The city's share of the proposed Oceanfront arena has escalated by nearly $46 million now that officials have estimated the full cost of borrowing the money needed to build it.
Details of the proposal in a draft of a report to be presented to the City Council today show that financing costs would bring the city's total to just under $241 million. Last week, Mayor Will Sessoms estimated the cost at $195 million but noted that did not include borrowing costs.
At the same time, city officials have suggested boosting the hotel tax by 1 percentage point to help pay for the proposed arena at the Oceanfront, and resort hoteliers voted Monday to support the idea.
A rate increase to 14 percent, from 13 percent, would generate an estimated $2.8 million per year for the project. For a $200 hotel room, a customer would pay $28 in tax, up from $26.
"We think it will be a big boost for Virginia Beach and the region," said Verne Burlage, president of the Virginia Beach Hotel-Motel Association, which he said voted unanimously to support it.
Last week, Sessoms roughly sketched out to the council the framework for how an arena deal involving three partners might work. In a brief interview after the meeting, he said the estimate didn't include the cost of interest, which he said he didn't yet know.
With the interest, the estimated cost of the arena is nearly $346 million; an additional $80 million is needed to relocate an unnamed professional sports team, for a total of about $426 million.
Sources have said since August the target arena tenant is the NBA's Sacramento Kings and that the city and Gov. Bob McDonnell have met with a member of the Maloof family, which owns the Kings.
As part of today's presentation to the council, the head of the company trying to lure a pro team to town to be the arena's anchor tenant is scheduled to update his efforts.
Peter Luukko, president and chief operating officer of Philadelphia-based media and sports giant Comcast-Spectacor, last addressed the council in August. At that time, he called Hampton Roads "one of the largest underserved markets in North America" and the arena "a very viable project."
The city also last week asked state officials for $150 million for the project. That includes $70 million for the arena and the $80 million to relocate the team. Legislators have greeted the request with mixed reviews.
The third part of the plan calls for Comcast-Spectacor to put $35 million toward building the arena. The company would lease and operate the arena for 25 years and recruit a team.
The report calls for the council to decide on Dec. 11whether to move forward with negotiations. That non-binding decision may or may not require a formal vote, Sessoms said.
It also says the arena will generate annually $29.1 million in city revenue, which will cover interest on the $241 million in bonds and generate some excess revenue. The debt service on the bonds is estimated at $19.7 million a year.
The city revenue includes a $2 per ticket "arena development fee."
Aaron Applegate, 757-222-5122,email@example.com
For original article, click here.
- 2022 (3)
- 2021 (11)
- 2020 (17)
- 2019 (17)
- 2018 (7)
- 2017 (16)
- 2016 (56)
- 2015 (22)
- 2014 (89)
- 2013 (228)
- 2012 (146)
- 2011 (5)
- 2010 (5)