The Virginia Beach City Council has taken a major step towards the development of a new arena, as the group approved a funding plan on Tuesday.
At one point, United States Management (USM) was to looking to fund the approximately $200 million arena by borrowing $170 million from The Import-Export Bank of China. Those plans were scrapped last month, when it was was announced that USM would instead work with B.C. Ziegler and Company of Chicago.
For reasons that were noted here last month, the move to a domestic financier makes sense. Not only is it reasonable to believe that the interest rate from a United States bank would be lower, but borrowing from B.C. Ziegler removes several mandates that would have been in place with The Import-Export Bank of China, including a requirement to build the arena with Chinese-sourced materials.
USM now has until November 8 to secure financing, which must be closed on in at least 10 months. The bulk of the project will be privately financed, though Virginia Beach is expected to kick in some funds. More from the Virginian Pilot:
Under the framework of the new preliminary deal, B.C. Ziegler would finance $200 million, or the guaranteed maximum cost to design and build the arena – whichever is less.
The complex would be privately financed, with the city covering the cost of the land and $76.5 million in infrastructure upgrades through a tax on arena event tickets and hotel stays.
“This was a good vote,” Councilman John Moss said after the meeting. “I’ve been a proponent from the beginning. If you don’t buy a ticket or stay in a hotel, you’re not paying for it.”
The 18,000-seat arena could open in 2018.