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$300M vertical farming campus coming to Chesterfield

A $300 million indoor vertical farm campus — billed as the world’s largest — is coming to Chesterfield County’s Meadowville Technology Park, Gov. Glenn Youngkin announced Wednesday. San Francisco-based Plenty Unlimited Inc. is expected to produce 300 jobs over the next six years in a multiphase project.

The first farm, expected to be completed in winter 2023-24, will grow Driscoll’s strawberries at scale. Founded in 2014, Plenty is based in California and recently secured $400 million in Series E financing. The company has more than 200 patents related to its agricultural technology, which allows it to grow produce year-round in 30-foot grow towers.

Youngkin, who made the announcement Wednesday morning at the future campus site, called the vertical growing technology “mammoth towers that represent the future of agriculture. They’re rewriting the rules of agriculture, where you can, in fact, see yields and yet use fewer and fewer of our precious natural resources. How’s that for a combination?” CEO Arama Kukutai said that indoor vertical farming has up to 350 times the yield per acre than traditional outdoor farms.

The campus will be on 120 acres off Bermuda Hundred Road in the Chester region, and officials with Plenty anticipate 20 million pounds of produce to be grown annually when the full campus is in operation. Aside from producing about 4 million pounds of strawberries annually, Plenty expects to grow leafy greens, cherry tomatoes and other crops.

Chesterfield is situated within a day’s drive of about 100 million customers, according to Kukutai. “Transport times, shelf-life freshness — those are all really important,” he said Wednesday. Kukutai noted that the project involved “a huge amount of investment and effort,” and that the company made a commitment to remain in Virginia at least 20 years. “These are long-term, very large physical assets that we’re building. We hope to not just create hundreds of millions of dollars of investment but hundreds of jobs, and to have this be really a historic moment in the development of indoor farming.”

At Wednesday’s announcement, Garland Reiter of Driscoll’s noted that the extreme heat earlier this year in California has caused further challenges to conventional agriculture. “It’s really hard to farm our crop, so we look forward to going indoors,” he said.

Virginia competed with five other states for the project, and Youngkin said he met multiple times with the company’s leadership during late winter and early spring, as Plenty decided where to go.

Plenty Unlimited has a research facility in Wyoming and is currently building a vertical indoor farm in Compton, California. Earlier this year, the company struck a deal to supply leafy greens to Walmart in California, with the possibility of more markets in the future as Plenty opens additional farms.

Virginia has become home to operations for several indoor agriculture companies, including AeroFarms, which announced its expansion plans in Pittsylvania County in July, Beanstalk’s launch in Fairfax County,  and Soli Organic Inc. in Rockingham County, which sells lettuces, herbs and purées at 20,000 stores nationally.

Rendering of the future Plenty Unlimited Inc. campus, including the Driscoll’s strawberry farm, in Chesterfield County’s Meadowville Technology Park

The Virginia Economic Development Partnership and the state Department of Agriculture and Consumer Services worked with Chesterfield County to secure the Plenty deal, and Youngkin approved a $2.4 million grant from the Commonwealth’s Opportunity Fund and $500,000 from the Governor’s Agriculture and Forestry Industries Development Fund — an incentive package created specially for the company, Youngkin said.

Plenty is eligible for other benefits through the Port of Virginia Economic and Infrastructure Development Zone grant program, as well as the major business facility job tax credit for full-time jobs created. VEDP will provide job training and other support through the Virginia Talent Accelerator Program at no cost to the company.

Youngkin said that with AeroFarms and Plenty here, the state will have the two largest indoor vertical farming facilities in the world.

Last week, nonprofit drugmaker Civica Rx announced its plans for a new lab in Chesterfield’s Meadowville Technology Park, a $27.8 million investment expected to create 51 jobs.

 

UPDATED: Richmond picks Diamond District development team

Updated Sept. 15

The city of Richmond announced Monday it has selected a joint venture including Richmond-based Thalhimer Realty Partners to build a new baseball stadium for the Richmond Flying Squirrels, as well as a mixed-use development surrounding the stadium, revitalizing the area into a new neighborhood to be known as the Diamond District.

The entire project is expected to cost $2.44 billion, with the first phase costing a minimum capital investment of $627.6 million, according to information provided by the city Tuesday. A Richmond City Council resolution to officially select RVA Diamond Partners LLC, sponsored by the mayor and seven city councilors, is scheduled for a vote Thursday. Because the venture involves the sale of city-owned land, seven out of nine council members must approve the motion.

Other partners in the RVA Diamond Partners joint venture include Washington, D.C.-based Republic Properties Corp., Chicago-based Loop Capital Holdings LLC and San Diego venue developer JMI Sports. According to the city’s announcement, the group committed to purchase the first $20 million of bonds needed to finance the stadium, which is required to be completed and open for the 2025 Minor League Baseball season.

According to Cushman & Wakefield | Thalhimer, the parent company of Thalhimer Realty Partners, the ballpark will have a capacity of 10,000, and the rest of the project will include 935,000 square feet of office space, 195,000 square feet of retail and community space, and two hotels with a total of 330 rooms.

The project also will include 2,800 residential units — both rental and 157 condos for sale — available at different price points, with 20% of rental units priced for households earning between 30% and 60% of the area median income, and 100 apartments under project-based vouchers for public housing residents. Twenty percent of all residences for sale will be priced for households earning between 60% and 70% of area median income, and the developers will put up a $1 million fund to assist home buyers with closing fees and associated costs.

The cost of the baseball stadium and public infrastructure will be financed with Community Development Authority (CDA) bond financing, the city said, which would not require Richmond to repay bonds if there is a shortfall. Bond financing will be repaid with tax revenue generated in the 67-acre development property, including taxes on real estate, businesses, meals, hotel revenue and baseball admissions. Local portions of the state sales tax, lease payments and other revenue will also be part of the deal.

An 11-acre park will also be part of the development, as well as open space and walkable blocks, connecting the Diamond District with the trendy nearby Scott’s Addition neighborhood, southwest from The Diamond across Arthur Ashe Boulevard. According to the city, the developers also wish to partner with the city’s School Board to develop a technical training center at the former Altria site on the city’s South Side, where the ONE Casino & Resort was set to be built.

The replacement of the Arthur Ashe Jr. Athletic Center, a nearly 40-year-old building that contains a 6,000-seat athletic facility and basketball court, will not be part of the first phase of the Diamond District development, but the Richmond City Council is expected to vote on a resolution to prioritize funding for recreational and extracurricular activities for city youth and young adults. The resolution pledges that the city will pursue “recreational and organizational opportunities previously served by the center on sites in the general proximity of the Diamond District prior to the transfer of the parcel” on which the Ashe Center is located and the future demolition of the center, which has been deemed too expensive to repair and maintain.

A 10-person panel that includes city employees and two City Council members chose the winning project, after 15 proposals were sent in. Last month, the city announced it had narrowed its choices to two teams: RVA Diamond Partners and Richmond Community Development Partners, which included San Francisco-based commercial real estate company JMA Ventures, Houston-based Machete Group and Tryline Capital, which has offices in Connecticut and New York, the Richmond office of Gilbane Building Co., Richmond-based Davis Brothers Construction Co. and Charlotte, North Carolina-based Odell Associates Inc.

Virginia Commonwealth University, which will use the new ballpark for off-season sporting events, and the Richmond Flying Squirrels will pay leases to use the stadium, the city has said. VCU plans to build a 40-acre athletic village east of the Diamond District, which could be made available to city residents through a separate use agreement, the city’s legislation says.

The replacement of The Diamond, the 37-year-old home of the Richmond Flying Squirrels AA baseball team, was the chief factor in the project’s timing. Lou DiBella, president and managing general partner of the Squirrels franchise, said Monday night in a statement: “The Richmond Flying Squirrels are proud to be an anchor tenant of this proposed revitalization and development of the Diamond District, a natural extension of the growth of our beloved hometown. The Squirrels will be the most well-known neighbors in a new, diverse and dynamic neighborhood. We commit to being a great neighbor and to making memories together for decades to come.”

In 2020, Minor League Baseball revamped its facilities requirements to include indoor batting cages, coaches’ rooms, locker rooms for female employees and other features that the aging Richmond stadium lacks. A document released last month by the city said, “A new ballpark must be built to keep Minor League Baseball in Richmond beyond the 2024 season.”

The entire multiphase project is expected to be completed in up to 15 years, with the inclusion of housing, hotel and retail space (and possibly office space), in addition to the stadium.

“This proposal meets our goals to equitably revitalize an underdeveloped part of our city and maximize its potential to enhance the quality of life for all Richmonders,” Mayor Levar Stoney said in a statement. “Commitments to affordable housing, minority business engagement, publicly accessible open space and a new ballpark mean that the Diamond District will be enjoyed by, built by and benefit all residents of our city. The Diamond District has long been a diamond in the rough. I look forward to seeing it shine.”

 

Diamonds in developers’ eyes 

Standing near the grand entrance of upcoming entertainment venue and food hall The Park at RVA, Orcun Turkay says he’s excited for the future of Richmond’s newly branded Diamond District. He calls it “Scott’s Addition 2.0,” referencing the trendy adjoining neighborhood.

Exact plans for the Diamond District, which will include a replacement for the city’s Minor League Baseball stadium, The Diamond, are not yet set, but Richmond City Council is expected to choose a developer soon.

Excitement about the new district is fueling adjacent projects like The Park at RVA, which plans to open this fall.

Located along Interstate 95 within view of The Diamond, The Park at RVA will offer duckpin bowling, mini-golf and multiple bars and restaurants, as well as a 200-seat venue for music and comedy shows. It will be housed in a 55,000-square-foot space on the second floor of a two-story industrial building owned by the project’s lead investor: Alexandria-based heating, ventilation and air conditioning contractor Michael & Son Services Inc. (CodeRVA, a regional magnet school for computer science,
is the first-floor tenant.) 

Turkay, The Park at RVA’s managing partner and vice president of operations, says the venue will offer more entertainment options under one roof than anywhere else in Richmond: “You can go to food halls and arcade bars, but not everything at once.”

Plans to redevelop the area surrounding The Diamond into a new mixed-use, mixed-income district built around a new stadium started a few years ago during discussions for the city’s Richmond 300 master plan for growth. This summer, the city narrowed the field to three competing development teams, which were pared to two finalists in August. There’s pressure to move forward, as work must begin quickly on a new Richmond Flying Squirrels stadium to meet newly adopted league facility standards and open by March 2025.

Greater Scott’s Addition Association board members have endorsed development team RVA Diamond Partners, a joint venture including Washington, D.C.-based Republic Properties Corp., Chicago-based Loop Capital Holdings LLC and Richmond-based Thalhimer Realty Partners Inc. “We made it extremely clear to the city … that we want this to happen,” says Rob Long, president of the board. “This is an awesome project.”  

Where there’s smoke

Updated Sept. 1, 2022

Henrico County’s Altria Group Inc. advertises on its website that it is “moving beyond smoking,” although the owner of Philip Morris USA still is one of the world’s largest producers of cigarettes and other tobacco products.

Now the 6,000-employee, $26 billion corporation may have to move beyond smoking more quickly than it anticipated.

As part of the Biden administration’s cancer moonshot initiative, which aims to cut U.S. cancer deaths by 50% during the next 25 years, the U.S. Food and Drug Administration has said it plans to limit the amount of nicotine in cigarettes “to minimally addictive or nonaddictive levels.” (The FDA is expected to issue the proposed rule in May 2023, at which time it would be open for public comment.)

Additionally, the FDA plans to ban vaping products manufactured by Washington, D.C.- based Juul Labs Inc., in which Altria has a 35% financial stake. Juul’s products were still on shelves as of August after a July FDA decision to further review studies comparing e-cigarettes with conventional cigarettes, a process without an announced timeline.

But the fact that either move could happen in the future poses challenges to Altria’s long-term profitability and sustainability.

In addition to the federal government’s aims, Altria has other problems: The U.S. International Trade Commission forced Philip Morris’ IQOS tobacco-heating system out of the U.S. market in September 2021 over a patent dispute. And the lack of a federal law governing cannabis sales has kept Altria’s $1.8 billion investment in Canadian cannabis company Cronos Group Inc. from paying off.

In a late July earnings call, Altria CEO Billy Gifford, who was promoted from chief financial officer to CEO in April 2020, acknowledged this was “a pivotal point in the U.S. tobacco industry.” A month earlier, The Wall Street Journal deemed it an “existential threat” to Big Tobacco — and Altria in particular.

No Juul in the crown

When Altria released its 2022 second- quarter financial report in July, its net revenues for the quarter were $6.54 billion, down 5.7% from the second quarter in 2021, hewing closely to the company’s predictions for this year.

Meanwhile, Altria’s $12.8 billion investment in Juul, the California-based vaping company that has come under federal scrutiny (as well as numerous lawsuits) over its appeal to underage smokers, sank to a worth of $450 million as of June 30.

According to Altria, it has an option to be released from its noncompete agreement with Juul if the vaping manufacturer is barred from selling its vape products for a year or more in the U.S. or if Altria holds no more than 10% of its initial investment in Juul — in other words, $1.28 billion, a threshold it has already passed.

Altria’s Philip Morris USA is the nation’s largest cigarette manufacturer but tobacco sales have been declining steadily. Nearly 399 billion cigarettes were sold in the United States in 2001; by 2020, the number had fallen to 203.7 billion, according to the Federal Trade Commission. Photo by AP Photo/Gerry Broome

But Altria has not yet sought to be released from its noncompete agreement because the company would also lose certain rights on Juul’s board.

“At this time, we continue to believe that these investment rights are beneficial to us,” Altria spokesperson Jennifer Kelly said via email. “Therefore, we have not opted to be released from our noncompete obligations at this time, but we retain the option to do so in the future.”

Steve Marascia, an analyst at Richmond- based investment firm Capitol Securities Management who follows Altria’s progress and owns stock in the company, rates Altria with a “buy” recommendation. He says the FDA’s movement toward banning Juul’s e-cigarettes and mandating lower nicotine levels doesn’t pose an immediate risk to Altria.

Altria is “still generating a lot of cash flow,” he says, which allows the company to continue paying dividends — an item of interest to many investors, who have seen Altria increase dividends for 53 consecutive years. “The dividend is very key for the stock itself, and the ability to maintain the dividend will be important for the stock.”

In late August, Altria’s board voted to boost its quarterly dividend by 4.4% to 94 cents per share, up from 90 cents. The quarterly dividend is payable Oct. 11 to shareholders of record as of Sept. 15.

But ultimately, Altria will need to diversify from cigarettes, Marascia notes. “Their options are either they seek other products, make acquisitions or potentially merge with another company.”

Past diversification

Earlier this century, Altria was a more diversified company. Originally known as Philip Morris Cos., it changed its name in 2003 to the altruistic-sounding Altria Group in part to distance itself from its tobacco business.

This followed years of bad press and lawsuits over cancer deaths. In 1994, seven of the nation’s top tobacco CEOs, including Philip Morris USA’s William Campbell, testified before Congress that they didn’t believe nicotine was addictive. Four years later, Philip Morris and the top three other tobacco manufacturers entered into the Master Settlement Agreement, agreeing to settle state government lawsuits to recover tobacco-related health costs. Under the agreement, the four Big Tobacco companies agreed to pay at least $206 billion to the 46 participating state governments (including Virginia) over 25 years.

At the beginning of 2007, Altria owned both Philip Morris USA and Philip Morris International Inc. and held an 88.1% stake in Kraft Foods Inc. — but not for long. In March 2007, Altria spun off the maker of Oreos and Oscar Mayer hot dogs as a separate stock, separating from Altria, which had acquired Kraft for $13.1 billion in 1988. Altria started its investment in food products in 1985 with the $5.8 billion purchase of General Foods Corp., maker of products such as Tang drink mix, Hostess snack cakes and Maxwell House coffee.

But amid more legal woes — including the company’s loss of a federal lawsuit in 2006 brought against Altria’s Philip Morris USA and co-defendants R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. — and declining tobacco sales, Altria’s diversification efforts were scaled back during the following decade.

In 2008, as part of an ongoing restructuring process, Altria also spun off Philip Morris International, its overseas tobacco operation, in a move aimed to free PMI of agreements governing Altria’s domestic cigarette business. At the same time, Altria decamped from its New York corporate headquarters to the homier climes of Henrico County, where Philip Morris USA was already based.

The following year, Altria purchased UST Inc., the largest producer of smokeless tobacco products such as snuff and chewing tobacco, as well as the owner of the Chateau Ste. Michelle wine brand, which Altria sold for $1.2 billion in cash to New York private equity firm Sycamore Partners in 2021.

Today, Altria’s tobacco sales are mostly confined to the United States, and it made two large investments in 2018 to bolster its future in the domestic markets for cannabis and vaping devices. The company says it is “committed to working with policymakers and stakeholders to create a regulated legalized [cannabis] market in the U.S.,” while the House of Representatives and Senate grapple toward a unified policy.

While Altria’s $1.8 billion investment in Canada’s Cronos Group could be viewed as a smart preparation for a future U.S. cannabis retail market, the tobacco manufacturer’s $12.8 billion investment in Juul in 2018 is widely viewed as a massive error that went south almost immediately.

Beginning in November 2019 with a lawsuit by California’s attorney general, Juul has been buffeted with hundreds of lawsuits and a federal ban on its flavored nicotine products. Plaintiffs claim the company’s flash drive-mimicking vapes and fruit- and candy-flavored nicotine products were designed to appeal to underage smokers at a moment when fewer young people were smoking cigarettes, instead of adults trying to quit smoking, as the company has claimed.

Then-California Attorney Gen. Xavier Becerra accused Juul of adopting “the tobacco industry’s infamous playbook, employing advertisements that had no regard for public health and searching out vulnerable targets.”

However, even as many of the lawsuits against Juul have been settled, Gifford and other officials at Altria continue to oppose a full ban on e-cigarettes, which they claim present safer alternatives to cigarettes for people trying to quit smoking.

In his July 28 earnings announcement, Gifford said, “The FDA has the opportunity to create a mature, regulated marketplace of smoke-free products that can successfully realize tobacco-harm reduction and improve the lives of millions of adult smokers. … We continue to believe that harm reduction, not prohibition, is the best path forward.”

John Boylan, a senior equity analyst for financial services firm Edward Jones, says that the short-term impact from the proposed FDA Juul ban is negligible, but it does point to the need for Altria to consider strategies for long-term sustainability.

“Altria gets the vast majority of its sales and profits from traditional tobacco,” Boylan says. “Juul is a small contributor. Therefore, if Juul is removed from the market, it should not have a meaningful impact on our short-term earnings-per-share estimate. However, we believe this points toward the need for Altria to accelerate and intensify its investments in alternative nicotine-delivery systems sooner rather than later.”

Glowing embers

Nevertheless, Altria still faces other challenges, including the continued U.S. ban on its IQOS heated tobacco product, produced by partner and former subsidiary Philip Morris International, which continues to market the product in other countries.

The U.S. International Trade Commission ruled in September 2021 that the device violated two of rival R.J. Reynolds Tobacco Co.’s patents, and it issued a cease-and-desist order against Altria, a decision backed by the Biden administration in November 2021.

Like vaping devices, heated tobacco products are viewed within the industry as harm-reduction measures to help smokers wean themselves from their addictions to traditional cigarettes. With heated tobacco’s limited flavors of menthol and regular tobacco, though, IQOS and similar devices are less favored by teens and young adults.

Altria and PMI began selling IQOS products in the U.S. in October 2019, but R.J. Reynolds filed its patent complaint with the ITC in May 2020, leading to the removal of both IQOS and Marlboro HeatSticks from U.S. markets last year.

The ITC ruling left PMI and partner Altria with two options: Produce the device domestically or change the design, which would require FDA approval and take longer. In February, PMI said it would start manufacturing its IQOS devices in the United States, in hopes of returning the product back to U.S. stores by the first half of 2023. Altria says it is “focused on returning IQOS to the market as soon as possible.” In the meantime, it’s investing in marketing its other smoke-free products, including Copenhagen dipping tobacco and on! pouches.

Another wrinkle for Altria is a failed reunion with PMI, which collapsed in November 2021, two years after the two companies said they began discussing an all-stock merger. Even worse for Altria, PMI’s proposed $16 billion purchase of Swedish Match AB, announced in May, could set up the former subsidiary as a direct competitor to Altria in smokeless-tobacco sales, although the deal was delayed to October.

When the merger was still in motion, financial analysts said banding together seemed to be a wise decision because PMI and Altria are viewed as parts of a diminishing industry.

“The biggest problem is that the cigarette industry is seeing an annual decline of cigarette usage,” notes Marascia. “They are going to need something to buffer that decline. It is not just Altria — all the tobacco companies are seeing the same rate of decline.”

Despite the obstacles, the end is not nigh for Altria, if only because of governmental red tape, says Clive Bates, a longtime tobacco control advocate and a consultant on public health, energy and environmental policy based in London.

He believes that reduced nicotine standards “will never happen” in the U.S. because Congress will likely assert control over such a big issue with impacts on so many factors beyond the FDA’s jurisdiction, including tobacco farming, the supply chain, state tax revenues and law enforcement.

Anti-smoking measures from the FDA are notoriously slow to take effect. A 2012 edict by the agency ordering tobacco manufacturers to include graphic warning labels on all U.S. cigarette packages has been postponed seven times in court as of this summer, with the latest deadline set for January 2023.

Amid the turmoil, Altria has notched one small success recently, with retail shares of Swiss oral nicotine pouches on! expanding from 2% of the U.S. market in 2021’s second quarter to 4.9% in 2022 — although net revenues dropped from $693 million in 2021 to $665 million during the same periods, in part due to lower shipment volume and higher promotional budgets, although Gifford says he’s encouraged nonetheless.

Altria owns an 80% interest in Helix Innovations LLC, which produces on!, a deal reached in 2019 with Burger Söhne Holding AG for $372 million. Altria subsidiary Helix was formed at closing, and on! has been available in the U.S. since 2016. 

Marascia says he isn’t giving up hope on Altria’s future. “They have stated they want to offer other products [as alternatives to cigarettes] for years. I don’t know what products they are going to go with now. They might come up with something totally new — you never know.”

Liberty launches search for new president

Liberty University announced Wednesday that it has hired an Atlanta-based executive search firm to find its next president, who will succeed Jerry Prevo, the longtime board chair who became the Lynchburg private Christian institution’s interim president after Jerry Falwell Jr. stepped down amid scandal in August 2020.

“President Prevo has been a gift from God and exactly what Liberty needed over these transitional years. He has positioned Liberty well for the future,” Liberty board Chairman Tim Lee said in a statement. “Liberty University will always be indebted to President Prevo for stepping out of retirement for these three years to serve Liberty tirelessly and sacrificially. His exceptional work will ensure a good start for our next leader, and his own contribution to Liberty University will be remembered and celebrated for generations.”

According to Liberty’s announcement, CarterBaldwin Executive Search, an Atlanta-based firm that focuses on finding leaders for health care, technology, nonprofit and other business sectors, will lead the search for a new president to be hired prior to the 2023-24 academic year. The university will release a full job description in mid-September. Price Harding, CarterBaldwin’s chairman, and Bill Peterson, a partner who is a 1996 alumnus of Liberty, will co-lead the search.

Prevo, a former pastor of Alaska’s Anchorage Baptist Temple, stepped in as interim president in August 2020, when Falwell Jr. resigned after a series of personal scandals, including allegations that he had knowledge of an affair between his wife and a young man who also was their business partner briefly. Falwell has denied that allegation, but the university sued him for $10 million for breach of contract. He also has countersued, seeking the return of some legal documents, a revolver he kept in his desk and other personal items he says the university has not allowed him to collect since banning him from Liberty property. Both suits were still active as of early August.

Liberty also was sued by 22 anonymous women — both former students and staff members — who alleged that Liberty “intentionally created a campus environment where sexual assaults and rapes are foreseeably more likely” and discouraged victims from reporting their assaults. In May, 20 of the plaintiffs settled their lawsuits against Liberty, but the U.S. Department of Education is investigating the university over claims of Title IX misconduct, although often these cases are resolved quietly with an agreement.

The university also launched a third-party investigation of the university’s finances and real estate dealings during Falwell’s tenure in late 2020, but no report has been publicly released yet.

The school has the largest enrollment of any university based in Virginia — with 95,148 students enrolled in 2021, according to Liberty — mostly due to remote learning students.

Axios to be sold to Cox Enterprises for $525M

Axios Media Inc., the Arlington-based digital media company and news outlet, announced Monday it will be sold to investor Cox Enterprises Inc. for $525 million in a deal reached Sunday. The company is expected to reach $100 million in revenue this year, it says.

According to Axios, its three co-founders — CEO Jim VandeHei, President Roy Schwartz and journalist Mike Allen — will retain three seats on the media arm’s board, along with Cox Chairman and CEO Alex Taylor, and Cox will control that board.

Meanwhile, Axios HQ, the company’s software division, will be spun off into a separate company led by Schwartz. Axios HQ has some seed capital, Axios says, and it plans to raise money next year to grow independently. This year, the division is expected to bring in $6 million, and it has more than 300 clients.

According to Cox, VandeHei will be Axios HQ’s board chairman, and Schwartz will be its CEO. Cox will be the sole minority investor in the spinoff.

“We have found our kindred spirit for creating a great, trusted, consequential media company that can outlast us all,” VandeHei said in a statement. “Our shared ambitions should be clear: to spread clinical, nonpartisan, trusted journalism to as many cities and as many topics as fast as possible.”

Axios was formed in 2017 after VandeHei and Allen co-founded Politico a decade earlier. Known for its bullet-point news style, email newsletters and brevity, Axios has increased its reach from the Washington, D.C., area to other U.S. locations. Axios Local is in 24 cities — including Washington and Richmond — and runs local newsletters; according to the announcement Monday, Axios plans to expand its coverage to 30 cities by the end of this year and, ultimately, hundreds of cities.

Cox, based in Atlanta, has a strong presence in Virginia and in 2019 sold local TV and radio stations to a private equity firm Apollo Global Management, although it retained the Atlanta-Journal Constitution.

This is the third time Axios has come close to being sold; in 2021, a deal with German publisher Axel Springer fell through, and The Athletic and Axios were in talks to merge via a special purpose acquisition company. Cox stepped in as an investor in fall 2021.

According to Axios, the deal with Cox is expected to close within a few weeks.

“With so much happening in the world, Axios plays a critical role in delivering balanced, trusted news that people need,” Taylor said. “Our company started in the media business, and we have always had a passion for journalism. Bringing a forward-thinking organization like Axios into Cox Enterprises is exciting for us on many levels, and we look forward to helping them continue to scale and grow.”

More Diamond District details released; city narrows pool to 2 developers

Richmond has narrowed its pool of Diamond District development team finalists from three to two, city officials announced Friday, while releasing some more details about the competing proposals, which include thousands of residential units and a new Richmond Flying Squirrels stadium expected to be paid for with bonds.

Still in the running to develop a new mixed-use neighborhood and baseball stadium on nearly 68 acres off Interstate 95 are RVA Diamond Partners and Richmond Community Development Partners (RCDP). The project proposals include a range of 2,300 to 3,200 residential units as part of the Diamond District, and 100 subsidized units — including at least 40% for Gilpin Court residents — are part of the city’s goal for affordable housing.

The winning team will be chosen “by the end of the summer,” according to a document released Friday by the city, as the city government’s Diamond District’s evaluation panel members continue examining the two development teams’ financial details.

Under either group’s plan, stadium construction and infrastructure like sidewalks and utilities would be paid for through Tax Increment Finance (TIF) bonds, but the city will not have to guarantee repayment of the bonds, even if the project falls short of expected tax revenues. Virginia Commonwealth University and the Richmond Flying Squirrels will pay leases to use the stadium, the city says.

Putting the project under considerable deadline pressure is the timely replacement of The Diamond, the 37-year-old home of the Richmond Flying Squirrels AA baseball team. In 2020, Minor League Baseball revamped its facilities requirements to include indoor batting cages, coaches’ rooms, locker rooms for female employees and other features that the aging Richmond stadium lacks. In order for the Squirrels to be in an MLB-compliant stadium by the league’s March 2025 deadline, construction must start soon, developers have said.

The city’s document released Friday puts the requirement in stark terms: “A new ballpark must be built to keep Minor League Baseball in Richmond beyond the 2024 season.”

The entire multiphase project is expected to be completed in up to 15 years, with the inclusion of housing, hotel and retail space (and possibly office space), in addition to the stadium.

Both finalists include national and local developers and contractors. Diamond Partners includes Washington, D.C.-based Republic Properties Corp. and Chicago-based Loop Capital Holdings LLC as well as Richmond-based Thalhimer Realty Partners Inc. and San Diego venue developer JMI Sports.

RCDP includes San Francisco-based commercial real estate company JMA Ventures, Houston-based Machete Group and Tryline Capital, which has offices in Connecticut and New York, the Richmond office of Gilbane Building Co., and Richmond-based Davis Brothers Construction Co. Charlotte, North Carolina-based Odell Associates Inc. is the project’s proposed stadium architect.

The development team excluded by the city Friday, Vision300 Partners LLC, was a joint venture among 40 Richmond-area businesses and community organizations led by Boston developer Freehold Communities and included Dallas architecture firm HKS Inc. and Richmond-based companies such as Spy Rock Real Estate Group, Hourigan, Shamin Hotels and engineering firm Timmons Group Inc.

The city’s Diamond District advisory panel — a 10-person group of two Richmond City Council members and seven city employees, as well as a representative from VCU — was expected to recommend one team by the end of July, but that deadline passed without a decision. In late July, City Council President Cynthia Newbille urged the panel to finalize its recommendation — which will head to council for a vote — in short order.

 

Va. Credit Union loses bid to expand membership

The Virginia State Corporation Commission ruled Wednesday that the Chesterfield County-based Virginia Credit Union cannot expand its membership to the Medical Society of Virginia, possibly resolving a three-year battle between the credit union, the Virginia Bankers Association and several community banks in the state.

The credit union issued a brief statement Wednesday: “We are disappointed by the decision. We believe that extending membership eligibility as an option for members of the society was reasonable.” Under state law, VACU has the option to appeal the decision to the Virginia Supreme Court, but spokesman Glenn Birch said Wednesday that the credit union has not decided whether it plans to appeal.

The dispute started in August 2019, when the VBA and seven small community banks appealed to the SCC in protest after the state Bureau of Financial Institutions in July 2019 approved VACU’s request to offer membership to the medical society’s 10,000 members. The banks contended that with 10,000 more members, VACU would have too great an advantage over community banks, which operate under different rules than nonprofit credit unions and could potentially lose tax revenue. In March, the banks summed up their case, declaring that “credit unions have a sweet deal,” with “no [federal or state] income taxes … and no obligations to invest in the community.” Credit unions are, however, responsible for paying real estate and personal property taxes.

Ultimately those arguments meant less in Wednesday’s ruling by SCC Commissioners Jehmal T. Hudson and Judith Williams Jagdmann, who found that VACU did not meet the required burden of proof that the medical society was unlikely to be able to form its own credit union — which is preferable under state law, as opposed to allowing a large organization’s members to join an existing credit union. The society has more than $3.52 million in securities and more than $1 million in equity in its building that could help fund a new MSV credit union, according to research by economic analyst Christine Chmura on behalf of the banks. Also, the society’s CEO, Melina Davis, is a member of the credit union’s board and “could provide valuable expertise” to an MSV credit union, according to the ruling, citing Chmura’s report.

VBA President and CEO Bruce Whitehurst said Wednesday that his organization is “obviously pleased with the ruling, which is consistent with state law.” Steven C. Yeakel, president and CEO of the Virginia Association of Community Banks, echoed Whitehurst’s comment, saying, “We are obviously pleased with the ruling.”

However, Virginia Credit Union League President and CEO Carrie Hunt said, “It remains disappointing and frustrating that the bankers continue to thwart credit unions from providing provident credit to Virginians. The reality is, credit unions are not in competition with community banks. Large banks are. The Virginia Credit Union League will continue to zealously fight for the interests for all credit unions in Virginia to do what they do best — provide the best in consumer financial services to citizens in the commonwealth.”

Virginia Credit Union is the third largest credit union based in Virginia, with about $5.04 billion in total assets as of March and more than 300,000 members. In 2019, the credit union said that the medical society approached it about joining, and the matter was brought before the Bureau of Financial Institutions, which is required to approve any membership expansion of more than 3,000 under state law. VACU, like many credit unions, has expanded its scope for membership over the years. It started as a service only for state employees, but its charter was changed to include city and county employees, students at state universities and people who live in several localities in Virginia, including Fredericksburg, Petersburg and Richmond.

The case took longer than expected, as an original SCC hearing took place in July 2020, with a decision expected later that year. However, Whitehurst noted, the COVID-19 pandemic, which forced most work to take place virtually at first, and the commissioners’ decision to hold a second hearing last year, caused the ruling’s delay. SCC spokesperson Andy Farmer said Wednesday that “this was a complex case with multiple parties participating and a significant amount of evidence. In their deliberations, the SCC commissioners review the entire case record.”

CVTC property inches closer to redevelopment

Once home to more than 3,600 people with intellectual disabilities and other conditions, the Central Virginia Training Center property in Amherst County is drawing closer to a different future. In June, Gov. Glenn Youngkin signed into law the latest state budget, which removed $25 million in tax obligations from the 350-acre site, making it more palatable to developers.

With the Lynchburg Regional Business Alliance leading the effort to redevelop the land, “about eight” local, regional and national developers had expressed interest in the parcel as of late June, says Megan Lucas, the alliance’s CEO and chief economic development officer. Declining to name the developers, she estimates that work could begin as soon as two years from now.

First, Lucas notes, the state’s Department of Behavioral Health and Developmental Services, which owns the Madison Heights property, must designate it as surplus land so it can be sold.

“Then we get to work,” says Dena Potter, director of communications for the state’s Department of General Services, which tasks its Bureau of Real Estate Services to research property records and see if another state agency could use the land before offering it for sale. “It could take six months to a year for us to get through the entire process … before a property could be marketed for sale.”

But that process would have taken much longer if the tax debt had not been removed; state Sen. Steve Newman, R-Lynchburg, added a request to defease the outstanding bonds, which would likely have taken more than a decade to pay off, Lucas says.

Preparing for the redevelopment started in spring 2020, when the century-old campus shut down, closing a dark chapter of eugenics-driven government policies in Virginia. The parcel, which overlooks downtown Lynchburg and the James River, holds about 90 buildings, most of which are not in use, and woodlands.

A group of local officials and consultants created a master plan released in April, proposing a mixed-use future for the site, with residential and retail properties alongside office buildings.

Aside from fielding calls from interested developers, Lucas’ team also is getting the word out about the parcel to other East Coast developers. The property, which includes about 110 acres of developable land, is part of a federal Opportunity Zone, which carries significant tax benefits. “Our goal,” she says, “was to determine the highest and best use of the property.”  

Youngkin, CNBC see room for growth in Va.

In July, Virginia ceded the top spot in CNBC’s America’s Top States for Business rankings to neighboring North Carolina, with Virginia taking third place in the annual list. Virginia had previously held the No. 1 slot for a record-breaking two years — a feat no other state has matched in the coveted award’s 15-year history. (Virginia has ranked No. 1 in the annual awards five times, making the top 10 every year but 2016 and 2015, when it ranked 13th and 12th.)

Gov. Glenn Youngkin, while running for office last year as the Republican nominee, downplayed the significance of Virginia’s consecutive wins, which came during the tenure of Democratic Gov. Ralph Northam.

Although Virginia’s educated population and openness for new business are reasons it has continued to score at or near the top of CNBC’s list, such accolades “haven’t always translated into growth in Virginia,” Youngkin said in a statement after the 2022 announcement.

The new governor, of course, did mention some economic development wins that have taken place since he took office in January — Lego Group’s announcement that it will build a $1 billion manufacturing facility in Chesterfield County, and the twin announcements that defense contractors Raytheon Technologies Corp. and The Boeing Co. are both moving their global headquarters to Arlington County.

But there’s room for improvement, both Youngkin and CNBC say, particularly in the area of Virginia’s high cost of living, a deterrent to attracting and retaining skilled workers.

Although Virginia is far from alone in experiencing rising residential home sale and rental prices and inflation, CNBC cited the commonwealth’s cost of living as a significant factor in the state’s drop to third place, giving the state a D+ in the category.

Citing the same economic pressures, Youngkin has attempted to remove some of Virginians’ tax burdens, but only somewhat successfully because state Senate Democrats have held his legislative agenda in check.

The state Democratic Party chairwoman, Susan Swecker, took a different view of this year’s Top States for Business ranking, saying that Youngkin’s “focus on running for president in 2024 and playing to a far-right base” caused the state to drop to third place.

The truth likely lies somewhere in the middle, since CNBC’s 88 areas of consideration include factors that were influenced by Northam’s administration and two years of the Democratic-led legislature, as well as during Youngkin’s first six months on the job with a divided statehouse.

As you’ll see in this year’s Site Locator, Virginia has both a strong workforce development pipeline as well as a healthy economic development landscape, with renewable energy, manufacturing and tech sectors all represented in the past year’s biggest deals.