Richmond Mayor Levar Stoney has enlisted Hunden Strategic Partners to review the sprawling, $1 billion proposal his administration is weighing to redevelop more than 21 acres of publicly owned real estate around the Richmond Coliseum.
The city retained the Chicago-based firm for $112,000 on June 25 to study the redevelopment plan, according to an agreement the city released to the Richmond Times-Dispatch. The firm will analyze the financial underpinnings and potential economic impact of the plan submitted by NH District Corp., a nonprofit group led by Dominion Energy CEO Thomas F. Farrell II.
Hunden will issue a report of its findings to the Stoney administration in August, said David Rose, a senior vice president with Davenport & Co., the city’s external financial adviser.
“If we get the report mid- to late August and evaluate it, we’ll have a little bit of time to talk with City Council members in advance of September’s introduction,” said Rose, referring to a timeline for advancing the proposal that the Stoney administration previously shared with council members.
The city is in negotiations with NH District, which submitted the lone proposal in response to a formal request the Stoney administration issued last fall. Stoney has said details of the group’s proposal are fluid, and he has not yet made a decision whether he will submit it to the council for consideration. The council must ultimately sign off on the plans.
The Hunden study is a part of what Stoney characterized as his administration’s “unprecedented due diligence” on the proposal that could reshape downtown. But its findings may not matter if negotiations aren’t productive, Rose said.
“[Stoney] has said, ‘Look, if I don’t get something I like, irrespective of what Hunden does, then I’m not bringing it to City Council,” Rose said.
NH District is proposing a new $220 million arena, 2,800 apartments and condominiums, a 527-room Hyatt-brand hotel, 176,000 square feet of street-level storefront space, the rehabilitation of the Blues Armory, the construction of a new GRTC transfer plaza for bus riders, a Virginia Commonwealth University medical office building and other infrastructure improvements.
A Times-Dispatch story published this week based on documents obtained through a Freedom of Information Act request and interviews with NH District representatives indicated the proposal would cost $1 billion. But the city’s agreement with Hunden states that NH District’s total investment for the proposal is $1.4 billion.
Of that figure, $1.1 billion would be privately sourced debt and equity, the document states. The remaining $300 million would be financed by bonds underwritten by a special tax zone the group has proposed.
The zone — called a tax increment financing district, or TIF — would siphon all new tax revenue generated by the development to cover debt service payments on the bonds used to finance the public portion of the deal, meaning the new arena, armory rehab and infrastructure improvements.
Typically, one of the special tax zones is drawn around a small area where a project is happening. NH District is pushing for the city to draw the boundaries around two Dominion properties — a tower under construction at 600 Canal Place and the existing One James River Plaza.
The properties are about half a mile away from the 10-block area the city administration had marked for redevelopment. Those boundaries could also include a new high-rise Dominion submitted plans to the city for last month, though the company said it has not decided whether it will ultimately build a second tower.
According to financial projections NH District sent to the city in early May, drawing the boundaries around the towers could divert an estimated $4.2 million to $7.7 million annually in property tax revenue Dominion would owe the city.
Over three decades, new revenue from the company’s properties could generate $165 million to help pay for the redevelopment. The money would otherwise go into the city’s general fund to pay for such core services as public safety and education.
The group’s financial projections show that including the towers in the TIF isn’t necessary for the project’s financing to work. However, including them in the tax zone would reduce the financial risk for bond investors and could allow the city to pay off its debt faster, according to NH District representatives. The money could be needed if the redevelopment’s revenue projections aren’t met.
According to its agreement with the city, Hunden’s study will include a review of the proposed TIF and the projected new property, meals, lodging, sales and admissions taxes NH District said the redevelopment will generate.
In an interview last week, Stoney said he personally requested that an out-of-town firm conduct the review so it is impartial.
“I wanted someone who was not tied to any of the entities that may be involved in the project,” he said.
Hunden has worked with the city before.
In 2013, then-Mayor Dwight C. Jones’ administration studied potential uses for City Stadium at the request of the City Council. His administration commissioned a study of athletic uses for the facility that Hunden completed.
Reached by phone, Rob Hunden, owner of the firm, declined to comment on the company’s arrangement with the city and directed questions to the Stoney administration.