share the ball
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I may get a few points wrong here so I would welcome other posters to edit or add where I may misstate some facts
the City is building the stadium and using the Richmond Development Economic Authority as the conduit to do this (not unusual for projects like this in cities/states etc to use an authority as a conduit because it will keep the debt off the books of the govt entity and often provided a better mechanism to negotiate and enter into contracts without the burden of following a state/city formal process)
the Authority will issue tax exempt bonds, which saves lots of money for the project since interest rates are lower than if the Squirrels issued taxable debt (interest rates maybe 30% lower or thereabouts than if the Squirells issued taxable debt)
the Authority will then negotiate leases with the tenants (in this case Squirrels and VCU )
the Squirrels have agreed to pay a lease payment of $3.2 million a year for first 10 years and then the lease payment drops to $1 million annually with increases of maybe 3% annually for the subsequent 20 year period. - Lease will require the Squirrels to properly maintain the facility at its cost (not really sure what the Authority is responsible for under the lease but typical leases still require owner to maintain certain things etc - I just don't know what the lease says)
VCU was reported to be paying the Authority $400,000 annually to lease for 30 years and in addition was entering into an agreement with the Squirrels to pay them about $300,000 annually as VCU's share to maintain the facility each year
my failing memory seems to remember the Authority bonds would be issued for 30 years and require annual debt service payments of near $8 million dollars annually on average (now that was an estimate and one must understand that interest rates could have changed since the estimate was made as well as the cost of the project (which we know did increase marginally as well as the scope of the project) ) so I am going to speculate that the final annual debt service will range from $7 million annually to $9 million annually
the lease payments the Authority would receive in years one. to ten (if VCU executes the lease) would pay $3.6 million of annual debt service of $7-9 million . The city would make up the difference from a number of sources which the primary source would be new real estate taxes generated from development immediately adjacent to the CarMax Park / Diamond
now given what the Squirrels would pay vs VCU in the lease payments it is obvious they are the major tenant and should have the greatest say in the # of dates they have access to the field etc
Now here is where I think it is gone off the rails - VCU owns the VCU sportsbackers stadium where we play soccer and have our track and field program faciities - VCU was going to sell this to the Richmond economic authority for $24+ million because the footprint was part of the area adjacent to CarMax Park that would be developed to generate those new real estate tax revenues needed to pay off the remaining annual debt service on the bonds not covered by the Squirrels and VCU leases
The price of $24+ million was likely determined as the price it would cost VCU to build the replacement facilities in the Athletic Village since it would need new places to play soccer and track and field
Recently the cost of that project from VCU has risen from $24+ million to $28 million as reported in the paper (the old cost of materials has risen reason ) and at VCU's Board of Visitors meeting/s.
My 100% speculation is VCU now wants the Authority to increase what they will pay VCU to the revised amount of $28 million and the Authority/City has balked at that request. AS SUCH , VCU is using leverage to get more money by refusing to close on the sale. The City/Authority cannot move forward to start a lot of the development adjacent to the CArMax Park until it gets the VCU Sportsbackers Stadium. and without the VCU sportsbackers stadium the city's ability to raise those required new real estate taxes to pay debt service is severely hampered
IMO the latest twist of VCU not playing at CarMax Park this season is less about VCU - Squirels relationship and more about VCU - City relationship
So borrowing from Marcellus in Hamlet "all is not well in the state of Denmark"
like I said earlier, please feel free to edit this or add or correct me with any facts others know and/or are privy to
go Rams
