Three No Votes Means Plan is Not Accepted
The Virginia Beach City Council today rejected changes to a financing plan to build a private arena at the resort.
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. A key element of the arena plan is transferring 5.8 acres of city-owned land in the parking lot near the Virginia Beach Convention Center to the Development Authority. In turn, the authority would have leased that land to a private company, United States Management (USM), which would finance, build, own and operate the arena.
Mayor William Sessoms and Councilmembers Ben Davenport, Bob Dyer, Shannon Kane, Amelia Ross-Hammond, John Uhrin, Rosemary Wilson and Jim Wood voted in favor of the revised financing plan. Vice Mayor Louis Jones and Councilmembers Barbara Henley and John Moss voted against it.
USM submitted the arena proposal in 2014. The City Council approved a development agreement with USM in December 2015. In June, the developer proposed some changes to its private financing plan. It dropped a Chinese lender in favor of an American lender, and increased the size of the company’s loan. USM originally proposed borrowing $170 million. Under the revised plan, USM would have borrowed up to $240 million, including about $210 million for construction.
The City Council agreed with this change in principle in July, but asked USM to meet seven conditions. The company met six, but did not meet a seventh, which required the company to finance the project with investment-grade bonds. Instead, USM proposed contributing an additional $7.5 million in equity to the project – a change the City Council ultimately rejected.