VIRGINIA BEACH – The city has a question for its residents.
Developers of the $210 million Oceanfront arena are straying from their original plan to seek Chinese financing for the project, preferring the assistance of an American investment bank.
So the city is asking: Do residents support the new private financing plan?
City Council approved the arena project details in December and gave developer United State Management LLC 10 months to secure the loan it sought from a Chinese lender. Now, the LLC has switched gears, saying the company will instead borrow $200 million from Chicago investment bank B.C. Ziegler and Company. Since the loan is larger than the planned Chinese loan, USM will reduce its own investment from $40 million to $10 million.
City staff will provide the results of the survey to the City Council before its vote on the proposed financing change. The survey will close at noon on July 8.
Under the revised plan, the city will still lease the land to USM for 60 years and provide $76.5 million in public infrastructure outside the arena, mainly for parking, lighting, street improvements, underground utilities and a public plaza. The public contribution would be funded through the city’s Tourism Investment Program, which is financed primarily by a portion of taxes on restaurant meals, hotel rooms and amusements.
The city also agreed to divert all taxes collected at the arena and one-eighth of the hotel tax generated citywide during the next 30 years to the developers. Those payments would help USM pay off its financing and are estimated to total about $96 million over the life of the deal, according to the original plan.
After its opening, the arena is expected to generate about 400 jobs, $15 million in salaries annually, 65,500 room nights annually in local hotels and $111 million a year in net new spending, according to the city.