School officials begin dissolving ill-fated ‘Project Ace’ linked to Altria warehouse donation

Project Ace is rapidly heading toward the dustbin of history after Richmond’s School Board voted Monday to take control of all the properties it owns and begin the process of dissolving it.

The decision will clear the way for Richmond Public Schools to go ahead with plans for what School Board member Stephanie Rizzi called a “state-of-the-art” technical school in a former tobacco warehouse that Altria donated to the school system in 2017. 

To get access to tax credits that could be used to convert the Altria properties into a school, the division created the for-profit Project Ace, LLC shortly after the donation to serve as the site’s legal owner.

It isn’t uncommon for tax-exempt organizations to set up LLCs or similar businesses during construction projects in order to take advantage of tax credits. But work never started on the Altria properties, and officials failed to realize that in the meantime, Project Ace was racking up real estate taxes. 

By July 2021, tax liability had reached almost half a million dollars, and the city was threatening to put the site up for auction. 

That never happened, but it still took years for city and school officials to reach an agreement on what to do about the property. This June, they mapped out a plan as part of a settlement over the future of the Arthur Ashe Center, an athletic facility at the corner of Arthur Ashe Boulevard and Robin Hood Road that developers plan to demolish to make way for the new Diamond District. 

That settlement calls for ownership of the Altria properties to be transferred from Project Ace back to the School Board. The city will then transfer an amount equal to Project Ace’s tax liability to the nonprofit Richmond Public Schools Education Foundation, which will pay down the tax bill. 

The elaborate setup is designed to leave the school division with no tax liability while staying within the confines of Virginia law, which generally prohibits local governments from preferentially waiving taxes. 

From an accounting standpoint, it’s also a wash for the city: the $723,000 it pays out to the foundation comes right back into its coffers.

Lincoln Saunders, Richmond’s chief administrative officer, said the arrangement “is a great step to clear up something that had been a point of contention.” 

“This and the other agreements that came out of the mediation between the city and the School Board I think are positive steps forward and will continue to strengthen our collaboration,” he told The Richmonder. 

Rizzi, who along with attorney Tom Wolf was a chief negotiator for the School Board in the Arthur Ashe agreement, said the settlement “sets a precedent for engaging with and working together with the city.” 

Besides resolving the Project Ace issue, the settlement also put $400,000 toward current and past stormwater fees owed by the School Board to the city this year and pledged to make annual appropriations to cover the fees in the future, pending City Council approval.  

“We’re setting the stage for working together with the city government in a way that doesn’t involve mistrust and acrimony,” said Rizzi. 

Monday votes 

The vote the School Board took Monday paves the way for the tax money transfers to begin. 

Besides accepting the transfer of the Altria properties, the resolution the board passed directs Superintendent Jason Kamras to execute all the documents needed to carry out “the dissolution, winding up and termination” of Project Ace.

As superintendent, Kamras is the manager of the company, which is itself controlled by the Richmond Public Schools Real Estate Foundation. That foundation — which has no relation to the RPS Education Foundation that is handling the tax liability transfer — was also created in 2017 in response to the Altria donation and is the “sole member” of Project Ace. 

Gerald Carter, an attorney with law firm Harrell & Chambliss, which is acting as special counsel to the schools for the Project Ace transfers, urged the board Monday to consider what it wants to do with the real estate foundation in the future. 

“It’s not something that you have to make a decision on at this time one way or another,” he said. “Your real estate foundation could be helpful to you in the future if you decide that you still want to keep it.” 

School Board Chair Dawn Page expressed relief at the conclusion of the vote.

“This project started in 2017,” she said. “It’s been a long time coming.” 

What’s next for Maury Street

The Altria properties, which sit at 2301 Maury Street, 2401 Maury Street and 2416 Everett Street, cover roughly 10 acres and contain a 288,000 square foot facility once used to warehouse and process tobacco. 

City property records show they are assessed at about $9.5 million collectively. 

School officials have long eyed the properties as a potential site for a new career and technical education school. The division’s current technical school buildings, located off Westwood Avenue near Interstates 95 and 64, are more than 50 years old and require major repairs. 

In 2020, Kamras announced Richmond Public Schools was partnering with Reynolds Community College to develop a new technical school at the Altria site.

In 2023, the division received $20 million from the state’s newly created School Construction Assistance Program for the project.