Virginia Beach Arena · 2016. 10. 5. · – Full Public Presentation available on USM website. The...
Transcript of Virginia Beach Arena · 2016. 10. 5. · – Full Public Presentation available on USM website. The...
Virginia Beach Arena
Create a flexible, state-of-the art venue that:
• Serves as an iconic symbol for the City, Region, & State
• Offers events for everyone
• Draws major acts and top tier events
• Creates memories of a lifetime
• Creates jobs
• Catalyst to revitalizing the Oceanfront
• Year-round playground
• Major sports team potential The time is now. The place is Virginia Beach. 2
Our Vision
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Arena Project Team
Local Experience and Global Expertise
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Operate – AEGSprint Center (Kansas City, MO
T-Mobile Arena (Las Vegas, NV)
Staples Center (Los Angeles, CA)
AEG Facilities manages and/or owns 120 of the industry’s preeminent venues
World’s 2nd largest promoter
Owns more professional sports franchises and events than any other company
The time is now. The place is Virginia Beach. 5
City Economic Impact
Construction Impact
New Jobs
2,300
New Spending
+
$240MSalaries
Materials/Services
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City Economic Impact
Annual Operations Impact
New Jobs
440
Net NewSpending
NewSalaries
$15M
+ 20-Year NPV
$1.7B$111M
RoomNights
78,500
• Fundamental business model and market analysis
• City incentives, payment cap, and term– Present Value of Incentives (CBRE): $115 M
• Privately financed and locally owned
• Highly qualified, experienced team
• Minority participation
The time is now. The place is Virginia Beach. 7
What Remains the Same
• Domestic lender option• Change in equity• Loan structure and amount
– Includes construction period interest which reduces risk during construction
– Includes 1 year Debt Service Reserve which reduces risk during operation and in the unlikely event of default
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What Changes
Main Benefits of Proposed Financing Change
• Domestic Alternative to Chinese LoanAddresses any perceived security concerns
Removes procurement requirement
Removes political volatility
• Accelerated Development/Opening2016 ground breaking/2018 grand openingWe haven't stopped!
• US Bank Trustee administrates Loan Proceeds
The time is now. The place is Virginia Beach.
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City Resolution Adopted July 12, 2016Set the following conditions for Council’s “enthusiastic support” of USM’s pursuit of Bond Structure with approximately $230 M in bonds and $10 M in equity:
1. Maximum amount financed no more than actual price of construction contract, not to exceed $200M plus capitalized interest on a drawn-down basis, debt service reserves and issuance costs
2. Cannot finance previously incurred expenses or development fee3. Maximum Payment Cap and term cannot change4. A complete independent financial feasibility study5. Repayment of bonds solely from revenues of project and previously approved
incentives, and shall not be an obligation of City, VBDA, or Commonwealth 6. All protections and cure rights of the City to remain, and 7. An indicative rating letter from a major rating agency and the bonds are
anticipated to carry an investment grade rating from one of the 3 major agencies
USM has met all requirements but 1In lieu of a Bond Rating letter, we are contributing an additional $7.5 M in equity
Plan of Finance• Taxable Private Placement
– Known Finance Structure• Large Qualified Institutional Investors • Bond Proceeds will be limited to use for the Construction Contract,
Loan Costs, and required Reserves • No Developer Fees or reimbursement of costs other than prepaid
loan costs • USM fully responsible for the debt• Bonds repaid by same revenue streams as current Agreement
– 1% of Hotel Tax – “But For” Taxes – that if not for the arena, would not exist – Payments from Arena Operations
• VBDA serves Conduit Issuer– No obligation and no recourse to VBDA, City, or State– Same role it plays for other private entities, such as Westminster Canterbury
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Proposed Change in Finance Structure
Bond Placement vs. Chinese Bank LoanLoan will fund $192,500,000 of
Construction ContractConstruction Contract over $200MEquity contribution of over $20 million
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City Protections• Tax incentives subject to appropriation• City has the right, but not the obligation, to
cure loan in the unlikely event of default• The City would negotiate new terms, if it
chooses to step in
Private vs. Public Financing• Doesn’t impact debt capacity of the City• Doesn’t impact the bond rating of the City• Monies don’t compete with fundamental services
– Teachers, schools, police, fire and rescue
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• AEG Corporate Review• CBRE Appraisal• CH Johnson Market/Financial Feasibility Study
– Nationally recognized and respected consulting firm– Extensive Study Process
• Site Visit• Stakeholder and Industry Expert Interviews• Comparable Facility and Market Analysis• Financial Projections
– Full Public Presentation available on USM website
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Financial Model Validated
National Comparable Facilities
Virginia Beach Arena Feasibility Study 15
Proposed Arena Sprint Center BOK Center Pinnacle Bank Arena
Smoothie King Center
Chesapeake Energy Arena Average
Location Virginia Beach, VA Kansas City, MO Tulsa, OK Lincoln, NE New Orleans, LA Oklahoma City, OKMarket Characteristics (MSA)
Population 2016 1,746,934 2,098,082 992,640 324,396 1,265,665 1,379,525 1,212,062Households 656,287 820,791 385,544 127,825 498,419 532,882 473,092Median Income $58,564 $57,817 $51,532 $53,333 $47,800 $52,650 $52,626Entertainment/ Recreation & Sports Spending (Fees & Admissions) $417,938,668 $524,342,544 $210,643,154 $72,539,491 $279,409,598 $304,485,900 $278,284,137
Total Business 62,049 81,386 39,996 13,797 57,205 54,827 49,442Median Age 36.3 37.4 37.4 34 37.8 35.7 36.5
Facility Characteristics (FY 2015) Year Opened 2017/2018 2007 2008 2013 1999 2002 2006 Most Recent Renovation - - - - 2014 2014 2014
Historic Cost (million) - $276 $196 $184 $110 $89 $171Funding Sources Public/Private Public/Private Public/Private Public Public Public -Anchor Tenant/s - - ECHL NCAA NBA NBA -Club seats 1,200 1,888 682 832 2,450 2,838 1,738Suites 30 72 45 36 56 48 51Loge Boxes 50 - 20 20 16 48 26Total Arena Seats 16,500-18,000 19,000 19,200 16,310 18,500 19,675 18,537
Sources: Esri BAO, AEG, SMG, RSVdatabase, team/facility's website, Johnson Consulting
Proposed Arena in Virginia Beach, VASummary of Comparable Facilities and Markets
Comparative Market Analysis - Summary
Virginia Beach Arena Feasibility Study 16
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The NumbersProposed MAXIMUM Bond $240 MLess: 1 Year Debt Service Reserve ( 16 M)
Net Debt Balance $ 224 M
Average Net Revenue and Incentives (CHJ) $19.5 MAdditional Surplus Reserve for Debt Service (1) 5.0 MAverage Annual Amount Available $24.5 M
(1) Total $21 M in reserves
Average Debt Service Coverage 1.5
Sensitivity Analysis 30%
• We have dreamed this dream with the community for over 3 years now
• Tremendous business, civic, and education support• Per CH Johnson, a venue of this size and scope would
meet a severely under-met need• Without a facility, we can’t get a team• If you don’t buy a ticket to an event or stay in a hotel,
you don’t pay for the arena• We need a final vote to move forward and make this
dream a realityThe time is now. The place is Virginia Beach. 18
We Ask for Your Support
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Host Grand Opening!