VIRGINIA BEACH, Va. (WAVY) — After nearly a year, the City of Virginia Beach and the developers behind the new “Dome” project have come to an agreement on how to fund the largest public-private partnership in city history.
Representatives from Virginia Beach and Venture Realty Group presented the proposed 114-page development agreement for “Atlantic Park” to City Council on Tuesday afternoon. While the amount of public investment has remained unchanged since an initial agreement was approved in early 2019, where the money comes from has.
Atlantic Park — a Pharrell Williams-backed $325 million mixed-use, multi-venue development — will take the place of the former Virginia Beach Dome site, which is located between 18th and 20th streets. The proposal includes plans to build a 3,500 seat music venue, surf park, restaurants, office space and residential units.
The city’s cost for the project would be roughly $96 million and would be used to construct the parking garages, entertainment venue and common spaces.
The city would pay off 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 Reality, would secure financing for the remaining $230 million.
However, it’s the annual incentive payment of $5 million for 20 years where things get “complicated.”
Developers and city staff have pitched making the dome property a special district to be governed by a “Community Development Authority.”
Unlike the Virginia Beach Development Authority, the CDA proposed in this deal wouldn’t be run by appointed members, but rather all 11-city council members, according to Mike Culpepper with Venture Realty Group.
The authority has power to issue bonds, but since it is an “independent authority,” it wouldn’t impact the city debt. Those bonds would be paid through revenues and additional taxes levied on the project.
The $5 million/year would be used to finance a portion of the parking garages and streetscapes according to Deputy City Manager Ron Williams.
“Monies that are generated on-site that cover that bond are capped and all the other production of additional revenues do go toward to our normal dedications for the schools and for the general fund,” Williams said. “We used a balanced approach to do this partnership.”
The city anticipates the project could have close to an $8.2 million fiscal impact each year. Revenue distributions would include $1.9 million to Virginia Beach City Public Schools, $2.8 million to the city’s general fund and $3.5 million to the City’s Tourism Investment Program fund.
As the largest proposed public-private partnership in Virginia Beach history, steps are being taken to make sure the city doesn’t end up in the same position they were in with the arena developer. In that case, the project fell apart when the city claimed the developer failed to close on their loan at the 11th hour.
“This development agreement is unique because it does essentially lay out a process to get to a project versus just saying we’re going to agree on the project and then you’re off and running,” Williams said. “What it does is give us the due diligence in the free development phase to make sure that the project is sized right that it’s feasible and that I can be financed.”
To come to fruition, the agreement needs to be approved by both the Virginia Beach City Council and the Virginia Beach Development Authority.
The agreement covers the process for delivery of the project, such as construction plans and schedules, the guaranteed maximum prices for the components and the process for real estate closing.
A public hearing is scheduled for November 12th with a council vote on November 19th.