OPINION: Navy Hill: What Went Wrong?

A majority of City Council believes that Richmonders want the city to focus on our biggest problems.

In late 2017, Richmond Mayor Levar Stoney triumphantly announced “the largest economic development project in the city’s history.” The billion-dollar Navy Hill development would transform downtown, adding new apartments and offices, retail shops and restaurants, and a brand-new Richmond coliseum.

Two years later, the project is all but dead. What happened?

The apparent death blow came from City Council, whose approval the mayor needed to make Navy Hill a reality. At the Jan. 27 meeting, five of the city’s nine council members introduced a resolution asking Stoney to withdraw the Navy Hill proposal and start over.

The council resolution contained at least four major complaints.

1. Navy Hill arose out of a flawed process.

According to the resolution, the mayor rushed the proposal process, only allowing 92 days for developers to respond. More importantly, the city tailored its request for proposals to the Navy Hill development group’s plans, which were already in place long before the request was issued.

The developers tried to gin up the appearance of public support by flooding the internet with ads, possibly even paying residents to attend a council meeting. The resolution’s authors seemed to realize that much of the support claimed by the developers actually came from people with financial stakes in the project.

While the council resolution didn’t name him, the development proposal process did not reflect civic needs so much as the interests of one man in particular: Navy Hill’s leader and Dominion Energy’s chief executive, Tom Farrell, who has been arguing for a new Richmond arena for almost a decade.

The resolution calls for better planning and real public input. Council especially seems to want to connect any development with the city’s Richmond300 planning process, which does a much better job of gathering community ideas and needs than Navy Hill ever did.

2. Navy Hill’s benefits aren’t so beneficial.

The council resolution reflects concern over some of the supposed benefits of the project, especially its affordable housing component. The Stoney administration negotiated the addition of affordable housing units to the deal, but council wants tougher requirements built directly into a new request.

The Navy Hill math on affordable housing was always fuzzy, with the originally 600 units now down to around 280 with some 200 additional units. Few of these units would be accessible to low-income residents, thanks to the generous way developers calculate affordability. New market-rate apartments already are being built in downtown that would rent at the same rates.

Other supposed benefits were not mentioned in the resolution, but many of these were of questionable worth to the proposal. For example, if there is such a strong business case for more convention space, it seems like developers should be lining up to build a convention hotel no matter whether a new arena pops up down the street or not.

3. A new coliseum may not be necessary.

The developers and city administration have argued from the beginning that a new arena would have synergistic effects on the downtown area: Restaurants and retail spending, increased hotel stays and occupants of new offices and apartments would bring in more than enough tax revenue to cover the costs. Critics, myself included, are skeptical of these claims, citing economists and similar developments in other cities that have not produced the promised revenues. One thing even the developers admit is that arena revenue alone is nowhere near enough to cover construction costs, so a new coliseum requires a hefty public investment.

The council resolution acknowledges this skepticism by making the new coliseum optional. It calls for a proposal request that lets the city see if alternative visions of downtown development — that is, those without a costly arena rebuild – can offer a better return on investment for the city.

4. The costs are too high.

The plan controversially uses tax-increment financing to pay for arena construction. Such funding can be a useful development tool for cities — when properly implemented, it merely uses future revenue from a construction project to pay for that project, at no current cost to the taxpayer.

But the arena-construction project is so expensive that the Navy Hill version had to draw on tax revenue from existing properties, thus robbing the general fund of money that would otherwise go to schools, salaries and other city priorities. Even if the developers were successful getting the General Assembly to throw state sales taxes into the deal, the project hinged on using revenues from properties outside of the development area, especially a newly built Dominion Energy tower.

The council resolution calls for any tax-increment funding to instead be limited to the development area. Plus council wants to appraise the land that the city was essentially going to give away to the Navy Hill developers. City residents cannot know how much the project would actually cost unless we know how much we would gain from just selling the land slated for development.

While the developers did all they could to bring public pressure to bear on the City Council, none of it seems to have overcome the skepticism of a majority of council or constituents. What happens next is anyone’s guess. The council may have asked the mayor to withdraw the proposal, but he initially refused to do so. We still may see a vote. Also, we still may see some tinkering to the proposal that helps it rise from the dead. But with five of nine council members clearly opposed to Navy Hill, the math is against it.

One thing is clear: a majority of City Council believes that Richmonders want the city to focus on our biggest problems, and not the next big, shiny project.

The mayor appears to have believed otherwise and now he’s paying the price.

Richard Meagher is associate professor of political science at Randolph-Macon College. He blogs about state and local politics at rvapol.com.

Opinions expressed on the Back Page are those of the writer and not necessarily those of Style Weekly.


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