August 30, 2006 News & Features » Cover Story


Arrested Development 

Under Mayor Doug Wilder, has the city's economic development been put on the back burner.

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A similar investment in the Richmond region would be the equivalent of three years' worth of NASCAR dollars surging from the Richmond International Raceway, or the opening of two Philip Morris research facilities downtown.

Willis still recalls the feeling. "It sent chills … to stand there on the tarmac with these guys from [Basel] Switzerland and know the opportunity can make you or break you," he says. In the end, La Roche decided to build its massive drug-research and manufacturing center in Florence, developing 1,400 acres along the Pee Dee River.

Virginia courted La Roche, too. But something happened on the way to the chapel. Those who invoke the story say that Virginia was on the short list to land La Roche, but then-Gov. L. Douglas Wilder thwarted the relationship.

Instead of La Roche execs finding Wilder waiting at the airport, they were left waiting on Wilder at the Executive Mansion. After about an hour of no Wilder, people familiar with the negotiations say, the cadre of powerful businessmen picked up and left.

They took their business with them.

Willis is now mayor of Florence, S.C. And the city is a different place because of La Roche, he says. "It gave our city credibility to compete in the global market," he says, and companies such as Honda and QVC have since established roots there. More important, he says, the enormous investment has swelled the city's tax rolls, providing much-needed funds for ailing public schools, police and other public services.

Hugh Keogh, president and chief executive of the Virginia Chamber of Commerce, dismisses the account as irrelevant: "Old news," he quips. Keogh served as head of the state's department of economic development from 1987 to 1992 under governors Gerald Baliles and Wilder.

"Would we have liked to have had [LaRoche] here?" he says. "Yes. Was it a major loss? Yes. Has Virginia more than overcome it? Absolutely, yes."

But others say the story offers new meaning now that Wilder is Richmond's mayor and sheds light on everything from the city's response to Shockoe Bottom to its pursuit of MeadWestvaco.

It has some people asking, When it comes to economic development in the city, is Wilder an asset or a liability?

After 18 months on the job, Wilder is defying assumptions about economic development just as he's done elsewhere with City Council, the budget, the school board and his City of the Future plan. He's turned the meaning of "open for business" into a veritable dare, asking not what the city can do for an investor but what can the investor do for the city? Gone, Wilder says, are the days of excessive incentives — read: Stony Point Fashion Park and Riverside on the James.

Wilder's earned praise for reeling in what had become unblinking payouts to civic booster organizations, a proposed performing arts center, a downtown hotel and the city's own languishing properties. But critics charge that he's pushed his economic development department to the brink of ineffectiveness.

Style Weekly interviewed 27 people involved in city development for this story — members of the mayor's Shockoe Advisory Committee, current and former city officials, City Council members, real estate brokers and private developers. A half-dozen of them declined to be named, fearing backlash from City Hall, such as a building-permit denial or health-code citations.

Nevertheless, when asked about the city's role in economic development, most seemed to raise the same skepticism: Who's in charge? What's in the pipeline? Where's the new ballpark or Miller & Rhoads hotel? What would happen differently if Tropical Storm Gaston struck today?

In response to those questions and others, Linwood Norman, Wilder's press secretary, replies: "The mayor does not fence with shadows. He likes to deal up front with people." Simply put, Norman says, "The city of Richmond is clearly experiencing an economic boom and the department of economic development is on top of it."

So how does one define an economic boom?

For starters, rising property values throughout the city have generated more real-estate tax revenues at the city's disposal. And everywhere, it seems, luxury condos are in development, a sign that the city is a desirable place to live. There are cues from the corporate world, too, such as the downtown research facility Philip Morris is building.

But the number of actual jobs in the city is hardly increasingly. Businesses continue to vacate Richmond for the space and comfort of the surrounding counties, according to the Virginia Employment Commission. And since Wilder's inauguration, several of the development projects that were on the city's horizon have been nixed.

Under Wilder, the Richmond Department of Economic Development has lost two directors, first when John Woodward was forced out in sumer 2005, and then again this summer, when Wilder's own hire, William Jabjiniak, was quietly demoted and moved to another city department.

Two deputy directors in the economic development department also have left, and the city's Industrial Development Authority, an entity charged with making loans to businesses to bolster economic development, is under investigation by Richmond Police for missing loans worth $240,000. It has been renamed the Economic Development Authority but for now remains inoperable.

How about a comprehensive economic development plan for the city's future? On that question, both the city administration and City Council agree: There isn't one.

A draft of one exists, numbering 100 pages or more, and sits in Councilman William J. "Bill" Pantele's Main Street office, gathering dust. Pantele, a lawyer who serves as chairman of the council's finance committee, says he's read the plan. It's "pretty good," he says — it just hasn't been reviewed by the Wilder administration.

Even if it had been, Pantele adds, there's a caveat: "I don't think we have an adequate economic development strategy or the organization to implement it."

Looking around Richmond, that may seem incidental. Cranes and backhoes abound. According to the Richmond Department of Economic Development's Web site, recent and ongoing construction projects in the city total more than $2 billion.

The $102 million federal courthouse project is well under way in the 700 block of East Broad Street. The $190 million Capitol Square improvements are moving forward, however slowly. Virginia Commonwealth University is transforming multiple city blocks for its new nursing school, medical center expansion and engineering school with investments exceeding $1 billion now and an expected $1 billion to come, albeit off the city's tax rolls. And a slew of local and national developers such as Robin Miller and Douglas Jemal are increasingly ubiquitous, their hands in property across the city.

Yet all of this is happening with little or no assistance from city administration. Contrary to what some observers had envisioned, the Wilder team has stymied more developments than it has spawned.

Under the previous administration, in 2003 the city took credit for ushering in Stony Point Fashion Park and the Riverside on the James condo project — and was criticized for prodigious financial enticements to help developers pay for parking and public improvements, not to mention real-estate tax abatements.

Today the opposite is true. Plans are halted for the $112 million performing arts complex. A $330 million ballpark project is off the table. Insiders say that other major developers have made offers that haven't been acknowledged by the city. Likewise, they note, even some phone calls to the mayor from friends who want to launch projects have yet to be returned.

Such assertions come as little surprise to Jemal, president and owner of Washington, D.C.-based Douglas Development Corp., which has invested more than a half-billion dollars in downtown Richmond during the past few years. Jemal has purchased and plans to develop into condos or office space landmarks such as the former Interbake Foods factory and the 23-story former Central National Bank building. He also has $200 million tied up in the James Center.

When it comes to economic development, Jemal says: "The city has not done anything. It doesn't get it."

He says he's met with Wilder, Chief Administrative Officer William Harrell, former policy adviser to the mayor Paul Goldman and the former head of the economic development department, Jabjiniak, but they haven't acknowledged his requests. In order to move forward with his developments, he needs the city's help with things like parking and other minor concessions.

"Everybody talks the talk, but nobody walks the walk," Jemal says. The city's stalling on his inquiries have affected his ability to develop the landmark bank building at 219 E. Broad St. that he purchased from James E. Ukrop and Bob Englander for more than $5 million, he says.

"We're hampered with marketing" efforts, he says, because the city hasn't responded to offers he's made to purchase a parking deck the city owns, through its metropolitan authority, or to requests he's made for additional parking. He asks a reporter to check out the lot at Second and Grace streets, which he describes as derelict. "I don't think it's giving away the kitchen sink" for the city to agree to sell and profit from a parcel that incurs debt, such as one at Second and Grace, he says.

Despite the bureaucracy, Jemal says the city is still an attractive place to do business. He predicts economic development will be increasingly driven by individuals like himself who recognize the city's potential but don't need its help in realizing it. "Every resident that lives downtown brings $15,000 to Richmond," Jemal proffers from research he's conducted on the trend in urban-loft and -condo living.

Business owners and investors in Shockoe Bottom tell a similar story. Exactly two years ago, on Aug. 30, 2004, Tropical Storm Gaston flooded the 9-acre historic neighborhood with up to 14 inches of rain in just 10 hours. A 2005 report by the Federal Emergency Management Agency estimated damage to the 42 businesses in Shockoe Bottom at $60 million. Some shops and offices relocated, and some, including restaurants such as Bottoms Up Pizza, remained closed for nearly a year. At least two, The Kitchen Table and the coffeehouse 17.5 Ethos, closed for good.

City Council President G. Manoli Loupassi says Shockoe Bottom has become the "poster child" for how the city does economic development. Loupassi, who is chairman of the Greater Richmond Partnership, wonders of Wilder's efforts to foster economic development, "What has he done?"

The city's development has come despite the city's help, Loupassi says. "I feel the city is experiencing a tremendous amount of private investment," he says. "We've turned the corner and there's a core synergy that recognizes it's an economically viable place to invest."

To be sure, Shockoe Bottom had suffered intermittently from an identity problem and recurring crime long before Gaston. A group called the Richmond Ballpark Initiative hoped a baseball park development would change this.

They rallied behind Washington, D.C.-based Global Development Partners, which proposed a $330 million multi-use ballpark project with commercial, residential and retail space next to the 17th Street Farmers' Market. Property owners and the city, which owns about three acres in the area, realized the long-held land might fetch millions.

Conversely, preservationists and Church Hill residents argued that the ballpark would disturb Shockoe Bottom's historic footprint. The mayor lambasted the project as financially risky for the city (it required significant city taxes to pay off the project's bonds). Then came Gaston, which exposed the Bottom's economic fragility.

Enter the work of the mayor's Shockoe Advisory Committee. Wilder charged the group with reviewing specific development proposals for the Bottom once questions were raised about Global's financing plan for the ballpark.

The 15-member panel spent 14 months to issue its report. When it did, it recommended such things as infrastructure improvements, neighborhood collaboration, increased code-enforcement efforts by the city — but offered no word on future projects. "We requested other formal proposals but didn't get any," says Michael Pratt, a Virginia Commonwealth University economics professor who served as chairman of the advisory committee.

That's in stark contrast to what Wilder's administration was telling the public. In an April 29 article in the Richmond Times-Dispatch, Goldman, the mayor's policy adviser at the time, declared there were "upwards of a half dozen" developers that were seriously interested in the same tract of land where the Bottom ballpark project was proposed and that the developers had details and financial backing.

Those developers never emerged.

Reached by phone, Goldman uncharacteristically declined to say why those developers didn't come forward. When asked by a reporter, the city's Norman says only, "Was this the old Goldman or the new?"

"The stadium proposal stilled other interest," Pratt says of the advisory committee's findings. "The Shockoe community is already evolving," he says. "The question is, can it move on and overcome certain barriers?" Pratt casts Shockoe Slip as a model, showing that once momentum and a unified voice and vision are in place, "those things pertaining to economic development take care of themselves."

That developers failed to show raises serious questions about the Wilder administration's approach to development. Wilder's team has repeatedly said that the developers were there and that others would step up without requiring grand giveaways from the city. But in the case of Shockoe Bottom, if those developers existed, they never offered a single proposal.

City Councilwoman Delores McQuinn, whose 7th District includes Shockoe Bottom, sees the area and the city's approach to economic development in dire terms. Two of her constituents died in Gaston.

"This city is gripped in fear, that's the bottom line," McQuinn says, following last week's town hall meeting at Main Street Station to address progress in the Bottom. At the meeting, Wilder's staff announced it would spend $20 million to fix drainage in the Bottom as opposed to the $1.9 million originally promised.

Still, McQuinn has doubts. "The business folks and developers, they're holding off because of the distraction," she says. "And people are afraid to speak about it. I talked to a developer today who said he was here and ready to make a huge investment until he witnessed the unrest with the whole political atmosphere."

Developer Charles MacFarlane, the only member of the Shockoe Advisory Committee who also is a Bottom resident, says the role the city plays in the Bottom's future is paramount. "If ever there was an opportunity to get it right in terms of new urbanism and 'live, work and play,'" he says, "it's Shockoe Bottom. This city has absolutely not gotten it right in this regard."

"Everybody thinks it's about money, but it's not," MacFarlane says. "It's about getting commuter parking out. It's about landscaping, maintenance and cleanup of what we have. It's about trash cans. I pick up trash every Saturday and Sunday."

MacFarlane shows a reporter a design book the city of Norfolk put together on architectural styles for what are called "adaptive reuse" historic properties. "The good news is, the city is listening," he says. "We're just anxious to see these things in place."

David Napier, owner of Old City Bar and interim president of the newly formed Shockoe Bottom Neighborhood Association, had hoped for a new ballpark but refuses to fuss about it now. Instead, he envisions a bustling Shockoe Bottom complete with shops, eateries and attractions that keep its historic charm aglow — think Charleston, S.C.

"We're at a critical juncture," Napier says. If the city floundered in its response to the area before, he says, it seems committed now. On a recent citizen-initiated cleanup July 29, he spoke directly to Wilder. "I feel tasked," Napier says of the impression the mayor made. "The ballpark [debate] got me so worked up, the roller-coaster was too much. I think the whole process scared potential developers off."

Now, he says, small steps will have to do.

"We're so shell-shocked we're thinking streetlights; we're thinking what comes after we spruce it up. We're not going to push for any great economic development project that we might not get."

In a recent driving tour of the city's economic development projects with Style, Wilder, along with Chief Administrative Officer Harrell, recently appointed Economic Development Director Garland Williams and Project Development Manager C. Cary Brown, offer a different view of the city's progress.

The four-hour jaunt is a circuitous route that touches every district and shows off both the city's pride — the James Center, the Virginia BioTechnology Research Park, Cary Street Road — along with the public housing and boarded-up and empty buildings. It's the same tour given to public bonding agents from Moody's and Standard & Poor's.

It's difficult to not be impressed by the prospects on Richmond's horizon. Neatly dressed and instantly likable, Brown is the guide, plucking details about projects with ease. Wilder, Harrell and Williams listen attentively. A security guard sits at the front of the van. A red Buick holding two more guards follows behind. Stopping in front of the new United Network of Organ Sharing headquarters on Leigh Street, Brown points out the confluence produced by VCU Medical Center, the BioTech Park and UNOS: "On any given day there will be 2,000 scientists north of Broad," he says.

Wilder has ruffled feathers from reportedly taking credit for projects that resulted from the work of others. For instance, a day before then-Gov. Mark Warner was to announce that Philip Morris was building a $300 million research and development project downtown, Wilder trumped the governor by announcing the project to the press.

Harrell says Wilder's role in the Philip Morris project is facilitative. The BioTech Park happened on Wilder's watch as governor, he says, so therefore the BioTech Park is the reason Philip Morris wanted to be where it is.

But there's no mention of the lengthy courtship commenced by entities such as the Greater Richmond Partnership and Warner, who were critical in luring Philip Morris USA's headquarters to Richmond from New York — which, some would argue, had more to do with landing the research center.

As the entourage skirts past heaps of scaffolding hiding the facades of various projects, Wilder says he can't take credit for the federal courts complex and similar efforts under way before he took office.

That's not the case with the much-anticipated Miller & Rhoads project, which calls for a 240-room Hilton Hotel to anchor high-end condos, office and retail space. The effort has been marked by fits and starts, largely because of lenders worried about the city's paltry 60 percent hotel occupancy rate.

"This was absolutely dead," Wilder says, pointing to the remnants of the flagship department store as a city-driven initiative. In his words, the developer of the project "wasn't cutting it" until he stepped in.

He pushed the process along after the Richmond Redevelopment and Housing Authority alerted him to myriad problems with the project, Harrell says: "The mayor drove getting this thing done." (A source close to the deal says that the hotel slated for the project will now likely be a Hilton Garden Inn, not a full-service Hilton Hotel, a considerable step down in prestige.)

The hotel isn't done. It sits empty and vacant, more than a year after construction was originally expected to start.

But it's coming, they say during the driving tour. It's the nature of economic development, the group members explain, to keep things close to the vest. Meanwhile, Brown hints of more projects in the pipeline: A hotel in Shockoe Bottom. The possibility of a major retailer anchoring a refurbished Carpenter Center. And there is its most aggressive pursuit: to convince the region's newest Fortune 500 company, MeadWestvaco — now in temporary quarters — to choose the city over the surrounding counties for its home, on land next to the Federal Reserve with a view of the river.

Wilder seems to grow reflective at the prospect. Pressing his head to the window, he remarks: "All of what we've been talking about on the bus is, if we define it, money. But for what?"

Time and again Wilder has said if you fix education and crime, economic development will follow. It also means letting some projects, such as Jemal's, steer themselves. Passing by Blackwell, a community still plagued by public housing that, Wilder adds: "It doesn't make any sense to bring businesses here, unless there's some purging of our own involvement." S

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