Briefing on Dome Site Development Agreement Scheduled for Oct. 29 City Council Meeting

Wednesday, October 23, 2019

Representatives of the City of Virginia Beach and Venture Realty Group have reached agreement on proposed terms for the development of Atlantic Park, a mixed-use, multi-venue development proposed for the former Dome site located between 18th and 20th streets, with an estimated $325 million investment partnership. City staff and Venture representatives will brief the City Council in public session on Oct. 29 at 2 p.m. in the City Council Chamber, 2401 Courthouse Drive. The meeting will be cablecast live on VBTV (Cox 48, Verizon 47) and streamed to VBgov.com and the City's Facebook page. The draft Dome Site development agreement and a summary are available at www.VBgov.com. The documents are posted under Related Information. 

The 114-page agreement will be a binding contract and subject to approval by the Virginia Beach City Council and the Virginia Beach Development Authority (VBDA). The agreement outlines the process for delivery of the project, including the development of construction plans and schedules, establishing the Guaranteed Maximum Prices for the project components, authorizing the process for the real estate closing, and the commencement of project construction.

Project Overview

The 10-acre +/- Atlantic Park will include mixed-use commercial development anchored by residential and entertainment uses that will provide a vibrant atmosphere in the heart of the Central Beach Entertainment District. Project elements include:

  • Mixed-use commercial tenant spaces including retail, experiential retail, and restaurants
  • Class A commercial office spaces
  • Approximately 425+/- market rate residential rental units
  • Wavegarden Lagoon surf park with supportive retail, cabanas and park amenities
  • State-of-the-art music and entertainment venue for an estimated 3,500 ticketholders
  • Structured parking garages integrated in the development with an estimated 1,935 spaces
  • Pedestrian common areas and amenities commonly found in first-class mixed-use developments

The project's estimated fiscal impact, once stabilized, is close to $8.2 million. Based on this estimate, direct revenue distributions 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 (TIP) fund.

Public – Private Investment

The preliminary project master plan calls for a combined investment of $325 million as follows:

  • Private Investment of $230 million for the retail, residential, commercial office and surf park
  • Public Investment of $95 million for public parking, streetscapes and the entertainment venue  paid for through the TIP fund; no General Fund tax revenues will be used for this project

Performance Grant Incentive

In order to achieve high-quality entertainment and experiential retail with a mix of retail, residential, office and restaurant components, the City will utilize a performance-based incentive structure to generate revenues necessary to finance a portion of the project elements. These combined revenues, referred to in the agreement as a Performance Grant, will be payable solely out of a combination of state and local tax revenues generated by the components of the Atlantic Park development. The City will commit to making a Performance Grant of up to $5 million per year for 20 years.

The sources of the Performance Grant are Atlantic Park-generated tax revenues through the following assessments:

  • 100% of the local admissions tax (excluding the entertainment venue)
  • Local meals tax with a rate of 1.06% (excluding the entertainment venue)
  • An amount equivalent to a 1.5% local sales tax payable from the TIP Fund
  • State sales tax with a rate of 2.025%
  • Special tax revenues generated through additional admission tax and the real estate tax levied only on project components

These revenues exist only because of the project.

Bond Financing & Project Construction Fund

In order to leverage the combined public and private investment, the City will create a Community Development Authority (CDA) to facilitate the development and financing of the project. The CDA is only applicable to the project components and real estate of the Atlantic Park development. The members of the board of the CDA will be members of the City Council. Bonds issued by the CDA will not be City debt nor the obligation of the City. A Project Construction Fund will be created to pay for other project components. The Project Construction Fund serves as a form of gap financing over and above the necessary private equity and private financing that are an obligation of Venture Realty Group.

The primary purpose of the CDA is as follows:

  • The CDA will issue bonds to finance a portion of the parking garages and streetscapes. CDA bonds will be repaid with Performance Grant revenues.
  • There will be additional real estate and admissions taxes in the CDA District to support CDA obligations. These Special Tax Revenues are part of the Performance Grant and are imposed by the CDA only on the Atlantic Park development. ​

Background

Plans to develop the land assemblage commonly referred to as "the Dome site" into a year-round destination began in February 2017. Then, at the direction of the City Council, the VBDA issued a Request for Letter of Qualifications (RFQ) soliciting a knowledgeable, experienced, qualified and capable developer with a strong, cohesive internal and external development team experienced in complex multi-venue urban development projects to design, develop, manage and construct all facets of this project.

Venture Realty Group was selected as the preferred development partner. Following more than a year of public engagement, commissioned studies and project vetting, in January 2019, the City Council approved a non-binding Term Sheet outlining the summary of basic terms of a possible Development Agreement. The developer and City staff negotiated over a 10-month period to arrive at terms for the Development Agreement. 

Attachments

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