“While I am not ready to give the go-ahead to the Highwoods proposal, I can say this is a potentially transformative project,” Jones said yesterday at a news conference at City Hall.
The full study will be released in several weeks.
“Clearly a lot of stars have to line up for us to move forward,” he added.
One such constellation would be for the city to issue a $59.2 million bond to finance construction of the ballpark portion of the development. Without credit support from the city, it is highly unlikely the project can be financed, Jones said.
City support would decrease the cost of interest on the loan from 10 percent interest rate to just over 4 percent, which would translate into savings of $20 million, according to the study’s research.
The bond would be paid with incremental tax revenue generated within the first phase of the development.
That means the city and its taxpayers would be on the hook if sales projections fall short of the $67.3 million in annual spending needed to support the project, according to the study, which was conducted by Davenport & Co., Economic Research Associates of Washington, and Chmura Economics & Analytics of Richmond.
That figure represents 2.1 percent of the $3.1 billion spent in Richmond through 2008.
“[The study’s] assumptions are with a modest increase in sales, the project could sustain itself and not result in transfers from other areas in the city,” said David M. Hicks, the mayor’s senior policy analyst.
The numbers did not reassure Charlie Diradour, a real estate developer and operator of a website advocating reviving the Diamond as best place for baseball.
“This is so similar in nature to the CDA bonds on Broad Street [to tear down the Sixth Street Marketplace and for Miller and Rhoads] when we were told parking revenue would cover the debt service,” Diradour said. “Now there is $1.2 million to cover those bond shortages in this year’s budget.” Diradour has business interests in the Fan District.
The bond represents nearly 11 percent of the city’s debt capacity allotted for the next seven years. Diradour thinks residents would be better served to fund a new jail and school improvements.
“The new mayor is very even-handed and open to new ideas. There is no reason he should be caught between a rock and a hard place for what Wilder did in the waning days of his administration,” Diradour said. “[He] has the ability and political capital to turn this around rather than put a burden on the taxpayers.”
At the news conference, Jones did not express any concern over the city’s ability to meet the bond obligation, but the mayor did offer three conditions he would like to see met.
“Any plan to move forward should include a way to successfully incorporate a GRTC Transfer Center along with the Shockoe Center,” Jones said. “The project was initially proposed a transit-oriented mixed-use town center, and I don’t think we should lose sight of that.”
Jones said that he has asked GRTC and Highwoods Properties to begin working together to coordinate the two projects. According to the study, Shockoe Center is incompatible with the planned $45 million transfer center as it is currently drafted. It is likely both projects will need to be modified for them to coexist, the study concluded.
Jones also wants to be careful that the plan would not interfere with future high-speed rail prospects. Third, Jones said he wants to see “clear plans” as to how the area’s history will be preserved and incorporate the African American cultural heritage. The proposed site was once a major hub for the North American slave trade.
Jones said more work needs to be done to make sure all of the above competing interests are met.
“We could in the future be looking at high speed rail at Main Street Station with a GRTC transfer station; African American culture and history; baseball; and a Shockoe center with retail, office, hotel and residential all in one place,” Jones said.
“Such a project has the potential to put Richmond on the map in a way that has not been done before.”
Jones said there was no timeline for his decision. According to the study, it is assumed that “the project will not proceed until the economy returns to levels achieved prior to the current national recession, but not before Spring 2010.”
The mayor’s office only released an executive summary of the study, which you can read here.
Al Harris is a BizSense reporter. Please send news tips to [email protected]