VIRGINIA BEACH, Va. (WAVY) — A judge has ruled that the City of Virginia Beach did not breach its contract with the developer of a proposed arena at the Oceanfront.
The decision came after 8-days of testimony in which lawyers for the Mid-Atlantic Arena, LLC argued that their clients are owed millions in damages after the city cut ties with their proposal to build a $245 million, 18,000 seat sports and entertainment arena a year-and-a-half ago.
“The city acted in good faith,” said Judge Thomas Padrick Jr., in his ruling. “Plaintiff did what they could to get this deal closed but there was just not enough money to close it according to the terms and conditions contained in the deed.”
The “deed,” Judge Padrick is referring to, is the 2015 development agreement that called for a privately financed arena that the city would provide infrastructure upgrades and tax revenue benefits for.
Mid-Atlantic attests their $180 million construction loan was properly closed a by the midnight deadline on Nov. 7, 2017.
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However, it’s the $70 million in equity that would have completed the financing that was the center of the case.
In court it was said that 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.
The city’s lawyers argued AEG’s money was never “committed” to by deadline. After several deadline extensions, former Mayor Will Sessoms testified council members expressed it had gone on too long.
The judge ruled it was within the city’s right to make sure there was a financing mechanism in place. Furthermore, he suggested that MAA going around the city to close on the construction loan could be considered a breach of contract on their part.
“I think the judge understood that at the end of the day that try as they might, and I believe they tried really hard, the developer just couldn’t deliver the debt and equity needed to build this arena in the time frame that was permitted,” said Mark Stiles, the City Attorney. “Unfortunately it just didn’t work out, but it certainly was something that was worth pursuing.”
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Following the ruling, President and CEO of MAA Andrea Kilmer said she had thirty days to decide if they would appeal.
“Well obviously we respectfully disagree with the judge,” Kilmer said. “To get a deal like this closed like this in six months is really insurmountable but we did it, we did close our loan.”
She testified last week “we’d still like to build an arena.”
“Honestly the real travesty here is the fact that we could be six months out from the citizens of this community being able to attend a state of the art facility right in their backyard, privately financed with top acts with their family and friends to create memories forever,” Kilmer said.
