Virginia Beach will have the state’s largest arena, one capable of supporting an NHL or NBA team, under the terms of a deal approved Tuesday.
The City Council’s 10-1 vote to approve the $210 million project was the culmination of more than two years of negotiations on a deal that will allow private developers to build, operate and own an 18,000-seat arena at the Oceanfront with public money and financing from a state-owned Chinese bank and on 5.8 acres of public land.
“Every now and then you have to take a bet,” said Councilman John Moss, before voting to approve the project. “And I think this is a bet that … is worth taking.”
Under the terms, the city will spend $76.5 million from special tourism funds to improve infrastructure around the arena and will provide the developer, United States Management LLC, a 30-year incentive package that could total nearly half-a-billion dollars, largely with tax revenue generated at the complex. The arena, near the Convention Center off 19th Street, will become public property at the end of a 60-year lease.
USM will invest $40 million in equity and borrow another $170 million from the Export-Import Bank of China, which is owned by the state. It will repay its debt largely with the city’s incentive package, which will be generated from taxes collected at the arena and 1 percent of the city’s hotel tax.
USM has until 2019 to open the arena but wants to do so by 2018.
Councilman Barbara Henley, who cast the lone dissenting vote, said she had serious concerns about the project that “go on and on.”
She disliked potential impacts on parking at the Oceanfront, was averse to terms that had shifted in the proposal — such as the lease previously changing from 40 years to 60 years — and wanted loans secured and everything finalized before voting. She said she was concerned the Chinese bank could make requests in the loan agreement that would not suit the city and that the city would be stuck with a deal that it has already stamped.
USM President Andrea Kilmer told reporters in a brief interview “it’s unfortunate she feels that way,” repeating later that the deal is final and cannot be amended.