VIRGINIA BEACH, Va. – City council members will decide whether to accept changes to the financing plan for the arena project on Tuesday night.
The arena will be privately funded by the developer, United States Management, which is an entity of The ESG Companies. The city will contribute $76.5 million in costs for things like improvements to nearby roads and utility lines, according to the agreement passed in December 2015.
Originally, the developer was seeking a $170 million loan from a Chinese bank to finance the project, but in June asked to change the source of the funding to bonds with backing from B.C. Ziegler, a Chicago-based investment bank. The cost of the project has not changed, estimated at $200 million.
City council agreed to allow the change as long as seven conditions were met. Last week, City Manager Dave Hansen briefed members of city council, saying all conditions were met except for one. The one that was not met says the bonds used in the financing will be unrated. The developer will increase its contribution to the cost of construction to offset that risk, according to Hansen’s presentation.
The amount of private financing needed has also now increased to up to $240 million. Council members held a closed session meeting to discuss the changes.
City council will hold a public hearing before its vote on October 4.