Updated Navy Hill Assessment (September 20)
(For an easy-to read flipbook version of this statement, click here.)
The proposed Navy Hill development is a matter of a great interest and concern to voters in the 5th District and citywide. It’s important for its own sake, and because it raises fundamental issues about how economic development projects in Richmond should proceed, now and in the future. The City of Richmond has a positive obligation to use its powers to assure that all projects benefit the public interest with priority given to broadening employment and ownership opportunities for residents who have long been excluded from the economic pie.
That’s why I released a detailed statement of economic development principles back in July focused on employment, housing, minority contracting, taxpayer transparency, and public buy-in. After the formal release of the Navy Hill proposal in early August, I committed to reviewing and providing my provisional assessment of the proposal’s pros and cons by September 20. Publication of this document today fulfills that pledge.
This statement contains my initial review as well as critical questions, outlined in two parts. In Part One, I begin with a couple of top-line statements and my current position on the proposal. In Part Two, I provide some details from my read of the project as well as outstanding issues and questions that I believe must be addressed by the administration and project proponents.
There have been several developments in the last few weeks that significantly affect the viability of the project.
1) The Navy Hill Advisory Commission has yet to be fully seated or to begin its work. This delay is significant because this Commission has been charged by City Council with the task of formal scrutiny of the proposal.
2) The controversy concerning ghostwritten editorials supporting the project has further undermined public trust in the project and cast doubt on whether there will be a fair public discussion of the project’s merits.
3) Most significantly, former Chief Administrative Officer Selena Cuffee-Glenn had acted as the point person in negotiating the Navy Hill project. Her termination this week by the Mayor raises major questions about the project’s viability in the near term.
City Council and the larger public needs to know who the “point person” for this project will be – the person who can be reasonably expected to know and understand the details as well as to explain why certain provisions are in the public interest.
City Council and the larger public needs to know who will be directly responsible for oversight and monitoring of this entire project, should it be adopted and move into implementation.
In my judgment, the most urgent task facing this administration right now is to secure a highly competent professional administrator to help the organization reach a higher level of effectiveness. Investing energy in moving forward with this deeply controversial proposal at this time will detract from the more fundamental task of getting the administration on track and assuring a successful transition to the next CAO.
Summary Position: At this time, I do not believe it is advisable for the Navy Hill proposal to move forward in any form through City Council until these fundamental issues above are fully addressed.
While we await the outcome of the issues outlined in Part One, it is still relevant to assess the project details based on the information that is currently available.
Key elements of the proposal include:
The Economic Development Authority, on behalf of the City, would sell bonds to build a new arena (at total cost to the public of $476 million).
At the same time, private investors would commit to $1.3 billion in private investment in the adjacent area for a hotel, housing units, commercial activities, and other amenities. This development would primarily occur in in an area of downtown is currently generating little (to zero) tangible revenue.
A July 1, 2019 benchmark would be established based on the tax assessment value of a much wider, 80-block area inclusive of the Coliseum area, an area that currently contains both non-taxable property and private development. This is the “increment financing district.”
Tax revenue collected on the property value assessed on July 1, 2019 would continue to be directed to the city’s budget as is currently in place
The “incremental” increase in property value after the benchmark date of July 1, 2019 becomes the basis for an additional pool of tax revenue – this “incremental” tax revenue (over and above the benchmark) would be directed toward repayment of the loans.
Proponents claim that the resultant economic activity will not only pay back the cost of the arena, but generate major, ongoing new revenue streams for the City of Richmond, as well as bring jobs, housing opportunities, business opportunities, and other benefits to downtown, a public “profit” stream that would begin to appear within five years, and totaling nearly $1 billion over 30 years. Even subtracting the growth in the tax increment area projected to happen even without the project, the net new revenue generated by the project is estimated at $750 million over 30 years.
These claims must be scrutinized and objectively assessed.
I have previously stated my criteria for assessing economic development projects in the City of Richmond:
1) Creation of living wage jobs for Richmond residents
2) Capacity to add the supply of affordable housing in Richmond
3) Commitment to minority contracting
4) Commitment to transparency as to taxpayer liability (and related financial questions)
5) Significant public support
While the proposal does make a tangible effort to address most of these issues, it’s unclear in the current documents that the plan goes far enough or that it can be reasonably expected to reach the financial viability that is claimed. A couple of important examples:
Example #1: The documents state a commitment to coordinating with the Office of Community Wealth Building to conduct job fairs in all nine Council districts as well as in public housing communities. But there is simply not enough evidence presented to show that these steps are likely to produce success toward helping under-employed City residents find jobs. As the 5th District representative, I would insist upon further information and detail on the steps required to ensure progress toward this goal.
Example #2: Attention has been focused on the financial underpinnings of the proposal. The numbers presented by Davenport, the City’s financial advisers, project that the project will generate a net financial surplus to the City, as long as it performs at 46% or higher of expectations. Understanding the basis of these numbers is critical to the evaluation of this project, because the promise of a significant positive revenue stream to potentially support our City’s future needs is a primary promised benefit.
While a new Coliseum is a nice thing for a thriving City to have, it cannot be considered an urgent priority. Likewise, revitalizing the blocks and space around the Coliseum is a welcome prospect, but there are other areas of City with many more residents that also need revitalization and reinvestment (such as the Hull Street Corridor).
Similarly, the project involves other important public and private benefits (the GRTC transfer station, potentially a new Social Services building, a new hotel). But it’s entirely possible those benefits could be derived in other (possibly superior) ways than this specific project.
In my judgment, there are two main cases to be made for doing this project.
The first is that it might create living wage jobs with benefits helping Richmond residents in poverty. That’s why more information and detail on the employment pipeline component of the proposal is essential.
Second, proponents claim the project will produce a substantial addition to the tax base and generate significant new revenue that would not exist but for the project. But what is the basis for those numbers?
We, the members of the public, need to be shown the methodological basis by which each of these numbers has been estimated, especially the first (total projected revenue) and the last (the estimate of what might happen in the area without the project). The estimates provided and the assumptions behind them need to be scrutinized and independently verified by professional economists and analysts with no stake in the project.
Additionally, community members have raised an important question – could “organic” development also produce significant economic benefits? In other words: What is the economic advantage of the large-scale “master plan” strategy versus a strategy of selling off smaller parcels of public property?
This is a fair question … and it’s one that I will push aggressively in order to receive a direct response from the administration and the project backers.
Genuine Community Wealth Building
In the past few weeks of research, talking with residents throughout the 5th District as well as monitoring the public conversation, I have come to realize that there are additional fundamental questions that need to be addressed (in addition to those noted above):
Who is benefiting from this project, in the long term, not just as employees or contractors, but as also as owners? What effort is being made to assure that the businesses, restaurants, and other commercial activities expected to be generated in the project area will be owned more broadly: by people of color, by local residents, by the employees themselves?
The scale of investment is simply too large not to have a front-end conversation on how it could be used to build genuine community wealth—placing assets and ownership with a broader class of people than the usual “1%.”
In my view, any effort to bring this area of our City back with a public-private partnership should have an explicit reparations component ... it should include a deliberate effort to build black, locally-owned wealth, both in recognition of historic injustices and because that is exactly what is needed to build a more equitable Richmond.
How will revenue surplus be managed and directed? We need to have a front-end conversation on designating the project “public profit” (revenue surplus) from the deal not just to City services in general, but to further investments in community wealth building (whether carried out by public or nonprofit agencies).
What will be the broader community representation on the board of the Navy Hill District Corporation? We need to scrutinize this important question with a view toward the long term.
These are important questions for any project, but especially for a project bearing the Navy Hill name. Many community members, as well as my long-time friends, Ben Campbell and John Moeser, have provided poignant, forceful reminders of the legacy of neighborhood destruction of historic Navy Hill. I believe that we can start to address the injustices of the past with the right decisions for our future.
This statement and my observations about the Navy Hill project are far from comprehensive; many more specific questions have been raised and will need to be answered if the process moves forward. As this statement hopefully makes clear, I believe that the proposal has not yet earned the buy-in and support of the community, and it almost certainly cannot do so without significant changes. I am hopeful that the public will get firm answers to the questions posed here so we can evaluate the plausibility of the developers’ claims with confidence.
I remain committed to sharing my research and concerns on this important issue with voters as well as engaging their feedback. And, I will release a full and firm statement no later than October 21 to update my position on the viability of the project.
When 5th District voters go to the polls on November 5th, they will know exactly where I stand on the proposal, why I take that position, and my recommendations for steps that can be taken to help Richmond realize its full potential.