Page 1486 – Virginia Business

Combating the opioid crisis

Virginia businesses are teaming up with health-care providers in an effort to break the cycle of opioid addiction.

Last year, Virginia saw 1,227 opioid-related overdose deaths, according to the governor’s office.

Dr. Hughes Melton, the state’s commissioner of behavioral health and developmental services, told a Virginia Chamber of Commerce health conference in June the economic impact of opioid addiction in the commonwealth is about $1.4 billion a year.

At the conference, Dr. Dheeraj Raina, Anthem’s medical director, said those costs include absenteeism, tardiness, turnover, theft and increased workplace conflict. The opioid epidemic also reduces the pool of potential employees.

In June, Virginia Attorney General Mark Herring filed a lawsuit accusing Stamford, Conn.-based Purdue Pharma of violating the Virginia Consumer Protection Act with “false claims about the purported safety, efficacy and benefits of its opioids, including OxyContin.” The company has denied the allegations.

A growing number of Virginia localities — including the city of Alexandria and Dickenson, Bland, Caroll, Smyth and Washington counties — also have filed suit against opioid manufacturers.

In August, Gov. Ralph Northam, a physician, began a series of lectures on the opioid crisis to students at four Virginia medical schools. The lecture tour was scheduled to end Sept. 5 at Liberty University.

The Virginia Department of Health (VDH) and the Virginia Hospital & Healthcare Association (VHHA) have begun a “Partnering for a Healthy Virginia Initiative” to address community health needs. Jeff Stover, the VDH’s acting deputy commissioner for population health, says “opioids are high on the agenda” of the initiative. Opioids include prescription pain relievers, heroin and synthetic drugs such as fentanyl.

The group’s advisory committee includes nearly two dozen representatives of companies, hospitals, foundations and local health departments. “We’re trying to catalog the various projects in communities,” Stover says. “We’re creating a puzzle, then finding where there are missing pieces. We plan to evolve into specific projects.”

Need for top-notch safety
Fredericksburg-based Quarles Petroleum Inc. is acutely aware of the dangers of prescription drug misuse, says Danîs Brown, the fuel company’s manager of health and safety. “A propane truck has a bomb on the back. Your health and safety program needs to be top notch,” he says. In addition to complying with Department of Transportation drug-testing requirements, “we make sure we go above and beyond what’s required by law,” Brown says.

The company conducts pre-employment testing, quarterly random testing and post-accident testing. “People are truly vetted,” he says. “We haven’t had a positive on random testing.”

In safety-sensitive jobs, employees cannot use opioids, even those prescribed by health-care providers, Brown says. If workers must be prescribed opioids, they are put on short-term disability or moved to other positions.

Quarles strives to educate all employees about the dangers of over-reliance on opioids, he says. “If they have a personal health issue or an injury outside of work, we expect them to talk to their doctor about maybe forgoing an opioid prescription for something less dangerous.”

Centers for Disease Control and Prevention guidelines recommend non-opioid therapy for chronic pain outside of cancer, palliative and end-of-life care. The CDC says that “when opioids are used, the lowest possible effective dosage should be prescribed to reduce risks of opioid use disorder and overdose.” The agency suggests alternative strategies such as cognitive behavioral therapy, acupuncture, medical massage and physical therapy for treating chronic pain.

Drawn into the crisis
Alex Shaw, a risk performance specialist with Scott Insurance in Richmond, and Stephanie Wesolowski, a Scott health-risk management consultant, advise companies on ways to prevent employee misuse of prescription drugs.

Many companies don’t even realize they have been drawn into the crisis, Shaw says. “We’ve heard from people who say, ‘We don’t see it in our company.’” These businesses, however, often don’t see the problem because their drug testing is too limited. “Many drug-testing panels do not capture all opioids, just morphine, codeine, and heroin,” Shaw says. “So, you need to find out:

What drug testing are you using? Specify what you want to test for. It’s a huge blind spot for many organizations.”

He also recommends that employers build strong relationships with their occupational medicine providers. “Talk with physicians and make sure opioids aren’t the first drug of choice. Let them know your preference is something other than an opioid,” he says.

Wesolowski emphasizes the importance of educating supervisors, managers and HR directors as well as employees about effective alternatives to opioids. “Behavior change through physical therapy is seen as more difficult than ‘just give me a pill,’” she says. “The view often is: ‘Isn’t there something I can take?’”

Dr. Robert Trestman, chair of the department of psychiatry at the Virginia Tech Carilion School of Medicine, says that businesses and society must address addiction as a chronic disease that needs to be managed, not punished. “If we can reconceptualize that it is akin to something like diabetes, that makes it easier to understand” and provide appropriate treatment, Trestman says.

“Three EAP [employee assistance program] visits will not be enough.”

In contrast to the stereotypical drug addict, the majority of people addicted to opioids “are employed or employable,” Trestman says. He also notes that many people using opioids started with legitimate pain prescriptions.

Employees must understand that the goal of treatment is not to eliminate pain completely, but to manage it at a tolerable level, says Trestman. “Sometimes doctors just write a prescription — people take it even when it is unnecessary.”

People on opioids for more than 30 days are at risk of becoming addicted, he notes, because in addition to relieving pain, opioids activate regions in the brain causing euphoria, a high. “Our brains were never designed to cope with this,” Trestman says. “The challenge we need to recognize is that even really solid employees are at risk. But it is treatable — with appropriate support.”

Offering a helping hand

Cheryl Brown now is living in a newly repaired apartment in Richmond, thanks to legal assistance provided without charge by attorney Chip Nunley.

Brown, a heart transplant recipient who uses a wheelchair, had told the management of her apartment complex that her ceiling was leaking and water was seeping into the kitchen. Eventually, the ceiling began to bow.

“She was in her kitchen cooking dinner one night, when the ceiling collapsed and sent her to the hospital,” says Nunley, a partner at Hunton Andrews Kurth in Richmond. “The apartment complex didn’t do anything about it.”

Nunley learned about Brown’s predicament through JusticeServer, a custom-designed online case management system. It is an example of Virginia programs designed to provide pro-bono legal services to people who can’t afford attorneys.

In November, Nunley filed suit on Brown’s behalf in Richmond General District Court. In April, the apartment complex was ordered to move her and her belongings to another apartment in the complex, providing suitable alternative housing until repairs in the new unit were completed. “They were additionally required to cover the cost of moving her from the old to the new apartment,” Nunley says.

The attorney has represented about 40 residents in Brown’s complex. Several of those cases came from JusticeServer. “The vast majority of these people suffered in silence,” he says. “There is a tremendous need for lawyers in private practice to do pro-bono work for people who have real and fundamental legal problems like housing and can’t afford to hire an attorney.”

2010 conference
JusticeServer automates the process of matching lawyers to cases. “It cuts out all of the inefficiencies so lawyers can spend their time representing people rather than tracking down information,” Nunley says.

To gain access to the JusticeServer, attorneys sign up with legal-aid societies that use it and specify the type of cases they are interested in handling. Once they are in the system, lawyers have secure, confidential access to files. They can subscribe to an email notification service that alerts them when a case matching their experience is listed.

The creation of JusticeServer resulted from the Supreme Court of Virginia’s 2010 Pro Bono Summit, which examined the need to improve legal services to underserved clients. Capital One Financial Corp. developed an information management and case referral system, leading a project team that included the Greater Richmond Bar Foundation, the Central Virginia Legal Aid Society, the Legal Aid Justice Center and the Virginia Bar Association Pro Bono Task Force. JusticeServer was launched in 2012. The portal went public the next year.

“This year we have rolled out JusticeServer 2.0, which is the next generation to improve performance,” says Harry M. “Pete” Johnson III, a Hunton Andrews Kurth partner who was a member of the committee that organized the 2010 Pro Bono Summit.

“My firm alone has handled well over 1,000 cases through JusticeServer since it started.”

More than 1,000 lawyers and law students in the Central Virginia area have registered for JusticeServer since its launch, and more than 10,160 cases have been handled. “That includes legal-aid clients and our nonprofit assistance program,” says Alexandra “Ali” Fannon, executive director of the Greater Richmond Bar Foundation.

A hotline provided by the Virginia Bar Association’s Young Lawyers Division also uses JusticeServer to find cases. Volunteer attorneys contact callers to see whether they can provide limited answers to their questions.

“Young attorneys love JusticeServer. Instead of going to legal aid and getting a list of people, they can log onto the system at home or on their lunch break to see what calls need to be made,” says Johnson. “It makes things more efficient. It makes our ability to provide service easier.”

Tackling veterans’ issues
The aim of another Virginia pro-bono program is helping veterans, military service members and their families. They can find assistance through the Veterans Issue Task Force of the Virginia Bar Association (VBA). The task force evaluates requests for legal help, matching them up with Virginia lawyers who provide their services for free or reduced fees.

“We support veterans and service members in all branches of the military, including activated National Guard members and reservists,” says attorney Bob Barrett, chair of the task force. “We take a broad approach.”

Barrett, a veteran himself, is keenly aware of veterans’ needs. When veterans return to civilian life, they no longer have access to a variety of resources, including the services of Judge Advocate General (JAG) officers on their base. “Veterans don’t know where or who to turn to,” says Barrett, associate general counsel at Performance Food Group in Richmond.

The task force also can help active-duty service members when JAG officers are not licensed in the service members’ state or don’t have the expertise needed for their problems. “They are not always available to provide support,” Barrett says of JAG.

The task force grew out of a talk by Major Joseph Geraci, a United States Military Academy psychology professor, at a 2009 VBA meeting. Geraci highlighted the psychological and legal problems many veterans face.

“He gave a very meaningful speech that resonated with a lot of the VBA leadership,” Barrett says. Bar association members decided “this is a problem we are facing as a society” and they should help. They started the task force that year.

More than 280 attorneys are listed with the task force, which gets requests on issues ranging from housing and divorce to civil rights and employment.

“Some days we get five requests, and then there are days when we don’t receive a request,” Barrett says, noting that people can ask for help through vba.org/veterans. “It comes in waves.”

The task force handles only Virginia cases. Currently about 20 percent of the requests are placed with attorneys. “I wish the percentage was better, “ Barrett says. “Sometimes we don’t have an attorney in their geographic area, and sometimes we just don’t have attorney volunteers and coverage for certain types of cases.”

The task force works with other groups such as William & Mary Law School’s Puller Veterans Benefits Clinic. “We have an informal partnership with them. They can help with veteran’s benefits sometimes,” Barrett says.

The task force also offers training sessions for lawyers and veterans. “I have done training seminars over the years,” Barrett says. “I will be giving one on hiring veterans to try and provide some insight into the laws that apply when you hire veterans or service members.”

In addition, the task force provides training on the challenges that military service members often face in returning home. “We also do veteran’s advocacy, looking at what legislation can be passed to help veterans as well as service members and their families,” Barrett says.

A healthier state?

A former construction worker was in such despair that he got down on his knees in George Washington University Hospital’s emergency room and begged Dr. Jennifer Lee for help.

The man had been to the ER in Washington, D.C., many times before, desperate for a hip replacement. He told Lee that he didn’t want to go on disability. He wanted to go back to work.

But she had to tell him that his debilitating condition was not life-threatening, and without health insurance she couldn’t help.

“I thought about him so many times because it was really distressing to me as a doctor that I could not help him to get what he needed,” she says of the incident, which occurred before the District of Columbia expanded its Medicaid program.

Now director of the state Department of Medical Assistance Services (DMAS), Lee is overseeing the expansion of Medicaid health coverage on Jan. 1 to as many as 400,000 Virginians — including low-income adults of working age without children.
Lee is optimistic that the new benefits will improve their health and the state’s economy, too.

Budget compromise
Medicaid expansion in Virginia under the Affordable Care Act has been a slow and contentious process, long-thwarted by state lawmakers who saw it as a break from the commonwealth’s conservative fiscal policies.

But a budget compromise in May ended the impasse, allowing Virginia to accept more than $2 billion in federal funds to pay for about 90 percent of the expansion costs. The state’s share of the cost will be financed by new assessment fees — essentially a tax — on hospital revenues.

Until now, Virginia has had one of the most restrictive Medicaid programs in the nation, ranking 46th among states in per-capita spending, according to DMAS. Expansion under ACA will increase the income eligibility level to 138 percent of the federal poverty level and extend coverage to adults without dependents.

Before expansion, a childless adult without a disability was not eligible for Medicaid. Beginning next year, an adult with an annual income at or below $16,754 can sign up for the program.

A family of three will be eligible with an income at or below $28,677, quadrupling the previous threshold of $6,900. For a disabled person, the eligibility level goes from $9,700 to $16,754.

Virginia joins 32 other states and the District of Columbia in agreeing to expand Medicaid coverage. Originally a key component of ACA, Medicaid expansion became optional for each state in a 2012 U.S. Supreme Court ruling upholding the health-care law’s legality.

Work/training rule
Lee says her office is “working very intensely” on two tracks to gain federal approval of the state’s Medicaid plan. In addition to amendments to the existing plan, the state is seeking approval of a waiver that would tie recipients’ benefits to work, study or civic engagement requirements.

The addition of the Training, Education and Employment Opportunity Program for Medicaid beneficiaries was part of the budget compromise. The requirement would apply to some current Medicaid recipients as well as new ones. In November, the commonwealth will ask for federal approval for a waiver, known as the 1115 Demonstration Waiver, that would allow the requirement to take effect.

While Medicaid expansion is on track for the Jan. 1 launch, Lee says the timetable for implementing the waiver provisions is less certain. In a potential complication, a federal judge in June struck down a similar work/training requirement in Kentucky.
Lee points to the man with chronic hip pain she met in the ER to explain her view on the requirement.

“People want to be well. People want to work. They want to pursue more opportunity,” she says. “But they need some help to deal with an injury or an illness to get them back on their feet.”

Net savings?
With Medicaid expansion, the commonwealth will receive $2.4 billion in federal funds for fiscal years 2019 and 2020 to pay for 90 percent of the costs of caring for newly eligible recipients. That federal infusion, Lee says, will result in net savings of $355 million to the state’s General Fund for those years.

“Medicaid expansion actually results in net savings to the commonwealth,” she says. “I know that sounds counterintuitive.”

Uninsured people, she notes, often put off seeing a doctor or taking medications until they have a medical crisis. Then they end up in emergency rooms and are unable to pay for costly treatments. “Someone still pays that bill,” she says, “and those costs are absorbed by the system and increase costs for everybody else.”

Expansion is expected to close the “Medicaid gap” that leaves many low-income Virginians without insurance options. These are adults who are ineligible for the existing Medicaid program but did not earn the minimum income required for receiving insurance subsidies under ACA.

With the higher income threshold under expanded Medicaid, some people who received subsidized insurance on the health exchange may now qualify for Medicaid.

Lee says DMAS is trying to determine how many people fall in each of those groups. Doug Gray, executive director of the Virginia Association of Health Plans (VAHP), says he has seen estimates that as many as 90,000 people now insured through the ACA exchange may be eligible to move to Medicaid plans.

Also uncertain is the health status of new Medicaid enrollees who will make up the risk pools for six managed-care plans offered by insurance companies under Medicaid. The plan providers can earn a profit up to 3 percent above their underwriting gain, Gray says, with any percentage above that being shared with the state.

For example, if profits exceed 3 percent — an event Gray says is unlikely — half of the amount up to 10 percent would be returned to the state.

Premiums are to be based on a sliding scale not to exceed 2 percent of monthly income for those between 100 percent and 138 percent of the federal poverty level.

“Part of the challenge is to develop a rate to pay for the new enrollees,” Gray says. “Some are going to be much sicker than others.”

But the state will benefit, he says, as a large number of people with chronic conditions — diabetes, asthma, heart disease — will get treatment early on “instead of having to go to the ER for help after it’s too late.”

Health exchange effects
Gray says it is too soon to gauge the impact of Medicaid expansion on premiums paid on the health exchange. Some very sick patients may leave the exchange for Medicaid, but healthier people now on the exchange also may move to Medicaid. Either move could affect the exchange risk pool.

“It will be a mix. The question is: When the mix is all said and done, is the net effect a reduction for premiums?” he says.

In July, insurance companies told the State Corporation Commission that rates for individuals covered under ACA’s Virginia exchange are expected to increase by an average of about 13 percent next year.

Lee says a 2016 study found that states with expanded Medicaid plans saw an average drop of 7 percent in premiums for health insurance policies bought through marketplace exchanges.

But that study by the U.S. Department of Health and Human Service predates the election of President Donald Trump and subsequent cuts to federal cost-sharing reduction payments that subsidize ACA policies.

Assessment fees
The General Assembly approved two provider assessment fees as part of Medicaid expansion.

The assessments on hospital revenue will be imposed on 69 private, acute-care hospitals, according to Julian Walker, vice president of communications for the Virginia Hospital & Healthcare Association. Exempt are children’s and specialty hospitals, such as psychiatric and rehabilitative facilities, and the University of Virginia and Virginia Commonwealth University medical centers.

One assessment fee, which will pay for Virginia’s 10 percent share of Medicaid expansion, is expected to yield $281 million during the two-year budget cycle and up to $300 million annually in subsequent years, Walker says.

The second assessment will be used to increase the reimbursement rate for treating Medicaid patients. The reimbursement rate now is 71 percent, or 71 cents for each dollar of care, despite state law that sets the acceptable level at 78 percent, Walker says.

The rate will increase to 88 percent with the second assessment fee, which is expected to bring in about $250 million. However, Walker says the exact numbers remain uncertain because the implementation process is ongoing. The state is expected to begin collecting the assessment payments in October.

Although hospitals are paying the state’s cost for Medicaid expansion, Walker says, they will receive only about 36 percent of revenue that will be generated.

Other health-care providers such as pharmacies, home health-care businesses, medical equipment companies and labs are among beneficiaries that won’t be subject to the tax, he notes.

Hospitals will benefit as a result of the increased Medicaid reimbursement rates as well as from a reduction in the uncompensated care of uninsured patients, Walker says. But, it’s still not clear how many people will actually enroll in Medicaid. “The challenge of uncompensated care will not vanish,” he says.

The association historically has opposed provider assessments but agreed to the bipartisan proposal to facilitate Medicaid expansion and to improve reimbursement rates, Walker says.

‘In-reach program’
Getting Medicaid expansion up and running requires a multi-partner push, says VAHP’s Gray. “People aren’t going to be just magically enrolled” on Jan. 1, he says.

At community health centers that treat people across the state regardless of their ability to pay, officials are contacting patients who might be Medicaid eligible to walk them through the enrollment process.

“We have what we call an in-reach program,” says R. Neal Graham, CEO of the Virginia Community Healthcare Association.

The centers see about 106,000 uninsured patients, the majority earning up to 200 percent of the federal poverty level, he says. As many as 70,000 might qualify for Medicaid under the 138 percent income level cutoff, with about 75 percent of those enrolling.

“Most of our people — the vast majority who are uninsured — are employed or working part time. They just don’t earn enough,” he says.

Many earning under 200 percent of the poverty level can’t afford insurance, he explains. “So, we’re worried about that group that is at 138 percent to 200 percent that won’t qualify for Medicaid but still won’t be able to afford insurance.”

Many others in the state won’t be eligible for Medicaid because of their immigration status. Undocumented immigrants do not qualify, and immigrants with legal status are not immediately eligible.

“We’re still going to need our safety net system, our free clinics to fill in the gaps,” Lee says. “But those gaps are going to be a lot smaller.”

An architect of a rebuilt city

“Over the past 20 years, VCU’s capital projects have sustained neighborhoods during economically difficult times. Between 1996 and 2013 — beginning near the peak of a violent crime epidemic and extending through the nadir of Richmond’s population loss and the Great Recession — VCU invested more than $1.6 billion in its Monroe Park and MCV campuses.”
— Draft of Virginia Commonwealth University’s new strategic plan, “Quest 2025: Together We Transform”

In 1968, Richmond Professional Institute merged with the Medical College of Virginia, forming the state’s first truly urban university.

This year is the 50th anniversary of that unlikely merger. RPI was known largely for its quirky art school, while MCV was a sober bedrock of the state’s medical heritage.

It took years to make the marriage work, but it has. In the process, VCU — with a total enrollment of more than 31,000 students — has changed the face of Richmond, especially since the 1990s when the university’s building efforts began in earnest.

Brian White, a real estate developer with the local firm Historic Housing, remembers his hometown before VCU began an almost block-by-block reinvention of its campus in central Richmond.

“I grew up in Richmond and graduated from [high school] in the late ‘80s when Richmond was just a mess,” White says.

He recalls venturing onto a block of West Grace Street next to the VCU campus that then featured an X-rated theater and a biker bar. “I was mugged on Grace Street when I was 15,” White says.
Now, West Grace is one of VCU’s success stories, with dormitories, a campus theater and eateries. The street has become a symbol of the construction campaign at VCU begun by Eugene P. Trani, who became the university’s president in 1990.

‘Trani Town’
Trani almost immediately began pushing through a remake not only of Grace Street, but also the West Broad Street area paralleling the VCU campus.

One VCU official recalled finding bullet casings, drug paraphernalia and other detritus on a preliminary walk-through of the area.

Some in the media began calling Broad Street’s remake “Trani Town.”

The West Broad Street initiative signaled that, amid a tide of homicides — peaking at 161 in 1994 during a crack cocaine epidemic — and a cratering of Richmond’s central business district, VCU was placing a bet on better times.

Replacing old buildings and filling vacant spaces, VCU largely used proceeds from general obligation bonds to build a 114,000-square-foot School of the Arts building, which was dedicated in 1999. The school has since become a flagship for VCU’s ambitions. In the latest U.S. News & World Report rankings, VCU tied UCLA for the top spot for graduate fine-arts programs at U.S. public universities. The two public schools ranked second overall behind Yale.

The arts school was part of a VCU initiative along a six-block corridor of West Broad Street. The corridor also includes the Stuart C. Siegel Center (the consistently sold-out arena for VCU’s men’s basketball team), a sports medicine building, a 396-bed dormitory and the university bookstore.

VCU has become the city’s largest developer, and its expansion continues unabated.

In October, VCU President Michael Rao told Richmond’s Forum Club that since 2009, when he succeeded Trani, the university has had construction projects totaling 5 million square feet worth $2.1 billion.

“The university has an obligation to participate in the solution of urban problems,” Rao said. “We’re very proudly a public university, and our public university was built to be a public good for Richmond and beyond.”

Over the years, VCU’s expansion efforts occasionally have encountered opposition from its neighbors.

Perhaps the best-known example occurred nearly 30 years ago when the university was planning to expand into the historic Oregon Hill area.

University Architect Mary Cox recalls that, when Oregon Hill residents learned of those plans in 1989, the disclosure set off a furor.

When Trani became president the following year, he established community advisory boards and began developing relationships with the neighborhoods surrounding the university, Cox says

“One of the first bold gestures of the 1996 master plan was to move VCU north toward Broad Street,” Cox adds.

Another prickly problem came as the VCU Health System’s expansion began encroaching on the Museum of the Confederacy and the adjacent White House of the Confederacy, a 200-year-old structure where Confederate President Jefferson Davis lived during the Civil War.

Last year, the Heath System purchased the museum building for $6.25 million, as the museum consolidated its holdings with those of the American Civil War Museum.
The White House of the Confederacy was not affected by the purchase.

ICA and other projects
VCU’s golden anniversary has unleashed a new series of projects. Its capital projects spree began in April with the opening of the Institute for Contemporary Art (ICA) — the biggest funded project in the university’s history.

The $41 million structure, designed by renowned architect Steven Holl, was named one of the most highly anticipated buildings of the year by Architectural Digest.

In the spring and early summer, VCU and its health system began other projects, including:

A $93 million engineering research building on its Monroe Park campus;
A 16-story, $349 million tower for outpatient services on VCU’s medical campus, the largest capital construction project in the history of VCU Health; and
A $95 million rehabilitation hospital in Goochland County in a joint venture with Sheltering Arms.

In August, the university opened the doors on a $96 million residence hall that will house 1,518 students on 12 floors. Texas-based American Campus Communities — in a public-private partnership with VCU — designed and built the residence hall and will run it under a 50-year operating agreement.

The university says that the partnership will allow the university to preserve VCU’s debt capacity for other projects.

“If we can get a private developer to come in and operate it … then, that’s debt capacity that we can use for other things,” says Dave Goodwin, director of financial services for the university’s division of facilities management.

As of late July, VCU’s outstanding debt was about $450 million. A March 2017 credit report from Moody’s Investors Service, a credit rating agency, concluded that VCU’s debt was “manageable” and gave the school a favorable credit rating, Aa2.(The university is constantly repaying debt as well as borrowing, so its debt numbers are in constant flux.)

Rebound since 2000
VCU’s building boom has helped Richmond regain its momentum after the city’s population fell from 250,000 in 1970 to 197,000 in 2000, a 21 percent decline.

By 2017, Richmond’s population had rebounded to an estimated 227,000, with a median age of 33 — a reflection of the torrent of millennials who have swept into the city in recent years.

Growth on the university’s downtown Medical College of Virginia campus and the creation of the nearby Virginia Bio-Technology Research Park also have helped stabilize downtown after the loss of many businesses in the 1990s, including two major department stores, Thalhimers and Miller & Rhoads.

“VCU has gone from a commuter to a residential college. That’s been huge for the university and for the urban core,” says Lucy Meade, marketing and development director for Venture Richmond, a city promotional group.

Meade says that VCU students, along with empty nesters and working-age millennials, helped fuel a surge in downtown’s population.

That change, in turn, she says, has made the city an attractive place for companies, especially those searching for millennial talent.

Time magazine reported last year that Richmond ranked second in the nation in terms of millennial move-ins during 2010-15. The number of millennials in the city grew 14.9 percent, or by 5,176 people, during that time. The Urban Land Institute, which developed the study, defined millennials as people between the ages of 25 and 34.

Architect Robert Mills, a pioneer in the use of historic tax credits, says VCU was an early advocate of rehabilitating existing buildings. “At the time, this philosophy was operating in unchartered waters,” he says.

Today, Mills says, developers cannot rehabilitate enough downtown buildings to accommodate the demand of people wanting to live in the city. The stock of viable, historic structures for rehabilitation is running short.

“We are facing a new situation in downtown that I never thought would happen in my lifetime — the development of new, contextual infill structures on the empty lots between the rehabilitated historic buildings to meet the demand for downtown housing,” Mills says.

“Weaving contextual infill development within the framework of the existing structures is creating a new, unexpectedly dynamic community in downtown Richmond. VCU is at the forefront of this new wave,” he says.

Trying to fit in
VCU has made a determined effort to house more students on campus. About 83 percent of its freshmen live in VCU housing, and more than 6,600 students reside on campus overall.

In addition, private developers have built apartment complexes nearby because of increased demand for housing that the university has been unable to meet.

Architect Sanford Bond, co-founder and principal of the Richmond firm 3north, says VCU has made enormous progress over the years in the design of its buildings.

“In the ’60s and ’70s there are some unfortunate buildings from an architectural point of view that VCU built. I think now they’re much more sensitive to what they’re building to the urban environment, and I think they’re trying to fit in better,” he says.

Cox, the university architect, says that because VCU is an urban university in an old city, its two campuses encompass a variety of architectural styles. They range from restored Victorian-era homes to the cutting-edge edifices.

“We will never have a cohesive architectural language like you would find at Virginia Tech or the University of Richmond … and part of the reason for that is, a lot of our buildings we inherit,” Cox says.

“We choose not to take land by eminent domain. We don’t really know where we will be as our footprint grows. We tend to purchase land as it becomes available, and we get what we get.”

Cox says the university once acquired a grocery store and remade it into classroom space. “You would never know,” she says.

A ‘killer arena’

NH District Corp., a group of corporate leaders headed by Dominion Energy CEO Thomas F. Farrell II, wants to reinvent a section of downtown Richmond with a $220 million arena as its centerpiece.

At the group’s planning sessions, one topic inevitably is discussed, and it has nothing to do with bond initiatives or blueprints: “It comes up in every meeting: This can take Beyoncé,” says Jeff Kelley, the group’s spokesman.

Major entertainment acts, such as Beyoncé’s, tend to skip the city because the drab, 47-year-old Richmond Coliseum can’t accommodate them, Kelley says, but “these acts [would be able to] stop in Richmond now. … They can stop right here and be in an amazing neighborhood in a killer arena.”

The city is considering NH District’s proposal for a $1.4 billion mixed-use, residential and business project in which a 17,500-seat arena would replace the 12,000-seat Coliseum. The entire project, built on city-owned real estate, would be funded via a mixture of publicly backed bonds, private investment and the creation of a special tax district.

Kelley says, “People ask, ‘Why do we need to have an arena?’ And, you know, I think our answer is: We deserve it. Richmond is becoming a world-class city, and world-class cities have amenities like this, and, in my personal view, I think it’s time. We’re due.”

The proposed redevelopment project is just the latest evidence of the Richmond area attempting to take a larger spot on the nation’s stage as a greater lure for corporate relocations and investment.

“Quality of life is becoming more important for companies in attracting talent to this region,” says Barry Matherly, president and CEO of the Greater Richmond Partnership. And as companies look at factors that would attract desirable millennial and Gen Z workers to the region, they are noting that Richmond lacks a facility for larger music and pro-sports events.

“In economic development, workforce is the No. 1 issue, and young professionals are the biggest concern of companies because that’s their current and future workforces,” Matherly says. “Areas that can attract and retain young professionals are going to be the most successful in bringing in businesses.”

The arena proposal would give Richmond the ability to create a new neighborhood from scratch.

“These are once in 30- to 40-year projects. And so the ability to shape an area with a major project with a coliseum … is what other cities are doing in venues that can be used for entertainment or concerts or sports,” Matherly says.

NH District’s proposal would transform a 21-acre, 10-block downtown area that, in addition to a new arena, would include a 527-room hotel, a bus transfer plaza, condominiums, 2,800 apartment units and 176,000 square feet of retail. The project also includes a $10 million renovation of the city-owned Blues Armory building, which may include a new food court. The neighborhood, which is surrounded by Virginia Commonwealth University Medical Center, the VA Bio+Tech Park and the J. Sargeant

Reynolds Community College downtown campus, now is virtually devoid of housing or retail.

The effort would “create a walkable urban center” and connect the city’s economically depressed East End with new employment opportunities, Kelley says. And, he adds, “If it goes forward, it will be the biggest minority-business opportunity in Richmond history. Somewhere around $170 million will be set aside for minority contractors.”

The plan would create a special tax increment-financing district around the arena. Tax revenues from the area would be used to cover debt service on bonds used to finance the public facilities in the project, including the new arena. Dominion has suggested that the district include its two downtown office towers a half mile away, one of which is under construction. The towers would generate an estimated $165 million in tax revenues during the next 30 years.

The Richmond City Council initially was expected to consider the NH District proposal in September. In mid-August, however, Richmond Mayor Levar Stoney told the Richmond Times-Dispatch the city still was negotiating with NH District on some key issues.

“We’ve made significant progress on several of the deal points that I’ve said are absolute must-haves for the city —especially on affordable housing and minority participation,” Stoney said in a statement. While there are “details to iron out before we take it to City Council,” the mayor said he remains “confident we will get this done.”

In its statement, NH District said it “will meet the Mayor’s vision and address Richmond’s need by delivering the community’s largest commitment to affordable housing, the largest level of minority participation Richmond has ever seen, thousands of jobs and training opportunities for Richmonders, and new tax revenue for core services.”

Rapid bus transit
Another way that Richmond is working to become more appealing to younger professionals, Matherly says, is with transportation projects such as the Greater Richmond Transit Co.’s recently launched Pulse rapid bus transit service. The Pulse runs for 7.6 miles along Richmond’s Broad Street corridor from Rocketts Landing in the east to the Willow Lawn shopping center near the Henrico County line in the west.

Combined with dedicated bike traffic lanes that the city has added downtown in recent years, the Pulse provides transportation alternatives to millennial and Gen Z workers who eschew driving and car ownership.

While the Pulse bus lanes and transit shelters were under construction, the project disrupted traffic, angering some local merchants whose shops became difficult to reach. Nonetheless, the new service appears to be a hit. In the first month after its launch in late June, Pulse had already exceeded its ridership expectations, says GRTC spokesperson Carrie Rose Pace. “We’ve done at least a thousand better than the goal every day,” she says.

Pace added that the GRTC expects an even more significant spike in ridership with VCU students returning to school in this fall. In a one-year pilot program, Virginia Commonwealth University is paying the transit system $1.2 million to allow VCU students and employees to ride GRTC buses for free.

Upgrades at river port, airport
Economic development opportunities for the region also have been aided by recent infrastructure upgrades to Richmond International Airport and the Port of Virginia’s Richmond Marine Terminal on the James River, Matherly says.

One recent business prospect, a maker of technical devices, was pleased to learn that Richmond offered the company an opportunity to receive raw materials by barge and to ship finished products out by air.

In September, Richmond International Airport began work on a $35 million extension of Concourse A, adding six gates to meet growing passenger demand. The project will increase the total number of gates at the airport to 28.

“Increasingly, RIC is seeing growing demand for overnight aircraft parking positions. Late-night arrivals become the next morning’s kick-off flights,” says Jon E. Mathiasen, president and CEO of the Capital Region Airport Commission. “While the airport can meet current requirements, the goal is to stay a bit ahead of the demand curve to meet foreseeable future needs.”

The airport is also planning a $4 million expansion of its Transportation Security Administration checkpoint at Concourse B. Expected to begin in October, the expansion will offer more room for increased flow of passengers at the airport. An expansion of the airport’s Concourse A security checkpoint is expected to follow.

“Facility expansion at Richmond International Airport is a reflection of the Richmond region’s growth,” Mathiasen says. “If the economy continues its current trends, I see nothing but growth ahead for RIC and the community it serves.”

In recent years, the Richmond Marine Terminal also has made a host of multimillion-dollar infrastructure improvements. The changes include a new harbor crane and an improved 409-foot river cargo barge equipped to carry refrigerated cargo.

The changes allow the port “to provide a more comprehensive level of barge service to current and potential customers and continue to serve as a catalyst for commerce in the Richmond metro area and beyond,” says John F. Reinhart, CEO and executive director of the Virginia Port Authority, which leases and operates the Richmond Marine Terminal.

In response to the terminal’s ability to handle more cargo, the Greater Richmond Partnership and area economic development officials have launched an export initiative. The goal is to have every cargo container arriving at the terminal bearing imported goods returned with exports from Virginia. “Every container that comes in here, we want something else from a Virginia or Richmond company to go back the other way,” Matherly says. “Trade is a two-way street.”

Construction boom
Driven in part by the upgrades to the Richmond Marine Terminal and by what some real estate industry analysts are calling a “golden age” of distribution warehouse construction, there is an explosion of commercial development along the Interstate 95 corridor around the river port.

“That wouldn’t be happening,” Matherly says, “if the port had not been upgrading and able to attract more volume.”

Newport Beach, Calif.-based Panattoni Development Co. is building a million square feet of speculative warehouse space on 62 acres.

And Richmond-based Hourigan Development is erecting 1.5 million square feet of high-bay warehouse buildings called Deepwater Industrial Park on the 110-acre Alleghany Warehouse Co. site near Philip Morris USA’s Richmond Manufacturing Center. Hourigan Development President Joseph Marchetti says the warehouse park “is a significant stride for economic development and the positioning of Richmond as a trade leader.”

Just a few years ago, Matherly notes, Richmond didn’t have any speculative warehouse space. Now warehouses are being built at a steady pace, spurred on by demand from internet businesses and developers’ confidence in Richmond’s strong, diverse economy. For example Richmond developer Devon USA, which last year built a 328,000-square-foot spec warehouse that became an Amazon distribution center in Hanover County, now is building a $20 million, 321,000-square-foot spec warehouse at the James River Logistics Center in Chesterfield County.

This year, Richmond’s industrial warehouse market is expected to expand its high-bay inventory by more than 2.7 million square feet, a 13 percent increase, according to CBRE.

All of these indicators point to a healthy economic outlook for the Richmond region, Matherly says.

But, he adds, the people planning new projects need to remember to keep one question in mind: “Is this going to help us keep the young professionals?”

Danville refuses to be debate talking point

In February, Arkansas Gov. Asa Hutchinson, a Republican, toured Danville’s workforce training facilities. The stops included the Gene Haas Center for Integrated Machining, the Regional Center for Advanced Technology and Training, and the precision machining programs at George Washington High School and Danville Community College.

In July, officials from Watertown, Wis., paid a visit to learn how Danville has transformed its downtown and former tobacco warehouse area into the River District with loft apartments, restaurants, a brewery and other new businesses.

These out-of-state visitors came to Danville because they saw it as a model of revitalization in an area that has been hard-hit by economic change in recent decades.

What they didn’t come to see, and probably would not recognize, is the Danville that Corey Stewart, Virginia’s Republican nominee for the U.S. Senate, described in a televised July debate with his opponent, incumbent Democratic Sen. Tim Kaine.

“It’s boarded up. People have left. Young people have left. The opiate crisis is completely out of control. The murder rate is way up. All crimes are way up. Suicides are up. It’s sad,” Stewart said, blaming the city’s demise on Democratic trade policies.

That assessment got a rise out of Lee Vogler, the city’s Republican vice mayor. In a tweet, he wrote, “We’d be happy to show you, or anyone, the great work that is being done by many ppl. We’re a great city. Not a talking point.”

Volger’s tweet was repeated in a Danville Register & Bee editorial titled, “Stewart’s Cheap Shot at Danville.” The editorial traced Stewart’s talking points to an article in Breitbart News, “Left for Dead in Danville: How Globalism is Killing Working Class America.”

“Has Danville undergone traumatic changes in the last 40 years? Absolutely,” the editorial said, noting the economic body blows the city suffered from the collapse of the U.S. textile industry and the demise of the tobacco warehouse auction system.

“What Stewart and the Breitbart writer don’t acknowledge, because it doesn’t fit their predetermined narrative, is that this city and its residents are far from dead,” the newspaper said. “Rather, we are re-examining ourselves, tallying our strengths and weaknesses and determining where we fit in in the 21st-century economy. And we are rebuilding and repurposing ourselves for that new economy.”

Joining the chorus a few days later was an op-ed piece in the Register & Bee by two Danville-area natives, Whitt Clement, a former Virginia secretary of transportation, and Todd Haymore, a former state secretary of commerce and trade.

They noted that, while still higher than the state’s jobless rate of 3.2 percent, Danville’s unemployment rate fell from 15.3 percent in 2009 to 5.4 percent in May.

Economic projects recruited to the Danville area since 2010, they said, have included investments of nearly $210 million, promising nearly 1,400 additional jobs.

“No, Danville is not boarded up, desperate and facing a bleak future,” Clement and Haymore said. “Danville is open, excited and ready to take on all the new opportunities the future will undoubtedly bring.”

There may be more at stake in this dispute than wounded civic pride. Site selection for economic development projects is a process of elimination. Companies looking to relocate or expand often want to move quickly in finding the right site and setting up production. Unless they are challenged, disparaging comments about a potential location can cause it to be culled from the finalists.

Stewart followed up the debate with a news conference in Danville in late July. Facing a crowd of supporters and protesters, he acknowledged that the city has made progress in recent years but blamed the demise of the city’s textile industry on “unfair trade agreements that the Washington elite like Tim Kaine supported.”

The delegation from Watertown arrived just three days later. Their visit mirrored a similar trip Danville leaders made in 2010 to Greenville, S.C. Once called the “Textile Capital of the World,” the city has revamped its economy in recent decades, becoming, for example, the North American headquarters for Michelin. The Greenville trip led to the development of the River District, an area that has seen $150 million in private investment and $35 million in public spending in the past seven years.

Instead of heading south eight years ago, the Danville delegation could have headed north to a Rust Belt city that also is undergoing revival, Duluth, Minn.

Duluth’s port on Lake Superior once was the busiest port in terms of gross tonnage in the U.S., shipping ore from the Iron Range to plants in other states.

Beginning in the 1950s, however, industrial jobs began to vanish and the city’s population fell. In the 1980s, someone put a billboard on I-35 asking, “Will the last one leaving Duluth please turn out the light?”

Since then, the economy and the population have rebounded, thanks to recent developments in tourism, education, health care, aviation and advanced manufacturing.

In 2014, Outside magazine named the city No. 1 in its annual list of Best Places to Live in the U.S.

Stewart no doubt knows the city well. He was born there.

William & Mary business school receives $10 million gift

Virginia Beach philanthropist Jane Batten is giving $10 million to the College of William & Mary to create an online learning center for its business school.

As a result of the gift, the Raymond A. Mason School of Business is expected to increase its online graduate programs.

The business school first offered an online MBA program more than four years ago. It added an online master’s degree in business analytics program this summer. Both programs are now housed in the new Center for Online Learning.

The business school expects to see a four-fold increase in its online offerings in coming years. As the number of programs grows, the school expects to add faculty and staff dedicated to the new center.

Batten and her late husband, Frank Batten, have made other gifts to William & Mary in many areas, including scholarships, the Fund for William & Mary and the Mason School’s residential MBA program.

Unemployment falls in Virginia metro areas

Unemployment fell in metropolitan areas throughout Virginia in July.

The Virginia Employment Commission (VEC) reported Wednesday that jobless rates were down in all of commonwealth’s 11 metropolitan statistical areas (MSAs).

The highest rate was 3.6 percent in the Lynchburg area. The lowest was 2.4 percent in Northern Virginia.

Three other MSAs — Staunton-Waynesboro, Charlottesville and Winchester — also had rates below 3 percent.

The VEC numbers are not seasonally adjusted, meaning they do account for seasonal adjustments in the labor force.

Using that standard, Virginia’s jobless rate in July was 2.9 percent while the national unemployment rate was 4.1 percent.

The decline in metro-area unemployment in July follows upticks in May and June.

A breakdown of the MSA results shows:

Bristol: 3.4 percent in July, down from 3.7 percent in June.
Charlottesville: 2.7 percent, down from 3.1 percent.
Harrisonburg: 3 percent, down from 3.5 percent.
Hampton Roads: 3.2 percent, down from 3.5 percent.
Lynchburg: 3.6 percent, down from 3.9 percent.
New River Valley: 3.3 percent, down from 3.7 percent.
Northern Virginia: 2.4 percent, down from 2.7 percent.
Richmond: 3.1 percent, down from 3.4 percent.
Roanoke: 3 percent, down from 3.4 percent.
Staunton-Waynesboro: 2.7 percent, down from 3.1 percent.
Winchester: 2.5 percent, down from 2.8 percent.

Among Virginia’s 134 cities and counties, Arlington had the lowest unemployment rate in July, 1.9 percent, while Petersburg had the highest rate, 6.3 percent.

Commonwealth Commercial names national director of property management

Henrico County-based Commonwealth Commercial Partners has named Paul Harnett senior vice president, director of property management.

Harnett will oversee the company’s tenant services and nationwide property management portfolio of more than 15 million square feet.

Most recently Harnett served as managing director at Gemini Real Estate where he was responsible for a 4 million-square-foot shopping center portfolio spanning 11 states and several Northeast hotel assets. He’s also worked at Madison Marquette, Kane Realty Corp. and The Related Cos.

DHG names managing partner of Norfolk office

DHG has named Tom Hazelwood managing partner of its Norfolk office.

Hazelwood previously was office managing partner in DHG’s Winston-Salem, N.C., and High Point, N.C., offices.

Hazelwood has served a variety of clients representing a wide range of industries, including manufacturers, distributors, real estate entities and various other closely held companies, many of which are owned by private equity groups.

As an assurance partner, he has assisted clients with complex accounting issues, including mergers and acquisitions. He also has extensive experience with not-for-profit organizations.

Hazelwood earned his bachelor’s degree in accounting the University of North Carolina at Greensboro.