Preliminary Report From Navy Hill Commission Emphasizes Risk In Redevelopment Project
The independent commission tasked with vetting the Richmond Coliseum redevelopment deal has released a preliminary report on the project’s financing.
The Navy Hill Advisory Commission’s report emphasized that the city could be on the hook if the project doesn’t pan out. The financial analysis was conducted by John Gerner, the commission’s vice-chair. He found that around $17 million in property tax revenue from Downtown will be used to fund coliseum construction over the first five years.
“As part of our responsibility to City Council, I feel they need to understand there is a financial commitment,” Gerner said. "They may decide that it’s an investment in this project, and that’s for them to decide.”
The preliminary report also showed that more than $300 million would be diverted from the city’s general fund over 30 years. Money in the general fund pays for things like schools and infrastructure.
Gerner said these numbers come from the amount of property tax generated by the existing buildings that are part of the special taxing one - property taxes that would otherwise be available to the city regardless of whether it approved the redevelopment or not. The city has proposed using an 80-block tax increment financing district in downtown to get a $311 loan for building a new downtown arena.
The city could get its money back and more, but only if the project is successful. Projections from the city’s financial advisor, Davenport, show that the new arena and surrounding private development could generate more than $1 billion in new tax revenue in the best-case scenario.
City Councilwoman Kim Gray attended Saturday’s meeting where Gerner presented his findings. Gray said she wasn’t surprised by the numbers, but said the risks involved in the project bore repeating.
“That existing tax revenue will be used is something that’s been an understanding for me as a councilperson, but I think it is downplayed to a large degree because there are people who very much want this development to move forward,” she said.
Gerner’s preliminary report also highlighted the fact that some of the details surrounding the deal are not actually in writing. He specifically pointed out that the amount of the bond that will be taken out to pay for a new arena, and what will be offered to bondholders as security, will be decided after Richmond City Council votes on the deal. And even though the city expects sponsorships for a new arena to pay a substantial part of the bond, the developer is refusing to disclose sponsors until after the deal is approved.
You can read Gerner’s full presentation here.