The Virginia Beach City Council recently held a meeting on the funding for a proposed arena, and is seeking to iron out some concerns before an upcoming vote.
Funding for the arena has been awaiting this layer of approval. In July, United States Management (USM) reached an agreement with the Virginia Beach Development Authority. Under that plan the authority was to act as a conduit issuer for USM. Furthermore, developers in the project would receive reimbursement worth upwards of $476 million over 33 years from the city. The sources used for that reimbursement include tax revenue stemming from the arena, tax incentives relating to construction, as well as 1% of the city’s hotel tax.
While that was a major step in fulfilling the proposal of a $210 million arena, the Virginia Beach City Council still has to sign off on the plan. It previously was expected that the council would render its decision later this month, and at one point several local officials were confident that the funding plan would be approved.
However, the council will not formally vote on the project this month–and is not expected to vote until at least October 4. The funding model was discussed in a private meeting earlier this week, and it seems for right now that one major issue–an investment grade bond rating–looms large. More from The Virginian Pilot:
The project has been in a holding pattern as the developers have worked to fulfill seven conditions for the financing set by the council in July.
Former Deputy City Manager Doug Smith, who spearheaded the project until his departure last week, said United States Management has met all but one of the conditions, including conducting the financial feasibility study.
Developers are still waiting to meet a final condition: an investment grade bond rating from a rating agency. The rating letter, expected at the beginning of September, still hasn’t arrived, and little explanation has been given for why.
In August, City Manager Dave Hansen said a positive bond rating is essential because it will determine the interest rates on the debt that the city will be reimbursing.
It has previously been stated that the arena could open in 2018, but construction has not begun on the project.
RELATED STORIES: Virginia Beach Confident in Arena Funding Model; Suites Already on Sale for New Virginia Beach Arena; Virginia Beach Approves Arena Funding Deal; New Virginia Beach Arena Funding Plan Emerges; Status Update on New Virginia Beach Arena on Tap
