Richmond changes financial structure of minor-league stadium

The city of Richmond intends to change the financial structure of the planned minor-league baseball stadium at the Diamond District, a move that significantly cuts costs but shifts the financial risk to the city and its taxpayers.

City officials, who revealed the new plan Monday, want to issue general obligation bonds backed by the city, saving $200 million. But if the project fails to generate the expected revenue, Richmond would have to pay off the debt. 

Lincoln Saunders, the city’s chief administrative officer, called the proposal a good bet for the city — a bet that depends on the developers’ ability to bring residents to the neighborhood and the Richmond Flying Squirrels’ ability to sell tickets. 

“We think the risk is low because of the strength of the market and the strength of the Squirrels,” Saunders said in an interview. He added that the new financial structure will not affect the city’s ability to pay for its other capital projects, such as schools, sidewalks and parks. 

Lincoln Saunders


The City Council, which heard the proposal Monday, still needs to approve the change. A majority of members support the measure, according to a spokesperson for the city. 

Major League Baseball issued a statement calling the financial change “an important step forward” to ensuring the stadium is built in time for the 2026 season. 

Lou DiBella, managing general partner of the Flying Squirrels, echoed MLB’s sentiment. “April 2026 is just around the corner, so it is imperative that all stakeholders move forward collectively and with a sense of urgency,” he said.

Lower interest rate lowers cost for city

Under the old plan, the city would have created a community development authority to issue bonds. Bond buyers would have assumed all the risk, because if the stadium were to fail or if revenue did not meet expectations, the buyers would lose out on their investment. 

Because the bonds carried a significant amount of risk, the authority would have sold them with an 8% interest rate, meaning it would have been expensive for the city to pay off the bonds’ debt. Bonds are essentially loans from investors to governments, companies or banks. The higher the interest rate, the more expensive it becomes for the bond seller to pay back the investor. 

When the city first announced the plan for the community development authority to sell bonds, in 2022, the interest cost was about 5%, Saunders said. Since then, the rate has risen, making the stadium project more expensive. 

General obligation bonds issued by the city of Richmond will carry a much lower rate, about 4%, because they are considered a sure investment. Richmond has a strong credit rating and is reliably known for paying off its debt. 

Richmond's new baseball stadium

Richmond’s planned baseball stadium is to include a beer garden, family zone and party area.

With a lower interest rate, the cost of the stadium, the infrastructure and its financing will total roughly $280 million, compared to about $500 million under the old plan. 

Out of the $280 million, about $110 million will go toward the stadium, $60 million will go toward paying for water, sewer, electricity, roads and other infrastructure costs, and the rest will pay off the bonds’ interest. 

It is not only cheaper for the city to issue its own bonds but also faster. The city does not need every detail of the ballpark finished before the bonds go on sale. Richmond leaders expect to sell the bonds in a matter of days or weeks and have the money ready for a groundbreaking in June and sitework to start in July. 

Selling bonds faster allows the city to exploit a legal loophole, too. Under current law, Richmond can use state sales tax revenue at the stadium to pay off its debt. But that law is due to expire July 1, which could cost the city about $25 million in tax revenue. If Richmond can sell the bonds before July 1, it can claim the state tax revenue throughout the life of the project. 

New plan shifts risk 

But with a cheaper, faster financial plan comes a shift in risk. Under the old plan, the investors were taking a risk their bonds would not be paid off. Now, it’s the city and its taxpayers who will hold the bill if the project fails to bring in sufficient revenue. 

Asking elected officials to approve such an arrangement can be a hard sell. In her criticism of Gov. Glenn Youngkin’s now-defunct plan to build an arena in Alexandria, Sen. Louise Lucas, D-Portsmouth, often said taxpayers should not hold the responsibility of paying for the arena in the event of a revenue shortfall. 

Saunders said the Squirrels and the Diamond District are good bets. The city expects to collect real estate taxes from property owners around the stadium. In essence, the city’s plan hinges on people’s willingness to buy and rent homes near the stadium. Given how Scott’s Addition has become a residential hot spot, and how apartment buildings are springing up all over North Arthur Ashe Boulevard, it is not hard to believe people will move there. 

The city also will depend on the Flying Squirrels’ ability to pay taxes and lease payments to the city, and the Squirrels need fans buying tickets to do so. Again, that seems like a good bet, because the Squirrels continually draw some of the best attendance figures in minor league baseball. Richmond is a good market for professional baseball. 

Richmond’s pocketbook isn’t limitless, and the city can issue only so much debt. Localities issue bonds to pay for schools, parks and streets. Richmond can build only so much at one time. 

But Saunders said this project will not cause the city to surpass its debt capacity. Because the stadium will bring revenue as well as debt to the city, the project will free up millions of dollars in debt capacity.

As a general rule, the city does not borrow more than 10% of what it makes in a year. The stadium will not significantly change the percentage of debt the city owes, Saunders said. 

“We would not be backing this if it affected our ability to fund those improvements we need to make for the city overall,” he said. 

City Council members were receptive to the new plan on Monday afternoon. Katherine Jordan, who represents the Second District, said it’s important to get shovels in the ground. She will continue watching how the stadium is designed and what kind of benefits the community receives. 

Kristen Nye, the council’s president, said she does not love the idea of using the city’s financial backing. But the stadium area is blighted and underused, and the Squirrels remain a popular entertainment option for families. She considers the new plan a good option for moving forward and is interested to hear from residents. 

“We’re almost there,” Nye said. “Starting over would be a nightmare.”  


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