Virginia Beach Arena Proposal
Private Proposal to Build a Sports and Entertainment Arena in Virginia Beach
Since 2012, the city has been discussing the possibility of a sports-and-entertainment arena at the Oceanfront. In 2014, Virginia Beach-based United States Management, a private company, proposed building a private arena near the Convention Center.
Here are the latest developments in that project:
Virginia Beach City Council Terminates Agreement to Build Arena
November 8, 2017
The Virginia Beach City Council voted last night to terminate the agreement to build an arena on City-owned property across the street from the Virginia Beach Convention Center. While the developer, Mid-Atlantic Arena LLC, and its lenders executed some documents last night, the City maintains that there has been no loan closing as defined by the Development Agreement because a number of the conditions necessary to satisfy the terms of that agreement were not accomplished, including:
- the City had not received all of the necessary loan documents it was entitled to review and approve;
- not all of the loan documents were executed;
- the required equity had not been committed; and
- even if a partial closing has occurred, there are still many contingencies to be satisfied before the bank is obligated to fund the loan to build the project.
The developer had requested and been granted all of the extensions contemplated by the development agreement that has been in place since Dec. 11, 2015.
“I am extremely disappointed the terms of the development agreement were not met,” said Mayor William D. Sessoms, Jr.
Because the loan has not closed and the deadline for closing has passed, and pursuant to the City Council resolution adopted last night, the City delivered the attached termination letter to the developer this morning.
City Grants 60-Day Extension for Arena Financing
August 15, 2017
At the request of Mid-Atlantic Arena, LLC (MAA), the successor in interest to United States Management, LLC, today the City granted a 60-day extension of the Outside Closing Date. This extension, which is permitted by the Development Agreement previously approved by the City Council, establishes a new closing date of no later than Nov. 6, 2017, and will help to facilitate completion of necessary work to close the financing for the development of the 18,000-seat Virginia Beach Arena.
Upon review by City Attorney Mark Stiles, and following a conference with the members of City Council, City Manager Dave Hansen granted the 60-day extension. "I remain optimistic that the developer will be able to finalize the necessary financing to bring about this privately owned and operated Virginia Beach arena," he said. "This will significantly expand the quality and variety of entertainment provided to our citizens and visitors throughout the region."
The request, initiated by President and CEO Andrea Kilmer of MAA, included a letter from JP Morgan, Chase Bank, National Association, in support of the extension. The letter states that MAA is making tangible and material progress towards closing the loan.
"The City has been actively working with the developer's team and has seen real progress toward the closing of the loan," said City Attorney Mark Stiles. "The need for additional time was contemplated at the time the Development Agreement was executed and this request is not surprising given the size and complexity of this transaction."
City of Virginia Beach Accepts United States Management's Loan Commitment Letter: USM Has Six Months to Close on Private Loan
March 14, 2017
The City of Virginia Beach is one step closer to having a privately funded entertainment and sports arena built on City-owned land near the Virginia Beach Convention Center. Following a review and recommendation by the City Attorney and City staff, City Council accepted the developer's Loan Commitment Letter that outlines the financing and funding commitments the developer has secured. By accepting the letter, the City is affirming that the letter generally meets the contract terms approved for this project in December 2015.
"This is one of the most exciting projects that Virginia Beach will see. It has the potential to transform the critical corridor between the convention center and our boardwalk and move us closer to becoming a year-round destination," said Mayor Will Sessoms.
In December 2015, the City Council approved and the City executed a Development Agreement with the developer. This contract outlines certain milestones the developer must achieve. If the developer meets those milestones, the City is contractually obligated to move forward with the transaction. The Loan Commitment Letter fulfills the first milestone. It establishes the developer has secured the private financing and private equity to fund the construction and operation of the arena. The developer has committed to securing a private loan commitment of $150M and provide equity investments of $70M. The amount and type of City investment is unchanged from what was approved in 2015. The City will lease to the developer the land on which the arena will be constructed for $1/year for 60 years and provide $67M in infrastructure improvements to the area around the building as well as a rebate of certain taxes.
On March 8, 2017, the developer provided a fully executed Loan Commitment Letter. City staff evaluated the Letter against the contract agreement and determined it is generally consistent with the previously agreed upon deal terms. Those terms received considerable scrutiny: residents weighed in during several community meetings and public hearings. The Development Agreement does not allow either party to re-evaluate the deal or negotiate new or different terms. Therefore, no further action is required of the City Council and no additional public hearings are necessary. The developer has until September 7 (with two 30-day extensions possible) to close on the loan.
City Council Vote – January 3, 2017
The City Council, at its January 3rd meeting, voted to provide the developer a 60-day extension to secure financing for the proposed arena. This is in addition to the extension City Council approved on November 1st that was set to expire on January 7th.
City Council Presentation and Vote – October 4, 2016
Andrea Kilmer, president of United States Management, made a presentation to the City Council on October 4, 2016.
Read the presentation here.
After the presentation, the City Council rejected the revised financing plan. Three City Council members voted against the changes, which was enough to defeat the proposal. To approve the changes, a super-majority of nine City Council members (out of 11 total members) was required. Only eight members voted in favor of the financing plan. A super-majority is required whenever the City Council transfers land previously used for public purposes to the Virginia Beach Development Authority, which was the case here.
City Council Presentation – September 27, 2016
City Manager Dave Hansen made this presentation to the City Council on September 27, 2016. It summarizes proposed changes to the private financing of the arena project. The City Council is scheduled to hold a public hearing and vote on these changes October 4, 2016.
Read the presentation here.
New Feasibility Study – September 15, 2016
The city received a new feasibility study from USM on September 15, 2016. It generally confirms previous estimates of demand for an arena. (Some parts of the study were redacted, as allowed by the Virginia Freedom of Information Act, to protect the confidentiality of the company's proprietary information.)
Read the feasibility study here.
City Council Adopts Financing Resolution on July 12, 2016
The City Council approved a resolution endorsing the new arena bond financing arrangement proposed by USM and extending the time for meeting certain deadlines.
Read the resolution here.
Deputy City Manager Doug Smith summarized the changes in a presentation to the City Council. See his presentation here.
Financing Update Presentation on June 28, 2016
The City Council heard an update on the financing for the proposed arena.
View the PowerPoint from the June 28 Arena Financing Presentation
City Council Approves Arena Agreements on Dec. 8, 2015
The City Council has formally approved the agreements between Virginia Beach and USM. The Council adopted three resolutions on Dec. 8:
View a summary and full text of the resolutions
- Approving the execution of agreements with USM and transfer of land to the city Development Authority
- Declaring the City Council’s intent that no General Fund money will be used to support the arena
- Reaffirming the city’s strong and continuing support of the Tidewater Veterans Memorial and Park near the arena.
Agreement Presentations - November 2015
The agreement was presented at meetings on November 10th and 19th; both of these presentations can be found below. In addition, the Mayor wrote a letter to the Mayor's Veterans Committee concerning the Veteran's Memorial on November 24th; that letter can also be found below.
Complete Agreement Documents
The path forward regarding the arena agreement is as follows:
- November 10 - City Council Public Briefing – Docs Publicized
- November 17 - Virginia Beach Development Authority (VBDA) Briefing
- November 19 - Public Briefing at the Virginia Beach Convention Center, Suite 5, 6:30 p.m.
- December 1 - Public Hearing at Virginia Beach City Council
- December 8 - City Council Vote
- December 15 - VBDA vote to authorize their role in transaction
Resort Beach Civic League Presentation - April 20, 2015
A public briefing to the Resort Beach Civic League was provided on April 20, 2015. In advance of the briefing the RBLC presented questions to staff for a response. The responses to the questions and the briefing provided are below:
City Council Meeting - December 9, 2014
On December 9, 2014, the Virginia Beach City Council unanimously approved a non-binding agreement for an entertainment and sports arena at the Oceanfront.
Arena Town Hall Meeting
A public town hall meeting was held on Wednesday, December 3rd from 6:30-8:00 pm at the Virginia Beach Convention Center. Concerned citizens heard the latest updates on the proposed Oceanfront arena and were able to express their opinions to City leaders and officials from USM. To view the presentation, CLICK HERE
November 25th City Council Meeting
Video of the arena term sheet presentation given to the Virginia Beach City Council at their meeting on Tuesday, November 25th
View the non-binding term sheetNovember 20th Briefing
On November 20, the city and USM held a joint media briefing in which a summary of the tentative non-binding term sheet was unveiled. A timeline of work done on the arena to date, along with anticipated future meetings, and a Q&A were also shared and can be found below:
A video was also shown which described a trip taken to Lincoln, NE to view a similar arena to the one proposed in Virginia Beach.
Citizens Communications Committee
On March 24, 2014, two companies presented their proposals for an arena to the Citizens Communications Committee.
The Citizens Communications Committee, along with those sitting in the audience at the March 24th meeting, submitted questions after hearing both proposals to be answered by a combination of City staff, USM, and W.M. Jordan.
May 13, 2014 City Council Meeting
On May 13, the City Council received a briefing from Convention Sports & Leisure (CSL), a consultant brought in to provide an in depth overview of each arena proposal.
City Council then decided to proceed with negotiations with USM and suspend discussions with WM Jordan, pending those negotiations. The goal is to develop a term sheet that is agreeable to both parties – the city and USM. We expect to learn on or about July 8 the approximate costs of infrastructure to the city and its citizens.
May 27, 2014 City Council Meeting
On May 27, the City Council adopted a resolution directing the city staff to pursue negotiations with USM, to hold the PPEA process and the Jordan proposal in abeyance pending the outcome of these negotiations, to prepare a report determining the scope and cost of public infrastructure, and continue involvement of the Citizens Communications Committee.
July 8, 2014 City Council Meeting
On July 8, City Manager Jim Spore and Deputy City Manager Doug Smith briefed the City council on preliminary conceptual cost estimates for infrastructure related to an arena. This included parking assumptions, roadway improvements, site development, utility improvements, and overall project infrastructure costs.