The cost behind Henrico's 'Green City' arena: 'It's a once in a blue moon type project'

Posted at 11:46 PM, Dec 15, 2020
and last updated 2020-12-16 06:38:47-05

HENRICO COUNTY, Va. -- There is always a fair amount of financial risk associated with sports arena projects, according to an expert in public-private partnerships, but with aproposed 17,000-seat arena in Henrico County, that risk will fall on the developers, and not the taxpayers.

John Buttarazzi, an adjunct professor at Georgetown University's McCourt School of Public Policy, said it was that unique financing structure, centered around a Community Development Authority, that could lead to the project's success, as long as people want to invest.

"The first real test on it being financially viable will be when the CDA issues bonds, if there are no takers that's going to be a pretty good indication," on whether the project will come to fruition, Buttarazzi said.

The head of the Henrico County Economic Development Authority, Anthony Romanello, said he believed the project would be a slam dunk.

"It's a once in a blue moon type project," Romanello said.

Romanello and Carie Tretina, the Chief of Staff for County Manager John Vithoulkas, sat down for an interview about the massive project.

The name: Green City.

"It was in early spring of 2020, and our office got a call from the developers asking if there was a suitable site for such a unique economic development opportunity," Tretina said.

Turns out, it was some of the same developers behind the Navy Hill project.

That nearly identical proposal for the area around the Richmond Coliseum was backed by Richmond Mayor Levar Stoney but ultimately rejected by Richmond City Council in February.

Council members who voted against the proposal questioned the financials of the project, what they perceived as a lack of transparency, and the submission of just one proposal for the redevelopment of the downtown property.

But, when the developers brought the Green City plan to Henrico, every single member of the Board of Supervisors jumped on board.

"Does there need to be an RFP put out there, do there need to be multiple competitive bids going on? Or no?" CBS6 investigative reporter Melissa Hipolit asked.

"So, no, economic development opportunities come in all different forms and fashions, and this one is an unsolicited proposal," Tretina responded.

The $2.3 billion arena project is slated to be built in Northern Henrico on the old Best Products site off Parham Road, near interstate 95.

In addition to the arena, plans calls for office and retail space, two hotels, and 2,400 residential units.

Green City carries nearly double the price tag of Navy Hill, but those behind it said the financing structure is practically the same where tax revenue generated from the project would pay back the debt used to fund the development.

"Will this hurt the region if this project is in Henrico as opposed to the downtown Richmond area?" Hipolit asked.

"Though the project is in Henrico, there will be numerous regional and statewide benefits that come from the economic activity an arena anchored mixed-use development provides," Tretina replied.

The city's proposal was slightly different from Henrico's in that real estate tax revenue from an 80-block area surrounding the actual development would have been used to service the debt.

Some critics felt that money would have been better spent on schools and other services. In both proposals, each locality would not have been responsible for paying back the debt used to fund the developments had the projects failed.

"With Green City there is no chance that taxpayers would be left holding the bag, so to speak?" Hipolit asked.

"That's not the way we do business in Henrico. There is no risk to the taxpayer," Romanello said.

"Let's say the developer is having trouble paying back the debt? What would happen?" Hipolit asked.

"That would be between the developer and the bondholders," Romanello replied.

John Buttarazzi teaches a course about public-private partnerships like this one.

"This would be exciting, if they land the NCAA tournament for basketball, I'll probably go down there," Buttarazzi said.

He said there is always a fair amount of risk associated with sports arena projects on the revenue side.

"But that's what kind of makes this structure interesting, right? Because the operating, the financial risk, is really being shifted over to the developers," Buttarazzi said.

Henrico plans to create a community development authority for the project.

The county said that will allow the developer to take all tax revenue generated within the project's borders for a period of up to 30 years to repay the bonds.

After that, the county gets the tax revenue generated by the project, which is just like what happened with Short Pump, White Oak Village, and Reynolds Crossing.

"In those three situations a CDA was established and in every single one the debt has been paid off and the county has now regained tax dollars?" Hipolit asked.

"Yes, exactly right," Romanello replied.

"It's been done before, there are other CDAs in the state, so it's quite possible," Buttarazzi said when we asked him if the plan could succeed.

Buttarazzi said taxpayers should keep an eye out for if Henrico County ends up making a financial contribution to the project.

He said it could be justified, but, if it happens, it is worth exploring the reason why.