Do you support the new private financing plan for the Virginia Beach arena? Why or why not?
In December, the Virginia Beach City Council approved a development agreement for a
$210 million sports-and-entertainment arena at the resort, near the Convention Center. Unlike most American arenas, the Virginia Beach arena will be privately financed, built, maintained and operated. It will be built on city land.
Since December, the developer – Virginia Beach-based United States Management – has been working with a Chinese lender to secure financing. The City Council gave USM 10 months to secure the loan.
On June 28, USM President Andrea Kilmer updated the City Council on the financing issue. Kilmer announced that USM has found a lender in the United States and will no longer pursue financing in China. That means the arena will not be required to use Chinese steel, glass and other materials, which was a condition of the Chinese loan. USM also will reduce its equity in the project (from $40 million to $10 million) and will finance approximately $200 million. USM will be fully responsible for the debt.
To watch a video of Kilmer’s presentation to the City Council, click here. To read USM’s PowerPoint with details of the project, click here.
All of the other terms of the project will remain the same. The city will still lease the land to USM for 60 years. The city also will provide $76.5 million in public infrastructure outside the arena, mainly for parking, lighting, street improvements, underground utilities and a public plaza. Money to finance this infrastructure will come from the city’s Tourism Investment Program, or TIP Fund, which is financed primarily by a portion of taxes on restaurant meals, hotel rooms and amusements.
Groundbreaking is expected in late 2016, with a grand opening in late 2018.
The arena’s construction will generate approximately 2,300 jobs and $240 million in salaries, materials and services. Once it opens, the arena will generate approximately 400 jobs, $15 million a year in salaries, 65,500 room nights annually at local hotels and $111 million a year in net new spending. Overall, it will generate about $1.7 billion over 20 years.
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