RICHMOND, Va. -- Richmond officials said getting shovels in the ground for a new home of the Richmond Flying Squirrels as a part of the Diamond District project is likely in the closing innings with a new funding structure to pay for a portion of the overall $2 billion project.
The new plan speeds up the timeline of the project but also exposes the city to the potential of more financial risk.
On Monday, the city announced it now plans to issue $170 million in general obligation bonds to pay for a new stadium to replace the outdated, dilapidated Diamond and infrastructure improvements during phase one of the Diamond District project.
Richmond CAO Lincoln Saunders said the city's financial advisory firm approached them earlier in the year with the idea of a new funding structure.
Instead of creating a Community Development Authority (CDA) to issue the bonds in the private market, the city would issue the bonds with the backing of the city behind them, securing a lower interest rate.
That structure allows for a 4% interest rate on the bond repayment, compared to more than 8% under the previous CDA model, which will reduce the cost by $215 million over 30 years.
"The CDA would have had what would be considered an unrated bond because it’s a new entity. Whereas the city, we’re very lucky, we’ve worked really to get an AA-plus rating with Wall Street, which enables us to borrow at a much more cost-effective rate," Saunders said. "The cost-benefit analysis just weighs in favor of it being a city-backed bond at a much, much more affordable rate.”
The catch: if the project doesn't meet revenue projections, city taxpayers would be on the hook to pay off the bonds for the project.
However, officials in the administration and city council view that risk as very small based on the market for property near Scott's Addition and the continued success of the Flying Squirrels.
The team sold out opening night once again, regularly ranks at the top of attendance ranking in minor league baseball, and cranes keep going up near Scott's Addition.
"People are going to keep buying tickets and coming to games, and this is going to be a place where people want to live work, and play," Saunders said.
The city plans to issue the bonds in June if the new plan is approved by the city council, which would allow them to capture $24 million for the project in state funding that is set to expire on July 1.
Also, a special tax zone — where new revenue was set to help pay for the Diamond District financing and was initially expanded to include properties just outside the Diamond District — will be shrunk considerably, Saunders said.
The new tax zone will only cover the stadium and phase one construction, Saunders said, which would return more than $220 million in surplus tax revenue to the city's general fund over 30-plus years when compared to the old plan.
The city projects the revenue from phase one of the project will completely cover the debt services on the city's bonds.
Seven of the nine members of Richmond City Council are already signed on as patrons of the paper introducing the plan, signaling strong support from the body which must approve it to move forward, which would require five vote "yes" votes for approval.
At an event Tuesday morning, Richmond Mayor Levar Stoney said MLB and the Squirrels both back the plan, and he expects the public will too since the cost reductions, he said, outweigh the potential risk.
“This saves the city money over the course of a long period of time, and I know Richmond wants the Squirrels here in the city limits," Stoney said. “We have one of the most valuable pieces of land right off I-95 on the East Coast. Investment certainly will come. So when you add it’s a valuable piece of property with the record of the Flying Squirrels, that to me mitigates the risk in the project and saves us money in the long run.”
If the city issues the bonds in June, Saunders said work on the site would begin that month, with the stadium construction beginning in earnest this fall.
The city projects the stadium will be ready for opening day 2026, which met MLB's extended deadline to bring Squirrel's facility up to league standards. The Diamond does not meet those standards.
The plan goes before the City Council's Finance committee on April 18, and a public hearing is scheduled for April 22.
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