‘Confident it’s going to happen’: Virginia Beach extends deadlines for Atlantic Park financing

VIRGINIA BEACH, Va. (WAVY) — The gargantuan effort to build a surf park and entertainment district at the Virginia Beach Oceanfront remains alive after City Council signed off on changes to its multi-million dollar agreement with developers.

The development team’s financing on the first phase of the project now won’t be due until June of next year: a five-month extension from the current deadline of Dec. 31. The second round of financing will now be due Dec. 31, 2022.

In the same fell swoop, the city also agreed to loan the authority tasked with helping finance the massive project nearly $18 million to make infrastructure improvements around the site.

The extensions are framed as a way to help the city and developer navigate the supply and inflating construction costs issues they are currently facing. The mayor said he doesn’t believe the public-private partnership is at risk of failing as the proposed Oceanfront arena did several years prior.

In that case, the project fell apart when the city claimed the developer failed to close on their loan at the 11th hour, after several similar financing deadline extensions.

But unlike the arena, which was a one-dimensional complex, the team behind Atlantic Park — led by Venture Realty and including Virginia Beach native Pharrell Williams — is putting together a mix of uses.

The binding agreement between the city and the development team approved in late 2019, calls for the complex to span between 18th to 20th streets and between Pacific and Arctic avenues. It will be anchored by a giant surf park, but also include a nearly 6,000-person indoor-outdoor entertainment venue, retail, restaurants, office space and residential units.

“It’s a multifaceted project,” said Michael Culpepper, managing partner of Venture Realty and one of the minds behind the project.

However, it was revealed to City Council last week that there are snags in developing the marquee draw: A key piece of equipment needed to operate the wave park hasn’t been designed yet.

“The Wavegarden Technology has become so popular that’s so many other localities are ordering this equipment and moving forward with Wavegarden facilities … we are being forced to wait in line,” Culpepper said ahead of Tuesday’s meeting. “The facility is not able to be designed and permitted because of the current backlog.”

Without the designs and permits, there is no way to finance the surf park portion of the project.

“Without the surf park there is not an Atlantic Park project,” Culpepper said.

He is confident they will get what they need.

In the meantime, the city has signed off moving forward with a two-phase closing that would allow construction of the 6,000-seat indoor/outdoor entertainment venue to begin, with an expected opening in time for the 2024 concert season.

“I think it’s critical that we show we are open for business. I think we had some extraordinary circumstances and barriers since we started this process,” city Mayor Bobby Dyer said in support of the vote to extend the deadlines. “We have to figure out how to do complex deals.”

The vote on the half-dozen amendments to the development agreement passed on a 9-1 vote. Councilman John Moss was in opposition and Councilman Michael Berrlucchi was absent.

The more than $330 million project is the largest public-private partnership in city history.

In the last two years, the city has continued to buy up additional property for the development, of which they have pledged roughly $110 million for the construction of the entertainment venue, parking garages and streetscape improvements.

The city is planning on paying off the majority of its debt by using the Tourist Investment Program, which is made up of mostly hotel, restaurant, amusement and cigarette taxes. 

Venture Realty would secure financing for the remaining estimated $230 million for the wave park, experiential retail, restaurants, office space and residential units. The developer would get an annual incentive payment of $5 million for 20 years in order to reinvest in the property.

That money would come from project revenues and additional taxes levied on the project.

“I am confident it’s going to happen,” Dyer said.