VB arena proposals compete for Council’s vote

VIRGINIA BEACH, Va. (WAVY) — After a deal for a major sports arena at the Oceanfront fell through in 2012, three months ago the idea was brought back to life with a new proposal. As the deadline for competing arena proposals nears, another plan is about to enter the mix.

In November, John Lawson, President of W.M. Jordon Co., presented Virginia Beach City Council with a plan to build an 18,000-seat arena next to the Virginia Beach Convention Center. The private-public offer was $1 million less than the 2012 project and wouldn’t require a professional sports franchise. But it would still require the city to finance 75 percent of the cost.

The city would pay Lawson to build the arena, but over 25 years, concerts, faith-based conventions, ACC basketball tournaments and even Olympic swimming trials would bring a million more visitors to the Oceanfront each year and pay the construction debt.

“[The financial details] will have very little opposition because there is such minimal risk to tax payers in Virginia Beach, and the updside is huge,” Lawson told WAVY.com in November.arena3

Lawson’s group includes Comcast-Spectacor which would agree to a 25-year management deal, and Live Nation, one of the biggest concert promoters in the world. The hope with Lawson’s proposal would be to build the arena as self-sufficient, but with the potential to expand and lure an NBA or NHL team to the resort city in the future. The same plan worked in New Orleans and Oklahoma City.

Now, the 60-day period for competing arena proposals is almost over, and Andria Kilmer, VP and CFO of ESG Companies in Virginia Beach, seems to have an offer the city will have a hard time refusing. The project would be paid for entirely by loans from foreign investors.

“We agree that a major arena is the right decision for Virginia Beach and are exploring options that are best for our community, such as shifting the risk from the City and citizens to private investors,” Kilmer told WAVY.com in November. “We are finalizing our analyses in anticipation of making a proposal that will be for a locally-owned, privately-financed arena which incorporates national and international players to provide Virginia Beach with an iconic world class venue.”

Kilmer and her group, including CEO of Ballard Construction Steve Ballard, have the support of Virginia Beach delegate Ron Villanueva. And the $200 million or so needed to build the project will come from a bank in China. ESG would pay the loan back over time.

Local company Smithfield Foods was bought by Chinese investors for $7 billion back in September. So a couple hundred million to build an arena in Virginia Beach seems like chump change, and as one city official said, “how do you walk away from that?”

arena4Although, Ballard Construction  will be involved in building the arena, Mortenson Construction will also be a major player. The company is considered one of the largest sports contractors in the nation, with offices across the U.S. and in Shanghai, China.

The ESG group will present their plans to Council on Tuesday. But deals that seem too good to be true often are. ESG’s plan won’t need taxpayer money for construction costs, but it will need it for various improvements, like a giant TV screen outside the building, a skating rink, improved roads and parking lots nearby, maybe even a new off-ramp at Birdneck Road.

That cost could be as much as $50 million, but would still be less of a burden on the city’s bond ratings than what would be required in Lawson’s proposal. With Council’s priority list still including projects like light rail expansion and the Dome Site, interest rates and bond ratings are important — you can only borrow so much.

So where does a major sports arena fall in City Council’s priorities? A year ago, it probably wasn’t even there. But with these two proposals on the table, it has moved way up — maybe close to the top of the list. It was even discussed at Council’s last private retreat.

But Council’s choice of proposal may come down to the details. Both are aesthetically breathtaking: the ESG building with giant doors in the back that would open for sound stages and equipment for state of the art concerts and sporting events. If Lawson had presented his proposal earlier, before the Chinese came for their visit, it may have already been approved. But the devil is in the details. Lawson told WAVY.com his proposal is the most extensive and time consuming he’s ever undertaken, while Kilmer’s offer is expected to be a little more vague.

City staff will now go through both proposals with a fine tooth comb. Term sheets will have to be written, and citizens will get their say. It will be one of the most crucial votes by the City Council in decades, and could frame the oceanfront for generations.

More on this story Monday, February 17th on WAVY-TV and FOX 43 news. 

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