One institution decided six years ago to drop out of the ranks of Virginia’s same-sex schools: Randolph-Macon Woman’s College.
On July 1, 2007, it was renamed Randolph College and became a coeducational institution. Lawsuits and angry protests followed from both alumnae and students who fought the change.
The college’s board of trustees, 70 percent of whom were alumnae, said the shift to coeducation was critical to increase enrollment and preserve the institution’s endowment.
When the board took the vote, the private school’s enrollment was 712, down from 900 in the 1960s.
In late August, the college welcomed its largest freshman class in 28 years, as 220 new students enrolled, a 22 percent increase over the previous year.
In his welcoming statement to freshmen, Randolph President Bradley W. Bateman said:
“Overall total enrollment for 2013-2014 is also expected to grow significantly. Randolph anticipates a total enrollment of 685, representing a 6 percent increase over last year and a 37 percent increase since 2009.”
In a later interview, Bateman said total enrollment has risen to 694. Approximately 13 percent of its student body is international.
“We’re going to shoot to raise enrollment to 800-850 and stabilize there over the next four years. That’s our optimal enrollment,” Bateman says.
Randolph lists its cost at $43,960, including tuition, room and board and fees, with 96 percent of students receiving financial aid. The endowment tops $130 million.
Bateman says he and others at the college have been building bridges to the alumnae of Randolph-Macon Woman’s College.
“So far, the results have been wonderful,” he said. “Women who carried placards in protest six years ago hug me and say what can they do for me.”
Bateman emphasizes to alumnae that the fact that the college is now coed in no way diminishes the great education they received here.
“I had a 1992 graduate say, ‘Thank you for mending my broken heart.’ That means everything,” Bateman says.
In a normal year, the race for governor between Democrat Terry McAuliffe and Republican Ken Cuccinelli would be the top political story in the state.
But this is not a normal year. Most people are blaming it on bad politics.
At its epicenter is Republican Gov. Bob McDonnell. Federal prosecutors are investigating the gifts and loans showered on the governor’s family by Jonnie Williams Sr., CEO of Star Scientific, a dietary supplement maker based in Henrico County. McDonnell, who maintains Star received no special treatment from his administration, says he has repaid the loans and returned the gifts. (Read more about Gov. McDonnell's gifts scandal.)
The gifts were revealed after the governor’s former chef, Todd Schneider, was charged with embezzlement for stealing food and other goods from the Executive Mansion. While he was under investigation, Schneider tipped off federal and state authorities that Williams had paid $15,000 to cover the catering bill for the wedding reception of one of McDonnell’s daughters. First reported in The Washington Post in March, revelations about Williams’ gifts to McDonnell family members continued to roll out for months.
Schneider and state prosecutors reached a plea agreement in mid-September, avoiding an October trial that likely would have caused further embarrassment to McDonnell and Republicans. (Under the agreement, Schneider pled no contest to reduced charges. He will repay the state $2,300 but face no jail time.)
But the governor’s race has been marred by more than just McDonnell’s troubles. Both candidates have engaged in shameless mudslinging, attacking the each other’s ethics.
Altogether, it’s a toxic brew that has overshadowed what the candidates say is the central message of this year’s gubernatorial contest: jobs and economic development.
Gifts to Cuccinelli
Besides McDonnell’s troubles, Cuccinelli, Virginia’s attorney general, has been further burdened by his own association with Williams and Star Scientific.
The attorney general once owned Star Scientific stock and accepted $18,000 in gifts from Williams.
Those gifts range from a catered Thanksgiving dinner for his family to vacation stays at Williams’ lakefront vacation home in Southwest Virginia, which recently has been sold.
Cuccinelli did not initially disclose $5,000 worth of the gifts he received from Williams, and he was tardy in reporting the ownership of more than $10,000 in Star Scientific stock.
But at the attorney general’s request, Richmond Commonwealth’s Attorney Michael Herring investigated Cuccinelli’s compliance with Virginia’s Conflict of Interest Act and found that no laws had been broken.
Although he initially said he could not repay the gifts, Cuccinelli said in mid-September that he had donated the cash equivalent of the gifts to CrossOver Health Care Ministry, a Richmond-area free clinic. “I did this to resolve any questions surrounding the matter concerning Star Scientific. I made the decision to send the check because it is the right thing to do, plain and simple,” he said in a video discussing the donation.
Another headache for Cuccinelli is an investigation into the actions of one of the lawyers in his office, Sharon Pigeon.
State Inspector General Michael Morehart is trying to determine whether Pigeon, while representing the Virginia Gas and Oil Board, was out of line in advising two energy companies, EQT Production Co. and CNX. They are being sued by Southwest Virginia landowners over natural gas royalties tied up in state-mandated escrow accounts.
The parent company of CNX, Consol Energy, has donated more than $100,000 to Cuccinelli’s gubernatorial campaign.
Cuccinelli has maintained that his office has done nothing wrong.
McAuliffe’s baggage
Cuccinelli’s opponent, McAuliffe, brings his own baggage to the gubernatorial debate.
A close friend of Bill and Hillary Clinton, McAuliffe is a former chairman of the Democratic National Committee, where he became the most prolific fundraiser in its history.
He ran unsuccessfully for the Democratic gubernatorial nomination in 2009, losing a primary battle to state Sen. Creigh Deeds, who was defeated by McDonnell.
One of McAuliffe’s most recent ventures has supplied Cuccinelli with plenty of ammunition. The attorney general has lambasted McAuliffe for his involvement with GreenTech Automotive, an electric car company under investigation by the Securities and Exchange Commission.
The company’s headquarters is in McLean, but its manufacturing operations, originally intended for Virginia, are in Mississippi.
McAuliffe quietly resigned as chairman of the company in December but remains a major shareholder in GreenTech. In an Aug. 16 opinion piece in The Washington Post, he said that federal investigators had not contacted him and all he knows about the investigation has been from news accounts.
The probe involves EB-5, a federal program through which wealthy foreigners could receive permanent residency if they contribute at least $500,000 for projects that would create jobs in the U.S.
President Obama’s nominee for deputy secretary of the Department of Homeland Security, Alejandro Mayorkas, is under investigation by the department’s inspector general for allegations he mismanaged the EB-5 program and gave special treatment to GreenTech and McAuliffe. He denies the allegations.
Cuccinelli also has attacked McAuliffe for saying the electric car factory site wound up in Mississippi because Virginia declined to offer any incentives. Emails from officials at the Virginia Economic Development Partnership showed their concern about GreenTech’s business model and its proposed use of the EB-5 program.
The company has struggled to get its footing, and thus far has not produced the thousands of jobs that McAuliffe once predicted.
Jobs are priority
Both candidates have identified job creation as the overriding issue in their campaigns, and they have tried to break through the headlines about McDonnell’s scandal to get their messages across.
AP Photo/The Richmond Times-Dispatch, Joe Mahoney
The debate has boiled down to who would be best at creating jobs and why the other guy would be a disaster.
In the mid-1980s, he helped found the Federal City National Bank in Washington, D.C., where he later became chairman after it ran into problems with federal regulators. He helped lay the groundwork for the bank to merge with Credit
International Bank. He also has been involved in numerous investment deals and venture capital firms.
To promote Virginia’s economy, McAuliffe believes the state should invest in education and transportation to create a more educated workforce and to provide companies with uncongested arteries to move their goods and allow their employees to get to work.
McAuliffe has the backing of teacher groups and the Virginia Association of Realtors.
The Democrat also would create the position of chief jobs creation officer — a role similar to the one that Lt. Gov. Bill Bolling has played in the McDonnell administration — as a single point of contact and authority.
He has been endorsed by the Virginia Farm Bureau, Virginia Police Benevolent Association and TecPAC, the political arm of the Northern Virginia Technology Council. The council itself, however, did not make an endorsement, citing the deeply divided opinions of its members.
A significant part of Cuccinelli’s plan for economic development centers on $1.4 billion in tax cuts.
He wants to put more money in the pockets of individuals and businesses to stimulate economic growth at the grass-roots level.
His plan includes lowering the personal income tax rate by 13 percent, from 5.75 percent to 5 percent, and business income taxes by a third, from 6 percent to 4 percent.
Cuccinelli has said he will pay for the tax cut in part by identifying and eliminating outdated exemptions and loopholes in the tax code that promote crony capitalism.
He also pledges to ensure that state government growth does not exceed inflation plus population growth. “Last year that would have [provided] about $400 million worth of tax relief; the prior year over $500 million with growth still going on,” Cuccinelli said at a recent public appearance.
Except in special circumstances, Cuccinelli does not have much enthusiasm for economic incentives to lure businesses to Virginia. “Incentives need to help Virginia beyond the industry targeted. It is not enough just to help that one industry,” he has said.
Using GOP voices
McAuliffe likes to quote moderate Virginia Republicans in attacking Cuccinelli’s positions.
“The way to grow [the] economy is to keep our taxes low, but unlike my opponent I’m not going to propose a $1.4 billion tax cut,” McAuliffe told a Northern Virginia forum sponsored by local business groups. “Vince Callahan, the former Republican chairman of the House Financial Appropriations Committee, talked about the disastrous effect it would have on our budget. We know where it’s most likely to come out of is education and public safety.”
McAuliffe also has invoked the name of another Republican, Bolling, who was once Cuccinelli’s rival for the gubernatorial nomination.
Citing Bolling, McAuliffe said that any governor who does away with business incentives “won’t be a jobs governor.”
The quote is from a speech Bolling gave in June to Roanoke County business leaders, in which the lieutenant governor said that the 10 to 15 percent of business projects in the state using incentive-driven deals tend to create hundreds of new jobs.
In a written response, Cuccinelli campaign spokesman Anna Nix replied that the current tax system inhibits growth by letting the government pick winners and losers.
While Bolling has refused to endorse either candidate for governor, one of his allies, Boyd Marcus, a Republican consultant who also has advised former GOP Gov. Jim Gilmore and Republican U.S. Majority Leader Eric Cantor, recently defected to McAuliffe’s camp.
Cuccinelli recently landed his own coup when Democrat Dave “Mudcat” Saunders, who advised Mark Warner’s gubernatorial campaign and former Sen. Jim Webb’s campaign, said he’s supporting Cuccinelli.
‘Full Flop’ on coal
In portraying McAuliffe as slippery on the issues, Cuccinelli has attacked the Democrat’s position on coal mining, a major industry in Southwest Virginia.
PolitiFact Virginia, which fact-checks statements by politicians and others, has judged that McAuliffe has made a “Full Flop” on coal, backing away from criticism of the industry four years ago.
In a Democratic primary debate in 2009, McAuliffe is quoted as saying: “We have got to move past coal. As governor, I never want another coal plant built.”
PolitFact points to a statement made by Josh Schwerin, a spokesman for McAuliffe, to The Virginian-Pilot newspaper in May, when asked to clarify McAuliffe’s position.
Schwerin is quoted as saying: “Terry believes we need to support coal workers, both through increased exports throughout the world, and workforce training to ensure that displaced workers can find new careers.”
Anti-gay? Pro-union?
McAuliffe has charged that what he has called Cuccinelli’s extreme social agenda — he says Cuccinelli once referred to gays, as “soulless human beings” — will deter businesses from locating in Virginia.
Photo by Mark Rhodes
However, Bev Gray, a Northern Virginia businesswoman, believes McAuliffe, not Cuccinelli, will hurt the commonwealth’s economy.
“It’s very simple,” says Gray, president and CEO of Exhibit Edge of Chantilly, which designs, produces and manages trade show exhibits. “Ken will make it easier for me to build my business, with tax incentives and with fewer regulations.
“One of my concerns is that if Terry gets elected, he will bring unions into Virginia. Every time we have to use a union employee, that’s $14 an hour added to my bottom line.”
McAuliffe worked extensively with unions as chairman of the Democratic National Committee and has had business relationships with union leaders. Nonetheless, in January he said at an event sponsored by the National Federation of Independent Business that he would preserve Virginia’s right to work law, considered a key advantage in competing with other states for business prospects.
Role of federal government
Cuccinelli and McAuliffe have widely different views about the role of government in job creation.
“As governor, I want to go up to the federal government and get as much money as possible,” McAuliffe said recently.
Cuccinelli, however, is skeptical of government involvement in the economy.
“The private sector is in control of what’s best for them, not your governor or your government,” Cuccinelli said, in speaking of economic policy and the private sector’s ability to create jobs.
He also didn’t like the idea of a large state government.
“The role I believe the governor most appropriately can play is to rein in state government so that our struggling businesses have what they need to invest in diversification so they can stay here,” Cuccinelli says.
Transportation
An article of faith among many business leaders, especially those in heavily congested areas such as vote-rich Northern Virginia and Hampton Roads, is that improving the state’s transportation means improving the climate for business.
McAuliffe has leapt on the issue to draw a sharp contrast between his position on the $6 billion transportation-funding bill that passed in the last session of the General Assembly and the stance that Cuccinelli took on the proposal.
“I supported the plan because it was critical for our future. And I urged Democrats to put aside partisanship in support of the plan,” McAuliffe said. “My opponent, Ken Cuccinelli, opposed the plan, opposed it for ideological reasons. And he led the Tea Party opposition to the plan.
“A modern, efficient transportation plan … is an issue of business competitiveness and an issue of quality of life when Northern Virginia families are spending 67 hours [annually] stuck in traffic,” McAuliffe said.
He was quoting a statistic from the Texas A&M Transportation Institute, which in 2013 rated Northern Virginia’s congestion as the worst in the nation.
Cuccinelli told the same audience that though he opposed the transportation plan, he would fully implement it “in the spirit in which it was passed,” if he is elected governor.
He added that reforming the Virginia Department of Transportation is one of his top priorities, if he wins the governorship.
“I think more needs to be done in terms of involving the regions and localities in the control of the money and how it’s spent,” Cuccinelli said.
More mud ahead
If the last days of the gubernatorial campaign are similiar to what has been happening so far, voters can expect to see more mud slinging. Here is a taste of some of the character attacks thus far.
Cuccinelli on McAuliffe:
“He’s the person who invented the scheme to rent out the Lincoln Bedroom and proudly bragged about selling seats on Air Force One for political donations.
“He’s an unindicted co-conspirator in a union election money-laundering case. He has famously given over a million-dollar gift loan to the president of the United States.”
McAuliffe on Cuccinelli:
“He’s the true Trojan horse of Virginia politics. You come in pretending to be one thing, and you end up being something else.
“He can stand up here and talk about jobs and transportation. [But] he’s done nothing but hurt jobs, try to stop transportation and led a very social ideological agenda against women’s health and gay Virginians.”
Stephen Farnsworth, director of the Center for Leadership and Media Studies at the University of Mary Washington, says this election is “tailor made for people who like their politics ugly.”
One of the big questions about this contest is whether voters will be so turned off that they decide to stay home.
A small turnout typically favors Republicans, who swept the state’s top offices in 2009 when less than 40 percent of registered voters went to the polls.
Democrats are working hard to produce a large turnout. More than 70 percent of the electorate voted in the 2008 and 2012 presidential elections when Virginia landed in Barack Obama’s column.
“One of these guys is going to be elected,” Farnsworth says with a sigh. “But I don’t think the electorate is going to be happy with either one.”
Virginia Gov. Bob McDonnell was once mentioned as a potential GOP presidential candidate in 2016.
His approval ratings were once on an upward trajectory.
His private life was once private.
That was before his apology last summer for the embarrassment that his actions, and those of his family, had caused the commonwealth.
That was before the onset of federal and state investigations into more than $165,000 in gifts and loans from an executive — Star Scientific’s CEO Jonnie Williams Sr. — who wanted his anti-inflammatory supplement offered on the state health plan. (The request was denied.)
That was before Maureen McDonnell, wife of the governor, was on track to become the most controversial first lady in modern Virginia history, amid stories of a $15,000 New York shopping trip and a $6,500 Rolex watch for her husband, paid for by Williams.
The governor maintains that Star received no special treatment or state grants. He no longer wears the watch, and he says he has repaid the loans and returned most of the tangible gifts that he and his family had received from Williams, including $15,000 in catering for one daughter’s wedding and $10,000 to help pay for another’s. It is not clear whether the reimbursements include more recent revelations made by The Washington Post, including a weekend trip to Cape Cod and golf outings for his sons and staff.
In the twilight of his four-year term as governor, McDonnell has become a chew toy for the news media. For a time, every day brought new revelations of gifts and loans.
Amid the ongoing crisis, McDonnell took a tour of the state in August to celebrate the accomplishments of his administration.
Those accomplishments include:
Guiding approval of the first comprehensive transportation-funding plan in 27 years through a highly divided legislature.
Achieving four consecutive state budget surpluses.
Selling a record amount of Virginia’s agricultural products to overseas markets.
Working to restore the voting rights of felons.
Journalists who followed him on the tour observed that he seemed to have lost weight and seemed wearier than before.
Calls for McDonnell’s resignation have come from a few Democratic legislators, a few Republican pundits such as blogger Jennifer Rubin and broadcaster John Fredericks and from some publications, such as The Virginian-Pilot newspaper in Norfolk.
McDonnell has insisted that he will serve out his term, even though his approval ratings in polls have dropped steeply.
In October 2011 a poll by the Quinnipiac University Polling Institute found that 62 percent approved of the way he was handling his job. By July 2013, only 46 percent approved.
At best, McDonnell’s future is clouded.
Of course, some politicians have overcome what once appeared to be career-ending scandals.
But Larry Sabato, the authoritative University of Virginia political scientist, is pessimistic about McDonnell’s chances.
He cut to the chase in a tweet over the summer:
“McDonnell’s political career is over. Finis. That’s no longer in dispute.”
Mark Merhige marvels at how downtown Richmond has changed since the 1980s.
That’s when he and a group of investors including his father, a federal judge, bought an old warehouse in the Shockoe Slip neighborhood. They renovated the building, creating office space and some of the first loft apartments in the area.
The decision proved to be a harbinger of things to come.
Today, Shockoe Slip and the adjacent Shockoe Bottom — once dominated by historic but decaying warehouses and commercial structures that supported the tobacco industry — have blossomed into a trendy area of cobblestone streets, shops, restaurants, and commercial and residential properties.
“I’d love to tell you that I was a real estate genius and a visionary. But I have to tell you I was just a 26-year-old who was just thinking about chasing girls and having a cocktail,” says Merhige, co-founder and principal of
The Shockoe Co., whose precursor he formed in 1986. “It was very logical to a 26-year-old to be down here.”
These days you’ll see a lot of 20- and 30-year-olds in downtown. Their arrival has helped produce a spike in Richmond’s population, according to new Census estimates.
The city’s population now tops 210,000. That’s nowhere near the 250,000 people the city had in 1970 before a steady migration to the suburbs during the next three decades.
Nonetheless, for the first time in recent memory, the city is growing at a faster rate than most of its suburban neighbors, including Chesterfield, Hanover, Powhatan and New Kent counties. (Henrico County’s growth rate was a bit higher, 2.6 percent compared with Richmond’s 2.3 percent.)
Between 2000 and 2010, the city’s population grew by 6,500. And, between July 2011 and July 2012 the city welcomed more than 4,000 additional residents.
The surge in downtown has been led by Millennials, the generation that generally includes people born from the early 1980s to the early 2000s.
Changing the culture
John Accordino, director of the VCU Center for Urban & Regional Development (VCURD) in Richmond, says two-thirds of Richmond’s downtown’s population is in the 18-34 age group, compared with one-third in the city as a whole and a quarter in the metro area.
That critical mass of youth, he believes, is helping to change the city’s culture. For one thing, it’s becoming less car-centric. Among today’s youth, Accordino says, “the culture of driving has changed. Driving is a lot less hip and less desirable than it was a generation ago.”
Today, many young professionals are walking or bicycling to work, pouring out of the apartments that have sprouted throughout downtown and just south of the James River in the Old Manchester community.
Richmond will take big steps toward recognition as a bicycle community during the next two years.
Richmond will be the site of the USA Cycling Collegiate Road National Championships (May 2-4, 2014), and the next year (Sept. 19-27, 2015) it will host the UCI (Union Cycliste Internationale) Road World Championships.
Organizers say the World Championships could have an economic impact of $86 million in the Richmond area, drawing approximately 1,500 athletes and a worldwide TV audience of about 300 million.
With the help of the state, the city will be repaving many of its potholed streets to make the ride smooth for the legion of bicyclists who are on their way.
Accordino of VCU says the concentration of young professionals downtown presents Richmond with an opportunity for a fresh burst of creativity and innovation. “We’re down the road in creating the city of the 21st century,” he says.
Accordino does not mind tooting the horn of his own institution, VCU, and its contribution to downtown Richmond’s youthful demographic. “In the last decade, VCU has grown by 9,000 students [to nearly 32,000], and VCU has invested $1.5 billion in the downtown in the last 15 years,” he says
2,400 new apartments
Since the beginning of 2012, more than 2,400 apartments have been built or are in the process of completion. During that same period, 750,000 square feet of commercial property has been completed or is under way.
Lucy Meade, director of marketing and development for Venture Richmond, a downtown leadership and booster group, says private and public investment in the projects total more than $1.15 billion.
She notes that downtown development forged ahead even during the recession. “It is incredible. We now have 14,000 people living downtown.”
Meade noted that Richmond has a larger downtown population than Austin, Texas (9,800); Nashville, Tenn. (5,100); Raleigh, N.C. (5,000); Tampa, Fla. (3,500); even Cleveland (9,800); and it holds its own with Charlotte, N.C. (about 14,500).
“Creative, innovative communities are seeing tremendous growth in their downtown populations because more and more people want an urban lifestyle,” Meade said.
Richmond’s experience with downtown growth is part of a pattern in many downtown areas across America, according to a Census Bureau report.
Among major U.S. cities, Chicago’s downtown showed the most growth in the 2000-10 period. The city’s downtown population surged by 36 percent. Washington, D.C., was second with a 14.2 percent increase.
But growth was not universal. For example, Baltimore’s downtown population dropped 6.1 percent and Dayton, Ohio, dropped 19.8 percent.
Meade says one of the recent trends reported by developers is an influx of empty-nesters and unmarried singles in their 40s and 50s moving in from the suburbs to get away from cutting the grass and maintaining a home.
But Robin Miller, a developer involved in the creation of more than 600 residential units, says young professionals overwhelmingly have been the force driving the market for apartments in Richmond.
Their presence also has sparked a push in new restaurants and music venues. “It is all young professionals, 80 to 90 percent of it,” Miller says. “They’re kids who got out of college and have been living with three or four roommates, or in mom’s basement for a few years, and they want a place of their own.
“Unlike 20 years ago, when you came out of college you went anywhere the job was. Now, young professionals go to where they want the quality of life,” he says.
Miller believes the increasing presence of young professionals in the city bodes well for job creation from companies who want to locate where the talent is.
That was borne out in 2011 when Tumblr, a hot blogging platform recently acquired by Yahoo for $1.1 billion, located its first office outside of New York City in the Corrugated Box Building in Old Manchester.
Tumblr’s mobile app team and community support group already were in the area, so setting up an office in Richmond was a logical decision for the company. The Corrugated Box Building also offered the open, collaborative space favored by startups.
Tax credits led the way
In many ways, the origins of Richmond’s revitalization can be traced to 1996, when the Virginia General Assembly enacted legislation establishing a historic rehabilitation tax credit.
That tax credit, 25 percent, coupled with a federal historic rehabilitation tax credit of 20 percent, which had been enacted in 1976, made it financially feasible for many developers to renovate and adapt historic structures for new uses.
During the past 30 years, more than 1,100 projects in Richmond have employed historic tax credits.
The credits have been used to restore city landmarks, such as the Hotel John Marshall, now an upscale apartment building; and The National, a former movie theater that has become a destination for musical acts and a cultural anchor.
Elizabeth Tune, manager of the Office of Preservation Incentives in the Virginia Department of Historic Resources, says Richmond would “look different, hugely different” if historic tax credits were not available. Whole neighborhoods would still be blighted, she says.
Greg Wingfield, president and CEO of the Greater Richmond Partnership Inc., says there are many success stories in attracting major employers to the region.
In 2006, for example, packaging giant MeadWestvaco moved its corporate headquarters to downtown Richmond, near the James River.
In 2012, online giant Amazon opened two distribution centers, one in Chesterfield County and one in nearby Dinwiddie County. The two centers employ 2,000 people, and a few months ago Amazon said it would be increasing the inventory capacity at the Chesterfield plant. Hundreds of more jobs are on the way. The company said in August it will add 5,000 full-time jobs at its U.S. distribution centers.
The biggest homegrown success story in recent years has been Health Diagnostic Laboratory, which was started in 2008 with a handful of employees. The company, which provides medical diagnostic testing and patient counseling, has grown its workforce to 660 in the city’s Virginia BioTechnology Park. The company anticipates having 1,000 employees by next year.
“They’re in a great niche market in health care,” Wingfield said, “and in a great location, adjacent to a teaching hospital [VCU Medical Center] in a biotechnology park.”
The skyline of Richmond will soon be changing again, with the construction of a signature office tower — the 15-story, $110 million Gateway Plaza — rising out of the heart of the business district, at the north end of the Manchester Bridge.
The tower will include more than 10,000 square feet of first-floor retail space and 520 parking spaces. The anchor tenant will be McGuireWoods LLP and McGuireWoods Consulting LLC. Richmond City Council has approved a plan to put more than $14 million in city financing into the project.
Museum is big attraction
Richmond has scored a couple of major coups recently that bolster the reputation of its quality of life: Outside Magazine, for example, named Richmond the Best River Town in America last year, and the Washington Redskins football team moved its training camp to the city this summer.
But the polestar for quality of life and culture in Richmond is the recently renovated Virginia Museum of Fine Arts.
During the past decade, the museum has reinvented itself in ways large and small, ranging from a major expansion to Friday night wine tastings and salsa dancing.
In 2010, the Virginia Museum completed a four-year $150 million expansion, which added 165,000 square feet to the museum’s existing 380,000 square feet. Since then, its annual attendance has boomed, making the museum a major attraction in the region.
The museum is open 365 days year and is free to the public except for special exhibitions. “We’re averaging 550,000 visitors a year,” says museum director Alex Nyerges.
To better accommodate the flood of visitors, the museum will rehabilitate by 2015 a 163-year-old former farmhouse on its campus for a regional tourism site.
That’s also the year that Virginia Commonwealth University’s $35 million Institute for Contemporary Art is set to open on one of the city’s gateways. “It will be a wonderful complement to what we do,” Nyerges says.
While many good things are happening in Richmond, the city still is dogged by poverty.
A recent study by the Mayor’s Anti-Poverty Commission notes that 26.3 percent of the city’s population meets the federal definition of poverty, which is an income of $23,000 or less for a family of four. Even more startling in Richmond is that the poverty for children has risen to 40.5 percent.
By comparison, the latest Census figures indicate that Virginia as a whole has a poverty rate of 10.7 percent. Richmond’s poverty rate also far exceeds neighboring counties such as Henrico (10.2 percent), Chesterfield (6.1 percent) and Hanover (5 percent). It’s also higher than Norfolk (17.1 percent); Roanoke (20.8 percent); Virginia Beach (7.1 percent); Fairfax County (5.5 percent); and Arlington County (7.1 percent). Danville’s poverty rate (25.6 percent) approaches Richmond’s.
“This is a crisis the city can no longer tolerate,” Thad Williamson and John Moeser, two members of the poverty commission wrote in an opinion piece in the Richmond Times-Dispatch. Moeser is a senior fellow in the
Bonner Center for Civic Engagement at the University of Richmond where Williamson is an associate professor of leadership studies.
Task force groups have been appointed in number of areas such as economic development, transportation and housing to act on the commission’s proposals.
Moeser says that, despite Richmond’s poverty, there has been a “complete change in the social geography of this area. Money is being injected into the city at a high rate.”
While level of poverty in the surrounding counties still is much lower, Moeser says the poverty rates there are rising as lower income families move to the suburbs to find cheaper housing. Between 2000 and 2011, he notes, the number of people living in poverty rose 66 percent in Henrico and 34 percent in Chesterfield.
Moeser laments the longstanding friction between the localities. “The state of regional relations in Central Virginia is as bad as they have been in many years,” he says.
Moeser cites as an example problems in establishing a regional transportation system. Others have pointed to a stalemate replacing the 40-year-old Richmond Coliseum and creating a new ballpark for Richmond Flying Squirrels.
From a municipal government to an automobile dealership to a symphony orchestra, CFOs say the keys to surviving and sometimes thriving in this post-recession but still nerve-wracking age come down to this: perseverance, innovation, learning to do more with less.
Virginia Business talked with a wide range of nominees for its annual Virginia CFO Awards to pinpoint the concerns of chief financial officers.
The awards, now in their eighth year, honor top CFOs in five categories. This year’s competition attracted 31 nominees who were feted at an awards banquet on June 20 at The Jefferson Hotel in Richmond. The winners in each category, chosen in voting by the 2012 winners, are profiled in the following pages.
But first some insights into the daily headaches and winning strategies employed by Virginia CFOs who face a slowly recovering economy.
A late hit in Roanoke
“We haven’t been blown out of the water,” says Ann Shawver, director of finance for the City of Roanoke.
That’s a good thing. A number of local governments across the country can’t say as much.
Ann Shawver, director of finance for the
City of Roanoke, says the health-care
industry has become an economic
driver for the city.
Still, that doesn’t mean everything has been rosy in Roanoke, which Shawver says lagged behind other parts of the state in being affected by the recession. The problems didn’t catch up with the city, which has a $260 million annual budget, until this year.
“We didn’t see real estate assessments dropping until fiscal year [20]13 — it was the first decline in our history, and they’re dropping again in [fiscal year 20]14,” Shawver says.
Fortunately, Shawver says, there has been growth in other taxes, as real estate assessments fell.
On Jan. 1, for example, Roanoke raised its lodging tax from 7 to 8 percent of the room rental. The additional money will go toward providing more funding for its visitors bureau and raising the profile of its tourism industry, with the hope of generating more spending from visitors.
Roanoke City Council also temporarily raised the meals tax from 5 to 7 cents per dollar to help boost the school system, which had been hurt by a drop in state appropriations.
The meals tax increase ended on June 30, 2012, but not before it had generated $9.5 million for the schools. The money was used to buy books, reinstate a full summer school program and pay for a reading camp for 600 students. “Roanoke was able to weather through this,” Shawver says, and now things look brighter.
She says the health-care industry is becoming an economic engine for this area. In recent years, for example, Carilion Clinic and Virginia Tech partnered to create a new medical school and research institute.
By 2015, Shawver says, the city also hopes to have passenger rail restored to the historically railroad-centric community.
In the do-more-with-less category, Roanoke has trimmed its employee rolls about 10 percent between fiscal year 2007 and fiscal year 2013. There were no layoffs; jobs were eliminated through attrition.
“We learned a lot with this recession,” Shawver says. “The first thing: Don’t get too comfortable.”
2008 ‘turned the spigot off’
Stacy Cummings says
Priority Automotive focused
on acquiring top-tier
dealerships with a future.
That’s a lesson shared by Stacy Cummings, vice president and chief financial officer of Priority Automotive Group in Chesapeake.
“From 2002 to 2008, it looked like the good times were never going to end. Then, in August 2008 it looked like somebody turned the spigot off.
“We downsized personnel and rearranged the salary structure. In the end, it turned out to be a good thing. We learned how tight we could run things — what’s necessary and what’s not,” Cummings said.
Although Cummings says that Priority “hit the skids” as did many automobile dealerships, it was in a good cash position and knew opportunities would come if it persevered.
During the economic recovery, Priority has focused on acquiring top-tier dealerships with a future. “We just purchased Hampton Honda, and we’re aggressively looking for other opportunities,” Cummings says. “But for every one deal you put together, we probably look at 15 to 20.”
With 1,100 employees, Priority hopes to generate revenue of a billion dollars this year. “Thankfully, the market has caught fire,” Cummings says.
Changes at Symphonicity
Wendy Young says a
symphony orchestra has
to be run like a
business to survive.
The market has caught fire for an orchestra in Virginia Beach, too, but in a much smaller and different way.
Symphonicity, the symphony orchestra of Virginia Beach, has seen its budget quadruple — to $304,000 – during the past decade. In addition, it moved into a spectacular new home — the Sandler Center for the Performing Arts, built in 2007 — and it’s even hit the beach, with pop concerts for bathers and strollers.
Not bad, for a symphony whose musicians are volunteers. What keeps them coming back is the love of music.
Yet, there is another reality. “Well, yes, the music is wonderful, and you have all these wonderful feelings. But you still have to run it like a business to survive,” says Wendy Young, a longtime pianist, who is Symphonicity’s executive director and CFO.
That has meant a constant stream of fundraisers, prospecting and landing corporate donors, plus joining with other arts groups to lobby the City Council.
With the expertise of a local advertising agency, the group also updated and differentiated its image and name (it was formerly the Virginia Beach Symphony Orchestra).
All of that has enabled Symphonicity to prosper, Young says. Still, she emphasizes that the foundation of the organization is the loyalty and participation of a legion of volunteer musicians. “Even though I look at it as a business, they look at it as a family,” Young says.
Rewarding good drivers
Trying to start a company in a nervous economy can be daunting.
Just ask Joe Herbert, CFO of DriveFactor in Richmond, a startup company with a global clientele in the auto insurance industry.
One of Herbert’s challenges is to maintain sufficient cash and capital to fund the business plan. He must be able to articulate the business plan to potential investors.
Giving drivers a score based on their behavior behind the wheel is at the heart of DriveFactor’s business.
It uses a branch of information technology called telematics to transmit information about drivers to insurance companies, which then assess the risk of a driver having an accident and charges insurance premiums based on that information.
“If you look forward two or three years, we believe that every one of us will have a driver’s score as well as a credit score,” Herbert says.
“[Good] drivers can get a discount on their insurance,” he says, and the information helps insurance companies manage their risk portfolio.
So far, so good. “The economy has not had a negative impact on our company,” Herbert says.
Borrowing picks up
Laurie Grabow says
borrowing is picking
up at Old Point
National Bank.
The banking industry has been hard hit by the recession, by the fallout from the bad business practices of some banks and by more stringent federal regulations on banking.
Laurie Grabow, executive vice president and CFO of Old Point National Bank in Hampton, says community banks like hers suffered, too.
“When the economy dipped, people were unable to pay loans, and all banks had larger charge-offs, and that affected income,” she says.
Many homeowners saw their property values drop below what they owed on their mortgages. Rather than cope with “underwater” homes, some people simply walked away from their property.
In response, Grabow says, Old Point, which has branches from Williamsburg to Virginia Beach, began focusing on asset quality and researching why some loans had gone bad. Then, the bank adjusted its processes to include more risk management. “We haven’t come all the way back, but borrowing is picking up,” Grabow says.
As part of Old Point’s recovery efforts, she says, the bank has redoubled relationship-building efforts with customers, offering them opportunities to take advantage of other services offered by the bank.
“For example, if a small business needs an equipment loan, perhaps we’ll ask if we can help with its retail accounts or merchant cards,” Grabow says.
Concierge health care
Steve Nardo believes
many people are willing
to pay for doctors whom
they can call at any time.
The Affordable Care Act was the focus of intense scrutiny and debate even before it was signed into law in 2010. Many Virginia businesses are concerned about what the law will mean for them when coverage mandates go into effect next year.
Steve Nardo, CFO at PartnerMD in Richmond — a concierge membership medical practice specializing in primary care and executive health — doesn’t share those fears. “We think we’re going to be one of the companies that do very well with [health reform],” he says.
Nardo cited a forecast estimating that 30 million more patients will be entering the insurance system in 2014, which will further crowd doctors’ waiting rooms.
Many people, he believes, will be willing to pay for doctors whom they can call at any time and who provide prompt service when patients come to the office.
“Our patients are seen within the first five minutes,” he says, and physicians will spend the time to fully understand their problems.
PartnerMD says it maintains a 95-percent retention rate. In Richmond, members pay about $1,900 annually for an individual membership and significantly lower rates for adding on a spouse and children, Nardo says.
The company was founded in 2003. Markel Ventures, a part of Richmond-based specialty insurance company Markel Corp., acquired it in 2011.
PartnerMD has Virginia offices in Richmond, Midlothian, McLean and Lansdowne, with additional offices in South Carolina and Washington state.
In the coming year, it plans to continue a national expansion, with the opening of seven to eight additional offices.
But the company will be careful not to grow too fast. “The culture is so important to us,” Nardo said. “If it takes longer to build coast to coast, so be it.”
If you’re a female engineering student, you’re part of a small minority.
Women earned only 18.4 percent of the undergraduate engineering degrees awarded in 2011 — the latest year for which figures are available.
Industry leaders say the nation desperately needs more homegrown engineers and scientists to keep up with its international competitors.
Dean Oktay Baysal of the Frank Batten College of Engineering and Technology at Old Dominion University knows exactly what needs to be done: “We must recruit more women to engineering.”
And, if we don’t? “Catastrophic,” Baysal says. “If we’re ignoring that population, then we’re ignoring the diversity of thinking and the diversity of solutions that women bring to the table.”
Baysal acknowledges that his university, as most others, hasn’t done a good job of recruiting women to its engineering programs.
Only about 15 percent of ODU engineering students are women, a rate lower than the national average of 20 percent. “I’m not proud of it,” Baysal says.
All-girl classes
Baysal is one of many Virginia education leaders urging efforts to interest girls in engineering before they get to college.
These efforts involve the creation of STEM (Science Technology Engineering Math) academies throughout the state.
One example is the New Commonwealth Governor’s STEM Academy at Chantilly High School in Fairfax County, which boasts one of the highest concentrations of technology jobs in the country.
Joan Ozdogan, a career experience specialist at the academy, says it has been able to interest girls in engineering through optional, all-girls classes.
Classes introducing high school students to engineering once were 98 percent male, an environment that proved daunting to many girls, who quickly dropped out, she says.
Since the all-girls classes began, however, interest and enrollment has soared.
“Over the past six years, just under 150 girls who have completed the GE2 [Girls Exploring Engineering] program graduated high school,” Ozdogan says.
“Of these graduates, 84 percent of the girls are currently university undergraduate engineering students or have graduated from engineering schools.”
She emphasized that the all-girls classes give students an opportunity to help and support each other. The “girls exploring engineering” program also puts power tools into the girls’ hands and teaches them basic technical skills, which Ozdogan says helps them catch up with the experiences that many boys may have already had.
“We’re making a difference in girls’ lives. Am I graduating an engineer? No,” Ozdogan says. “My goal is to help that young woman self-identify as an engineer. We want her to be self-confident and have basic technical skills.”
Record enrollment at Tech
Bevlee Watford, associate dean for academic affairs at Virginia Tech’s College of Engineering, has been involved in similar grass-roots efforts, including engineering summer camps for girls and outreach to middle and high school students.
The result: This fall’s engineering class will be 23 percent women. “This is an all-time high,” says Watford.
Virginia Tech has found that clustering women in engineering classes helps them persevere through the curriculum. Another boost came from the creation of a first-year, all-women engineering residential community called Hypatia.
“We created Hypatia in 2001 with 40 freshmen. It’s now grown to over 100 freshmen,” Watford says. “You have someone in your room taking the same classes, struggling with the same courses and the same problems. It’s very empowering.”
To date, 913 women have participated in Hypatia. Among the participants, 80 percent have graduated or still are enrolled in a full-time engineering program, Watford says.
Role models
If clustering women in the same classes and in the same residence halls helps advance them toward a career in engineering, is there more that can be done?
“Role models,” says Pamela Norris, associate dean for research and graduate program at the School of Engineering & Applied Science at the University of Virginia.
About 31 percent of the students in the school of engineering are women — far above the national average of about 20 percent — but only about 14 percent of the faculty are women.
Norris directs a program at U.Va. aimed at increasing the number of women faculty in engineering and the sciences, utilizing a five-year $3 million grant from the National Science Foundation.
One of the problems in attracting more women to engineering, she says, is that engineers haven’t explained themselves very well. “I honestly think we do a horrible job of describing what we do,” says Norris, a mechanical engineer.
She, for example, didn’t choose the profession out of fondness for gears but because she thought the field could benefit society. “I would describe engineering as problem solving to design a better future,” Norris says.
Different views
Olga Pierrakos agrees with that description for women engineers. An associate professor in the School of Engineering at James Madison University, Pierrakos has spent the past several years studying why students enter engineering and why they leave it.
“Male students come to see engineering as building things,” she says. “Women see the creative side of engineering and how it can help people.”
For women, Pierrakos adds, the level of pay does not seem to be an overriding factor, while it’s a driver for men.
A recent survey by the National Association of Colleges and Employers found that engineering graduates earn starting salaries far above those with other majors. A petroleum engineer, for example can expect a starting salary of $93,500.
Female dean at VCU
The ultimate role model for female engineering students may be a female engineering school dean. Barbara Boyan became dean of the VCU School of Engineering last year after serving as associate dean for research and innovation at Georgia Tech in Atlanta.
She says one of her main priorities is to make the engineering school a welcoming place for women as well as for men.
Her overriding goal, however, is to attract more students to engineering and to produce highly qualified engineering graduates.
Boyan believes a television show about engineers, perhaps drawing from the best elements of two hit shows that already have scientists in their cast —“CSI” and “The Big Bang Theory” — would be a boon to the profession. “It would say to the cool kids, this is a career.”
Executive education 2000: Executives stand in a line to go into a classroom.
Executive education 2013: Executives go online, and the classroom comes to them.
More and more, executive education in all its forms — whether it’s an executive degree program or a nondegree course — has an online component baked in.
Roy Hinton, associate dean of executive programs at George Mason University’s School of Management, has seen it unfold.
He offers an example: “You used to come to class and go away to do your teamwork. Now, you do your assignments and watch your content [online] and come to class to do your teamwork.”
Even when the lessons are over and the executives finish up, the online follow-ups can continue as schools reach out to offer supplemental material or pitch new content and courses.
No one is diminishing the value of face time with professors and thought leaders in executive education, it’s just that “online” has become the Zeitgeist of the early 21st century.
Besides the ascent of online learning, Hinton says, a second trend, customized programs — “an old trend that is sustaining itself” — is regaining the momentum it lost during the dark days of the recession, when companies were cutting their budgets to the bone.
Now, as the economy grudgingly improves, companies are coming in with problems and partnering with executive education programs to help solve them.
Hinton points to a recent client, Oracle Direct, that wanted to improve retention of its high-sales management group. Too many high performers did not see the company as a career destination. Oracle Direct, a direct sales and technical service arm of the software giant Oracle Corp., wanted to change that but, first, it had to change its culture. “They wanted their employees to know that they were willing to invest in them,” Hinton says.
So, George Mason University tailored a program that had high standards for admission but offered Oracle employees meeting those standards an opportunity for top-level leadership, management development and, ultimately, promotion.
Hinton says the GMU’s partnership with Oracle produced a significant improvement in retention for the company and helped the School of Management establish what it hopes will be a long-term relationship with a valuable client.
Cost shifting
Maureen Hall, executive director of the Virginia Tech Executive MBA program in Arlington, says one of the trends she has noticed in executive education is that increasingly participants are bearing more of the financial burden.
At one time, companies were paying 75 to 100 percent of the costs, but today it’s more like 25 percent, and the recession hasn’t helped. “In a recession, the first thing that goes is education,” Hall says.
Despite a decline in company financial support for executive education participants, companies still are giving employees time off to upgrade their skills, particularly the basics. “They want them to know finance, marketing and accounting,” she says.
Erika James is the new senior associate dean for executive education at the University of Virginia’s Darden School of Business, overseeing custom and open-enrollment programs.
She notes that Darden, which has a national and international clientele, is employing the latest technology to complement its roster of professors in the executive education arena.
“We’re using telepresence more and more to pull in key executives and case protagonists into the classroom,” she says.
“Telepresence” is a collection of advanced technologies that permit someone in a remote location to feel as though the person addressing them is in the same room.
Sometimes, James says, the best way to bring in the speakers you want when you want them is to beam them in using teleconferencing.
Technology also is playing a larger role in assessing executive education participants. Even before program participants arrive, Darden is measuring them through online personal leadership surveys, which might include observations from supervisors and cohorts.
Lou Centini, senior director of executive education at Darden, says assessments and comments from others help provide a clearer picture of each student’s strengths and needs. “It’s about evaluating an individual’s leadership capabilities,” Centini says, and its gives Darden more information in creating an individualized path toward progress.
Work/life balance
The effort of women executives to balance work and life has been a hot topic over the past year, spurred in part by the publication of Sheryl Sandberg’s book, “Lean In: Women, Work, and the Will to Lead.”
Sandberg, the chief operating officer at Facebook, explains why women’s progress in leadership positions in government and industry stalled and offers ways that women can reach their potential.
The book has been popular and controversial, but James says the conversation about women in leadership roles is pertinent to executive education today. “More and more women are leading startups, and a growing segment of entrepreneurs are women,” she says, a development that makes them good candidates for executive education.
James hears male executives talk about the same problems that had long been considered “women’s issues.” “It used to be that work-life balance was only about women. Now, men have the same concerns,” she says.
Jean Gasen, executive director for the Center for Corporate Education at the Virginia Commonwealth University School of Business Foundation, says she has been getting requests for programs from growing companies hiring young employees. These companies tell her their new hires often need help with communication and basic management skills.
A generation well skilled in texting is often not as well skilled in communicating orally and making presentations, she explains. “We can help with that,” Gasen says.
A return on investment
Across town at the University of Richmond’s Robins School of Business, Senior Associate Dean Richard Coughlan says companies are more insistent on seeing a return on their investment in executive education, particularly in more expensive customized programs. “There’s a much higher expectation that progress will be made in solving problems,” Coughlan says.
In some cases, he says, the problems that companies bring to the table require a response that resembles consulting more than training.
The UR dean also has seen a sharp rise in the number of nonprofits sending in managers and officers for executive training. He cites a “recognition among nonprofits that business acumen is required for survival — they probably didn’t hire for that.”
Larry “Chip” Filer, associate dean for executive programs at Old Dominion University’s College of Business and Public Administration, has concerns about the effect of sequestration on his programs, which draw heavily from the military-centric Hampton Roads area.
He’s not worried about degree-oriented programs, because the GI Bill has remained intact for tuition reimbursement in those areas. But, he notes, noncredit programs that don’t lead to a degree come out of a separate pot of money that has been affected by federal budget cuts.
“We are not that concerned about our MBA enrollment,” Filer says, “but we’re definitely concerned about our government contracting program.”
As baby boomers retire, Filer says, he’s fielding more requests from companies that want training in leadership and change management for employees who are moving up the ladder. “They’re technically proficient, but may have never had a chance to manage people,” he says.
Tapping retired talent
The Mason School of Business at the College of William & Mary says its executive education program has a treasure trove of talent that might be unequaled at other institutions.
That would be the school’s “executive partners,” a group of 125 recently retired C-Suite executives who live in Williamsburg and volunteer their time and expertise to the school of business. “We’ve got CEOs, CFOs, COOs,” says Deborah Hewitt, assistant dean for MBA programs.
The Mason School recently hosted a Southern regional conference for executive programs from about 30 colleges and universities. All of the schools were talking about a renewed focus on leadership skills. “There’s a good reason for that,” Hewitt says. “As things become more complex, leadership becomes more difficult.”
The corps of executive partners have walked that walk, she says, and their experiences — successes and failures — offer an unmatched reservoir of advice and counsel for executive education students and faculty alike.
The pitch to get the retired executives to sign up is not the kind of job description most HR departments would endorse. It focuses on hard work, interaction with students and faculty, a place other than the golf course to report to and an opportunity to guide the next generation of business leaders.
The downside: they don’t get paid, and they have to find their own parking. So far, recruitment has not proved to be a problem.
The jokes began almost immediately last year when the General Assembly approved a plan to sell naming rights for the commonwealth’s roads and bridges.
“In Virginia, the road to a pothole-free ride may be over the Big Mac Bridge,” the Los Angeles Times chortled after passage of the legislation, designed to scrape up money for transportation funding.
State Sen. Richard L. Saslaw (D-Fairfax) predicted the 2012 naming rights bill would spark a trend. “You will see the Burger King High School, mark my words,” he quipped to reporters.
So far, no Virginia highways have been renamed as a result of the legislation. (The state Department of Transportation is trying to figure out how much such deals might be worth.)
Nonetheless, Geico’s gecko now appears on signs at the state’s 43 interstate rest areas, encouraging motorists to take a break if they need to make a phone call or send a text message. The auto insurer’s $2 million annual sponsorship, part of another state program, is helping keep rest areas open after 19 were closed in 2009 because of budget shortfalls.
Off the road, however, Saslaw’s prediction about the spread of company names on public buildings is coming true. Corporate naming rights are playing an increasing role in the financing of public projects in Virginia and elsewhere.
Since 2004, the business of naming rights has grown nationally from about $4 billion annually to about $10 billion today, according to Dig In Research, an Ontario-based firm that tracks corporate giving. A growing number of companies are being offered naming rights for donations to public institutions and nonprofit groups in need of a financial boost for ambitious projects.
In Virginia, company names are sprouting on facilities ranging from laboratories at a community college in Roanoke to a municipal auditorium in Richmond.
New name for a landmark
For what officials believe is the first time in its history, the city of Richmond entered agreements for corporate naming rights to help finance capital projects.
One of the highest profile arrangements involved a decision last year to offer naming rights to tobacco giant Altria Group for the city’s historic Landmark Theater, which opened in 1928 as The Mosque. Naming rights for the theater’s stage went to Dominion Resources, parent company of the state’s biggest electric utility.
The city began a $50 million renovation of the 85-year-old theater in July 2012. Contributions from Henrico County-based Altria ($10 million) and Richmond-based Dominion ($2 million) will help finance the project.
“The city’s budget did not have the resources to accomplish the $50 million renovation alone,” says Tammy Hawley, press secretary to Richmond Mayor Dwight Jones.
Hawley adds that permitting major companies to acquire naming rights to the theater was spurred by strong interest in “Broadway in Richmond,” a program that brings musicals and other performances to the region. “The Broadway in Richmond series has resulted in over $80 million in economic impact,” Hawley says.
Richard Parison, executive director of Richmond CenterStage, an arts organization that manages the Landmark Theater and other city venues, says corporate naming rights have become increasingly popular among performing arts groups during the past decade as many built or renovated facilities.
Corporations, he adds, have a variety of reasons for seeking naming rights with an arts group. The connection can help companies engage with the community; link their names with creativity, innovation and diversity; and assist them with employee recruitment, because many employees want to settle in areas with a lively arts scene. “It isn’t about a check,” Parison says. “It’s about quality of life and economic development.”
In other instances, a company might seek naming rights for a city convention center, as Delta Air Lines recently did in Milwaukee, to gain a higher profile and possibly increase market share, he adds.
A first for Altria
For some companies, naming rights for a capital project represents a new kind of philanthropy. That was the case for Altria. “It’s definitely a first for us. We typically don’t do capital projects,” says Jennifer Hunter, senior vice president for corporate affairs at Altria.
Hunter says Altria approached the theater project with care and deliberation. “We had to step back and say, ‘Is this the right thing for our employees? Is this the right thing for the community?’”
In the end, she says, Altria judged it to be “an amazing project” that would give the local economy a boost while improving the cultural and artistic life of the region. “We’re not seeking recognition. This is our home.”
Tom Farrell, Dominion’s CEO, says its gift also constituted a rare arrangement for his company. “This is an off-budget item, one of a kind,” he says.
Farrell believes the renovated theater represents “a significant contribution to the community” and emphasizes the donation was financed by the company’s shareholders, not by its customers.
Under their agreements with the city, Altria and Dominion have naming rights on the iconic theater and stage for 20 years and 10 years, respectively.
Redskins training camp
Besides naming rights for the Landmark Theater, the city last year entered into a high-profile naming rights agreement involving the Washington Redskins and the Bon Secours Virginia Health System, which owns seven hospitals in the Richmond and Hampton Roads areas.
City officials say the Bon Secours/Redskins initiative is an economic development strategy that, when fully implemented, will bring $40 million in real estate development for the city, about $18 million in additional payroll taxes, 200 to 300 new jobs and additional health-care opportunities for the community.
Bon Secours committed to a sponsorship package that, over 10 years, will include $3.2 million for the naming rights to what will be called the Bon Secours Washington Redskins Training Facility, which is being built by the Richmond Economic Development Authority.
A Bon Secours spokeswoman emphasized the money is not a charitable contribution. (Click here for related story on tax treatment of naming rights.)
Under its lease with the city, which carries a $2.2 million price tag, Bon Secours will establish a men’s health and sports medicine office in the facility, as well as headquarters for a community childhood obesity initiative, Movin’ Mania.
The $10.8 million training facility is under construction on 17 acres of state-owned land near the Science Museum of Virginia. The city says other funding will come from additional sponsorships and lease payments.
Besides its agreement with the city, Bon Secours has a separate agreement with the Redskins that permits Bon Secours — for an undisclosed payment — to have naming rights on the facility during the weeks the Redskins are in town preparing for the NFL season, and to continue its community outreach support.
Besides having its name on the training facility, Bon Secours has secured rights for a long-term lease on city-owned property (formerly a school) for a hospital expansion project.
City officials estimate that the Redskins summer training camp, to begin this year, will bring $8.5 million into the local economy and draw 100,000 fans.
VCU athletic village
Not far from Redskins facility, the Department of Intercollegiate Athletics at Virginia Commonwealth University in March announced the largest corporate gift in its history — $4 million from Richmond-based Health Diagnostic Laboratory Inc. In return, VCU sports facilities will be known as the “HDL Inc. Athletic Village.”
VCU will use the money to develop its sports facilities and to promote wellness initiatives at the school and in Richmond.
“HDL places an enormous value on saving lives and preventing disease through advanced testing, lifestyle change and the type of active living that is enhanced by the athletic village,” Tonya Mallory, HDL’s CEO, said in a statement when the donation was announced in March.
The week before the HDL gift was announced, Richmond-based packaging giant MeadWestvaco gave $3 million toward a proposed VCU basketball practice facility.
The company, however, decided not to have its name on the building. “MeadWestvaco received naming rights for its gift and chose to have the facility called The VCU Basketball Complex … We honored that request,” VCU Athletic Director Ed McLaughlin says.
Neither Health Diagnostic Laboratory nor MeadWestvaco returned calls for a comment on their gifts.
Community college gifts
Community colleges also are tapping the corporate market for naming rights.
At Virginia Western Community College in Roanoke, two nursing labs in the college’s new Center for Science and Health Professions Building will be named for the Friendship Retirement Community after a $150,000 donation.
“These are nurses who one day might be working with Friendship. So, it’s a win-win,” says Josh Meyer, a college spokesman, who notes that the college’s career center — the Hall Associates Career Center — is named for an area real estate firm.
Meyer says Virginia Western will be seeking more corporate naming rights agreements.
That also is the intention of the Virginia Farm Bureau, which recently acquired the venerable State Fair of Virginia. The nonprofit fair, which began in 1854, is offering naming rights on every building, corral and stable on its Caroline County fairgrounds, a former farm that is the birthplace of Triple Crown winner Secretariat.
Currently, the only naming rights partner is agricultural cooperative Southern States, whose name will appear on a 143-stall stable. “We’d certainly entertain any potential partner who would have an affinity for the State Fair,” says Greg Hicks, the Farm Bureau’s vice president of communications.
“These types of arrangements help bring added credibility as well as awareness to your organization or business,” Hicks explains. “After a short period, your name becomes synonymous with the venue.”
Indeed, an arm of the Farm Bureau, Virginia Farm Bureau Insurance has a naming rights agreement in the Hampton Roads area for a 20,000-seat outdoor amphitheater and concert venue, called Farm Bureau Live.
“Advertising can be cost-prohibitive in that part of the state,” Hicks says. “This gives us a way to reach the 1.6 million residents in that area of the state at a relatively affordable price over an extended period of time.”
In an opinion piece on naming rights for the University of Cincinnati Law Review, William Drennan, an associate professor at Southern Illinois University School of Law, notes that these days you can buy naming rights for nearly anything.
He cites a University of Colorado at Boulder decision to sell naming rights and a plaque to a second-floor men’s bathroom at the university’s ATLAS technology hub, in exchange for a $25,000 donation from venture capitalist Brad Feld.
Feld’s name appears on the plaque, along with this inscription, “The Best Ideas Often Come at Inconvenient Times — Don’t Ever Close Your Mind to Them.”
The tax treatment of donations involving naming rights is a bit complicated.
Virginia Business turned to Mary Heen, a law professor at the University of Richmond, for an explanation. Her legal expertise is tax law, tax policy, legislation and regulation.
She led us through the thorny issue of charitable deductions and naming rights.
Heen says the tax issue in charitable deductions stems from this question: Has the donor received a benefit that is “more than incidental” in return for a contribution?
“When I receive an inexpensive mug or tote bag in exchange for a public radio contribution, the token thanks would be treated as incidental, and I may not need to reduce the amount of the contribution,” she says.
“However, if I receive a valuable item or substantial benefit in return for my gift, or if I bid on and win an item at a charitable auction, I have to subtract the value of the item or benefit received from the charity from the amount of my contribution claimed as a charitable deduction.”
Many charities, she notes, inform donors of the value of benefits they receive as “thanks” for contributions.
This process tends to be a case-by-case determination, Heen says, but there are tax regulations and rulings setting some guidelines.
“In the context of naming rights, it would generally be easier for an individual donor to show that having a building or room named after the donor is incidental to the charitable gift than it would be for a corporation engaged in selling products or services,” Heen says.
Nonetheless, even in the corporate context, naming rights have generally been treated as not providing significant benefits or monetary value, she says.
If a corporation uses naming rights as advertising, and if the corporation itself (rather than, for example, a corporate foundation) makes the contribution for the naming rights, the company could claim the payment as a business advertising expense, Heen says.
Another legal issue involving naming rights concerns the recipient of the donation.
“What if you have a company that has a significant scandal in the community?” asks Terry Burton of Windsor, Ontario, the president of Dig In Research and author of the book “Naming Rights; Legacy Gifts & Corporate Money.”
That potential problem, he says, is usually addressed in a clause in the naming rights agreements allowing names to be removed for bad behavior.
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