VB’s city manager, former mayor didn’t know arena loan closed before deal was terminated

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VIRGINIA BEACH, Va. (WAVY) — Virginia Beach’s city manager and former mayor testified that they were not made aware that the proposed arena’s construction loan closed before the deal was ultimately terminated. 

On Monday, video depositions of former Virginia Beach Mayor Will Sessoms and City Manager Dave Hansen were played in court on day 6 of a trial over the failed proposal to build a $245 million world-class arena at the Oceanfront. 

The developer, Mid-Atlantic Arena LLC, sued the city last January seeking $165 million in damages to cover the cost of developing and financing the arena, as well as lost future profits. 

“I wanted to get this deal done so badly, and I made it perfectly clear how we could get it done. And therefore I was extremely disappointed that the funds did not come prior to that evening,” Sessoms said. 

The evening Sessoms is referring to is November 7, 2017. 

City Council voted that evening 9-1, directing the city manager to terminate the Development Agreement if MAA didn’t close on the $180 million construction loan with J.P. Morgan Chase by midnight.  

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.

Yet Hansen, who sent out the termination letter the next morning, testifies he was never made aware.

“Would you be, have expected to receive notification sent to the city’s lawyers that the bank took the position that they had closed the loan that night?,” questioned Samual Meekins, Jr., an attorney for MAA.

After a brief pause, Hansen responded by saying, “I would, yes. Yes.” 

“Can you explain why you would not have gotten that information?” Meekins followed up.

“I cannot,” said Hansen. 

In Sessom’s testimony, he said he was also unaware of loan closing. Yet he signaled it would have been Stiles job to inform them.  

Yet, the lawyers for the city have argued that all necessary documents were still not delivered by the deadline. Mid-Atlantic needed to move $70 million in equity into an escrow account by midnight, according to per Sessoms.

ESG Companies would invest $16.5 million, Stephen Ballard, who would have built the arena, would provide $7.5 million, Hampton University would throw in $5 million and AEG, the arena operator would provide $42 million, according to former Governor Bob McDonnell, who was inside legal counsel for the project. 

However, on the loan closing deadline, Sessoms said the city had no commitment that AEG’s money was coming. 

While City Council was in the executive session that day, Sessoms and then Vice-Mayor Louis Jones left to go on a conference call with MAA President and CEO Andrea Kilmer and AEG. 

“[AEG was] very excited about the potential of being involved in a project in Virginia Beach,” Sessoms said. “They would not commit to [writing a letter confirming their $42 million committment]. And I asked the question three times.”

Sessoms said it was after that phone call he felt the deal might not happen.

“Well, in my position as mayor, it was made very clear to me by Council members that they were tired of being — that this had gone on too long,” Sessoms said.

That Nov. 7 deadline was a 60-day extension from a previous August deadline.

McDonnell asserted a week earlier that the deadline never applied AEG’s contribution A challenge to Sessoms’s account. 

“You did not read the development agreement to see whether or not your instructions had been carried out?” asked Mark Budeau, of the Greenberg Traurig Law Firm. who represents MAA. 

“No,” Sessoms said. “I would have been a very disappointed person with my city attorney if they have not been.”

The plaintiffs rested their case, and after a motion by the city to dismiss the case failed, the city began calling witnesses. 

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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