Richmond City Council approves baseball stadium financial plan (2024)

Richmond City Council voted 6-0 Wednesday afternoon to approve a new financial structure to build a minor-league baseball stadium at the Diamond District.

The approval is a significant step forward in what city officials are calling the largest development deal in Richmond’s history. And it is a change in strategy just weeks before site work is set to begin.

Under the plan, Richmond will issue $170 million worth of general obligation bonds, and revenue from the stadium and the surrounding development will pay off the debt. But if the revenue does not materialize, the city will have to cover the cost by raising taxes or cutting services.

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The initiative has received support from Major League Baseball and the Richmond Flying Squirrels, who have pushed for the stadium to open by 2026. Mayor Levar Stoney said city council’s approval shows that “we can work together and say yes to game-changing projects like the Diamond District.”

One notable opponent, Richmond lawyer Paul Goldman, said city residents should not have to bear the cost of the stadium if the revenue does not materialize. He has called for a referendum in which city residents could decide whether to approve the bonds.

Richmond City Council approves baseball stadium financial plan (1)

The upside of the new plan, city leaders say, is that it is cheaper and faster than the old one.

Under the old plan, a community development authority would have issued bonds and paid the debt at a rate of 8%. A fully designed stadium would be necessary to issue the bonds, delaying their sale, and the cost to build the stadium and finance it would have totaled $495 million.

Now, the city itself will issue the bonds. Because these bonds are considered a surer investment, the city can pay a lower interest rate of 4%. The total cost to build the stadium and surrounding infrastructure and to finance the project will be $280 million.

City needs fans, residents

The whole funding mechanism hinges on two predictions: that fans will continue buying tickets for Squirrels games and that residents will continue moving to homes built in the Scott’s Addition area.

These are safe bets, city leaders say. The Squirrels are perennially near or at the top of the Eastern League in attendance, and the surrounding area has been a hotspot for new residential developments.

“Is there risk? Yeah,” Sharon Ebert, a deputy chief administrative officer for Richmond, told city council last month. “I don’t think it’s a great risk. I think it’s a minimal risk.”

The move assures the Flying Squirrels will stay in Richmond, Stoney said last month. The city’s previous minor-league team, the Richmond Braves, left in 2008 because of the city’s reluctance to replace The Diamond, now in its 40th season and deemed insufficient by Major League Baseball.

“This really comes down to — do we let the Squirrels go or not?” Stoney said at the time.

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The $280 million will be broken into two bonds. One set of bonds will be worth $140 million and will pay for stadium construction. The city expects to collect revenue from real estate, sales and meals taxes that will form a $7 million annual debt payment. A development team, Diamond District Partners LLC, will build 1,700 residences, commercial space and a hotel in the first phase of construction.

The other set, worth $40 million, issued by the Economic Development Authority, will cost the city about $3 million in annual payments. That revenue will come from lease payments by the Flying Squirrels, who are expected to pay $3 million a year for the first 10 years and then about $1.3 million in year 11, Ebert said. The city also will collect lease payments from Virginia Commonwealth University, whose baseball team intends to play at the stadium.

The city is facing a fast-approaching deadline. Major League Baseball has told minor-league franchises across the country they need to play in modern facilities by 2025. Having determined it can’t meet that deadline, Richmond plans to have its stadium ready by opening day 2026.

Richmond's baseball stadium was billed as risk-free. Now leaders say there is risk.

Richmond City Council approves baseball stadium financial plan (3)

A recession could derail revenue

The downside of the city’s financial plan is that an event such as the pandemic or a major recession could derail the project’s revenue.

Goldman, the Richmond lawyer who opposes the project, said the development surrounding the stadium will bring new tax revenue even if the stadium is not built. That money could be used toward schools.

Andreas Addison, who represents the 1st District on city council, and is a candidate for mayor, said the stadium would be the neighborhood’s economic engine, the way Scott’s Addition is driven by breweries, and Manchester is driven by its proximity to the James River and its views of downtown.

He said a massive economic downturn, such as the pandemic or a recession, would affect the entire city, not just the stadium project. Such fears are not a reason to hold back development, he said. Amenities that draw residents and visitors into the city also help fund schools.

“We’ve got to put some economic activity to work to make the city attractive for investment,” he said last month.

Squirrels general manager Ben Rothrock and Todd “Parney” Parnell, who stepped down last season as the team’s day-to-day leader, attended Wednesday’s meeting. Parnell, who still works with the team as an adviser, said he was excited for the project but could not speak to the financial details.

Concern from city residents does not focus solely on the finances of the deal. There is worry in the opposite direction, that the stadium will not get built, Major League Baseball will yank the Squirrels out of the city, and Richmond will be left with another black mark on its history of economic development projects.

“People are scared this won’t happen, not ‘how are we going to pay for it?’ “ said Katherine Jordan, who represents the 2nd District. “We’re going to get this across the finish line.”

Richmond City Council approves baseball stadium financial plan (4)

City council, administration buck reputation

From Navy Hill, to the Sixth Street Marketplace, to school construction, the city long has struggled to build major projects and achieve lasting success. Discussion on The Diamond’s replacement has stretched 20 years.

Now an amphitheater is going up near Tredegar Iron Works. The city intends to improve Brown’s Island and Mayo Island. Gone are the days when city council and the administration cannot work together, said Ann-Frances Lambert, who represents the 3rd District.

After the meeting, Stoney put his arms around Lambert’s and Jordan’s shoulders.

“We’ve had an unfortunate reputation in the past that the administration and the city council were at loggerheads, and they can’t get anything right on behalf of residents and taxpayers in the city,” Stoney said. “The Diamond District represents we can have people at the table, whether it’s city council, we can all come together and say yes to game-changing projects.”

The city council also approved the creation of a community development authority, which will be led by a five-person board and oversee the long-term maintenance of the public park and neighborhood. The authority will levy a $1 tax on hotel visitors and a 25-cent tax on meals and sales – on top of the regular taxes already charged – that will be used to keep up the neighborhood, Ebert said. The authority also could eventually issue bonds to pay for a public parking deck.

The hotel is scheduled to be built at the beginning of the project and open in 2026, Ebert said.

Six of city council’s nine members attended Wednesday’s meeting. A bond ordinance requires approval from six members – not five like most legislative items. Addison, Jordan, Ellen Robertson, Cynthia Newbille, Lambert and Kristen Nye voted in favor of four ordinances that create the development agreement, the bonds and the community development authority.

“This is a huge deal and not all council is here tonight, and that’s another concern of mine,” Lambert said.

Arthur Ashe Center

Lincoln Saunders, the city’s chief financial officer, said Wednesday the city had reached a tentative deal with Richmond Public Schools concerning the Arthur Ashe Center. Owned by the city’s department of recreation and parks, the 42-year-old multiuse facility is often used by the school district for basketball games and other events.

The Ashe Center is scheduled to be torn down eventually as part of a future phase of development of the Diamond District. The city will work with the school district to make sure it has sufficient facilities, such as the former Washington Commanders training fields and the riverfront amphitheater. And when the city sells the property, it will give the revenue to the school system. Saunders declined to speak in detail about the tentative agreement.

Richmond City Council approves baseball stadium financial plan (5)

According to the city’s charter, after the city council approves a bond ordinance, members of the public have 30 days to assemble a petition opposing the ordinance. If the petition has enough signatures, the ordinance will not go into effect immediately. Instead, it would require a referendum in which 51% of voters would have to approve the bonds for the city to issue them.

But there are discrepancies within the city charter. On the state’s website, the paragraphs concerning a bond referendum indicate the number of signatures needed can be found in section 3.07. That section does not exist.

On the city’s website, the charter says the number of signatures can be found in a different section, 3.06.1, which would require about 11,000 residents to sign a petition.

On Sunday, Goldman sent a letter to the city asking for a determination on the number of signatures he needs.

“They should tell me,” Goldman said. “I shouldn’t have to guess.”

A spokesperson for the city did not respond to a request for comment.

The city intends to issue the stadium bonds in June and the infrastructure bonds in July. Site work will start in July, and the developer will purchase land around the stadium by the end of August. In the fall, the stadium will start rising from the ground, according to the city’s timeline.

From the Archives: Professional baseball in Richmond, 1953-1990

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Eric Kolenich (804) 649-6109

ekolenich@timesdispatch.com

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Richmond City Council approves baseball stadium financial plan (2024)

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