Virginia Beach

'We'd still like to build an arena': Week 1 of VB arena trial concludes

City sued for $165 million

VIRGINIA BEACH, Va. (WAVY) -- After 5 days of testimony, the developers behind Virginia Beach's failed arena proposal continue to bring forward witnesses to support their request for millions of dollars in damages. 

"We still want to build an arena," said Andrea Kilmer, President and CEO of Mid-Atlantic Arena. LLC, in court Wednesday. 

Her company was behind the proposal to privately finance and build an 18,000 seat, $245 million sports and entertainment arena next to the Virginia Beach Convention Center. The city in turn would give over the land for free, provide infrastructure upgrades and give the developer millions in taxes generated by the arena and a portion of the hotel tax for 30 years. 

"Everybody who saw this deal, saw gold," said Sam Meekins, Jr., an attorney for the arena during his opening statements. “For some reason, the city decided it didn’t want the arena." 

Back in November 2017, the City Council voted to terminate the deal, claiming Mid-Atlantic had not met all the requirements of the agreement, specifically the financing aspect of the deal.

To close on the $150 million loan with J.P. Morgan Chase, Mid-Atlantic needed to move $70 million in equity into an escrow account by midnight on Tuesday, Nov. 7, according to the city. 

In court it was revealed the construction loan was actually increased in Summer 2017 to $180 million to pay for extra bells and whistles. 

"They feel they have closed on the loan. This city feels they didn't close on the loan," said now former Mayor Will Sessoms days after the deal fell flat

"I was absolutely shocked that after all the work we have done that this is what the culmination of 4 years was," Kilmer said on the stand during her full day of testimony. 

However in court documents, MAA attests their construction loan was properly closed and sent an email delivering required documents to City Attorney Mark Stiles shortly after 11 p.m. that night. 

Kilmer testified that hours before that the city staff stopped responding to her team, which included Former Governor Bob McDonnell

"We felt though process we were concerned the bar was continuing to be raised by the city, and that we may not have been the preferred developer," Kilmer said. 

Kilmer and her attorneys continue to argue their agreement with the bank only required local money to be in at the time of loan closing. That means money from MAA, Stephen Ballard, who would have built the arena, and $5 million from Hampton University.

"The City required infromation that they didn't ask for in the original development agreement," Kilmer insisted.

The attorneys for the city continued to disagree, pointing out that they never saw documentation about AEG, the proposed arena operator, and its $42 million investment before the deadline. 

"City should not have thought AEG was committed to project," said Gary Bryant, the attorney representing the city.

Bryant referred to evidence from AEG executives on November 7, telling councilmembers "we are not there yet."

The trial is expected to continue Monday with video testimony from Sessoms and City Manager Dave Hansen.


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