The Coliseum proposal poses financial risks
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.