by James A. Bacon
I should have known: Mayor Dwight Jones’ plan to build a new baseball stadium in Richmond’s Shockoe Bottom was too good to be true. Two days ago, I posted a generally up-beat appraisal of the proposal on the grounds that it would generate up to $187 million over 20 years while costing the city only $80 million. Now we find out that those numbers come with two very big asterisks. First, the tax revenue forecast assumes that the city successfully re-develops acreage on the Boulevard where the present baseball field is located. And second, the cost estimate doesn’t include interest on the bonds used to finance the project.
Of the $17.7 million in projected annual revenue from the plan, $13.5 million would come from re-developing the Boulevard, reports Graham Moomaw with the Times-Dispatch. The mayor has given no indication that any private interest is waiting in the wings to develop that property, so revenue projections should be regarded as speculative at best. In terms of hard numbers, only $2.1 million would come from baseball revenues, primarily a lease with the Richmond Flying Squirrels, and another $1.9 million from a hotel, grocery store and apartment buildings in Shockoe.
On the cost side of the equation, the city would pay $79.6 million to build the stadium, invest in public utility infrastructure to prevent flooding, and do some historic preservation associated with Lumpkin’s Jail and the African graveyard. According to Moomaw, the city would pay $5.6 million annually to support the debt payment. Assuming the bonds have a standard, 20-year maturity, that would amount to $112 million — $32 million more than the mayor let on when he made the big announcement.
The numbers apparently also assume that the city incurs no additional expenditure to re-develop the Boulevard tract. (Moomaw makes no mention of such a cost.) What are the chances of that?
A Davenport & Co. analysis obtained by Moomaw contends that the Mayor’s plan offers the “greatest net benefit” because it both sparks development in Shockoe Bottom and frees up the Boulevard property, near the intersection with Interstate 95, for re-development. Fair enough.
But are those benefits worth the $3.5 million annual impact on cash flow ($5.6 million in bond payments minus $2.1 million in Flying Squirrels lease payments), added strain to the city’s bond-carrying capacity and the risk that re-development of the Boulevard might not pan out as quickly as expected? One must ask, how much tax revenue could the city generate by investing $80 million elsewhere?
This new information raises serious questions. I’m not saying the mayor’s proposal is a bad idea, but I do think it requires serious scrutiny before City Council moves forward with it.
Update: Writing for Style Weekly, Ned Oliver provides details of the development City Hall anticipates for the Boulevard: more than 1,000 apartments, nearly 800,000 square feet of retail, nearly 1 million square feet of office space, a hotel, a medical office and a sports-fitness complex. As Oliver observes dryly: “It’s unclear if the city has secured letters of intent for the Boulevard development as it has for the Shockoe Bottom plan.”
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