Navy Hill supporters and opponents crowded into the Richmond City Council chambers on Feb. 10, where the panel voted down the $1.5 billion proposal. (Photo by Rodrigo Arriaza)
The $1.5 billion Navy Hill proposal is dead in the water. Hailed as the largest economic development project in Richmond’s history, the arena and downtown reconstruction effort has been debated among city leaders and residents since late 2017, when Mayor Levar Stoney issued a request for proposals (RFP) for the project. More than two years later, Richmond City Council sank the deal, with members saying it was flawed from the start. So, what went wrong?
The final blow came in February, when a council majority struck the measures required to enact the Navy Hill deal, killing that iteration of the project. Opposition on council was led by five members who also passed a resolution petitioning Stoney to conduct a downtown small area plan, appraise city-owned land in the 10-block development zone and solicit public feedback before requesting downtown redesign proposals.
In the aftermath, Stoney says he’s open to a new RFP but needs council to approach future downtown redevelopment efforts with an open mind.
“That’s something I will certainly consider as I move forward, but what I need most from City Council is to find seven individuals who are going to be willing to act in good faith,” he says. “That’s the sort of assurance that I need to move any public plan on downtown redevelopment forward.”
Opponents on council agreed that the downtown area needed improvements but cited concerns including the public financing model for the 17,500-seat arena central to the plan and a lack of transparency in the Stoney administration’s negotiations with NH District Corp. The firm, led by Dominion Energy head Thomas Farrell, was tapped to take on the project after submitting the lone response to Stoney’s RFP, though closed-door negotiations stalled the deal’s public unveiling for over a year.
“I think [with] this deal, unfortunately, there were things that we couldn’t change, we couldn’t remedy and go back in a time machine to restore trust in the process and the players involved and the way that it all came about, but that’s not to say that there weren’t … good components about the work that has been done,” says 5th District Councilwoman Stephanie Lynch, who opposed the project.
Meanwhile, proponents of the project on council have argued that the decision could make future developers weary of pursuing projects with the city — though it apparently didn’t deter Washington, D.C.-based firm Douglas Development Corp. Following council’s ruling, the firm sent the city an unsolicited proposal to purchase approximately 14 acres of city-owned land in the Navy Hill development zone for $15 million. In comparison, about 21 acres of publicly owned land would have been sold to NH District Corp. for $15.8 million.
In a letter to the city, Douglas Development head Douglas Jemal says his firm would refurbish the shuttered Richmond Coliseum at its own expense without needing new city taxes, bonds or a tax increment financing (TIF) plan. Stoney spokesman Jim Nolan, however, says the pitch is missing provisions included in the Navy Hill plan to invest $300 million in minority-owned businesses, realign the street grid in the development area and renovate the Blues Armory.
“Before anybody looks at this as a counterpoint to the argument that the business community is going to be chilled by what happened with NH, first look at it and decide whether it’s a legitimate, fully fleshed-out proposal, because at least from what we’ve seen, it doesn’t appear to be that way right now,” he says.
NH District Corp. would have redeveloped a 10-block area north of Broad Street with a 525-room hotel and more than 2,500 apartments, with 480 units reserved for those earning below the area’s median household income (estimated at $83,200 by the U.S. Department of Housing and Urban Development in 2019), in addition to the new arena. Also included were 1 million square feet of commercial space, more than 250,000 square feet of retail businesses and restaurants, the renovation of the historic Blues Armory, and a GRTC transfer center.
While most of the development would have been bankrolled using private funds, new real estate tax revenues reaped from a sprawling 80-block special TIF district would have repaid more than $300 million in arena construction bonds. The proposed tax district became a stumbling block among council members and community groups such as social justice coalition Richmond for All, which argued it would siphon tax dollars away from Richmond Public Schools and other services financed through the city’s general fund. Those concerns were shared by the Navy Hill Development Advisory Commission, a volunteer board convened by council to assess the proposal that recommended against the publicly funded arena in its final report.
“One of the dominant drivers of good economic development is a quality public educational system, and I know that’s been an identified priority for the city for a while, so that has to play in the top of all of our minds, and I think those aspects were some of the concerns that were shared by the commission and were eventually shared by City Council,” says Corey D.B. Walker, visiting professor at the University of Richmond and a commission member.
Daniel Herriges, senior editor at Strong Towns, a Minnesota-based nonprofit that advocates for responsible urban growth and development, says an incremental approach to downtown growth would allow the city to adapt to citizen response to the redevelopment effort in real time.
“I look at the things that this project was supposed to promise: affordable housing and an entertainment venue and all these different aspects of it; they’re all things that could be done if separated from each other,” says Herriges, who wrote an essay about the project for Richmond magazine last year. “I get the allure of redeveloping a 10-block area in one fell swoop and having the momentum behind that, [but] the public sector shouldn’t be the one taking the risk.”
Stoney, meanwhile, says he stands by the terms of the Navy Hill deal, arguing it would have secured renewed economic activity, affordable housing and job opportunities downtown. Davenport & Co., the city’s financial advisor, projected the deal would have generated roughly $1 billion in net general fund revenue over 30 years after paying the arena bond debt. Of that amount, Stoney has said $500 million would have gone to public schools.
“I think we were the winners in the process because of the benefits that were baked into the plan, so it does sadden me that we’ve rejected such an opportunity to empower so many people right here in our city,” he says. “I always saw Navy Hill as a stimulus to a part of downtown that has been growing, and I can’t say there was anything different I would do in negotiations.”
