bus and train. Development plans would convert the station’s second-floor train shed to a GRTC transfer center. That could help expand the transit system to service suburban areas.
Farmers market infusion
Highwood’s brochure on the Shockoe project calls for an “extension of 17th Street Farmer’s Market as main promenade into ballpark, including open air pavilion, Shockoe Square entertainment area, and an ‘entertainment alley’ between the ballpark and existing nearby businesses.” Incorporating and uplifting the market could be a way to stay on good terms with the community. The market has done well in recent years, and this plan sounds like a way to boost its traffic even more. A ballpark could spur more shops and restaurants in the entire Canal area.
Jobs, jobs, jobs
If Highwood can get the financing together to pull this thing off, it will create thousands of jobs in construction, retail, entertainment and hospitality, not to mention at least one foam-suited mascot. Unemployment in Richmond was at 5 percent in August, compared with 3.2 percent the same month last year, and that figure probably will rise.
Return on investment
Some will say that any money the city spends on this project would be better spent on city services. But this development package is an investment. If successful, it could generate a nice chunk of tax revenue from increases in restaurant and hotel taxes. Then the city will have more money to take care of some of the deferred maintenance it has accumulated, such as upgrading schools, fixing roads and building a new jail.
Bragging rights
Economic developers often tour local baseball stadiums with prospective companies. A local ball club and chic downtown complex (buzz world: “synergy”) could help lure unrelated businesses to the area because company presidents look at quality of life when picking a location.
CONS
Local opposition
If the past is any indicator, there will be significant community opposition. Many county-dwellers, especially families, view Shockoe Bottom as the city’s red-light district, filled with drugs, crime and sin. They might be reluctant to embrace a downtown ballpark.
Global Development Partners’ plan for a downtown stadium four years ago drew the ire of community groups because it called for building over the site of a burial ground for slaves. Highwood’s plans call for the inclusion of a black history museum and an extension of the city’s slave trail. The juxtaposition of the museum with an entertainment destination is raising eyebrows among concerned residents. The plan also calls for the destruction of the 10-year-old Sports Backers Stadium next to the Diamond and its rebuilding elsewhere. Some might see this as a wasteful expense made to benefit deep-pocketed developers.
Pain could precede pleasure
The plan calls for $40 million in tax-financed bonds to pay for the new stadium Although details of how exactly this will be set up have yet to emerge, tax increment financing is a typical model. The way it works is that an area slated for development is designated as a TIF district, and base-line property tax values are established. Speculation in the future development raises the property tax, and the revenue generated beyond the initial base line value is put into bonds to finance the debt.
The plan says all taxes and fees will be generated from within Shockoe Center, suggesting that a variant of TIF will be used. That might not insulate the rest of the Bottom from speculative effects on the market. Brent C. Smith, a professor at Virginia Commonwealth University’s School of Business, says the speculative effects of TIF development can occur before the project is completed, meaning existing businesses won’t enjoy the increased traffic and revenue the development will bring unless they first survive the tax hike. Knowing a multimillion-dollar project is coming to the neighborhood could push property values up, putting an unexpected burden on property owners in the area already struggling to make ends meet amid a nationwide financial debacle.
“It could negatively affect business, especially those that are tenants,” Smith says. “Restaurant and convenience stores that are paying leases … property owners typically pass those expenses on to tenants.”
Commercial real estate overflow
Richmond office vacancies were up 9 percent in this year’s third quarter over the second, and more than a million square feet of subleased office space is available. The proposed projects would add an additional 800,000 square feet of office space to an increasingly glutted Richmond market. Meanwhile, retail sales are trending down as the industry braces for what could be the worst shopping season in a decade. Will retailers take a chance on these projects? Will the negative trends reverse by the time they start looking for tenants?
1870. 1972. 2004.
When will the next major flood hit the Bottom? A rain delay is one thing, but total inundation could cancel an entire season. Sure, the developers will carefully plan storm water management (the plan calls for “innovative solutions” to reclaim acres in the FEMA-designated flood plain), but we saw how effective the flood wall was when Gaston drowned businesses and residents four years ago.
Still no baseball team
Although the Richmond Baseball Club LC, a group of private investors headed by Bryan Bostic, is actively looking to recruit a minor league home team, no teams have publicly stepped up to the plate. It might be a tough sale. Ticket sales for the R-Braves grew increasingly dismal as their time here drew to a close. Highwood’s timeline rules out having a team by 2009 and puts the opening season in 2010 … at the Diamond. The new stadium won’t be complete until 2011 or 2012.
On Monday the City of Richmond finally announced its plans for Shockoe Bottom and North Boulevard: Tear down the Diamond, and build a new stadium downtown. Throw in an ample mix of retail, office and residential development at both sites. Just $765 million later, fans will have a new baseball team, the city will once again be a major shopping destination, and peace and prosperity will reign over the area for 1,000 years as a choir of heavenly angels sings.
If the pitch sounds vaguely familiar, it isn’t déjà vu. The year was 2005, and baseball was coming to the Bottom.
This time around, Mayor L. Douglas Wilder has anointed Raleigh-based Highwoods Properties to be master developer of the proposed Shockoe Center and Boulevard Gateway projects. One look at the comment section on the Times-Dispatch’s coverage of the proposal shows residents are already taking sides and offering an even mix of praise and scorn for the project details.
BizSense has five pros and five cons of the new plan:
PROS
Transit trade-ups:
Plans for Shockoe Center include upgrades to Main Street Station, conditions established in the city’s request for proposals. This will be a step toward making the station a hub for local and statewide transit via bus and train. Development plans would convert the station’s second-floor train shed to a GRTC transfer center. That could help expand the transit system to service suburban areas.
Farmers market infusion
Highwood’s brochure on the Shockoe project calls for an “extension of 17th Street Farmer’s Market as main promenade into ballpark, including open air pavilion, Shockoe Square entertainment area, and an ‘entertainment alley’ between the ballpark and existing nearby businesses.” Incorporating and uplifting the market could be a way to stay on good terms with the community. The market has done well in recent years, and this plan sounds like a way to boost its traffic even more. A ballpark could spur more shops and restaurants in the entire Canal area.
Jobs, jobs, jobs
If Highwood can get the financing together to pull this thing off, it will create thousands of jobs in construction, retail, entertainment and hospitality, not to mention at least one foam-suited mascot. Unemployment in Richmond was at 5 percent in August, compared with 3.2 percent the same month last year, and that figure probably will rise.
Return on investment
Some will say that any money the city spends on this project would be better spent on city services. But this development package is an investment. If successful, it could generate a nice chunk of tax revenue from increases in restaurant and hotel taxes. Then the city will have more money to take care of some of the deferred maintenance it has accumulated, such as upgrading schools, fixing roads and building a new jail.
Bragging rights
Economic developers often tour local baseball stadiums with prospective companies. A local ball club and chic downtown complex (buzz world: “synergy”) could help lure unrelated businesses to the area because company presidents look at quality of life when picking a location.
CONS
Local opposition
If the past is any indicator, there will be significant community opposition. Many county-dwellers, especially families, view Shockoe Bottom as the city’s red-light district, filled with drugs, crime and sin. They might be reluctant to embrace a downtown ballpark.
Global Development Partners’ plan for a downtown stadium four years ago drew the ire of community groups because it called for building over the site of a burial ground for slaves. Highwood’s plans call for the inclusion of a black history museum and an extension of the city’s slave trail. The juxtaposition of the museum with an entertainment destination is raising eyebrows among concerned residents. The plan also calls for the destruction of the 10-year-old Sports Backers Stadium next to the Diamond and its rebuilding elsewhere. Some might see this as a wasteful expense made to benefit deep-pocketed developers.
Pain could precede pleasure
The plan calls for $40 million in tax-financed bonds to pay for the new stadium Although details of how exactly this will be set up have yet to emerge, tax increment financing is a typical model. The way it works is that an area slated for development is designated as a TIF district, and base-line property tax values are established. Speculation in the future development raises the property tax, and the revenue generated beyond the initial base line value is put into bonds to finance the debt.
The plan says all taxes and fees will be generated from within Shockoe Center, suggesting that a variant of TIF will be used. That might not insulate the rest of the Bottom from speculative effects on the market. Brent C. Smith, a professor at Virginia Commonwealth University’s School of Business, says the speculative effects of TIF development can occur before the project is completed, meaning existing businesses won’t enjoy the increased traffic and revenue the development will bring unless they first survive the tax hike. Knowing a multimillion-dollar project is coming to the neighborhood could push property values up, putting an unexpected burden on property owners in the area already struggling to make ends meet amid a nationwide financial debacle.
“It could negatively affect business, especially those that are tenants,” Smith says. “Restaurant and convenience stores that are paying leases … property owners typically pass those expenses on to tenants.”
Commercial real estate overflow
Richmond office vacancies were up 9 percent in this year’s third quarter over the second, and more than a million square feet of subleased office space is available. The proposed projects would add an additional 800,000 square feet of office space to an increasingly glutted Richmond market. Meanwhile, retail sales are trending down as the industry braces for what could be the worst shopping season in a decade. Will retailers take a chance on these projects? Will the negative trends reverse by the time they start looking for tenants?
1870. 1972. 2004.
When will the next major flood hit the Bottom? A rain delay is one thing, but total inundation could cancel an entire season. Sure, the developers will carefully plan storm water management (the plan calls for “innovative solutions” to reclaim acres in the FEMA-designated flood plain), but we saw how effective the flood wall was when Gaston drowned businesses and residents four years ago.
Still no baseball team
Although the Richmond Baseball Club LC, a group of private investors headed by Bryan Bostic, is actively looking to recruit a minor league home team, no teams have publicly stepped up to the plate. It might be a tough sale. Ticket sales for the R-Braves grew increasingly dismal as their time here drew to a close. Highwood’s timeline rules out having a team by 2009 and puts the opening season in 2010 … at the Diamond. The new stadium won’t be complete until 2011 or 2012.