We, the residents, are in essence being asked to act as bankers. by Charlie Diradour
Why is everything we do in Richmond made more difficult than it has to be? We’ve all asked this question of ourselves over the years. Recently, where to place a baseball stadium has taken the spotlight in the local news. Once again we’re at odds and polarized over an issue that can be resolved by reviewing numbers. It’s simply math, really. You know, two plus two equals four, four plus four equals eight.
As a real estate developer, I look at numbers for a good part of my day, every day. So when Highwoods Properties was awarded the job to redevelop the areas around the Boulevard and Shockoe Bottom, I made it my business to understand its proposal.
By now, the deal is well known: The administration of former Mayor L. Douglas Wilder issued a request for proposals for both the Shockoe area and the Boulevard. Several developers applied and Highwoods Development won the bid.
It’s important to remember that this is the same administration responsible for losing the Richmond Braves to Gwinnett County, Ga. Also, the city sought a deal that would bring development to two areas. This is highly unusual. Why would we not issue two requests for proposals, one for the Boulevard and one for the Bottom? The answer is simple: Time was not on Wilder’s side. Wilder played chicken with the Braves and lost, and needed to claim victory before leaving office. In October, he announced that Highwoods, which proposed an office, retail, restaurant and hotel development called Shockoe Center around a $70 million ballpark, would make it all OK.
But the deal simply doesn’t add up. First, Highwoods’ projected retail and restaurant development is outlandishly overconfident. The developer’s claim that it can build 192,400 square feet worth of retail and restaurants, and generate more than $78 million in sales, is simply not feasible. This is important because the sales revenues generate the taxes needed to pay for the ballpark.
Highwoods is asking the city to create a special sports authority that allows for the creation of a tax-increment financing district. The tax district is a mechanism that sets aside new taxes created by the development — such as the meals taxes generated by the $28 million in restaurant sales — to pay for the public improvements to the area and pay off the debt on the $70 million ballpark. We, the residents, are in essence being asked to act as bankers. By issuing bonds we are risking our bond rating and our real estate tax rate in order to finance a ballpark and a retail development that’s unsustainable.
Numbers are what any deal boils down to and the numbers the developers are using to make their case are misleading. For instance, the developer projects retail sales at $400 per square foot. The malls in the far West End do not produce those numbers. An analysis of 2007 sales figures demonstrates that Short Pump Town Center produced $355 million in sales, or about $273 per square foot. But the real challenge is not projecting sales figures. Anyone can do that. The true challenge is walking the walk. Let’s say the development does $273 per foot in sales like pre-recession Short Pump. Gross sales would be $52 million per year at Shockoe Center, which wouldn’t be enough to cover the 30-year bonds on the $70 million ballpark.
Density, meaning population in and around the project, will be critical to the project’s success. Henrico County studies from 2007 indicate that 27,163 people were living within one mile of Short Pump Town Center. Within two miles, there are 47,634 residents. The estimated population in the 23219 ZIP code, which includes the central business district and Shockoe Bottom, was 2,438 in 2007. Clearly, there aren’t enough residents in the vicinity of Shockoe Center to generate the demand that Highwoods projects. The secondary argument developers make is that Shockoe Center will become a destination — that people will come downtown to shop. This raises additional questions. Why, for example, hasn’t Cleveland-based Forest City Enterprises, which also helped develop Short Pump Town Center, been unable to attract more retail to accompany its Tobacco Row condo development in the Bottom? And secondly, do we really want another Short Pump Town Center in Shockoe Bottom?
The developers claim that Shockoe Center will generate a total of $8.9 million in tax revenue. This number depends upon a premise that retail square footage is leased, that restaurants are full, and finally, that the baseball games are consistently well attended. In other words, according to Highwoods, there is no downside. This presumption is outlandish. Retail sales wax and wane. And to claim that the baseball team will draw consistently high attendance given Richmond’s lack of support for the departed Richmond Braves is disingenuous.
Can it work? Highwoods says it simply wants the chance to make its case. So why, then, is the city paying $100,000 to study the market for the developers? Mayor Dwight Jones has hired the same consultants who recommended moving the ballpark from the Boulevard to Shockoe Bottom in September 2008. That study didn’t look at a specific proposal, such as Highwoods’, and this one will. But why are we doing for Highwoods what it should be doing as part of its own due-diligence process?
All of this convoluted logic leads me to believe that we should have made this process easy for everyone. Look at Albuquerque, N.M., for example, which was in the same situation with its baseball team and stadium a few years ago. It had a good field but an antiquated stadium. The local government spent $25 million to build a new stadium for its Triple-A team. Average attendance skyrocketed and remains strong. We spent $500,000 on drainage problems at The Diamond two years ago. A few years before that, Richmond, Chesterfield and Henrico counties — not to mention the Braves — were in agreement on an $18.5 million renovation of The Diamond. It had regional support, was in a location that had a proven track record of success. And the taxpayers of the entire metro region had a stake in its success. Why are we allowing developers and team owners as well as independent consultants to tell us what we need?
Let’s stop making the easy things hard. And expensive. And risky. S
Charlie Diradour, president of Lion’s Paw Development Co., is founder of BaseballontheBoulevard.com
Opinions on the Back Page are those of the writer and not necessarily those of Style Weekly.
The Richmond Colisieum looks like an eyesore in the middle of the beautiful redevelopment. Can anything be done. Perhaps a new attractive color of paint on the top of the outdated arena. Better yet, implode the darn thing and rebuild it where Azalea Mall once lay. State of the art is always better for business. Duh! I mean, and Norfolk has a downtown mall! We cant even get a downtown plaza. Wake up lawmakers and developers. What are you all doing with the money? And what about VCU football. The fans have been begging have they not. Columbus OH never had a pro football team but Ohio State has given the city a great sense of pride. Oh Yeah, the Diamond. Come on. Enclose it and maybe put a dome on top of it and then youre talking attracting all types of franchises. Indoor Soccer/tennis? And lastly, we need ball courts(Raquet ball/Basketball courts at the local parks. Forrest Hill and Maymont are nice but lame. Lets be real here. Until Richmond MAKES THESE IMPROVEMENTS THE CITY WILL CONTINUE TO BE UNATTRACTIVE AND IT WILL NEVER FULLY REACH ITS POTENTIAL!
There are so many problems w/ the referendum proposal, I hardly know where to begin.
1) We elect officials to make these decisions. They are the ones w/ the time/incentive/information necessary to make an informed decision on this proposal. The average citizen can't, won't, and shouldn't be expected to educate themselves on this project to the level that the Mayor's office and City Council should. Richmond isn't a small town village in New Hampshire. We live in a representative democracy.
2) What developer would want to develop anything major in this town if every major project is going to be subjected to a referendum?
3) Even with a referendum, an independent study would still be necessary....otherwise what objective information would residents have to base their decision on? Would Mr. Rea prefer an ill-informed electorate?
4) A referendum runs counter to Mr. Rea's concern that "the loudest voice will prevail." A referendum means campaigns from both sides. Just how is that expected to cure the concern over the loudest voice prevailing? It would only exacerbate it. The best answer is for the Mayor and City Council, with the aid of independent third parties, to seriously evaluate and study the proposal. No loud voices involved.
5) If "surely, there are other issues that need our attention," as Mr. Rea suggests, why would we seek to occupy the attention of the voters by adding a meaningless, nonbinding issue to the ballot? (I'm assuming, of course, that Mr. Rea agrees that voters should spend time and energy educating themselves on issues before they cast their ballot.)
6) R-Braves fans had their vote. They didn't come out to support the team on the Boulevard. Now, the R-Braves are gone, and that major league affiliation is gone. So "R-Braves" fans as an entity don't really exist anymore not anymore than Brooklyn Dodger fans and really shouldn't carry any greater weight than any other citizen of Richmond in this process.
I believe Mr. Rea's referendum proposal is a red herring designed to do nothing more than distract and delay discussion and a decision on this issue. Rather than having City Council stick to it's current timeline for decision, he would apparently rather them wait until November for a nonbinding proclamation from an electorate that will not be nearly as informed as our duly elected officials are on this subject.
The politicians and promoters have had the where-to-build-a-baseball-stadium issue running back and forth, all over the map, for years. It's been settled, then unsettled. Our elected officials still seem to be afraid to be wrong.
I happen to agree with Charlie Diradour's position on this, but I know some well-meaning people who care about Richmond's future don't. Truth be told, all the studies don't agree, either. Where's the study of what the R-Braves' regular fans would like?
So, now I'm interested in finding out how many Richmonders want professional baseball to stay on the Boulevard, or at least don't want a stadium built in Shockoe Bottom.
In 2005 City Council was ready to put a non-binding resolution on the ballot that would have asked the voters to say what they thought of building a baseball stadium in Shockoe Bottom. Then the proposal for that referendum disappeared.
It was a good idea in 2005. Now it's a great idea!
In 2009, it's high time for Richmond's citizens/voters to have their say. Let's have the question put on the ballot in November. It only takes five councilpersons to make it happen. And, when a referendum is run with a general election, according to the City Registrar, the cost is next to nothing.
Wouldn't that be better than another six figure study of a study? Wouldn't that be better than simply allowing the loudest voice to prevail?
Let's have the citizens of Richmond declare their preference for Baseball on the Blvd., or Baseball in the Bottom. Please urge you council representative to consider supporting a referendum.
Surely, there are other issues that need our attention. While baseball is important, it's not more important than schools, or the decaying infrastructure, or what's economically feasible.
Go here (http://fdhub.net/baseball-on-the-ballot/) to read more background about the referendum on the baseball stadium concept.
What politician or promoter trying to win a public relations victory wants to come out as being against undiluted democracy?
Joe, if the numbers don't add up, the project should not go forward. I agree. But why don't we wait to see what the Davenport study of this proposal has to say? That's my main problem with Mr. Diradour's piece he seems to want to short circuit the evaluation process. I think that would be a tremendous mistake and a dereliction of duty by our city leaders considering the tremendous upside this project has if the numbers hold true.
As for seeing money connected to a specific bank account, while it would be nice if a major grocery store chain or other stores came forward and publicly announced their interest in locating at Shockoe Center, I wouldn't expect them to do that before the project is given the go-ahead. Lining up merchants is a risk that the potential bond purchasers have to decide whether they want to take on. Unless and until the developers sell the bonds (which may not happen if the bonds appear too risky, or for whatever reason), then the project does not go forward, and the city doesn't commit any money for infrastructure. If the developers sell the bonds, and the project does not generate the revenue that was promised, then that loss will go to the bondholders, who can either foreclose on the property, and thus, own a ballpark, or more likely, they renegotiate the terms of the payment. The city is not at risk on that, and that will be set out in the development agreement between the city and the developers.
Mr. Diradour, while I appreciate your offer to meet for coffee or lunch, I prefer to continue our debate in the open (and I'm not quite sure what "contact democracy" is anyway). Obviously, I prefer my anonymity, even though I am not "truly" anonymous, as you can easily associate my name with my prior opinions/statements. And no, my desire for anonymity has nothing to do w/ this project.
Fanguy I would like to have lunch with you or meet you for a cup of coffee so that we could discuss our differences. I admire your tenacity and want a chance to discuss this issue. Even if we go away from the conversation disagreeing, I think it would be a good exercise in contact democracy. Please email me at charlie@lionspawdevelopment.com Thanks Charlie
Wednesday, April 01, 2009 9:41:19 AM by JoeRichmond
FanGuy,
I have confidence that Charlie Diradour can address the issues you have posed to him. As the kids say: that is a conversation between "A" & "B."
I still have concerns about how this proposal was dreamed up before the current economic meltdown and therefore cannot trust any of the numbers in the report. The stimulus plan is not simply a hand-out to keep developers hands deep in the pockets of the citizenry.
If Richmond's elected leaders do not see that the city has more pressing needs than whether to build a baseball stadium, then that might be just what it takes to make even more people decide to pack it in and head to the country.
And, Fanguy, you talk a good game about private investors and the money they are willing to put on the line, but I have yet to see the money connected to anyone's name or bank account.
The numbers simply DO NOT ADD UP. I see no reason to trust Highwoods OR Diradour at this juncture. I am (literally) sitting on my wallet. Someone needs to show me the money and where it is truly supposed to be coming from before I can embrace this crazy idea.
Oh, and Joe, to address your point. First, who knows if the surrounding communities would support a new stadium on the Boulevard now. Regardless, the Boulevard is not the best place for baseball in Richmond. The Boulevard should be re-developed, but as the study from last fall confirmed, the highest and best use of the Boulevard is not baseball. We don't need to rebuild a commuter stadium on the Boulevard. We had one for 50 years and the Boulevard failed to develop.
I believe we should only support a ballpark if it is packaged as a vehicle for accompanying growth and development, which is what the Bottom proposal aims to do. Going it alone for $8 million and building something that will revive the Bottom, bring $300 million worth of private investment to the city, and fit with the growth that is going on downtown and along the waterfront is, in my opinion, a better goal for Richmond than re-developing a failed semi-suburban site with the aid of surrounding communities.
Joe, You say I'm up to my old tricks, but I notice you don't refute any of the points I make, and don't provide any support for the incorrect statement that Diradour makes about Richmond's bond rating.
Tuesday, March 31, 2009 7:19:38 PM by Joe Richmond
FanGuy,
And, I can see you are up to your old tricks.
I take a holiday for two weeks and I come back just in time to see you attempting to bully and impugn the integrity of Charlie Diradour, who incidentally uses his real name to sign his posts unlike you "FanGuy."
Help me understand something.
Henrico County has publicly supported the Boulevard site. Both Henrico and Chesterfield have previously agreed to renovate the Diamond. None of the counties have supported a Shockoe Bottom stadium.
Why should Richmond prefer to go it alone, instead of using this opportunity to promote some regional cooperation?
I see Mr. Diradour is up to his old, misleading tricks once again.
He states that "by issuing bonds we are risking our bond rating." This is simply not true.
But what is more misleading about this piece is Mr. Diradour's motives. Mr. Diradour goes on and on about financing and sustainability. To make this point, he uses strained comparisons between the square footage of a sprawling suburband mall and that proposed for the Highwoods development in downtown Richmond. Now, I will be the first to agree that If the numbers projected by Highwoods don't add up, then the project should not go forward. But what is striking about Mr. Diradour's comments is that rather than permitting an independent study of the proposal, he would rather you just take his word for it. He is, after all, a Fan developer who is strongly advocating a return to the failed baseball enterprise on the Boulevard. Why shouldn't we simply trust him??? Hmmmm......
Curiously, Mr. Diradour takes issue with the Daveport study, and asks why Davenport is doing work that Highwoods should have done. C'mon Mr. Diradour, would you really accept studies and analysis conducted by Highwoods at face value? No, you wouldn't, and the city shouldn't either.
I think I will wait to hear what Davenport has to say about the project. Personally, I'm glad that the city is taking the time to seriously consider and study a proposal that seeks to bring in more than $300 million in PRIVATE investment to the Bottom. Mr. Diradour, on the other hand, would apparently rather the city just dismiss the proposal out of hand.
If the numbers don't add up, then the project should not go forward. But what Mr. Diradour wants dismissal of the idea w/o true evaluation is not an approach our city leaders should follow.
