EDITOR’S NOTE: After this column was published in December 2018, it was updated to reflect additional contributors after the Richmond Times-Dispatch learned that some names had been left off the piece. (Updated 9/5/19)
By Hakim J. Lucas and Makola M. Abdullah
As Richmond prepares to launch its largest economic empowerment project, it is important to know how Navy Hill is different from past projects — and what business risks might keep it from happening.
Our hometown has had a Coliseum problem for many years. Major acts want to perform in the capital city of the 12th-largest state, but our outdated and ugly building keeps them away. The Coliseum drains more than $1 million in taxpayer funds every year, just to keep it open.
The game changed when the city asked for redevelopment proposals last year. It sought mixed-use development and much more: new jobs, mixed-income and affordable housing, a new bus transit center, a new convention center hotel, restoration of the Blues Armory, a pedestrian-friendly neighborhood, and a new arena.
And it wants this with no “moral or general obligation” of the city. If something goes wrong, taxpayers are never “on the hook.”
Richmond embraced these goals and created a nonprofit to make it happen.
The plan is expected to come forward this month, after more than six months of detailed discussions with city administrators. It will meet the city’s initial request, plus 680 units of affordable housing and a commitment to invest $300 million with minority-owned businesses. These are the largest community benefits in Richmond history.
The financial plan is completely different from the past, and it protects the city:
— Private investors take the hit if something goes wrong — not the city.
— No tax rates go up.
— No special tax breaks for developers.
— No tax dollars go to private developers or privately owned buildings.
—When new privately owned buildings generate new tax revenue on the city’s formerly vacant land, the revenue will pay for a new arena and a renovated armory, which the city will continue to own.
Here is how it will work:
1. NH District Corp. (NHDC) will acquire city-owned land, paying the city for it.
2. NHDC will use private capital to build privately owned buildings on that land — apartments, offices, stores, and restaurants. They will lease out those buildings, providing investors with a return.
3. Those buildings will pay real estate and other taxes. That is how the land changes from generating no tax revenue today to generating new tax revenue tomorrow.
4. That new tax revenue pays the mortgage on the new arena.
5. When that new revenue exceeds the annual mortgage payment (and an extra security cushion), it goes directly to the city’s general fund to pay for schools, roads, police and fire, and more.
Unprecedented partnerships are making this possible. (The Community Foundation is making its largest donation ever — times five — to invest in affordable housing, for example.) The plan builds on community engagement that welcomes everyone, and it lifts everyone: jobs, housing, entertainment, and economic development.
People are excited. We hear it everywhere we go.
We are confident that Richmond can do this — in part because we share the same interests as City Council. Its members have to demonstrate that they are being good stewards of city assets. They must achieve the best deal for residents and taxpayers. They need to pressure-test the facts, and see that there is a plan to deal with risks. The Navy Hill group must do all of these things, too.
Now it is time to prove this to the community, together.
Navy Hill will commit to:
1. Public meetings in every end of town,
2. Citizen review of what we proposed, and
3. Showing City Council what we showed to the city administration.
We welcome this review by citizens and especially by City Council. But the review must move quickly, because financial markets are changing. Interest rates have risen, trade policies are uncertain, and costs are climbing for steel and other building materials. These are real risks for this project.
For our community, there are real risks in doing nothing. The status quo is not good: a broken-down Coliseum, an unattractive downtown area, and vacant land that contributes no tax revenue to the city. And if Richmond does not get this done, it’s hard to see how there will be a next project.
So Richmond needs to decide, and promptly. That’s because Navy Hill has to raise private capital to pay for everything — and will do that before anything happens.
Lots of Richmonders are putting up their own money. They know a good investment.
This project requires outside dollars too, and potential out-of-town investors will ask, What are the returns — and how fast will they come?
If the answers are not good enough, they can use their money to build roads in Rhode Island, parks in Peoria, or an airport in Asia.
We want them to bring their money to Richmond.
So it is important to avoid a review that is really just a “slow no.” If interest rates rise one quarter-point, that adds $750,000 to the annual cost of building this new neighborhood. And every dollar that goes to interest payments is one less dollar going to schools, roads, or police and fire.
We believe in openness and transparency. In return, we urge City Council to attend all public meetings, read our materials and those of independent reviewers, and then ask questions about anything that is not clear — and to do it expeditiously. We also ask for the courage to change the status quo and improve Richmond for everyone.
We are committed to Richmond’s progress.