The huge plan to redevelop 67 acres of publicly owned land around The Diamond baseball stadium has a green light — despite questions about the soundness of its financial structure.

With promises of a bonanza of jobs and revenue, City Council gave a unanimous thumbs-up Monday night to the projected $2.44 billion project, clearing the way for the largest public-private development ever contemplated in Richmond history.

Before the vote, the council was told that Richmond will gain a largely risk-free, transformative development that will create a small town on the property and enable the city to finally build a new minor league baseball stadium.

The council, which did not seek an independent financial analysis, was told the big project headed for the property on Arthur Ashe Boulevard is a grand slam that will bring home employment opportunities for city residents, $1 billion in new revenue to the city over 45 years and an impressive, well-designed mix of offices, retail stores and an 11-acre park along, with several thousand apartments and homes for all incomes.

Just as importantly, council was advised, Black businesses comprise 45 percent of the development team that also has agreed to a 40 percent goal of inclusion for Black- and minority-owned business in construction and future opportunities.

“This is a project that will impact the entire city,” Council President Michael J. Jones, 9th District, said as he joined his colleagues in endorsing a development initiative that was first conceived in 2005 by then-council leader William J. Pantele.

Building a new stadium has been a city goal for at least as long, with at least two previous attempts failing.

City’s moral authority

But one unanswered question is whether the city will have to attach a moral pledge to back the bonds that must be sold to raise the money to build the stadium. Though not legally binding, a community’s attachment of a moral obligation to a local revenue bond is designed to reassure buyers that their money would be repaid and that other funds would be appropriated to prevent any losses or default in promised payments.

The cost of the baseball stadium that is to anchor the Diamond District is projected to be $80 million, according to Leonard Sledge, city director of economic development.

And another $25 million must be spent to rebuild the current Sports Backers soccer and track stadium owned by Virginia Commonwealth University that occupies seven crucial acres, at a new location, Mr. Sledge told the council.

To raise the money just for the baseball stadium, he said that $118 million in 34-year bonds will have to be sold to investors, with additional bonds needed to be issued to cover the cost of the Sports Backers’ facility.

Those tax-exempt revenue bonds are to be issued through the city’s Economic Development Authority (EDA) or through a community development authority (CDA) that is to be established, Mr. Sledge said. The city would never be on the hook to repay those bonds, Mr. Sledge said.

Two financial experts whom the Free Press consulted, John Gerner and Paul Goldman, believe those bond offerings will be rejected without the city’s moral pledge to prevent a default.

Better known as a political strategist, Mr. Goldman said that Richmond, like localities across the country, “get everyone excited with the rosy description of the great project that will result. But bond buyers are not impressed by that,” he said. “They want a clear assurance they are going to be repaid. And they aren’t about to take a city’s word for it.”

Mr. Goldman said that the bond buyers have plenty of options, and he expects the stadium bonds to languish without a council vote attaching a moral obligation. After all, he noted that the EDA and CDA have no real money of their own. If the city refuses to be involved, bond buyers will refuse to invest.

Then and now

Both he and Mr. Gerner expect a repeat of Richmond’s experience from 20 years ago when the city created the Broad Street CDA to sell $67 million in bonds to pay for improvements to the Downtown streetscapes.

Just as now, Mr. Gerner, a consultant on leisure and entertainment projects in this country and other parts of the world, noted that, in 2003, council initially was told that the city would never be responsible for the bonds, which were to be paid off with revenues from parking garages.

But seven months later, the city’s administration led then by City Manager Calvin Jamison was back before the council pleading for approval of a moral obligation pledge after investors refused to buy the bonds otherwise.

The council approved the moral pledge after being assured “it would only be used if a dire situation happened,” Mr. Gerner noted.

The CDA “soon failed, even before the Great Recession began” after the parking revenue estimates proved faulty, Mr. Gerner continued. During Mayor Dwight C. Jones’ tenure, the city terminated the CDA and took over the bond payments to prevent a default.”

Mr. Gerner pointed out in his response that the stadium bond financing plan is far more speculative. “The current stadium financing plan assumes that the bondholders will buy revenue bonds based on speculative development with no existing payment stream to rely on,” he said.

In his view, “that is risky and different from the Broad Street CDA bonds that had existing parking revenue for support or the Greater Richmond Convention Center Authority bonds that use hotel tax revenue or even the Navy Hill financing plan that used future incremental property tax from existing Downtown properties.

“I could not find an example of another municipality that used such an approach,” said Mr. Gerner, who was a key figure on a committee council created to analyze the Navy Hill project financial structure.

“A common approach is general obligation bonds” that pledge the full faith and credit of a local government, he said. Sometimes, he said, such bonds are backed by an irrevocable letter of credit from a major bank or financial institution, an approach he said the Richmond EDA adopted in the early 2000s to sell revenue bonds. “Henrico County also used this approach,” he said.