A sponsored ad from @NavyHillRVA, the Twitter arm of NH District Corp., caught our attention.
“FACT: A new arena will transform Richmond into a major East Coast destination for major shows and sporting events.” The promise mirrored an Oct. 9 tweet, linking to a sheet titled “The Top Ten Myths About Navy Hill.”
The word “major” carries great expectations. But so far, specifics on shows or sporting events seem thin. A burning question we have is: Would the new coliseum feature a regular tenant?
Investors are on board. Last Monday’s Navy Hill work session with City Council reviewed the bucket of revenues that would repay more than $300 million in non-recourse bonds for the new arena and associated infrastructure. It includes real estate taxes, sales taxes, meals taxes, arena sponsorships and more, aided by a downtown tax-increment financing (TIF) district. No risk for the city.
“The transaction is well-positioned for success with our bond investors,” said Bill Corrado of Citigroup, one of the two main bond underwriters, along with J.P. Morgan.
The presentation outlined what investors want to know — project sponsors, location, risks involved with the construction, financial strength of the revenues and reserves set aside for rainy day funds. They expect ongoing disclosure on how the development is proceeding.
So do members of the public and the question remains: is the transaction well-positioned for them? Even ardent supporters of the Coliseum plan might be curious to know the household names behind the “major” events promise.
Think about some regional successes — a recent University of Virginia men’s basketball title and an upcoming Ariana Grande concert in Charlottesville. Richmond should join the fray.
But a July copy of the deed of ground lease for the Navy Hill arena — a key document cited in the Oct. 7 work session with Council — outlines less “major” requirements for possible events and tenants. Two segments that stood out were:
“‘Comparable Facilities’ means 15,000 to 18,000 seat capacity multipurpose event centers constructed in the ten years prior to Agreement Date within urban downtown areas … such facilities shall not include those for which a primary user of the facility is either a National Hockey League team or a National Basketball League team.”
“The new Richmond Arena will be designed to standards typical of today’s first class multi-purpose event centers currently hosting NCAA and other regional tournaments (1st and 2nd round NCAA basketball), touring concerts and family shows, convention assemblies, and professional minor league or development league sports tenants in basketball or hockey.”
Are the two case studies of successful TIF districts presented to council adequate comparisons? Allentown, Pa., was a city “in desperate need of downtown revitalization,” Corrado said. Similar non-recourse bonds funded the PPL Center (8,500 seats for hockey). The $282 million project ($224 million in bonds for the arena) came with tax revenues from a 128-acre neighborhood improvement zone (NIZ). The main tenant is the Lehigh Valley Phantoms — a minor league affiliate of the NHL’s Philadelphia Flyers.
While attendance has been good in Allentown, Richmond’s proposed 17,500-seat venue is twice as large. A 2015 Morning Call newspaper headline read “How Allentown built the most expensive minor league complex in the country.” A March report found tax revenues in Allentown’s NIZ dropped 11% in 2018. Why were these absent from Monday’s presentation?
The unified government of Wyandotte County/ Kansas City, Kan., worked with the state to create a Sales Tax Revenue (STAR) Bonds program. Over the past 20 years, new attractions included a NASCAR speedway, a minor league baseball stadium and a Major League Soccer park. But a June 2018 Topeka Capital-Journal newspaper report noted other STAR developments in Kansas have suffered financial losses, such as the Museum at Prairiefire in Overland Park and the Heartland Park motorsports complex in Topeka.
“You showed us a couple of case studies of successful TIF districts,” asked Councilmember Mike Jones on Monday. “Got any unsuccessful ones? Got any ones that did not perform up to margin or up to expectations?”
“It’s a fair question,” Corrado said. He stressed again that risks are on bondholders. Even if results fall short of their expectations, municipal clients see “projects get built.” Richmond gets the arena.
That’s a more realistic take. As Navy Hill work sessions, development advisory commission meetings and individual district sessions continue into December, we’d love to see public and City Council confidence match that of investors. A complete discussion of benefits and risks associated with the project helps. “FACT: Navy Hill is the most expensive minor league complex in the country” is not the best banner for Richmond to fly, even if the private sector paid for it.
— Chris Gentilviso