Here’s the choice: Spend $25 million to $35 million to revitalize the 13,500-seat Richmond Coliseum or spend $220 million to replace it with a brand new 17,500-seat facility and add another $20 million to $30 million to revamp East Clay and East Leigh streets.
That choice has never been presented to the public. Instead, Mayor Levar M. Stoney and his predecessor, former Mayor Dwight C. Jones, have insisted that the only solution is a new arena.
Indeed, the working assumption on the part of city officials is that the Coliseum has outlived its useful life.
But both city and internal studies have long indicated that the neglected Coliseum, built in 1971, just needs significant work to remain usable for years to come.
That was the finding of the most substantial study on the building’s needs that was conducted in 2008.
Richmond-based SMBW Architects PC undertook the study for the city with help from two other expert building consulting firms, WJE of Fairfax and HCYU and Associates of Glen Allen. The three companies had experts examine the building and come up with recommendations for refurbishing the arena.
The bottom line: The Coliseum needed maintenance, repair and replacement of gutters and other internal and external items, but remained “a substantial and serviceable building whose original character and quality are still intact.”
The study estimated that more than $11 million in work was needed to extend the building’s life for 10 years or longer. But like other studies on the condition of city buildings, it ended up being shelved for lack of money.
As far as can be determined, no similar assessment has been authorized or conducted since then.
Between 2011 and 2015, the city allocated about $4 million primarily to replace plumbing so the building could have hot and cold running water and working mechanical systems. There is no indication that other work recommended by the study was ever done.
In his proposed 2015-16 capital budget, then-Mayor Jones estimated that the Coliseum needed about $30 million in improvements. However, he did not recommend any additional spending on the building. The Coliseum has not been mentioned in any subsequent capital budget.
Until recently, no one in city government had a good idea about how to pay for improvements to the building given the host of other needs the city has faced.
That issue has been resolved by the Navy Hill group led by Dominion Energy’s top executive, Thomas F. “Tom” Farrell II.
That group noticed the vacant and underused public land near the Coliseum and, with the help of consultants, came up with the idea two years ago of transforming the area between City Hall and the Coliseum with new apartments, offices, retail stores and a convention hotel.
The group’s theory was that these new developments, rosily projected to create $1.4 billion in new property value, would enliven the area and also generate tax dollars to pay for the larger, grander arena that was envisioned.
The problem for Mr. Farrell’s group is that their plan did not generate enough tax dollars to pay back the $220 million principal and interest cost of a new 17,500-seat arena.
Previously reported documents suggest the annual repayment could run $20 million or more in principal and interest, depending on the actual cost and the interest rate, or more than the new developments would generate.
In order to make the plan work, Mayor Stoney in November backed a proposal to take the increase in property taxes from 70 blocks of Downtown to help repay the Coliseum debt.
As yet, he has not sent that proposal to City Council for approval, but rumors are flying that he might do so in June or July. The council is promising to undertake a thorough review.
However, a $35 million facelift of the Coliseum could easily be paid for with taxes that would be generated by the proposed apartment, office, retail and hotel developments, most of which could still be done, figures show.
Instead of spending $450 million to $650 million to repay the principal and interest cost on a new, $220 million arena, amortization tables indicate that the total cost for fully renovating the Coliseum might only be $50 million to $75 million in interest and principal, depending on the interest rate.
And instead of spending $20 million or more a year to repay debt, the cost of repaying for refurbishing the Coliseum would be less than $3 million a year, the tables show.
Thus, the new development, much of which could still be built, could generate more than enough property tax revenue to repay the cost and still leave money to fund city needs.
For example, if $800 million in new development could be undertaken in the land around a refurbished Coliseum, that would generate $9.6 million in new property taxes, with $2 million to $3 million going to repay debt and the rest going to the general fund. If only $600 million in development could be accomplished, that would still generate $7.2 million in new property taxes, still providing extra money for the city’s general fund.
Refurbishing the Coliseum also would eliminate another major cost: Roadwork. The Farrell group wants the city to spend what has been estimated at $20 million to $30 million to raise the sunken portion of East Leigh and East Clay streets to create a better streetscape. So far, the city has not identified a source for that money.