Several days ago, we found out that the City of Richmond had finally come to an agreement with the developers of the Richmond Flying Squirrels, a minor league baseball team. For years now, the minor league team has been threatening to relocate unless they were built a brand-new ballpark.
- Here is the owner of the Flying Squirrels in 2015 – “Lou DiBella, President of the Flying Squirrels, (wrote) that the team’s future in the city is uncertain after plans for a new stadium appear stagnant.”
- Here is the owner of the Flying Squirrels in 2016 – “I’m riding with my friends at VCU on this,” Lou DiBella, president of the Flying Squirrels, said based on a Memorandum of Understanding agreement that determined each of their roles in the construction of a new ballpark they would share. This agreement never materialized.
- Here is the owner of the Flying Squirrels several weeks ago – “The President of the Richmond Flying Squirrels is warning that the city could lose its baseball team if a new stadium isn’t built soon. Lou DiBella, the president of the team, said he’s concerned with progress on a new ballpark”.
When the owner wasn’t threatening to leave, Major League Baseball (MLB) would step in and demand upgrades to the ballpark or else….something. Over the last few years, MLB has decided to pressure minor league cities directly into upgrading their local ballparks on the taxpayers dime. This year, MLB demanded that Richmond update the ballpark to the tune of $3.5 million worth of improvements. In other cities, MLB can demand city-funded upgrades to the ballparks of $1 million, $5 million and $10 million.
Back to recent events, the new agreement states that the entire undertaking will cost $2.4 billion and be named the Diamond District project. Included in this deal is a new ballpark that will cost $90 million to build and should seat around 10,000. Other developments in this deal include the creation of offices, retail stores, hotels and such in the next stage of this project. The difference between this agreement and past negotiations is that the “city is now planning to foot the bill for infrastructure improvements in the district, an expense the developer had previously agreed to cover”. There would be no new taxes added, but the city agreed to expand the tax increment financing (TIF) district, allowing the team to capture tax dollars from any new development in that area.
Hopefully, we get a full and accurate review of this deal. This mayor has a bit of history with holding back details until the very last second. For example, in 2019, this same mayor tried and failed to get a massive downtown project off the ground. She refused to share significant parts of the project with the public, so a community activist sued the mayor and won. Just to see how much taxpayer money would be used in this project. Thankfully, I am not the only one who seems a bit worried about how much information we do or don’t have on this deal.
Many parts of this project are being rushed right now. Rushed intentionally. Even though a third-party analysis of this deal won’t be published until later this year, city leaders are asking the council to agree to this deal in several weeks anyway. Still, there are so many questions left unanswered. The Richmond Times-Dispatch said in a recent story titled “Stadium deal for the Squirrels requires serious oversight”, that this project still has a significant number of questions relating to finances, legality and responsibility, left to be answered.
For example:
- Are we just giving the team 67 acres of largely city-owned property? And we are financing “much of the initial public infrastructure … that is needed in phase 1”?
- Why would the city expand the TIF District from 67 acres to 170 acres? The city has previously mentioned that they needed to raise money so that they wouldn’t be forced to add a new tax on residents. But doubling the TIF district area? This comes off like a move done by someone at the city who doesn’t actually understand taxes or TIF districts.
- Why is the developer loaning the city’s economic development authority $20 million AND being paid back at a “whopping 8% interest”?
- Are we really going to force surrounding developments to pay off this project’s debt?
But of all my issues, this is the big one. City officials are either confused about this deal or are struggling to keep up with the financial aspects of the draft agreement. The Times-Dispatch noted that TIF district language in the draft agreement says one thing, while city officials say it means something else. The draft agreement says that 100% of every tax revenue in that district will be used to pay off the project’s debt. Yet, city officials are publicly stating that “only the taxable increase in real estate values … will be diverted to cover bond debt”. That is quite a big difference.
Normally, a city would create a legal entity to oversee all the finances for this project. They haven’t even done that yet. Moreover, we still don’t know what the final language in the agreement says about payments to the team when revenues fell short. The city claims that the developers generously agreed to pay a “special assessment on properties included in the first phase of the project if the revenues fall short”. First phase? Special assessment? $1 or $10 million? There are so many issues left that need to be ironed out. City leaders need to sit down, read this agreement, and start sorting out the many places needed for updating and clarification.
This city needs to get their act together before it is really too late to save taxpayers from a financial pit. Last week, these same city leaders had a press conference where they claimed that affordable housing was a crisis. So what did they do this week? While giving away hundreds of millions of dollars in public money to a sports team? The city voted down a local nonprofits plan to construct homes.