Militant groups at the University of Virginia, tried to organize a “sit in” at the Board of Visitors meeting yesterday, but the event fizzled. A dozen or so local radicals showed up at the Rotunda, where the board meeting was held, but they were met by a strong force of uniformed University police. The entrances to the Rotunda were closed to the public, and visitors had to gain clearance to enter.

The board meeting proceeded without disruption.

Organizers announced their intentions on the Instagram page of the Dissenters, a member of the leftist student coalition protesting against UVA policy toward Israel and Palestine. Students have called for UVA to end relations with the U.S. “war machine” supplying weapons to Israel and also for the University to divest its $14 billion endowment of companies doing business with the Jewish state.

In the spring semester, the UVA student body voted in support of a resolution calling upon the University to cull its investment portfolio of companies with Israeli connections. The Ryan administration ignored the demand, which then became a rallying cry for pro-Palestinian protests. The University called in state police to disperse an encampment when protesters refused to take down their tents.

“Despite 68% of students voting to divest from death, UVA administration refuses to take any action,” stated one of the Instagram posts. “They crack down on protesters through UJC (student judiciary) trials, letters of retaliation against employees, false narratives about “outside agitators,” separation us from local communities that actually took care of us, and implementing fascist, ableist policies.”

“Therefore,” the post continued, “we are going to the top decision making body: the Board of Visitors to let them know they can’t keep ignoring us. As they make their corporate decisions about UVA’s future, we will occupy the room, holding them accountable through our signs for divestment and a cease to all forms of retaliation.”

No protesters were admitted into the Rotunda. Board members were escorted into the building through a side entrance. The protesters apparently had dispersed by the time the board meeting began at 1:30 p.m. University police maintained a presence outside the building during the meeting Thursday and Friday.

As it happened, the divestment issue did come up during a presentation by officials with UVIMCO, the organization that manages the endowment. UVIMCO’s CEO and CFO were there to brief the board about what it does and to discuss its investment performance, but they said unbidden that they had no intention of divesting.

“We are not divesting from any investments,” said Kristina Alimard, chief financial officer. “Our goal is to generate strong investment returns for the University.”

Michael J. Kennedy, the faculty representative on the board, said that the faculty favored divestment, and he asked for an explanation of why UVA was opposed.

CEO Robert Durden responded that UVIMCO did convene an advisory committee to hear the pro-divestment arguments but decided that such action would be inappropriate. “We do not like using our investment strategy as a way to address moral goals,” he said.

Even if UVIMCO was so inclined, its structure would make divestment difficult to accomplish. The group does not invest its funds directly. It entrusts its money to third-party managers, typically in funds with strict contractual terms with seven- to ten-year lifespans. Purging the funds of companies that do business in Israel would require onerous re-rewriting of the terms. “Our model makes that (divestment) difficult,” he concluded.

In Bloomberg, author Allison Nicole Smith commented on the Atlantic Park bonds. She wrote:

Muni deals funding tourist attractions have a checkered past. The list of defaulted bonds is a long one, including a water park in Edinburg, Texas, and an iron and steel manufacturing-themed park in Bessemer, Alabama.

Like the development in Virginia Beach, those parks were speculative bets conceived to invigorate local economies. But many have gone under because success was reliant on enough people consistently showing up, year after year.

The “speculative bet” part was never communicated to Virginia Beach taxpayers. Not In a hundred print and TV news reports over seven years. Not in press releases. Not in the records of public sessions of City Council or its development authority.

Extensive risks are described buried deep in Atlantic Park bond documents prepared for investors because they are required to be there. The investor prospectus for the state’s surf park bonds is 616 pages long. The one for the city’s parking garage bonds issued on the same day is over 1,000 pages long. Each of those issues were revenue bonds, requiring listing of risks to revenue.

Even those lists are incomplete.

Four examples of unlisted risks:

1. Staffing. The Park will need 1,600 employees.

Virginia Beach population has not been growing for some time and temporary summer workers are scarce. Our unemployment rate is much lower than nationally. Jobs in this region generally don’t pay enough to draw skilled workers from other areas. 

Even before COVID, city businesses had formally expressed to the City Council a growing concern about resort businesses being able to get the number of seasonal employees needed to meet demand.

After Covid, the shortage of restaurant, hotel and tourism industry workers has been severe. Other resort-area businesses still struggle to fill shifts.

2.  Utilities. The new entertainment district will draw a lot of new electrical power. It is not immune to the ongoing challenges to utility costs and availability.  

Natural gas supplies to this region are already constrained by pipeline capacity. The biggest customers, including the Navy, often face rationing in cold weather.

3. Security. Virginia Beach has an excellent police force and low crime statistics.

But the corridor between Norfolk and the resort district is a problem. Atlantic Park is being built in Virginia Beach’s biggest crime corridor.

The risk from Virginia Beach-based gangs is low overall. Norfolk, with its sky-high gang activity, appears to be the source of most of the gang problems seen in the resort area, especially in the summer. Gangs will attempt to gravitate to Atlantic Park like they plagued Town Center after it opened.

Atlantic Park will have an ABC license for outdoor drinking within the boundaries of the development. Vagrants and buskers who hang out on the boardwalk may find the Park attractive.

All told, the Park will need an excellent security force and significant police presence. Second precinct headquarters is nearby, but like Town Center, Atlantic Park may require a substation.

4. Noise. The city will own the concert venue in which a wall rolls back to accommodate 1,500 outdoor customers. It has been exempted by Council from city noise ordinances. That may prove more than just annoying to onsite apartment dwellers and nearby neighborhoods.

“Certain Bondholders Risks” detailed in the surf park bond offering memorandum are summarized below.

5. “Payment of debt service.” The primary issue is the debt load on the surf venue.

6. “Lack of operating history.” The developer of Atlantic Park has never managed a surf park facility but will manage this one. He has hired an Australian operator with surf park experience.

7. “Combination or layering of multiple risks may significantly increase risk of loss.”

8. “Risks associated with a multi-component development operational plan and multiple funding sources.”

9. “Failure of any component to realize its expected results whether in timing or in degree of traffic, usage, rent up or overall economic and financial success may adversely affect the operational results” of the others.

10. “Competition.” The signature feature is the surf venue. A surf park is planned near Richmond to be three times the size of the one in Atlantic Park.

Competition is abundant in the resort district for the new park’s restaurants, offices and apartments. Most will not be subject to special taxes, fees and assessments from the Atlantic Park Community Development Authority (the CDA).

A new public private development a few blocks away near the conference center has been under active consideration for some time. If built, it will compete with Atlantic Park retail and restaurant businesses as well as its apartments. Like them, they will be subject to the CDA’s special tax and fee levies.

11. “Economic Conditions.” National economic conditions, such as inflation or recession or both, resulting in a decline in discretionary income.

12. “Insurable liabilities and the costs of insurance.” The surf park should be particularly expensive here.

13. “Risks of construction delay.” That has already happened.

14. “Pandemic risk.” Covid resulted in the abandonment of other entertainment projects.

15. “Risks from nature.” Include hurricanes, flooding, sea level rise and lightning strikes. The management assumptions, to their credit, mentioned weather shutdowns. Most people are unaware that swimming pools must be shut down when lightening is within ten miles. That happens often enough in Virginia Beach to be a factor with the surf park.

16. “Environmental Regulation.” Electricity, natural gas and water use and trash generation are all extremely high in the resort district. Atlantic Park will add significantly to consumption. All are subject to regulation.

17. “Enforcement of Remedies.” Other parts of the Park will suffer if, for example, the surf venue is closed for an extended period by court action.

18. “Dependence on third parties” and “bankruptcy.” What happens, for example, if P3 Foundation or Wavegarden, the sole supplier of the surf park machinery, goes bankrupt?

19. “Cyber attack.”

20. “Actual results may differ” from projections of economic activity at the Park.

21. “Inability … to control increases in operating costs … without being able to obtain corresponding increases in revenues.“

22. “Risk of Audit by the Internal Revenue Service.” The VSBFA tax exempt bonds bear that risk.

23. “Tax Exempt Status of the Borrower, P3 foundation.”

Commentary. Among council members, only Councilman John Moss appears to be on record addressing risk in public session.

He pointed out in 2021 that the costs of commercial construction were soaring. He urged reconsideration of the project based on the new facts. The rest of the Council offered no recorded comment. In May of this year Moss wrote about Atlantic Park spending and risk with knowledge and passion. 

Moss abstained from closed-door Atlantic Park Council meetings and public votes because of a self-identified conflict of interest in that he might benefit financially if it were built. From his comments and his public interest track record, he would have voted against the Atlantic Park deals. But his would have been the only “no” on most votes.

If the City Council discussed these risks, members did not do so in public session when transparency required it. If the city had created a business plan, it would have factored the risks into multiple decision points. It did not create one.

The developer is surely working to mitigate the challenges he can affect. The city and the developer together should address risk mitigation both in writing and in public session well before Atlantic Park opens.

Council has left citizens with a huge stake in its success.

The University of Virginia is considering reinstituting mandatory submission of standardized test scores in admissions applications, Provost Ian Baucom told the Board of Visitors Thursday.

Many elite universities scrapped the mandatory SAT and ACT scores during the COVID epidemic in favor of “wholistic” admissions criteria. Now some are re-evaluating the decision. Citing the recent actions of peer institutions regarding the tests, Baucom said, the University was engaging a group of economics-department faculty with research expertise in higher education to “advise us whether to return to standardized tests in admissions processes” while still considering a “broader set of factors.”

The goal is to recruit and admit “extraordinary students who will flourish at the university,” Baucom said. The economists are gathering data right now, he added, and he promised to keep the board updated.

Baucom gave no explanation of why the University was considering doing an about-face on its decision four years ago to make the SAT-score submissions voluntary — roughly half of applicants continued to provide them — nor did he elaborate upon what “broader set of factors” might be in store.

Standardized test scores have long been criticized as part of the “systemic racism” afflicting higher education, and reducing the weight they are given in admissions was widely interpreted as a victory for anti-racism. But others have argued that standardized tests highlight talented minority applicants whose families can’t afford the internships, clubs, sports, music lessons and other extracurricular activities accessible to affluent households in more wholistic approaches.

UVA’s potential reversal comes on the heels of a U.S. Supreme Court ruling restricting the use of race in admissions, as well as enactment of a Virginia law forbidding the consideration of an applicant’s legacy status in admissions.

After the Supreme Court decision, UVA modified its version of the common application form to eliminate the “race” checkbox but allowed applicants to mention their race or ethnicity in their essays.

As it turned out, the racial composition of this year’s entering class has changed only a little from last year. The percentage of African-American students declined about a percentage point to 7.2% of the entering class. The percentage of Hispanic students increased more than a percentage point to 9.0%. UVA officials touted this year’s class as “the most diverse” in the University’s history.

A national industry group that advocates for home energy efficiency contractors has produced another report on how energy costs squeeze the poor the hardest, with Richmond one of its examples. The data was then used as an excuse to call for (you guessed it) the return of an energy carbon tax which paid those same contractors to do energy home improvements.

The American Council for an Energy Efficient Economy (ACEEE) is correct that the lowest income households struggle with basics like electricity, natural gas and other fuels, along with food, rent and clothing. It sucks to be poor. My big concern with the new report (full text here) is it doesn’t seem to account for the various government and private programs that provide hard cash to help with these bills, including the nascent Percentage of Income Payment Plan.  

Richmond has a slightly deeper problem than the nation as a whole. Nationally 15% of low-income households face an “energy burden” because they spend more than 6% of their income on it, but in Richmond that exceeds 17%. The big disparity is among renters (13% nationally but 16% in Richmond.)

The pitch of RGGI as the solution came Thursday morning in this from Virginia Mercury, which outlined the problem and then spent the final three paragraphs on the suspended Regional Greenhouse Gas Initiative, or RGGI. Mercury did a similar story back in April, based on a state report about energy assistance programs, and it also ended with a hard pitch for RGGI dollars to return. From the April report:

‘Since the first RGGI auction that Virginia participated in back in 2021, RGGI has provided nearly $400M for low-income energy-efficient housing,’ said Chelsea Harnish, executive director of the Energy Efficiency Council, a group that supports RGGI involvement and backed a bill this session that would increase transparency in energy efficiency program determinations. ‘There are no alternative funding options available at either the state or federal level for these programs in terms of program design nor funding levels.’

That final quote in the April article is false. It ignores how Virginia has created a major funding stream feeding this “industry,” forcing ratepayers of both Dominion Energy Virginia and Appalachian Power Company to pay an extra amount on every monthly bill to subsidize utility-managed energy efficiency programs. The link in the article goes to a 2024 state law that will likely increase the reliance on Other People’s Money for these questionable expenditures. So, Mercury was perfectly aware of them. It just left them out.

Mercury also ignores where the RGGI dollars come from: ratepayers. To the extent advocates are correct that energy costs are especially burdensome on the poor, reinstating RGGI will greatly increase those costs. When it was suspended by the Air Pollution Control Board, RGGI was costing Dominion customers more than $4 for every 1,000 kilowatt hours of usage. 

Since then the underlying cost of the RGGI carbon allowances, which were driving the tax amount on Dominion bills, has exploded. These are facts the Virginia Mercury, with its one-sided coverage, has ignored. What had been $3-$5 on most monthly bills would probably now be $8-10 per month if reinstated, making it the largest of the bill adders for that utility.

Poor folks with their poorly insulated housing and older appliances typically use way more electricity per month than the rich and middle class. That report from the ACEEE set the median monthly bill in Richmond at $150, meaning half of households pay more. Their RGGI taxes would be among the highest. That’s another fact the news hawks at Mercury omit.

The Mercury reports that another hearing on the pending lawsuit to reinstate RGGI is set for Monday.  The estimated cost to consumers of a decision to stick them with this tax again, based on the new auction prices, should be Exhibit A. Yes, any low-income customer who ends up getting home insulation or new Energy Star appliances might have benefits exceeding the tax, but nobody claims more than a small percentage of folks will benefit directly. The contractors will, of course.  

Exhibit B should be that the cities on the ACEEE list with the highest percentages of “energy burden” are Baltimore (26%), Boston (23%), New York (20%) and Rochester (21%). All are in RGGI member states, and their utilities are adding on the carbon tax costs. 

ACEEE and Virginia Mercury could be useful allies in efforts to keep energy costs reasonable by resisting the elements of the energy transition now underway which will add to that poor family’s “energy burden.” Instead, they will double down on advocacy for government-managed programs funded by taxpayers, even when the taxes involved hit hardest the people they claim to want to help.