What concerns do you have about the arena project?

Virginia Beach is exploring a possible 18,500-seat arena at the Oceanfront, to host large sports events, concerts and conferences. Negotiations are ongoing and there is no deal yet. Why an arena? In all of Virginia, there is no large, modern arena outside of the University of Virginia at Charlottesville. Norfolk, Hampton and Richmond have smaller arenas. None can hold mega-concerts and very large sporting events and conferences.

Comcast-Spectacor, one of the country’s biggest sports and entertainment companies, would run the arena for 25 years, paying rent to the city and covering all operating expenses, including any operating losses. Comcast-Spectacor is also pursuing a major-league team that would commit to playing in the arena for 25 years. Live Nation, the largest producer and promoter of live music events in the world, would book events.
 
The arena would be built across 19th Street from the Convention Center. A preliminary study found Interstate 264 and local roads can handle the traffic with no new improvements or interchanges needed. There are about 9,000 parking spots in lots and garages nearby. Trolleys and shuttle buses could carry arena-goers to and from their cars, hotels and restaurants.

For Virginia Beach, the arena is projected to generate:
• $92 million a year in new spending
• $8.9 million a year in new tax revenue
• 1,900 permanent new local jobs.

Statewide, the arena is projected to:
• Generate $11 million a year in new tax revenue for Virginia
• Support 3,712 new jobs
• Have an economic impact of $502.6 million annually

Construction is expected to take two years and would:
• Support 3,944 new jobs statewide and 560 locally
• Generate $559 million in total economic impact for Virginia

The arena would cost $300 million to build, plus $46 million for financing. Comcast-Spectacor would contribute $35 million and the city would contribute $161 million. The city has asked the state for $150 million. If the state does not commit to funding, the arena would not be built.  The city’s share would be paid for by people who use and benefit from the arena, not by taxes on real estate and personal property. There might also be up to $80 million in team relocation costs.

The City Council is committed to the project only if arena income funds all of the city’s debt and increases existing revenues to the city.

The city would issue bonds to pay for its share and pay back a little each year – like a mortgage on a house. The city would get money to pay back the bonds each year from:
• Arena operating net revenue:                          $18.5 million
• $2 per ticket surcharge:                                   $1.7 million
• Two-thirds of admission taxes from the arena:   $5.2 million
•  1% hotel tax increase:                                    $2.8 million
• State sales tax rebate:                                     $0.9 million
TOTAL                                                             $29.1 million

The city would receive $29 million a year in revenues to pay for almost $20 million in debt service.

The city has been working with its financial advisers and bond rating agencies to ensure this project would not hurt its credit rating or ability to finance other major capital projects, such as light rail, the Dome site redevelopment, schools, etc.

For more information about the project, feel free to take a look at the following resources:  Presentation, FAQ, and Web Site.

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