The proposal from a group of Richmond corporate heavyweights to redevelop the Coliseum and surrounding area north of Broad Street has the support of Mayor Levar Stoney, who announced Thursday his intention to send the $1.4 billion project to City Council for potential approval.
With the aging, nearly half-century-old arena visible behind him, Stoney formally threw his support behind the proposal by the Tom Farrell-led NH District Corp. at a gathering across the street in the Greater Richmond Convention Center.
Farrell, CEO of Dominion Energy, sat in front of and applauded Stoney alongside former SunTrust executive C.T. Hill and others involved in the lone proposal submitted in response to a city RFP put out last November, nearly a year to the day.
Stoney lauded the plan, now referred to as the Navy Hill neighborhood redevelopment, which would replace the Coliseum with a 17,500-seat arena and redevelop the 10-block area bounded by North Fifth, East Leigh, North 10th and East Marshall streets with 2,800 new housing units, including 2,520 market-rate apartments and 680 income-based units, and a 23-story, 527-room Hyatt Regency hotel to serve the convention center.
Plans also call for preserving and redeveloping the old Blues Armory building with a 20,000-square-foot food court plus entertainment and event spaces, replacing the GRTC transfer center along Ninth Street, and re-use of sites filled with outdated city buildings.
At $1.4 billion, Stoney said the overall investment would be the biggest economic development project in city history, to be funded in large part through the establishment of a tax-increment financing (TIF) district, in which real estate tax revenue from new development in the district would be used specifically to pay for the project.
The development is expected to generate $1 billion in additional tax revenue in 30 years, and Stoney said a third-party analysis by Chicago-based Hunden Strategic Partners – details of which were to be presented at a press briefing Friday – projected as much as $1.7 billion in tax revenue would be created from the project.
(Friday update: The $1.4 billion investment would consist of $1.1 billion in private development cost to be fronted by NH District Corp. and $300 million in non-recourse revenue bonds to be floated by the city. The bonds would be underwritten by JPMorgan Chase and Citigroup and paid back over 30 years using the $1 billion-plus in projected TIF revenue and $600 million in projected additional revenues the project would generate, such as sales tax revenue. Any surplus revenues would be distributed 50-50 to the city general fund and to paying off the bonds early, according to details shared in Friday’s press briefing.)
TIF puts the load on developers, bond holders
With the tax-increment financing, which would be managed by Union Bank, Stoney said the project would not impact the city’s tax rates or debt, nor would it require bond obligations from the city.
“The developers and bond holders will shoulder 100 percent of the risk for this project, and not the city,” Stoney said.
Stoney said the project would create more than 21,000 jobs – 12,500 during construction, 9,000 post-construction – and produce $300 million in contracts for minority businesses, one of several provisions he required the proposal to address.
Such commitments were made through negotiations with NH District Corp. that Stoney said lasted eight months. Local financial firm Davenport & Co. worked with the city in the process.
In addition to Farrell and Hill, the group includes former Altria CEO Marty Barrington and has commitments from Union Bank & Trust and The Community Foundation, which have pledged $1 million and $5 million, respectively, to the project’s income-based housing component. Local nonprofit Better Housing Coalition would oversee that part of the project.
The group has retained Fairfax-based Concord Eastridge and CEO Susan Eastridge, along with Michael Hallmark and his Los Angeles-based Future Cities, as master developers of the project.
Farrell said following the announcement that the new arena and Blues Armory would remain city-owned properties, while the rest of the properties would likewise be city-owned but leased out through long-term leases.
Farrell acknowledged the proposed TIF district has been expanded from the 10-block project area to include areas in neighboring Jackson Ward and south of Broad Street in Monroe Ward, as the Times-Dispatch reported earlier this week. The expanded area includes the new Dominion tower under construction on South Sixth Street and the site of a planned second tower nearby.
Farrell said the expansion was needed to include more property as the affordable housing component of the project increased – “to be able to literally find property inside the TIF district where we could build the affordable housing,” he said.
Of the 680 income-based units to be built as part of the project, 280 would be built within the 10-block project area and 200 would be built downtown. The remaining 200 would be constructed using TIF revenues specifically.
Regarding the project overall, Farrell said, “It’s been a long time coming. We’re very pleased.
“The mayor had bold vision, we had bold vision, and he had very worthy goals that we wanted to work with him on to get more affordable housing into the project, minority contracting opportunities, create the jobs, and we’re very pleased that we were able to accomplish all of that.”
‘This is why tax incremental-financing works’
In addition to contributing $1 million to the income-based housing component, Union Bank would make what CEO John Asbury called “a major sponsorship” associated with the project. He said details of that sponsorship, which would cover some of the project’s costs, would be disclosed at a later date.
Asbury, who said he has been involved in TIF projects previously and seen the funding method work for projects across the country, said the TIF district would be the first of its kind in Richmond.
“I am surprised, in 2018, Richmond has not seen this before,” Asbury said. “I’ve seen it work. Something that’s properly conceived, well-structured and well-managed, I have seen it work repeatedly across the United States. The operative term is incremental financing. This is an investment; this is why tax-incremental financing works.
“I am highly confident that the right players are involved, I’m highly confident in the plan. We will put our money where our mouth is to support this.”
Stoney said he would submit the proposal to City Council for consideration in coming weeks.
Note: This story has been updated and revised with details shared in a press briefing Friday.