VIRGINIA BEACH, Va. (WAVY) — Uncertainty surrounds plans to redevelop Virginia Beach’s former Dome site into a entertainment mecca, anchored by a wave pool and concert venue, as rising costs and supply chain issues continue.
In a presentation to Virginia Beach City Council Tuesday, city staff laid out a litany of proposed changes to the Atlantic Park development agreement that they, along with the developer, want considered in order to try to keep the project on track.
The changes — mainly technical in nature — would allow the sprawling more-than-$330 million development to be completed in phases, push back deadlines the developer must meet, and change the placement of the music venue.
However, there was also discussion that City Council should be prepared to approve two phases of loan closing on the project, plan for additional increases in costs for the entertainment venue and sign off on nearly $18 million of infrastructure improvements surrounding the property.
It left at least one council member expressing doubt in the project’s ability to be completed.
Deputy City Manager Taylor Adams said some of those items just came up in the last 24 hours.
The binding agreement between the city and the development team — which includes Virginia Beach native Pharrell Williams — was approved in late 2019, but had been in the works for several years prior.
With the goal of boosting tourism and bettering the resort’s image, the complex would span from 18th to 20th streets between Pacific and Arctic avenues on land that for 36 years prior to 1994 was home to the Virginia Beach “Dome.”
In the last two years, the city has continued to buy up additional property for the development, of which they have pledged roughly $110 million for the construction of the entertainment venue, parking garages and streetscape improvements.
Earlier this year, there had been some hope that ground could be broken at the Oceanfront site this fall. However, now, pending City Council’s approval, Adams said the target has now moved to late spring 2022.
“We’re in an unprecedented construction market,” Adams said.
The costs of construction have skyrocketed in the waning months of the COVID-19 pandemic, and while Adams told council members that currently their cost estimates appear to be “in the ballpark,” he said it’s all subject to change.
He is not ruling out the need to return to City Council to ask for more money.
The city is planning on paying off the majority of its debt by using the Tourist Investment Program, which is made up of mostly hotel, restaurant, amusement and cigarette taxes.
The lead partner, Virginia Beach-based Venture Realty, would secure financing for the remaining estimated $230 million for the wave park, experiential retail, restaurants, office space and residential units. The developer would get an annual incentive payment of $5 million for 20 years in order to reinvest in the property.
However, it’s the production issues on a specific type of equipment needed for the surf park that is holding up their progress, according to Mike Culpepper with Venture Realty.
It’s one of the reasons Adams pitched to City Council the possibility of a “bifurcated closing.”
“Many of our Oceanfront stakeholders are interested in us getting our entertainment venue online as quickly as possible,” Adams said.
Moving forward with a two-phase closing would allow construction of the 6,000-seat indoor/outdoor entertainment venue to begin, with an expected opening in time for the 2024 concert season.
The portion of project that includes surf park would close at a later date.
“It would close with quite a bit of investment at risk on behalf of the developer. I’m not going to get into all of that here today,” Adams said.
Finally, Adams is requesting City Council sign off on a plan to allow the developer’s project revenues to help pay for fast-tracked infrastructure improvements around the site.
An estimated $17.7 million would be used to improve everything from stormwater systems to traffic signals on 18th, 19th and 20ths streets, as well as Pacific, Arctic and Baltic avenues, prior to the park’s eventual opening.
“Projects that we’ve basically come to realize that if we knew in the beginning what we know now, we would have always requested City Council consider these,” Adams said.
The project is the largest public-private partnership in the city’s history and certainly has its critics.
Councilman John Moss spoke out that he doesn’t want to rush into a vote.
“We are accepting risk. Risk we haven’t articulated with the public and give them a chance to be educated,” Moss said. “We may never see a wave park, that’s a possibility … More than likely, the entertainment venue can’t be built within the current appropriated dollars in the [Capital Improvement Poan] and wouldn’t require more money. That wasn’t an ‘if,’ it was pretty much you can count on it.”
However, Mayor Bobby Dyer took a more optimistic approach and charged Adams to bring the proposals back to City Council for a vote next week.
“We’re four and a half years into this project. We have discussed it and we had to deal with some twists and some turns,” Dyer said. “Especially now with what is going on with the commodities with inflation and some things, it’s not the folks’ fault.”