The quest to bring an 18,000 seat capacity entertainment and sports arena to Hampton Roads has passed a major milestone.
United States Management, an ESG Company, has obtained a loan commitment, subject to satisfaction of usual and customary conditions, to finance the Virginia Beach Arena project from lenders led by JPMorgan Chase Bank, National Association. The principal amount of the loan will be $150-million with required capital contributions exceeding $70-million to be provided primarily by USM and its partners.
The terms of this innovative domestic lending approach have further strengthened the project’s positive outlook and include:
- USM will no longer have a material procurement requirement, as was the case with a previous financing plan, substantially reducing any perceived risks;
- The loan amount will be substantially lower while the equity contributions will be higher than the original arrangement approved by the City Council in December 2015; and
- The amortization period, total incentives, and annual payment cap will remain the same.
The City reviewed the Loan Commitment and agreed that the plan is consistent with the standing Development Agreement approved by City Council 10-1 in December 2015, meaning no additional vote was necessary to advance the process.
“We are required under our agreement with the City of Virginia Beach to close by this September,” says Andrea Kilmer, President and CEO of the USM. “We certainly plan to expedite closing, with groundbreaking soon to follow. Construction should take 24 months, meaning our Arena, the largest in Virginia, will be hosting events in 2019.”
USM has assembled a top-notch team to bring the Arena into reality. It includes contractor SB Ballard Construction and architect Clark Nexsen, both of Virginia Beach. They will work in collaboration with AECOM, a global leading $17-billion engineering, design, and construction and management firm with projects on seven continents. Los Angeles-based AEG Facilities, the largest and most successful owner and operator of arenas in the world, will manage the facility and attract world-class events to the market.
Mayor Will Sessoms announced the approval of the arena financing plan during the annual State of the City address on March 15 at the Virginia Beach Convention Center. USM CFO Valerie Wilkinson says, “This has been quite a journey that began more than three years ago to fulfill a vision for the City to build an Arena capable of hosting large music concerts, college and pro sports events, religious and political gatherings, civic functions and more, either individually or in association with the Virginia Beach Convention Center across 19th Street. Without an arena of this size and functionality, Hampton Roads would never be able to enjoy that level of activity at a local venue.”
“We thank the many individuals, companies and organizations, including the Virginia Beach Hotel Association, the Hampton Roads Chamber, and Tidewater Builders Association, that have been steadfast advocates for the Arena, principally because of the promise of jobs, tax revenue and expanded oceanfront development the facility will generate,” says Kilmer. “This is a true partnership with the City, which is investing in infrastructure improvements and sharing a percentage of its hotel tax to retire debt on the Arena, but the project will not impact Virginia Beach’s bond rating or put a burden on its general fund. We are taking the risk, but along with our financing partners, we believe it is a risk worth assuming because the Arena will fill a gaping need in our region.”
Stephen B. Ballard, President of SB Ballard, says the construction will require the hiring of several hundred persons, many of them skilled laborers. He says much attention will be given to ensuring that minority firms are considered for subcontracting opportunities. “Working with ESG/USM, our first task will be the $43-million in on-site infrastructure work that must be done to accommodate the Arena on the 5.8 acre site across from the Convention Center on 19th Street,” says Ballard. “Then local citizens and visitors to the area will begin to see the Arena itself rise and become an iconic symbol and principal destination for the city, region and Commonwealth.”