The Coli­seum pro­posal poses fi­nan­cial risks

Richmond Times-Dispatch - - EDITORIAL PAGE -

ED­I­TOR, TIMES-DIS­PATCH:

The Coli­seum project is an ex­er­cise in smoke and mir­rors by NH District Corp. and Mayor Le­var Stoney. Do­min­ion En­ergy CEO Tom Farrell, Stoney, and NH District want you to be­lieve that bond in­vestors will bear all of the risk for the project.

The non­profit sta­tus of NH District Corp. im­plies there is no con­nec­tion to de­vel­op­ers and po­ten­tial in­vestors who look to ben­e­fit fi­nan­cially from the project. Stoney’s spokesman, Jim Nolan, says the project will not re­quire new taxes or use of the city’s debt ca­pac­ity.

1st District City Coun­cil­man An­dreas Ad­di­son says it’s a proven model that works. The re­al­ity is that RVA is pro­vid­ing a $300 mil­lion tax in­cen­tive to de­vel­op­ers by us­ing “fu­ture” tax rev­enue and risk­ing its fi­nan­cial credit rat­ing.

De­vel­op­ers (un­known) will bor­row $300 mil­lion through NH District Corp.-is­sued bonds backed by city of Rich­mond credit and paid by city of Rich­mond tax rev­enue. Fu­ture tax rev­enue would be used to pay the debt on the is­sued bonds. The city will not be able to use that rev­enue for other pur­poses such as schools, trans­porta­tion, and po­lice.

If enough rev­enue is not gen­er­ated, the city could be forced to use gen­eral funds to pay the debt or risk its credit rat­ing. The NH District-af­fil­i­ated in­vestors will make money from the bonds and the de­vel­op­ers will have $300 mil­lion in low-risk cap­i­tal to build and make profit on the projects.

Tax-in­cre­ment-fi­nanced projects have worked in some cities but failed in oth­ers. They of­ten lead to lack of trans­parency for the pub­lic and re­strict elected of­fi­cials from de­cid­ing where tax rev­enues are spent.

Rich­mond has had its share of failed projects, but this project could set the city back decades. Whether we need a coli­seum is an­other de­bate. Kill this project now be­fore de­vel­op­ers and in­vestors have the city in a stran­gle­hold.

STEVE WIN­STON.

GLEN ALLEN.

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