VIRGINIA BEACH — Proposed Oceanfront arena developer United States Management delivered its newest loan commitment details in a letter to the city this week, two months after its second 60-day extension to come up with one.
“We are confident that after the appropriate review by city officials, the approval of the loan commitment will be forthcoming, and USM will be able to proceed promptly towards loan closing,” Andrea Kilmer, president and CEO of United States Management said in a news release. “We are enthusiastic to elevate this project to the next level.”
The proposed $220 million arena could fit 18,000 people on a six acre site across from the Virginia Beach Convention Center.
USM is required to create a funding mechanism, per its 2015 agreement with the city, to keep costs under $170 million and provide at least $30 million in equity and $10 million of working capital at a minimum.
Councilwoman Jessica Abbott said city council hasn’t seen the finer details of that commitment yet.
“We don’t have any of the final details yet, just that the letter has been received and that the city’s attorney’s team is reviewing,” Abbott said to Southside Daily.
According to a December news release, USM pursued a traditional loan with a major U.S. bank lender with arena experience and a good relationship with the venue manager or promoter.
City council gave USM a second 60-day extension to come up with a new loan commitment Jan. 8. This is the last time the developer would be granted an extension to come up with the loan commitment, according to the December USM news release.
USM plans to privately finance the arena, assuming all financial and operational risk. The city’s investments in the $300 million project include land, infrastructure and will contribute a portion of hotel and revenue tax generated at the facility to retire debt, according to the release.
Kilmer said building the arena could take about two years.
City communications director Julie Hill said reviewing the loan commitment will take the city attorney’s office about a week to finish.
“Once the due diligence work is complete, staff will review the terms with the mayor and city council and some time after that we will share the basic terms of the final agreement,” Hill said.
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