It's still too soon to determine the fate of the Broad Street Community Development Authority, a city official says.
Despite reports of the CDA's planned dissolution, Richmond Chief Financial Officer Harry Black says questions remain about how the city will cope with its exposure to financial risks relating to the quasi-governmental agency.
The revenue needed to repay the $66.7 million in construction bonds issued by the CDA in 2003 is coming up short, which could eventually force the city to fork over as much as $3 million a year to cover the difference.
Parking revenue projections have been off partly because of the stalled performing arts center, which was expected to generate significant special events parking, and delays in construction for the new Hilton Hotel at the former Miller & Rhoads department store. In addition, the owner of the Marriott Hotel has refused to pay $256,000 in special yearly tax assessments, sparking a lawsuit with the city that hasn't been resolved.
"Right now, the CDA represents a financial risk to the city," says Black, adding that the city is looking at alternatives. "We're studying it at this point, and we expect to have a more definitive solution within the next 30 days."
City officials are disappointed that the CDA doesn't have the revenue to build two additional parking decks downtown as originally promised, although Black says he's looking at solutions that would solve overall "transportation" issues, including increasing on-street parking capacity.
The city has enough debt capacity to reissue the bonds and lower interest rates, says Black. To maintain its favorable bond rating on Wall Street, Richmond can't afford to issue debt that exceeds 10 percent of its total budgeted revenues. Three years ago, the city's high debt-to-revenue ratio forced the creation of the Broad Street CDA in the first place, but now Black says that's no longer a primary concern.
City officials hailed the creation of the CDA in 2003 as a creative financing tool that allowed it to fund key infrastructure improvements on East Broad Street off the city's books. But the price was steep in exchange, bondholders received a 7 percent interest rate and Richmond ultimately agreed to back the bonds if the payments fell short.
Black says the city is "way ahead" of the financial risk proposed by the CDA, but says it's unclear how much demand there is for two new parking decks. Richmond is bringing in a parking consultant within the next 60 days to help it determine how much it can afford to build in preparation of a new federal courthouse, a planned Hilton Hotel and a revamped Carpenter Center.
Overestimating parking demand downtown got the CDA in financial trouble in the first place, Black concurs.
"Nothing definitive has been decided with respect with what the city's going to do," he says. "We have not analyzed the possibilities." SClick here for more News and Features