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Developers of the planned $210 million Oceanfront arena have met six of the seven requirements City Council set forth in July for approving the project’s financing. The City will host a public briefing Sept. 27 on the requirements developers met and didn’t meet, according to Deputy City Manager Doug Smith.
Smith, whose last day was pushed back to this week, said in a City Council meeting Tuesday evening a complete public briefing is in the works for Sept. 27 on all changes to the original plan laid out by the developers, United States Management LLC (USM). A vote could happen as early as Oct. 4, Smith said. He did not say which of the seven requirements USM has not met.
Earlier Tuesday, Smith gave a brief update on the project’s financing to the City Council, before going into a closed session.
During the short afternoon briefing, Smith said the developers have currently met six of seven conditions set forth by City Council in a July resolution, and have come forward with a proposal they believe compensates for the seventh condition. Council was slated to hear the proposal during the closed meeting, Smith said.
“And so frankly, we’re going to go into closed session with you all tonight and have that conversation,” Smith said during the briefing. “In terms of public comment and where we go from here, that will very much be driven by the conversation we have in closed session here in the next 15 minutes or so.”
USM’s initial finance plan included a Chinese lender. The plan laid out in July by USM requires the Virginia Beach Development Authority to serve as a conduit issuer of bonds USM would use to finance construction. USM is a special purpose entity and affiliate of the ESG Companies, which is based in Virginia Beach, according to ESG’s website.
The conditions imposed by the City Council in July for the arena’s updated finance plan are:
- a $200 million limitation on the maximum amount financed
- the amount financed cannot include any of USM’s previously incurred expenses or a development fee paid to USM
- assurances the maximum term of the agreement remains at 33 years
- the city will be provided with an independent financial feasibility study prior to a vote on an amendment to the development agreement
- bonds sold in relation to the project must have an investment grade from one of the three national rating agencies of at least Baa3 from Moody’s or BBB- from Fitch or Standard & Poor’s
- repayment of the bonds must be from revenue generated by the project and the bonds are not a general obligation of the city, the development authority or the state
- all city protections and cure rights previously negotiated will be reflected in final bond documents and project documents