T
he city of Richmond is at odds with Virginia Commonwealth University Health System over a failed redevelopment project. The Public Safety Building was supposed to be replaced by a $325 million multi-building complex, but the pandemic and changing office space needs made it unfeasible. VCU Health paid $73 million to exit the deal, but promised to pay the city about $56 million over 25 years as part of the agreement. However, VCU Health has stopped making payments, citing no obligation to do so.

    The city sees this as a breach of contract and is considering suing VCU Health. Meanwhile, VCU wants to purchase another expensive property, Altria's research building, which would deny the city even more revenue. The pending sale raises the stakes and makes the city's pursuit of compensation more important. A healthy relationship between the city and VCU is crucial for both parties' success.

    VCU Health argues that it was already compensated for the Public Safety Building property when it bought it in 2021, and that the city saved $5 million by having VCU demolish the building. However, the city claims it is owed $56 million and intends to keep its options open regarding the future of the parcel.

    The dispute has been ongoing for months, with representatives from both sides meeting at least five times in an effort to resolve the issue. The city's goal is to bring as many nearby city-owned properties back onto the tax roll, while VCU Health wants to purchase the Altria building and deny the city revenue. The outcome of this push and pull remains uncertain, but it has significant implications for both parties involved.

    The pending sale of the Altria building would cost the city more than $3 million in tax revenue each year, equivalent to cutting the city's tax rate by a penny and a half. Richmond charges $1.20 per $100 of assessed value, and real estate tax revenue accounts for about half of the city's general fund.

    VCU Health paid $73 million to exit the deal with the developer, but won't pay the city as part of the agreement. This has raised eyebrows among some observers, who see it as odd that someone got paid in full while another party is not getting paid at all. The dispute may ultimately be resolved by Richmond's next mayor, who will take office in January.