The Virginia Beach city council has okayed the new bank that will provide the loan for the city’s $200 million arena, and that’s not really very interesting to anyone except maybe financial industry geeks. What I’m more curious about is: This time, did the Virginia Beach media manage to correctly describe the financial setup, where the developers will borrow the money and then the city will repay it with tax revenue? Virginian-Pilot, whatcha got?
Under the framework of the new preliminary deal, B.C. Ziegler would finance $200 million, or the guaranteed maximum cost to design and build the arena – whichever is less.
The complex would be privately financed, with the city covering the cost of the land and $76.5 million in infrastructure upgrades through a tax on arena event tickets and hotel stays.
Close! The $76.5 million in infrastructure and land spending is correct, but the city will also kick back $8.5 million a year in property taxes, business license taxes, admissions taxes, arena meals taxes, construction sales taxes, arena sales taxes, and hotel taxes, which will pay off most of that $200 million in bonds.
How about WAVY-TV?
When the project was first approved, it looked as if a bank in China would help finance it. Now, a Chicago financial institution, B.C. Ziegler and Company, will be financing the $200 million in bonds to build the arena.
U.S. Management will put up another $10 million for the project.
Complete fail! Though at least WAVY says “finance” the arena instead of “fund” it, if any readers/viewers are savvy enough to catch that distinction.
One day, a Virginia Beach news outlet will actually explain who’s paying for the city’s new arena — here’s a link to the city council’s own summary of the funding plan, so any future journalists can have an easy citation. (Hint: It’s under “Consideration.”) Let’s hope someone manages it before it’s time to tear down this arena because it’s obsolete.
Neil! I just stumbled upon your blog! Thank you! This is the 3rd incarnaton of the Arena for VA Beach. The other two lost because they were “public”. Now they are calling it “private”and few seem to object. There is nothing private about this deal! The City will lease land to the developer for 60 years for $1 a year?! The City will issue debt to finance $70 – $80 million in infrastructure improvements!? AND, ALL taxes generated by the Arena…go back to the arena to pay for PRIVATE debt for next 30 years, with a cap of over $470 million!? NOW, in the Southside Daily, they are reporting that the Virginia Beach Development Authority will issue bonds in order for the private developer to secure the private financing with Zeigler (?!). I’ve been screaming that this is not private at all, yet most don’t get it. It is a guaranteed sweet deal for the developer. Help!
I’m typing as loud as I can! Other than rolling my eyes in the general direction of Virginia, not sure what else is in my power to do.