THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 8, 1996 TAG: 9601060027
SECTION: FRONT PAGE: A6 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 76 lines
Norfolk began seven years ago to acquire and demolish low-income dwellings in East Ocean View, the purpose being to raze the drug-and-crime-ridden neighborhood and entice private enterprisers to develop upscale housing, shops and restaurants there.
There is nothing wild about the city's ambition. Surrounded by water, the 100 East Ocean View acres targeted for transformation are potentially prime real estate.
A $9 million Cenit Bank loan enabled Norfolk Redevelopment and Housing Authority, the city's agent, to start the project. Collateral for the bank loan, which is being repaid by the city, is a couple of municipal parking garages.
No problem there. But now NRHA proposes that the city sell municipal bonds to underwrite continuation of the renewal to the tune of $5.75 million a year - instead of the current $1.75 million - over six years. That proposal ought not to be a fiscal problem but it presents some political difficulties at this moment in the city's history. So City Council intends to discuss the matter with citizens before acting. But act it should; dawdling would prolong uncertainty hanging over existing property owners and postpone the project's payoff to the city.
Citizens need to know that selling $38 million in bonds over six years for the renewal would not jeopardize the city's prized AA bond rating. They should know, too, that the city's financial picture is brightening. Among the signs of fiscal health: Recurring expenditures in the nearly half-billion-dollar municipal budget are being balanced by recurring revenues for the first time in many years. Shrinkage of the municipal work force and the city's expanding job and tax base contribute to that achievement.
Public discussion of the sale of general-obligation bonds to keep the East Ocean View renewal on track is needed because the city's projected investment of $59.5 million is more than earlier planned. The city aims to recover a third of its investment from land sales to developers and to recoup the rest from tax-and-fee revenue directly generated by the project.
City Hall also left the impression when the project was announced that bank loans - perhaps from a consortium of banks - would probably finance the renewal. No official indicated that the city would not issue bonds, but it seemed clear that the city hoped to avoid the bond route. Bank loans remain a possibility for a later stage of the project, when cleared acreage could become loan collateral.
There are other reasons for City Council to explain the NRHA proposal in a measured way: Disappointing attendance and revenue and higher-than-expected costs at Nauticus - the city's National Maritime Museum - have necessitated $1 million a year in city aid to the institution - aid that the city looks to the museum to repay in time. Additionally, the city will sell $20 million in general-obligation bonds to fund public improvements linked to construction downtown of the $300 million MacArthur Center regional shopping mall scheduled to open in 1998. At the same time, sentiment has built for greater City Hall attention to neighborhoods' capital and public-service needs - sentiment to which council is rightly responding in a systematic way.
But the case for the renewal of East Ocean View at the price City Hall is prepared to pay is persuasive. By taking a reasonable risk, Norfolk could count on reasonable - perhaps more-than-reasonable - returns. Several previous success stories come to mind. East Ghent, 150 downtown acres redeveloped with federal aid, is an esteemed city asset, yet its redevelopment consumed two decades. Re-creation of Lafayette Shores, another former deteriorated-housing site, as an upper-income neighborhood will surely more than repay the city's $5 million investment there in streets, utilities and other infrastructure. The same goes for Middle Towne Arch, near Norfolk State University, Freemason Harbor on the downtown waterfront and Pinewell-By-the-Bay in Ocean View.
Each of these residential urban-renewal developments is a winner, for their residents and for Norfolk as a whole. There is ample precedent, therefore, to justify confidence that East Ocean View's renewal will pay handsome dividends. Council needn't be shy about taking the bond route. by CNB