VIRGINIA BEACH, Va. (WAVY) — The Virginia Beach City Council’s decision to terminate an agreement for a proposed arena has culminated in a lawsuit. But the city says it plans to “vigorously” defend itself.
The arena’s developer, Mid-Atlantic Arena LLC, is seeking $165 million in damages from the city, saying Virginia Beach didn’t honor its side of the agreement.
Mid-Atlantic says the sum would cover not only the “significant investment” of developing and financing the arena, but lost future profits as well.
“We spent many millions of dollars of our own money and over four years of hard work to assemble a world‐class development team to meet the City’s long‐stated dream to enhance its reputation and economic well‐being as a prime visitor destination,” the company said in a release on Tuesday. “Beyond the damage to our company’s earnings and expectations, the harm to our reputation has been equally significant.”
Friday, City Attorney Mark Stiles released a statement saying, “The City did everything it reasonably could to support Mid-Atlantic’s development of an arena in Virginia Beach.” He added, “We are confident that the actions taken by the City were in good faith and in full compliance with its contract rights and its obligations to the public.” The City has retained Willcox & Savage, P.C. to assist with its defense.
Back in November, the City Council voted to terminate the deal, claiming Mid-Atlantic had not met all of the requirements of the agreement, specifically the financing aspect of the deal.
To close on the $150 million dollar loan with J.P. Morgan Chase, Mid-Atlantic needed to move $70 million in equity into an escrow account by midnight on Tuesday, Nov. 7. That Nov. 7 deadline was a 60-day extension from a previous August deadline.
Mid-Atlantic claims the bank was on board.
“We understood that deadline; and at 10:36 p.m., J.P. Morgan confirmed in writing that the loan was closed,” the developer said in the release. “At 11:06 p.m., we provided a fully executed Credit Agreement and Accounts Agreement to the City. Despite proof of the loan closing, the only contract requirement of our company on November 7, the City sent us a letter very first thing in the morning on November 8, stating that the contract with MAA was terminated. We have asked for a full explanation as to what information was provided to City Council during its closed deliberations in support of their decision to terminate but have been told there were no documents shown or notes taken.”
On Tuesday, Virginia Beach Mayor Will Sessoms said he believes the city is in “a very, very, very strong position” to defend the lawsuit.
Sessoms, who was one of the arena deal’s biggest supporters, told 10 On Your Side back in November that it was “the right decision to terminate the agreement,” saying at the time that the city didn’t believe Mid-Atlantic actually had the funds lined up.
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