Note: Due to a technical error, information received after deadline from Chief of Staff Lincoln Saunders was not added to the story correctly before it published. Saunders’ input is now included in the story.
Three months after Richmond City Council said “no” to the controversial Navy Hill project, the developers behind it are looking to revive a portion of the proposal with a mixed-use development that now calls for a taller VCU Health-anchored tower.
Capital City Partners, the development team that was enlisted for Navy Hill, has submitted an offer to the City of Richmond to buy the Public Safety Building property at 500 N. 10th St. and redevelop the site as a privately owned mixed-use office complex, highlighted with a 20-story tower that would exceed the height of the 17-story VCU Health outpatient building under construction across the street.
The $350 million project, totaling 545,000 square feet, is a variation of what was known as “Block D” in the Navy Hill project, but with the taller tower that would accommodate an additional 150,000 square feet of Class A office space. A tenant for that space isn’t named in the proposal, which describes the space as spec and “designed to attract new business to downtown Richmond.”
The rest of the tower, totaling 300,000 square feet, would house administrative and office space for VCU Health designed to support the Adult Outpatient Pavilion building under construction next door, as well as the health system’s nearby Children’s Hospital Pavilion.
An adjacent nine-story building would house new facilities for local nonprofit The Doorways, and a comparable-height building would house facilities for Ronald McDonald House Charities of Richmond. The smaller buildings also would house a new child development space for VCU Health.
The development also would include 20,000 square feet of ground-level retail space, including a pharmacy, and structured parking decks totaling 1,900 spaces, according to the proposal.
A letter to the city dated May 1 offers $3.175 million for the 3-acre site, which is bordered by Ninth, 10th and Leigh streets and the Department of Social Services building on East Marshall Street. The offer amount is based on an appraisal conducted by CBRE.
Property records show the latest city assessment valued the site at upwards of $15 million – about $4.32 million for the land and $11.05 million for the building.
Images submitted with the proposal show the tower and an adjacent nine-story building that would replace the 66-year-old Public Safety Building, which would be demolished. An extension of East Clay Street would cut through part of the property, connecting Ninth and 10th streets.
The project would not involve city funds or tax-increment financing, the funding mechanism that was one of several points of contention among council members and the public with the Navy Hill plan.
It also would return the property to the city’s tax rolls, producing $60 million in tax revenue over 20 years, according to estimates by CCP, which would own the buildings and pay for public infrastructure improvements, including the Clay Street extension.
CCP, led by Michael Hallmark of Richmond-based Future Cities and Susan Eastridge of Fairfax-based Concord Eastridge, was enlisted for Navy Hill by NH District Corp., a group of local business heavyweights led by Dominion Energy CEO Tom Farrell. The CCP proposal does not mention any involvement by NHDC.
Privately funded project
CCP plans to fund the project using a long-term lease from VCU Health as leverage. Financial terms of the lease would help underwrite project funding, which would be financed using what the proposal describes as “a credit-backed single tenant ‘build to suit/leaseback’ structure.”
CCP and VCU Health would negotiate final terms of the lease and financing with a financial institution of their choice, while the additional spec office space would be financed separately using a condominium structure.
The proposal also states that CCP has deposited $317,500, or 10 percent of its offered purchase price, in an escrow account as a “good faith deposit” coinciding with its proposal. The deposit was made with Thomas Title & Escrow, based in Dallas.
DPR Construction would be the contractor on the project, with Richmond-based SMBW signed on as the architect. VHB would handle site civil engineering and transportation planning, and Waterstreet Studio would handle streetscape and landscape design. Other firms on the project team include Richmond-based Sustainable Design Consulting and Chicago-based Omni Ecosystems.
CCP projects the development could be completed in late 2023.
The proposal includes letters of support from VCU Health, The Doorways, Ronald McDonald House Charities and Activation Capital, a nonprofit affiliated with the neighboring 34-acre VA Bio+Tech Park that is planning a six-story, 100,000-square-foot research building at 706 E. Leigh St.
That project adds to other investment in the area, including the Adult Outpatient Pavilion and, across Leigh Street from that building, VCU’s recently constructed School of Allied Health Professions building.
The projects dot the perimeter of the 10-block area beside the Richmond Coliseum that made up the Navy Hill proposal, which would have replaced the shuttered arena with a new facility envisioned to anchor the larger mixed-use development. The project, estimated to cost $1.5 billion and reliant in part on TIF funding, was voted down by City Council in February.
Another component of Navy Hill was a second office building that was set to house new offices for real estate research firm CoStar Group, which struck a tentative agreement to occupy a 400,000-square-foot structure that was planned beside the new arena.
Hallmark said CoStar is not involved in the new project and has not expressed interest in the 150,000 square feet of office space in the VCU Health tower. He said the tower was upped to 20 stories in height in part because of Navy Hill’s demise.
“Given that the other job-creating components of Navy Hill are not going forward, we felt it was important to create more economic development opportunity on this site, to take advantage of the tower base that we already planned,” Hallmark said in an email.
Asked if CCP hopes to revive other parts of Navy Hill or purchase other city-owned property in the area, Hallmark said no.
“We have a strong sense of loyalty to the major tenants planned for this site – The Doorways, Ronald McDonald House Charities of Richmond, expanding VCU Health Child Care and other VCU Health support space,” he said. “It is in everyone’s interest that their programs move forward with this project.”
Second offer received
In a memo this week to council members and Mayor Levar Stoney, acting Chief Administrative Officer Lenora Reid said the city’s economic development department is reviewing the CCP’s proposal and would correspond with the group on details. She said the proposal appeared to meet the city’s minimum requirements for consideration as an unsolicited offer.
“We will carefully review the offer and follow the process outlined by the city code for considering unsolicited offers,” said Stoney spokesman Jim Nolan in a statement. “The Department of Economic Development has communicated the receipt of the offer to council and will be discussing the contents with city council to decide next steps.”
CCP’s proposal follows another unsolicited offer the city received in February from D.C.-based Douglas Development Corp., which offered $15 million to buy nearly 15 acres of the Navy Hill project site, including the Coliseum, which it proposed to refurbish and bring up to current standards.
It wasn’t clear Wednesday where that offer stands. Lincoln Saunders, the mayor’s chief of staff, said the city sent a letter Feb. 24 acknowledging receipt and requesting more information but never heard back from Douglas.
Receipt of Douglas’s offer was also said to require, according to city code, that council solicit additional offers, either through an invitation for bids or a request for proposals, before it could respond to Douglas. Saunders said neither process had gone forward because the requested information was needed before council could officially consider the offer.