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The Virginian - Pilot (Norfolk, VA.)
VIRGINIA BEACH -- Mayor Will Sessoms said Wednesday that the City Council agreed with the arena developers on a financing plan to build a $220 million sports and entertainment venue near the Oceanfront.
"Game on," he said.
United States Management, the developer of a proposed 18,000-seat arena, submitted a loan commitment letter before its March 8 deadline that outlined a plan to borrow $150 million and contribute $70 million in equity.
Sessoms announced at his State of the City speech that there is "a real possibility now" of hosting part of the NCAA basketball tournament.
"Picture March Madness two years from now," he said. "Wouldn't it be amazing to have that happening right across the street at our new Virginia Beach arena?"
The council met with City Attorney Mark Stiles in closed session Tuesday night, and he told members that the financing is in line with the deal that was approved in December 2015, according to a Facebook post from John Moss. The council agreed with Stiles' assessment, which means it would not require a new vote.
"See you at the ground breaking this fall," Moss wrote.
Before that can happen, though, the developers must close on the loan that they've presented to the city.
The original plan council members approved more than a year ago involved $170 million in loans and $40 million in equity. There were public concerns about the Chinese bank involved, and closing on the deal was difficult because of language and distance constraints, said USM President Andrea Kilmer.
In October, USM wanted a Chicago-based bank to finance the deal, but council members ultimately rejected it because the loan amount of $240 million was deemed too risky.
This time around, JP Morgan will be the main lender.
"We heard the public when they said they don't want an international lender," Kilmer said Tuesday.
USM has until Sept. 7 to close on the loan, but Kilmer said it could be done by late spring.
Although the arena will be privately owned, the developers will receive up to $476 million over 33 years with 1 percentage point of the city's lodging tax, construction tax incentives and tax revenue generated by the arena. The city will also be shelling out $76.5 million in hotel and discretionary taxes for infrastructure in the area.
Sessoms touted the new financial plan and subsequent agreement with the city as "a very good deal." Other council members agreed.
"This is a tremendous opportunity for not only tourists to come in, but residents to enjoy a new amenity at the beach," Bobby Dyer said.
Kilmer said she's happy that the project is "out of the political limelight" now that the council has approved the deal.
"We're glad the ball is in our court to get this done," she said, adding the arena could open in 2019.
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