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.