RICHMOND, Va. -- Officials with the city of Richmond provided more detail Friday into who will pay for the $1.4 billion downtown Richmond redevelopment plan. A plan that includes a new downtown sports and concert arena, hotel, and hundreds of affordable housing units, according to the plan Richmond Mayor Levar Stone announced Thursday.
A bulk of the cost, $1.1 billion, will be paid for with private investment.
The remaining $350 million will be paid for with taxpayer funds; money raised through tax increment financing or TIF. A TIF district would be established in downtown Richmond.
CBS 6 reporter Melissa Hipolit learned the intricate financial details at a meeting with city officials and officials from Davenport and Company
The city did not allow cameras inside the meeting.
Here's how it works:
The city will create a special tax district called a TIF encompassing much of downtown.
Once the project starts, real estate tax revenues will effectively be frozen at their current level and all that money will continue to go into the city's general fund, so will all other taxes, like meals and sales taxes.
However, any additional tax revenues generated by the project will go toward paying off the bonds taken out to pay for the arena, armory and Leigh Street.
"We directed Davenport & Company, our financial advisors, to hire an outside third party to review the projections and details of the proposal, including the Tax Increment Finance district that we propose to use to finance the city owned assets that are part of the project. The independent analysis by Hunden Strategic Partners not only confirmed our own analysis, but forecasts greater revenue projections," Mayor Stoney said. "Based on the analysis of our third party, we believe that this project could provide our city with over $1.7 billion of revenue over 30 years. This far exceeds the revenue that would be generated if we did nothing."
This video was provided by NH District Corp to explain for their pitch for the TIF District
Some critics of Stoney's plan worried how such a large project might impact the city's efforts to improve and re-developing Richmond schools.
Officials countered the redevelopment plan would not take money away from schools because the real estate revenue included in the TIF district would be frozen once the project began.
Real estate tax money collected up to that frozen figure would continue to go to the City of Richmond general fund to pay for things like schools and city services. Money raised beyond that frozen figure would be used to pay off the bonds that would need to be purchased to build the arena and revitalize the Navy Hill neighborhood around the existing Richmond Coliseum.
Developers anticipate more than enough money will be raised through the TIF, and any surplus funds would spill back into Richmond's general fund.
"Tax revenue from the proposed TIF will ONLY go toward paying the debt on the Blues Armory, the Arena, and bringing Leigh Street up to grade," Stoney said. "The developers and bond holders will shoulder 100 % of the risk for this project."
Additionally, the 1.5 percent meals tax increase Richmond City Council passed earlier this year to fund school construction and renovation would continue to be used for that purpose -- even taxes collected from restaurants within the TIF district.
Richmond Mayor Levar Stoney made some bold promises during Thursday's announcement:
We will create 21,000 jobs -- including more than 9,000 permanent jobs and workforce training opportunities. Less than a mile away in Gilpin Court, 75 percent of our residents live in poverty. This project will offer economic opportunity to thousands of men and women who just need a helping hand.
This project will include more than $300 million in contracts for minority businesses – this will ensure that our talented minority contractors are in the game and NOT sitting on the sidelines.
We will build nearly 680 units of affordable housing – a substantial down payment on our goal of building 1,500 affordable units by 2023. We want those who work in this neighborhood to be able to live in it as well.
We will build a new GRTC transit center here in the heart of downtown, so that residents across our city can have a facility that offers shelter and dignity to our hardworking men and women who rely on public transit.
We will preserve and restore the historic Blues Armory - bringing it back to life as a centerpiece of this newly revitalized neighborhood.
And we will reconnect our street grid and raise Leigh Street so that we can create a true walkable and vibrant neighborhood that links to a resurgent Jackson Ward.
"With this project, we will leverage private investment and underutilized city assets in our downtown, to maximize growth that will benefit everyone in our city. This project represents a $1.4 billion investment that does not raise taxes and does not incur financial risk to the city," Stoney said."It will generate an additional $1 billion in additional tax revenue over the next 30 years. And we will use that additional revenue to finance the needs of our neighborhoods – for better schools, for better streets and for better core services. Simply put, this is a game changer."
Officials said the project will also generate an additional $1.1 Billion after bonds that the city will be able to use as it wishes to fund schools, streets and city services.
The mayor said he planned to submit his plan, in the form of ordinances, to Richmond City Council for approval. No timetable for that has been established.