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This week we have stories about the catastrophic VCU real estate deal and yes, the casino. Believe me when I say that I know you are tired of reading about it and I am tired of writing about it, but it is a vital issue that will affect the future of our city. It will be decided in a few weeks and then we can move on and focus on our other dysfunctional issues!
STORY #1 — Political Bus Runneth Over
Richmond BizSense and particularly Jonathan Spiers have been absolutely crushing the debacle at VCU that saw the health system enter into a real estate deal known as “the Clay Street project”that imploded but somehow left VCU on the hook for the enormous bill that has cost $80 million so far and could go to $100 million. As we have mentioned before, it’s a total anomaly in that VCU Health and VCU Monroe Park Campus have built literally billions of dollars of buildings and facilities in the last 25+ years with little fanfare.
Spiers released the third part of a series and it’s a doozie. He reveals that some VCU officials that were pushing then-CEO Art Kellerman to sign the deal a la Luca Brasi-style all sighed a collective relief once they got the signature they needed, forgetting the protestations Kellerman had been pleading for that the deal was bad and would be a mess at best, and a disaster at worst. Which it was.
The deal’s consummation on July 15, 2021 committed VCU Health to $617 million in rent over 25 years, real estate tax payments to the city that would continue in perpetuity, and any cost overruns for a project that was widely viewed as destined to go over budget.
Then, just three months later, almost as soon as Kellermann’s signature had time to dry, it became clear any relief about the project wouldn’t last long, as developer Capital City Partners informed the health system that the original project couldn’t be built.
Spiers uncovered a treasure trove of e-mails that show the incompetence of the developers (the ones who were supposed to build the Navy Hill boondoggle and are leading the Green City development in Henrico) who suddenly found that things in the fall of 2021 were somehow vastly different than just a few months prior. It’s as if they had been asleep when throughout 2020 and 2021 the world was upended by Covid and was still wreaking havoc on workplaces and life and construction costs skyrocketed and inflation was by 2021 creeping up. By 2021, remote work was widely seen as becoming a new norm for many jobs and the demand for more office space was at best, questionable. Spiers found emails that said the developers hadn’t even done adequate soil testing and faced higher than anticipated costs for a building that was widely known for decades to be an environmental hazard.
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