Richmond leaders to lend $14.7 million in emergency funds to Diamond District redevelopment

RICHMOND, Va. (WRIC) -- Richmond leaders are taking $14.7 million from the city's emergency reserve to support redevelopment of the Diamond District -- despite concerns raised regarding city code.

During its meeting on Monday, Feb. 23, the Richmond City Council voted to approve lending $14.7 million from the city's contingency reserve to the Economic Development Authority (EDA) for the redevelopment of the Diamond District.

The city's contingency reserve was set by city code and is intended to be used in "catastrophic, unforeseen or unavoidable events" that cause the city's revenue to decrease or increase in city spending.

City leaders like chief administrative officer (CAO) Odie Donald, II described this as an "excellent opportunity" for Richmond to deliver on promises it's made relating to the Diamond District.

"What we found here is [that] this transaction is, essentially, unique enough for us to use this tool," Donald said. "This was the right tool, this was the right process."

However, some city councilmembers expressed concerns about whether or not this was the correct path forward.

What is the Diamond District and why is it important?

The Diamond District redevelopment has been in the works for several years. It's described as a future sports and entertainment destination anchored by CarMax Park, the Richmond Flying Squirrels' new home.

Funding for this massive project has routinely become controversial. Most recently, in September 2025, the city discovered a $10 million funding gap in the cost of the project's infrastructure, which became apparent after a change in the project's scope.

Jason Guillot with Diamond District Partners and Thalhimer Realty Partners stressed the urgency of the project and the use of this contingency funding during the meeting, citing upcoming groundbreakings.

Guillot further explained that the Sports Backers Stadium is the key to the redevelopment, and that infrastructure improvements to streets, parks, utilities and stormwater are needed in the process.

"This is the doughnut hole in the doughnut," Guillot said. "We have to have it, at this point."

Grace Washington, president and CEO for JNG Workforce Development Services, also emphasized the importance of the funds for both local workers tackling the redevelopment and those who rely on affordable housing that will be constructed.

"We just ask that you don't slow down the momentum," Washington said.

Donald explained that the decision to use contingency reserve dollars comes after leaders "weighed all of the options" and found this one to be the most favorable for the city.

"For every litmus test that we've applied, we believe quite strongly that this is the process forward," he said.

Donald added that this $14.7 million will not leave the city's contingency reserve empty.

Concerns about consequences of using emergency funds

Councilwoman Kenya Gibson said that, despite her excitement and support of the project, she was concerned that allocating the contingency funding for what she called a "private project" would be a violation of city code.

"'It is the policy of the city that appropriations be made from the contingency reserve only when catastrophic, unforeseen or unavoidable events cause a reduction in revenue or an increase in expenditures, either or both, and B,'" Gibson recited from the city code. "'If funds are expended from the contingency reserve to cover appropriations, the Mayor shall submit to the City Council within 90 days after the date of which such funds were expended, a plan to restore the amount of the unassigned fund balance, so expended within three years after the date on when such funds were expended.'"

Gibson also expressed worry if another ice storm or emergency were to occur and the funds were no longer readily available.

"I think it's unconventional that a locality is providing the direct funding to a private entity and taking on this debt -- it's not a common occurrence," Gibson said. "And given the fact that this isn't a common occurrence, and we're talking about taking what I believe to be half of our safety net -- which we're always talking about how critical our safety net is -- we're taking half of it and putting it towards this private project. What happens if we have another ice storm and there are emergency needs and the money is simply not there? I'm not able to vote in support of the paper."

Councilman Andrew Breton posed several questions to the finance committee regarding how the loan works. One such question was asking if using the money in this way would be considered "investing" the money rather than "expending" it.

"That is my contention, yes, and I will continue to make that assertion," a finance committee member answered. "In effect, what we are doing is exchanging cash for a promissory note, and that note becomes an asset to the city's fund balance."

City officials explained that the loaned contingency fund becomes an investment. If needed, officials said the asset could be liquidated, but it would not immediately become available.

Gibson reiterated the need for transparency regarding the finances of the project moving forward and again questioned the idea that the loaned money would be considered an investment.

"This was originally called the rainy day fund," Gibson said. "When there's an emergency, you need to use the money right away. It's an emergency. So, if the money's not liquid, it's not doing what it needs to be doing in the rainy day fund. I don't think we can both invest the money and have the money at the same time -- that's simply not how the investments work."

Gibson also explained that she doesn't view the loan as an investment -- which would imply that the city would receive interest on the loan -- because the ordinance stipulates that, if EDA paid ahead of time, the interest owed could be forgiven.

"If we have an emergency, we have less money that we have access to immediately," Gibson reiterated.

City officials say councilmembers should not be concerned

Breton asked Donald to speak in more detail about the concerns colleagues like Gibson were presenting.

"The contingency reserve is for contingencies, right? The idea is that, things are unexpected, we need cash, usually in a hurry," Breton said. "And it sounds like this type of investment -- though it is an asset -- might not be that liquid as we would normally want. So how concerned should I be that, when we need the cash, it will be hard to get?"

In response, Donald said Breton should not be concerned.

"I think that, if we were concerned -- if we were extraordinarily concerned, I would be expressing that today," he said. "I think this is the same guy standing before you earlier when you asked about certain decisions, and I told you they would be catastrophic. So if I'm coming to you now and saying that, while we would have done it another way initially, after looking at all of the options, we believe that this is the best one, and it lines up."

Donald pointed out that the city has just navigated its third emergency event in recent history -- that being the recent snow and ice storm -- and that, in doing so, it had to review its emergency accounts.

"In looking at every decision being made, how we're using our accounts, understanding projected surplus and other activities -- [we're] quite confident here in our ability to weather any storm that is coming," he said.

Council: No matter the justification, this decision looks bad

Donald added that he admired the city council for asking such important and thoughtful questions about this matter.

Councilwoman Sarah Abubaker expressed her belief that, no matter the justification behind this decision, it reflected poorly on the city. She said this wasn't a truly emergent, unexpected expense, and that she would've appreciated the council hearing from city leadership about it sooner.

"What I feel like we're being put in the position of, oftentimes, as a body, is that we're being asked to vote against our own rules or code, or something catastrophic [will happen] -- like an entire economic development deal will fall through," Abubaker said.

Donald emphasized that he felt Abubaker's statement to be very fair. He pointed out that the Diamond District agreement predated his and Mayor Danny Avula's administrations and that, because of this, he hadn't had time to adequately prepare to fund the promises his predecessors made.

However, he said that he feels that, at this point, the Diamond District redevelopment was indeed an emergency and that, with the hand they've been dealt, this remains the best path forward.

Abubaker said that it remains her position that the city needs to do its best to provide more time for open dialogue about matters like this one. Donald said her comments were "well-received."

Gibson added that she felt this would be a good opportunity to dig into the finances behind the Diamond District.

Ultimately, the ordinance was approved 8-1, with Gibson being the sole dissenting vote.