VCU not paying property taxes causes hindrance for Navy Hill, plan’s developer says

Hannah Eason, News Editor

The Student Government Association held a presentation on the Navy Hill project during their Monday meeting with words from Michael Hallmark, the development principle for the NH District Corp.

The $1.5 billion Navy Hill project — which would redevelop 10 blocks of downtown Richmond with a new arena, hotel, affordable housing and $300 million invested in minority-owned businesses — requires review and approval from Richmond City Council before passing.

Mayor Levar Stoney selected the Navy Hill plan in November. NH District Corp, a nonprofit development group led by Dominion Energy CEO Thomas F. Farrell, is leading the plan.

Hallmark, an architect who specializes in arenas, laid out the Navy Hill plan in detail at the SGA meeting and spoke about the positive and negative aspects of the development.

Here are some excerpts from Hallmark’s responses at the meeting. Answers have been edited for space and clarity

Michael Hallmark on funding

All the money in this project comes from outside investor sources that have other interests besides Richmond schools. They want to make a return on their profit. And so there’s a category of investors constantly looking for that. They can invest in Richmond, they can invest in Philadelphia or Atlanta.

While the city appreciates VCU being here, VCU does not pay property tax on it’s buildings. … Therefore, there’s no money for street repair. The city is building streets, maintaining streets and providing police protection and fire departments, and building schools. It has been one hand tied behind its back because of a large number of public facilities here.

Part of the problem for the Navy Hill area is that VCU doesn’t pay property taxes, and neither do the government buildings downtown. These areas continue to need maintenance and police presence, although the area does not receive very much tax funding.

On the arena

The Coliseum was losing half a million dollars a year. That’s real money. That means when the city does its budget, and it gets up to a number, a half million gets taken out to keep that building open. This is why it closed. So here’s the here’s the bottom line for the new arena: without sport tenants, 4.2 million in revenue. With sports tenants, it will produce another $300,000 in revenue. So it’s helpful.

The bottom line of the building: Richmond doesn’t need [sports] teams to underwrite the building. In fact they don’t do a very good job of doing that. They want these teams to come because they generate real sales, and they generate parking tickets and those kinds of revenues. But it’s not an important feature.

It has three level components to it. In the lower bowl, which will have [60%] of the seating, a reserved suite level in the middle, and then upper deck seating. It’s designed to really enhance concerts, so we will get all the concerts in America. How can you say you’re going to get more concerts than they do in DC? That’s a big arena and a big, important market. The reason we can get more concerts here is because we don’t have an NBA team and NHL team that will suck up about 108 nights [annually]. So we have more open nights to be able to get those kinds of programs.

On area development

And so we took the city and divided it up into four quadrants. So we have Jackson Ward here on the upper left. Then we have Monroe Ward. There’s about 185 restaurants in Downtown Richmond. When you get to this quadrant, where Navy Hill is, [there are five] restaurants in that area. So essentially, north of Marshall Street, which is one block up from Broad, there’s one restaurant there. You have some of your health system campus; they’re spread around if you go there, but there’s no date night up there.

There’s no buildings at all anywhere in downtown that has 200,000 square feet of office space. So that means that a company — CarMax or anybody else — who wants to move to Richmond, is not going to do it. They’re going to skip it, they’re going to go to the suburbs, or they’re just going to go right on to Durham or Raleigh or Charlotte or somewhere else. That’s a problem. If our economic development friends were here, they’d be talking about that as a big problem.

We also have a commitment to having a high percentage of affordable housing in this project. It’s a difficult problem for a developer and investor to solve all those issues. Philanthropy and other things have to help with that motion. Some of our investors who are local are taking a part in doing that. We’re actually setting up a separate fund, that’s going to result in $10 million of philanthropy to go to affordable housing units that will allow families with even less annual income than normal for 40 miles. That’s a big deal.