Rendering of the tower and office complex that was proposed to replace the Public Safety Building. (BizSense file)
VCU Health’s review of a downtown development project that relied on its lease as anchor tenant cost the health system nearly $73 million, management confirmed Friday.
In response to multiple Freedom of Information Act requests from Richmond BizSense since the project effectively died in February, VCU Health sent a statement confirming that it made a one-time payment of $72.9 million to withdraw -se of its multi-year lease for the project, $325 million. Redevelopment of the Public Safety Building at 500 N. 10th St.
“Earlier this year, the VCU Health administration made the tough but wise decision to exit the project known as the Clay Street Project,” said the statement, attributed to interim CEO Marlon Levy.
“The original project plans were developed before the pandemic. Although well-intentioned, by the end of 2021, construction and other challenges made it simply impossible to build the original project,” the statement said. “Moving forward today would cause serious long-term financial repercussions. With this in mind, VCU Health was forced to make the difficult, but also prudent, decision to exit the original project.”
The release said VCU Health was required to make the one-time payment to end its obligations at the site. The payment was funded by VCU Health System’s operating funds and represents less than 2.5 percent of its annual operating budget, according to the release.
“Making this one-off payment means avoiding much bigger financial obligations and problems down the road,” he added. “The university is working in partnership with the Commonwealth and the City of Richmond to develop new plans that will benefit students, patients, our communities and Virginia. The property is envisioned as a signature development for VCU and Richmond with potentially a new facility for the VCU School of Dentistry as a centerpiece.
This is breaking news. Stay tuned for updates.
