At a meeting on Tuesday, the Virginia Beach City Council voted to end its contract with the developer of a proposed Virginia Beach Arena.
This week marked the deadline for Mid-Atlantic Arena to meet its financial obligations for the project, which called for the company to raise $70 million in private equity and obtain a $150 million loan from JPMorgan Chase. A previous deadline of September was extended to November in order to give the developer more time to complete the financing.
The council voted 9-1 at Tuesday’s meeting to end the contract, but there was a disagreement between the city and Mid-Atlantic Arena over whether the company had met its obligations. While Mid-Atlantic Arena executives, including president Andrea Kilmer, said that the company was in compliance with its development agreement with the city, Virginia Beach officials disagreed with that notion. More from The Virginian Pilot:
“Obviously, we spent a lot of money, and if they are trying to say we can’t close because of a technicality, that is disingenuous,” Kilmer said. “As far as we are concerned, we have complied with the development agreement.”
Kilmer would not say if JPMorgan Chase had granted the loan or whether $70 million in private investment had been deposited in a bank account. Those were requirements for the agreement to lease the city’s land to build an 18,000-seat arena for concerts, major sports tournaments and events, trade shows, and conventions.
“I am not going to get into details,” Kilmer said. “We have delivered everything to the city for closing.”
[Virginia Beach mayor Will] Sessoms said that the city disagreed with Kilmer’s representation during the council meeting, but that he couldn’t explain the details because Mid-Atlantic Arena’s information is proprietary.
The agreement between Mid-Atlantic Arena and Virginia Beach called for Mid-Atlantic Arena to privately build, finance, and operate a new venue near the convention center. The developer, however, would have been eligible for a reimbursement from the city of up to $476 million over 33 years through construction tax incentives, tax revenue generated by the venue, and one percentage point of the city’s hotel tax.
Discussions over the proposal have been taking place for several years. In 2015, the company stated its intention to obtain a $170 million loan from The Export-Import Bank of China, before announcing a a tentative $200 million commitment from Chicago-based B.C. Ziegler and Company in 2016. That proposal was ultimately rejected by the city council last fall, and the developer later announced its plan to obtain a loan from JPMorgan Chase.