City of Richmond previously proposed mediation to resolve the issue
The General Assembly passed a state budget deal that would cancel $56 million in payments the Virginia Commonwealth University Health System agreed to give the city of Richmond for a failed development project.
In 2021, VCU Health sought to develop a $325 million project at the city-owned Public Safety Building, located at 500 N. 10th St. But the project — which would have housed office space, retail and parking — was stopped before construction started.
As a part of the deal, VCU Health agreed to pay the city about $2.5 million annually through 2045. By June 2024, about $2 million had been paid to the city.
State budget language approved in 2024 directed the health system to stop making the payments, leading former city leaders to seek mediation over the deal. In a letter to VCU Health, former Richmond Mayor Levar Stoney said the city would consider litigation.
“This issue has been outstanding for a while, and we’re just trying to work towards an agreement — to work towards resolution,” former City Council President Kristen Nye told VPM News at the time.
On Saturday, the Virginia General Assembly passed amendments to the two-year budget that included language saying VCU Health “shall not be required to remit any payment to the City of Richmond” for the deal.
City Council President Cynthia Newbille didn’t respond to a request for comment, and VCU Health declined to make anyone available.
“While this appears to be a disappointing development, the City is evaluating the budget language to better understand its potential implications,” a city spokesperson told VPM News.
Early in the project, developer Capital City Partners told VCU Health that work could not continue under the plan’s initial budget. It cited concerns over site conditions and increased construction costs due to COVID-19 supply chain issues.
VCU Health paid almost $80 million to halt the project, according to a Joint Legislative Audit and Review Commission report. That included $73 million for the developer to cancel the deal and $5 million to the city to demolish the old Public Safety Building.
In October 2024, Marlon Levy, now VCU Health’s CEO, wrote that Richmond benefited from the deal, citing the demolition and receipt of $3.5 million from the developer.
Gov. Glenn Youngkin has until midnight March 24 to make a decision on the budget language and any legislation approved by the General Assembly. Lawmakers are then slated to meet April 2 to consider Youngkin’s amendments and vetoes.