What better way to mark the end of summer than to review 900 pages of municipal ordinances?
The official Navy Hill/North of Broad development plan was finally released by the Stoney Administration in early August. (You can read the papers here if you’re into that kind of punishment.) Many critics were annoyed at how long the city took to release them, but now we can see why: they really wanted this to be ready to go. I think Stoney’s team deserves some credit here, even if you oppose the development. They’ve at least done their homework.
I’ve written pretty extensively on the NH/NOB project in the past, mostly from a critical perspective. I remain skeptical, but I’m trying to keep an open mind about the actual plans. Major development deals like this one generally end up hurting local taxpayers. But once in a while you get a good one! Nothing is perfect – a lot of rich people would get richer from this deal no matter what we do – but that doesn’t necessarily mean the city won’t benefit either. Maybe RVA will be one of those lucky few that gets a deal that actually benefits the people, and not just developers.
First, here’s a reminder of how all this is supposed to work:
The city is going to borrow a LOT of money – probably almost $600M once they pay back the interest on the loan – mainly to build a new coliseum and a GRTC bus transfer station.*[UDPATE: The city says that GRTC should have enough state/federal funding to pay for the transfer station, so the loan is almost entirely for the arena and related infrastructure.]
This new coliseum will help lure in $900M in private investment, which will fund development of office space, apartments, retail stores and restaurants, and a convention center hotel.
Since the city has no money to build a new arena, they will use the FUTURE revenues generated by all the new development to pay back the loan: increased property tax from all the new stuff, admissions taxes from the arena, lodging taxes from the new hotel, meals taxes from new restaurants, sales taxes from new retail stores, and parking revenue. (This is the “TIF” funding mechanism you may have heard about.)
However, since this STILL wouldn’t generate enough money to pay back the loan, the city plans to include future revenues from almost ALL of downtown. So the arena loan also will be paid back by new property tax revenues from other buildings, and money from parking lots and meters throughout downtown, meals and sales taxes, etc*. – even if these buildings and establishments are already existing or far away from the arena. [*UPDATE: The city will ONLY collect meals and sales taxes from the NEW retail and restaurants.]
So just to be clear here: the city is borrowing money mainly to build the arena ONLY. [UPDATE: Apparently not the bus station.] Private investors are going to build the other stuff, without city money. New revenues from the development, plus other revenues from throughout downtown, pay back the city’s loan. The city says that all the new development will generate so much economic activity and tax revenue that the city will clearly benefit over the long term, at very little risk.
This entire plan must be enacted through a series of ordinances (the city’s version of a law) by the City Council, and approved/signed by the Mayor. Because some of these ordinances involve the city transferring and selling land, plus other financial machinations, they require a super-majority of the Council: 7 of 9 votes.
I also want to point out three changes in the current plan from what we saw last year in the original proposal:
The number of affordable housing units keeps getting revised downward. I already explained how the Mayor’s original promise of 680 units was nonsense, but even the 480 number that is still being reported in the news is pretty nonsensical as well. As radio reporter Roberto Roldan noted this week, the number of units that we’ll see in the next few years is way lower and will rent at close to market rates. (I’ll have more on this in the future.) In general I would be very skeptical of any supporters’ arguments about affordable housing in the deal; it’s not a lot.
It is not clear if the proposed re-grading of Leigh Street is still in the plan. This would be a huge loss to the project. Making downtown fully walkable was part of its appeal, as currently the arena’s loading docks and Leigh’s highway feel make the area super-unfriendly to pedestrians. A re-grade could be funded separately through the state, but it’s currently unclear (at least to me) what will happen here.
The developers are now going to fully pay for the transformation of the Blues Armory building into an event space. (I’ll have more later on why I don’t see this as a very big deal; it’s kind of like the car dealer throwing in a free sun roof. It’s fine.)
Last week, the City Council rejected the idea of a city-wide voter referendum. I could see the argument against it; it would be difficult to frame a voter question in a neutral way, and most people don’t seem to understand the deal.
But all eyes should turn now to the citizen commission Council set up to review the deal. Council has appointed two establishment-types to chair the commission, but the general opinion is that they will be neutral reviewers; there seems to be little objection to these guys from either the developers or critics. Still, the makeup of the commission will be crucial, as well as their ability to hear and absorb community input.
Over the next few weeks, I’ll be doing my own digging into these ordinances to try to make sense of them. Again, my big concern is watching how these types of deals have unfolding in other cities, with big promises often followed by big problems. The city says they’ve avoided those problems with this deal. We’ll see.