RICHMOND, Va. -- A lawsuit over the City of Richmond's plans to issue bonds for a new Diamond stadium could now be raising the cost of construction by $24 million.
It all comes down to a July 1 deadline to take part in sales tax incentives from the state for public development projects.
On May 9, local activist Paul Goldman filed a lawsuit after the Richmond City Council voted unanimously to approve $170 million in bonds for the new stadium and infrastructure upgrades. Goldman's suit was thrown out with prejudice by a Richmond judge this month, allowing the city to move forward.
But the city could not start the bond process until the lawsuit had made its way through the courts, including any appeal. City officials tell CBS 6 that they had planned to issue the bonds on June 12 if the lawsuit had not gotten in the way.
Goldman has until this this weekend to appeal the decision to toss the case.
On July 1, Virginia law will be changing a provision that allows localities to claim the state sales tax generated from public projects such as stadiums.
That means that from July 1 on, any tax money from projects like the Diamond will go to the state.
Now the city says they will have to work to find another source for that portion of the funding.
“Due to a frivolous lawsuit that was dismissed on all counts, the City will not be able to issue the general obligation bonds to fund the stadium before the state sales tax deadline on July 1st," Lincoln Saunders, the chief administrative officer for Richmond explained. "The City plans to explore all other avenues to capture the sales tax incentive.”
Despite the apparent extra cost, city officials insist the timeline for the Diamond project has not been impacted.
“We are full steam ahead on the Diamond District," said Saunders. "By the end of the week the City and the EDA will have sold the publicly offered bonds to finance the infrastructure necessary to support the Phase 1 vertical development including the new baseball stadium. The City and the EDA are closing in on a finalized stadium development deal and lease with the Squirrels. We expect to break ground on the site in the coming month."
Sources told CBS 6 they expect to issue the bonds as early as next week.
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