No algorithms. No content filters. No A.I. — Honest and insightful analysis from Richmond, VA.
In Part 1, we looked at the recent default of the Green City arena proposal in Henrico and how the failure of that area deal and the Navy Hill boondoggle are not as similar as one might think because of the way they were structured. The county site still has residential progress and additional potential while the city’s site remains almost the same as five years ago, which is nowhere. Plus, the county put the horse before the cart and proved it is not willing to throw away hundreds of millions of public dollars for an arena just to get a deal done, whereas the former Mayor and others were all too willing to do so; hopefully the new Mayor is not. Part 2 picks up with the last segment from Part 1.
Put simply, with Green City, Henrico saw the promise of a proposal but still required performance before a reward. They chose to put the horse before the cart in order to pull it. They required that the developer have the financing and enough equity to build the arena along with the other aspects of the development to generate the horsepower (see what I did there?) to pull the cart and pay the debt service. So while the announcement of the default has put the hold on the arena (for now), the residential component is under way as is some of the infrastructure; the site will still be a economic development plus for the county in some form or fashion without requiring an astronomical or reckless outlay of taxpayer dollars. The horse may not be moving fast yet, but it is moving and is pulling the cart.
In the city, Mayor Stoney chose to do the opposite and put the cart before the horse with Navy Hill. And our poor horse is still stuck behind the cart and looks too much like that poor fella in Gone With The Wind who gets everyone back to Tara just before intermission.
You may recall the Navy Hill boondoggle was a “plan” based on issuing $325 million of debt upfront to build the arena first and then “hope” all of the prospective residential, commercial and retail development would come behind it and generate the horsepower to pay the debt (with interest the total was about $600 million). The Navy Hill Development Corporation chose Capital City Partners as the developer, the same two developers tied to Green City. They, along with all the resources of the city and Mayor Stoney could muster, pushed fantastical development assumptions to show the development would surely generate the revenue to pay the debt, so there was no reason not to build the arena first (even though there were no tenants for the arena like a basketball or hockey team).
When the “plan” was studied and it became apparent the development projections were unrealistic, they proposed a synthetic 80-block Tax Increment Financing (TIF) district that would have diverted incremental taxes on some of the most valuable properties and office buildings in Downtown to finance the arena instead of being used for schools and other services. At one point, a Deputy Chief Administrative Officer for Mayor Stoney (who still works for Mayor Avula) told City Council that the TIF plan would undoubtedly succeed; she said the second Dominion office tower being considered at the time was practically certain to be built and it alone would generate about 17% of the annual debt service. Then the pandemic hit and changed the nature of office work; today that lot is empty and undeveloped. The building that was projected to be worth $360 million in 2025 and pay $2 million per year for 30 years for Navy Hill arena debt service is now an empty lot worth $10 million and generating a pittance of revenue. If the city had fallen for that empty promise, that $2 million of debt service would have had to have been paid from somewhere else in the general budget like schools or basic services.
That’s why you don’t put the cart before the horse. The results often fail to meet expectations because the development renderings look nice and shiny but are based
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