Leaders from the Flying Squirrels, the city of Richmond and their developers flew to New York City last September to meet with Major League Baseball for an urgent discussion. The goal: to figure out how to build the Diamond District ballpark.
When the meeting had ended, the parties agreed the Squirrels would choose the ballpark’s builders, replacing the companies already selected. The Double-A baseball franchise hired a project manager, a designer and a general contractor.
Groundbreaking is expected within weeks.
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But the arrangement has led to a question – why did a minor league baseball team get to choose the builders of a publicly funded ballpark, outside of an official procurement process designed to ensure affordability and fairness?
They are the experts, city leaders said. Plus, the project was facing a tight deadline, and there wasn’t enough time to restart the bidding process.
Paul Goldman, a Richmond lawyer who has criticized the stadium’s financing plan, said the act of building the stadium is being rushed and has become corrupted.
“You don’t take public money and just give it to a private entity and say ‘build the baseball stadium,’” Goldman said.
Disconnect between Squirrels, developers
In 2022, when the city chose RVA Diamond Partners as its developer, the team included The Whiting-Turner Contracting Company as general contractor, JMI Sports as the stadium developer and DLR Group as the stadium designer.
But there was a disconnect between how the developers envisioned the stadium and what the Squirrels wanted, one person familiar with the matter said, and who asked not to be named because of the sensitivity of the deal.
The Squirrels felt the ballpark needed more amenities and wouldn’t sign a lease agreement unless it had control over stadium planning. Lou DiBella, the Flying Squirrels’ president and managing general partner, did not respond to a request for comment.
At the New York meeting, the parties decided it was best the Squirrels lead the design of the stadium. The original companies left, and the Squirrels hired Machete Group as project manager, LaBella Associates as designer and Gilbane Building Company as the project manager.
The process of designing a stadium restarted. The remaining development team renamed itself RVA Diamond Partners and focused on building the neighborhood around the stadium, which will feature 1,700 residences, commercial space and a hotel.
With the clock ticking, there wasn’t enough time to start a public search for stadium builders, the person said. The project was already facing a tight deadline set by Major League Baseball, which wanted the ballpark open by 2025. Richmond intends to open its stadium in 2026.
And the city made it clear in 2021 and 2022 that the state’s procurement laws would not apply to this project, saying so on the top page of their request for offers.
Why the city took this approach is unclear. A spokesperson for Mayor Levar Stoney did not address the question. The Virginia Public Procurement Act is designed to ensure public bodies obtain high-quality goods and services at a reasonable cost and that government leaders choose contractors in a fair and impartial manner.
While the city said procurement laws would not apply, it still held a public bidding process. The companies the Squirrels chose applied as part of a separate group called Richmond Community Development Partners. That team wasn’t picked by the city and finished second.
Further bolstering the city’s position was the fact that at the time, most of the stadium project was not going to be publicly funded. The plan was for a community development authority to issue bonds. Then the city would create a tax increment financing, or TIF, district, and new tax revenue from the district would pay off the bond debt.
But as interest rates grew, that plan was deemed too expensive.
Earlier this year, Richmond changed course and backed the bonds with the city’s full faith and credit. Now, the city is planning to issue general obligation bonds, a strategy that saves the city $200 million. Real estate taxes and the Squirrels’ lease payments will pay off the deb. If the worst-case scenario occurs, and that revenue doesn’t materialize, the city will have to pay off the bonds by raising taxes or cutting existing services.
‘It’s supposed to be our money’
Because it’s a publicly financed project, Goldman, the Richmond lawyer, said the process of choosing builders should be transparent. It has been unclear why the Squirrels were picked to lead construction, who will pay for cost overruns, what deals have been made and the nature of the Squirrels’ role, he said.
“It’s not their stadium,” said Goldman, who is running for city council. “It’s supposed to be our money, our project – very simple.”
Earlier this summer, Goldman sued the city in an attempt to prevent it from issuing the stadium bonds, but a judge dismissed the lawsuit.
Andreas Addison, who represents the 1st District for Richmond City Council, said the city doesn’t build baseball stadiums and needs the expertise of outside professionals.
“The relocation of the stadium is the anchor to unlocking the 47 acres to be developed for the new neighborhood,” he said. “The success of the new stadium should be shaped by experts in how it’s designed.”
Addison, an enthusiastic supporter of the stadium project, added that the city has set certain parameters for the project, such as goals for including small businesses, minority-owned businesses and union labor as contractors for construction. Addison is running for mayor.
Katherine Jordan, who represents the 2nd District, which includes the stadium, said it’s reasonable for the Squirrels, the subject-matter experts in baseball, to lead the selection.
“That doesn’t mean the city isn’t setting the budget or managing the user agreements,” she said.
Stadium cost has climbed
A key reason procurement laws exist is to keep localities for overpaying for projects. After the locality requests bids from companies, the locality is supposed to pick the lowest cost qualified bid.
Though construction is expected to begin soon, the stadium’s price tag is undetermined. The expected cost two years ago was $90 million. Now it will be at least $110 million, as the project’s scope and acreage have grown. The cost to build has risen, too.
Lincoln Saunders, the city’s chief administrative officer, said in April the cost could reach $117.5 million and that the city might ask the Squirrels to pay if the number increases.
“The number kept going up and up,” one person said.
As the tenants, the Squirrels are expected to pay a significant sum. The team is expected to pay $3 million a year, which might be the highest lease payment in minor league baseball.
Construction on the stadium is expected to begin by August. Dominion Energy has begun removing electrical lines from the stadium plot and connecting underground wires to those on Hermitage Road, said Jason Guillot, a principal for Thalhimer Realty Partners.
Key pieces remain unfinished. The Squirrels haven’t signed a lease, the Economic Development Authority hasn’t approved a development agreement, and the city hasn’t issued the bonds that will pay for the stadium.
Still, Guillot said he’s confident the project gets done. Negotiations are rounding third base and heading for home.