Richmond’s World of Secrecy and Collusion

VCU President Michael Rao

by Peter Galuszka

There’s long been the “Virginia Way” of ruling oligarchs making decisions in backrooms while leaving the public out of the picture. But then there’s also the “Richmond Way,” which is the same thing on steroids.

The key focus today is the so-called Navy Hill District Corporation, a group headed by Dominion Energy chieftain Tom Farrell that wants to replace the aging Richmond Coliseum and build a $1.4 billion mixed-use project on 10 blocks just north of Broad Street downtown.

With Richmond Mayor Levar Stoney complicit, the group which involves some of the city’s biggest movers and shakers has worked mostly in secret and has gone to great lengths to keep the public as far away from planning as possible.

Richmond has had its share of flops when it gets into top-down, centralized economic planning somewhat reminiscent of Moscow, where I used to live and work. One was the 6th Street market, a failed project not far from Navy Hill. The city, which has a poverty rate of about 25%, is paying millions to the Washington Redskins, one of the richest firms in the National Football League, to train at a city facility for three weeks every summer.

Navy Hill also had an inauspicious start. When the city sent out requests for proposals for replacing the Coliseum a few years ago, it got exactly one proposal – from Farrell’s group. 

They retreated behind closed doors and eventually came out with a revised plan, it had a Hyatt Regency Hotel, mixed-use apartments and retail and restaurants.

It would be funded through instruments called Tax Incremental Financing. Founded in California in 1952, TIFs use future revenues from a project to help pay it off. According to Richmond analyst Richard Meagher, project developers and a city create a “district” and freeze the tax rates on the property there. And increase in valuation goes into a TIF fund that would pay off debt.

A curious situation developed early on in the project when the TIF district was expanded from 10 blocks to 80 blocks to include Dominion’s shiny new headquarters tower. It plans on building a similar building next door.

The city and Navy Hill have stonewalled much discussion on their progress and have provided few details. Proponents have throttled a proposed referendum on the project.

All the while, the city and Navy Hill have been busy skirmishing to battle back meddlesome interlopers, journalists and activists who want to know more about what is going on.

Style Weekly and Paul Goldman, a political activist who once headed the state Democratic Party, tried the Freedom of Information Act and failed, at least initially. When the city did respond to Goldman’s FOIA requests, it billed him $2,018.20, which he fought in court. When the Richmond Times Dispatch sought similar documents under the FOIA, it was billed only $269. (I guess that was the “friend” rate.)

The most recent display of sleazy maneuvering just came out of a few days ago, Richmond political author Jeff Thomas and Virginia Public Media (VPM which formerly was the WCVE public broadcasting group) were curious about some fawning op-eds praising the project in the Times-Dispatch. One was apparently written by Michael Rao, president of Virginia Commonwealth University. Another one was supposedly co-written by the two presidents of Virginia Union University and Virginia State University.

The FOIA yield was revealing. It turned out that in the Rao case, the story idea was hatched by a public relations official in the employ of Navy Hill. He contacted a top public relations official at VCU who eagerly cooperated. After some email back-and-forth, the opinion piece titled “Navy Hill Would be Transformative for All” was published in the newspaper under Rao’s byline. The other op-ed came out in similar fashion.

When asked about the oddity, RTD Executive Editor Paige Mudd said that the newspaper would not have published Rao’s column if the paper had known that he didn’t write it. The RTD apparently had requested emails regarding the formation of the op-ed under the Freedom of Information Act, but did not pursue the matter.

It’s not the first time in the state when a public relations unit of a major real estate developer vetted a supposedly independent op-ed written by a prominent academic.

Professor Steve Fuller, a prominent regional economist at George Mason University, recently wrote a laudatory op-ed about Amazon’s huge new headquarters project in Northern Virginia. The piece was reviewed by Amazon and then was published in a regional business newspaper, according to The Washington Post.

Opponents of the Navy Hill project note that it is wrong for the city to muscle its way into the Navy Hill project when there are so many pressing problems such as fixing up and improving the city’s public school system.

Under the TIF scheme, tax money from the project won’t go directly to meet the city’s needs. One could argue that meals and sales tax funds could boost schools, but if the project is so economically viable, why does it need TIFs?

Meagher notes on his blog that one big problem with TIFs is if they put up the scheme and the development doesn’t happen. He says the city claims it has $900 million in commitments from developers, but then again, who are they, what will they build and where? He cites other possible snags for the financial scheme, which somehow hasn’t gotten much attention or debate from Richmond’s ruling elite.

One odd thing about Richmond is that it is undergoing a renaissance, led mostly by Millennials who have done it the old-fashioned, sweat of the brow way. A lot of the new art galleries and related restaurants, for instance, had their origins in the “First Friday” street fests along Broad Street.

These sprang up organically simply because artists thought it was a cool thing to do. They did not need big, complicated public finance schemes, secret meetings, a non-forthcoming mayor, phony editorials by college presidents or Tom Farrell.

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14 responses to “Richmond’s World of Secrecy and Collusion

  1. I’m shocked, shocked to find out that paid professional spin doctors write op-eds, letters to the editor, speeches, and perhaps now even blog posts…..and none of those dollars come my way anymore. Come on, Peter, after years toiling for poor wages, talented ex-journalistas need to make a buck! Since Hamilton ghosted documents for George Washington, ’tis the American way!

    This whole Navy Hill thing is ripe for much more digging, no question. I resist getting sucked in, but maybe….

  2. Steve. I think a 50 – 50 split is fair

  3. Ahh Richmond. The most corrupt city in the most corrupt state in America.

    Peter writes …

    There’s long been the “Virginia Way” of ruling oligarchs making decisions in backrooms while leaving the public out of the picture. But then there’s also the “Richmond Way” that is the same thing on steroids.

    Exactly!

    The Virginia Way oligarchs are petty thieves in many ways. They are good at using an intentionally flawed state constitution and the antiquated concept of Dillon’s Rule to steal from other Virginians. But one day in 2012 came a fella from the North to River City. He might have been selling monorails but he wasn’t. He was selling an NFL training camp. Richmond’s upper crust was atwitter. A real NFL training camp. Think of the riches that will befall Richmond if we can land this big fish. Money was siphoned from various places. Roscoe P Coltrane, Lil Abner and Boss Hogg all shook hands with Charles Ponzi. The deal was done. Lol.

    At the time the deal was announced I put this comment on one of Peter’s articles after being asked why the Redskins don’t pay …

    “The Redskins don’t pay because they have found some “All Day Suckers” down in River City.

    However, it is a good cultural fit. Richmond adores losers. After all, aren’t there quite a few statues of Confederate generals lining the streets? Given the last 20 years of the Washington Redskins, maybe Dan Snyder ought to get his own statue on Monument Ave.”

    Virginia needs to move its capital to Charlottesville.

  4. The thing that I question most about the Navy Hill project — and the reason the TIF is needed in the first place — is that the financial structure is designed to pay for a new Coliseum. Take the Coliseum out of the project, which is subsidized by other development to the tune of tens (maybe hundreds) of millions of dollars, and redevelopment likely could occur without a TIF or city involvement at all. All the city needs to do is put city-owned land up for auction and let the private sector handle the rest.

    How badly does Richmond need a new Coliseum? What kinds of events and concerts will we lose? Is that loss worth hundreds of millions in subsidies to avoid? That’s the conversation we have yet to have.

    • Jim’s instinct are right. Why replace coliseum? Richmond’s problem, as I recall it, is that it has got dead hole in the center of town. Why and how is a new Coliseum going fill up that hole? The old one didn’t. And that is typical of Coliseums. Whether they be new or old, Coliseums don’t fill holes in cities. Instead, Coliseums dig deeper and more permanent holes in cities, and around cities, and indeed occupy cities like tyrants killing neighborhoods.

      Coliseums are vanity projects that kill living, thriving neighborhoods instead of enlivening them, whether those neighborhoods be residential, commercial or mixed use.

      So the first question here for me (who knows little of details) is will the proposed new coliseum act like a poison pill, not jump-start and fill up Richmond, making it city worth living in?

  5. Jim, i agree with you on this one. Richmond has other entertainment venues

  6. How badly does Richmond need a new Coliseum? About as much as Rome did under the Caesars. All sick and corrupt societies need ever bigger coliseums.

  7. This seems to quite similar to what happened with the plan to urbanize Tysons. Government agencies bent over backwards to reward landowners with density. Academics praised urbanism as solution to everything from traffic to climate change. Dulles Toll Road users are funding most of the Silver Line’s capital costs. And the media wrote fawning stories.

    We have some nice new buildings in Tysons with a lot of vacancies in the buildings business tenants left. Housing has largely been built for single people or empty nesters. Small spaces at bit prices. Silver Line usage is up some, especially since Cap One opened its new HQ. But a significant of riders go to the Malls to steal. Auto traffic is up substantially. With Apps like Waze, much of it travels narrow residential streets to the point where some people cannot get out of their driveways for more than an hour at night.

    And the added tax dollars from Tysons have done nothing to stop the ever-increasing residential real estate tax bills. But the people who made big campaign contributions have made big bucks from density.

    • Tyson’s Corner has been a monumental disaster from its beginning to wherever it finally meets its complete demise after it has been forcible pulled up by its roots and tossed in the trash.

      Meanwhile, Tyson’s been a plague on most everyone and everything in its region, and whoever comes close to it, whether daily or occasionally. Tyson’s is a toxic white elephant, one that has been poisoning most all around it, or passing through it, for the last 5o years and counting.

  8. TIFs are basically tax subsidies based on a premise that the private sector would not develop a place or region if it did not return as good a ROI as other opportunities might and if it goes on for years as a black sheep – cities get impatient and are willing to listen to TIF proposals.

    But there is a right way and a wrong way. The right way gives tax rebates ONLY if specified performance targets are hit and they are not – no tax break. You should NEVER give the tax break on the front-end as a gamble ………

    But Stever in another thread was talking about how clueless the public is on issues whether it be Dominion and electricity or things like this.

    I won’t go so far as to agree with DJ or Peter that it is “corrupt”. It’s just the way that business often works and not just in Virginia. Localities like Richmond can insist on transparency and maybe they should but people being people, not everyone wants to do business that way and not everyone in Govt believes in full transparency. That’s the way people are. And to be honest – in the initial stages of a prospective development , neither the govt nor the developer want full transparency while they are trying to get their finances lined up.

    We do TIFs down Fredericksburg way. We did one to entice Wegmans to build a store – and they did and the TIF was set up so they had to deliver a certain level of performance to get the rebates – and they did. everyone is happy. Doing something similar with a new Minor League Baseball team…ducks in a row… the owners gets his stadium and the city gets the money from concessions.

    • How about a TIF to get that Spotsylvania solar project back on track? What is it about a convention center that makes it any more worthy of taxpayer backing than a solar generation farm?

  9. TIF (Tax Increment Financing) is to be used only in blighted areas where strong evidence shows the area cannot be redeveloped with commercial financing but only with government involvement. Conceptually, it makes sense. However, in the land of crony capitalism, I expect ordinary citizens will lose out when it’s used in Virginia.

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