Community member Charles Willis speaking to the Navy Hill Development Advisory Commission at its meeting Saturday. (Photo by Rodrigo Arriaza)
Would the proposed Navy Hill arena be the crown jewel at the center of a thriving downtown district, or a money-sink for the city of Richmond? At the latest meeting of the Navy Hill Development Advisory Commission, authorities in the fields of arena development and urban politics presented opposing viewpoints on what the proposed large-scale downtown venue could mean for Richmond.
Richard Meagher, a Randolph-Macon College political science professor, and Michael Hallmark, an arena developer and designer who works with project developer NH District Corp., were invited to speak about the arena's demand and potential synergy with other developments in the 10-block Navy Hill development area.
Should the redevelopment plan be approved by City Council, the new arena would replace the shuttered Richmond Coliseum. According to projections from Spectra, the Philadelphia-based firm that would book performers and operate the venue, the new arena would host 121 events during its first fiscal year in operation, raking in $14.5 million in box office sales and a total net income of $4.3 million.
And although he said that the arena could survive without them, Hallmark said NHDC is eyeing the possibility of bringing in a G-League basketball team and a minor league hockey team as arena tenants, adding 60 events to the arena's schedule annually.
He argued that the arena's 17,500-seat capacity — it would be the largest venue in the state — would be a large enough draw, diverting big touring acts from John Paul Jones Arena in Charlottesville, but the minor league teams would be expected to bring in additional crowds of 3,000 to 4,000 people per game.
"Those 60 events are important, because those are 60 events times 3,000 [attendees] each event, which is like 60 more events at Altria Theater, so those folks are coming into our downtown from the outlying counties," he said.
The projections stand in stark comparison to figures from the Richmond Coliseum's last fiscal year in operation. The defunct venue hosted 73 events and brought in $7.2 million in box office sales in fiscal year 2018, but resulted in a net loss of $512,417 for the city, Hallmark said.
Meagher, however, said it's nearly impossible to gauge the market demand for any arena prior to its construction. That's because studies on the market and their economic impact are most often conducted by entities that have financial stakes in their success, he explained, creating a confirmation bias that often leads to unrealistic revenue and usage projections and, in turn, operating losses once the arena opens its doors.
"There is no clear science for demand and capacity for arena development; there’s very little evidence that you can use," he said. "They’re usually confirmation studies, and as a result, there’s no real clear match of a market to an arena.”
Hallmark conceded during his presentation that arenas rarely pay for themselves, but he compared the venues to museums and libraries — facilities that don't turn a profit, but create a community benefit.
"There’s a lot of things that communities decide will make their lives better that they find ways to support," he said.
Most of the Navy Hill project would be funded with about $900 million in private funds, but publicly funded bonds would be used to pay for the arena's construction. The so-called non-recourse revenue bonds would be repaid with new real estate tax revenues collected from an 80-block special tax incentive district.
Real estate and other taxes currently collected in that district would continue to go to the city's general fund, but increased real estate tax and parking revenue would be used to repay the bonds. Also going toward paying off the bonds would be sales, lodging, business and professional license taxes, and meals taxes from new businesses that open as part of the development, except for 1.5% of the meals taxes from new restaurants, which would be directed toward schools.
Meagher argued that although the non-recourse arena bonds mean there's no onus on the city to make up the difference for any shortfalls, the gargantuan redevelopment project could create what he called a political obligation — an albatross around the city's neck for decades.
"When a city commits to a massive project like this, it becomes a political obligation, not just a legal one," he said. "The arguments that people make is that we can’t just have a massive empty hole in the middle of our downtown. We need to fund it, and so local governments become obligated to rescue these arenas."
A key question among city residents who oppose the Navy Hill project has been why the Richmond Coliseum can't be reopened and allowed to continue operating as it had since 1971. The answer, Hallmark said, comes down to the venue's rigid architectural layout. As he explained it, the domed roof, ring-shaped exterior and large supporting buttresses make the Coliseum difficult to expand or modify to meet a growing event market.
"Essentially, it's a 50-year-old idea, and things change in 50 years," he said. "That doesn't mean that every arena ever built in America is functionally obsolete after 50 years, but this one is, and there's very specific reasons for it."
Throughout the meeting, commission member and Virginia Union University President Hakim Lucas stressed that the commission's mission to assess the Navy Hill development proposal that will appear before City Council, and should not spend its time focusing on alternatives. But alternatives were nonetheless mentioned — and in particular, commission members and both presenters addressed the revitalization of Scott's Addition, and whether a series of similarly small efforts could revitalize the blighted zone eyed for the Navy Hill project without the need for a large-scale city intervention.
Hallmark said that the redevelopment of Scott's Addition benefited from functional infrastructure and around 200 existing buildings that could be repurposed to house breweries and other attractive businesses — things the Navy Hill area lacks. Meagher disagreed with that assessment, however.
"If we can get a thriving neighborhood [in Scott's Addition] with just a little public investment, maybe you can get a thriving neighborhood elsewhere with similar or smaller swings instead of just swinging for the fences," he said.
The Navy Hill Development Advisory Commission will be required to deliver a recommendation to City Council on the Navy Hill project by Dec. 23, commission chairman Pierce Homer said. Two more working meetings are scheduled, and the commission will then hold four public hearings on the project in December.
