So after the Virginia Beach city council held its closed session about the city’s $200 million arena subsidy plans yesterday, the members of the council emerged into the light to hold an “informal” session that the public could attend. (Virginia Beach has some deeply, deeply weird ideas about democracy.) And it turns out that some news was revealed, namely that the developer hoping to build the project now wants to cut its cash investment and take on more debt via unrated bonds:
United States Management is interested in taking on as much as $240 million in debt to make sure the company can cover its construction loans, City Manager Dave Hansen said. The developer also reduced its equity contribution from $40 million to $20 million…
In July, the council set a number of requirements, and one of them included obtaining an investment grade bond from a rating agency. That rating hasn’t arrived yet, and United States Management President Andrea Kilmer said she can’t wait any longer if they want to break ground by the end of the year. The new proposal would require the arena to open by the end of 2019, but United States Management has a goal of 2018.
Hansen has said a positive bond rating is essential because it will determine the interest rates on the debt that the city will be reimbursing. The council had a difficult discussion during Tuesday’s closed session about proceeding with unrated bonds, he said.
So do the members of the council intend to still vote for the deal, regardless of its dependence on unrated bonds? No clue: Barbara Henley, who voted against the original deal last year, says she plans to vote against this one, too, but other councilmembers declined to comment publicly, and we can’t even glean anything from what they said in their official meeting, because that’s secret. Hopefully they’ll at least reveal the results of the vote, but at this point I wouldn’t rule anything out.