Virginia Beach getting sued by developer for killing terrible arena deal

What’s worse than offering to build a $426 million arena to lure an NBA team, then giving up on it when it became clear no NBA team was going to move to your city, then approving spending $206 million in public money on a $220 million arena instead, then giving up on that project when the developer couldn’t find anyone to loan it the money even though the city would be repaying it? I guess “proposing yet another harebrained arena plan” would be worse, but getting sued by the developer who failed to get a financing deal together because it says its “reputation” was damaged is right up there, and that’s what Virginia Beach is facing now:

In the lawsuit, Mid-Atlantic argued that it delivered the loan documents on time and that the contract did not require the developer to have the $70 million in the bank. It also said that it had deposited “tens of millions in equity” into an escrow account.

“The city pulled the rug out from under the developer, causing a substantial waste of time, money, goodwill and other resources,” according to the suit…

“We needed every hour, but the city and its lawyers, to our astonishment, decided at noon that day, ‘without legal authority or justification,’ as it states in our suit, to ‘not perform its obligations to convey the project land to the Virginia Beach Development Authority, nor execute and deliver the last few documents required of the City by the Development Agreement.’”

Mid-Atlantic Arena LLC further noted that now that there won’t be an arena, both investors and people who put down deposits on premium seats want their money back, which, duh.

The point of contention here looks to be whether the developers got in under the gun with financing plans and the city council said, “Sorry, we don’t care, hit the road,” as Mid-Atlantic contends, or the developers showed up at 11:59 pm waving a piece of paper and saying, “All good!” and the city council said, “Yeah, no, we don’t believe you, hit the road,” as the city contends. Either way, it’s likely to be a mess of a lawsuit, and a worst-case scenario ending to the Virginia Beach arena saga — unless it’s somehow resolved by the city reviving the arena plan, in which case that would clearly be the worst-case scenario for Virginia Beach taxpayers.

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7 comments on “Virginia Beach getting sued by developer for killing terrible arena deal

  1. What a mess. When are we the taxpayers going to hold these elected fools accountable and just say no more to sports venues.

    Enough we have enough already. Virginia Beach, come on. I just reread that cal Berkeley is 400 million in the hole in the athletic dept for an earthquake retrofit on the football stadium. Great use of public money.

    1. So… to make a stadium safer in the event of an earthquake is a boondoggle? Please explain.

      Just seems that if I’m actually in that stadium, it might be nice to know that it meets the minimum standards to withstand a major earthquake… since it’s right next to a major fault line.

      That said, Cal’s athletics department has some serious financial issues which I haven’t looked into. But I wouldn’t suggest that making a publicly-owned building safer in a potential disaster to be a bad thing.

      1. I will explain. Scrap the stadium and build something cheaper that you can afford and is earthquake safe.

        Bottom line stop spending money taxpayer money you don’t have on luxuries you can’t afford.

  2. It seems likely that this is an attempt by the alleged damaged party to extract some sort of settlement offer from their prospective partner on the grounds that paying a small settlement will be cheaper than fighting the lawsuit.

    Sometimes it works…

  3. This is just a scam from every angle. Who in their right mind is putting money down on seats that don’t even exist for a team that isn’t even in town. PT Barnum had it right.

    Furthermore, if I am the judge this lawsuit gets tossed. Basically this is just an extortation attempt. However, I am sure this will be settled and the plaintiff will make out nicely while the city, aka, taxpayers will be screwed, again.

    I am so tired of all this stadium and arena finaggling. People need to say no and tell their city leaders to say no. Sorry but you do t need a sports venue and team to be a big time city.

    Virginia Beach does not nor should it want an nba team. You are doing just fine without that nonsense.

  4. Somehow, I suspect if “tens of millions” had been put into an account someplace they probably would have approved the deal. But there were stories the day before the deadline saying they hadn’t heard directly from the developer AT ALL. (And that was on the heels of him having been given an extension.) The media couldn’t even find the guy for comment. Doesn’t exactly sound like he had everything set and just needed to iron out a few details.

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