Dome Site – Atlantic ParkDevelopment Agreement Overview

Virginia Beach City CouncilOctober 29, 2019

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ATLANTIC PARK UPDATEOctober 29,2019

WHO WE ARE

WHERE WE STARTED

HOW WE EVOLVED

WE DID OUR HOMEWORK

WE WORKED WITH WAVEGARDEN

WE LISTENED

1. Build Public Assets

2. Develop a World-Class Destination

3. Generate General Fund/School Revenues

4. Spark Transformation

ATLANTIC PARK WILL:

CHALLENGES WITH TDFP(GAP FINANCING)

• Designed for owner / operators

• Retail projects generally prohibited

• Relatively unknown program among institutional investors

THE MAINNORFOLK, VA

ANOTHER OPTION: CDA

• Community Development Authority

• Enacted in Virginia in 1993

• First CDA was formed in 1998 (Dulles Town Center)

• Since then, used over 30 times in Virginia

BALLSTON QUARTERARLINGTON, VA

WHAT IS A CDA?

• It uses a project’s tax revenues to pay for infrastructure within a given area• It is requested by the property owner • It levies additional real estate taxes inside the CDA district • It can issue and sell bonds to pay for the eligible costs• It is managed by a Board of Directors (in our case, members of City Council)

What a CDA Isn’t:• It isn’t an “Authority” like an EDA or RHA - Its “authority” is limited to the District• It cannot issue City debt (NOT supported by “full faith and credit” of the City)

ESTIMATED DIRECT TAX REVENUES GENERATED BY ATLANTIC PARK

Stabilized Year 1

Real Estate (excluding CDA) $2,227,400Sales $683,673Meals $2,300,623Amusement $2,411,664BPOL $546,400Total Annual Taxes $8,169,760

20 YEAR FISCAL IMPACT

• $57 Million to the General Fund

• $49 Million to Virginia Beach Public Schools

ECONOMIC IMPACT

• 3,600 jobs during construction

• 2,000 jobs once operating & stabilized

• $147,592,000 total operating impact

ATLANTIC PARK WILL:1. Build Public Assets2. Develop a World-Class Project3. Generate General Fund / School Revenues4. Spark Transformation

Development Agreement Overview

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Role of VB Development Authority

• Contractual party, but Agreement will be administered by City as third party beneficiary

• Owns collective parcels known as the “Dome Site”

• Solicited the RFQ in February 2017 – therefore, procured the parking, streetscapes and entertainment venue

• VBDA has authority to enter into longer term leases

Due Diligence Phase

• Acquisition of additional land

• Determine entertainment venue location

• General Contractor selection

• Zoning, Street Closure, Traffic & Subdivision Requirements

• Financing commitment progress

• Finalize preliminary master plan

• Petition for creation of Atlantic Park CDA

Pre-Development Phase

• Additional due diligence, if necessary

• Architect and consultant approval

• Design and construction plans advanced to agreeable percentage, memorialized by progress approval memos

• Preparation of development budgets and Guaranteed Maximum Price (GMP) purchase costs

Closing and Development

• Approval of development plans and development budget

• Lease agreement• Parking agreement• Condominium regime• Special service district

creation

The Project will include:

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• 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

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Preliminary Project

Plan

Annual Tax Revenues & Distribution

Local Tax DistributionLocal Tax Revenues

VBCPS $1.9M

General Fund $2.8M

TIP $3.5M

Atlantic Park

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 Up to $5M annually for 20 years

Atlantic Park Community

Development Authority

≡ 1.5% Sales Tax

100% Admissions*20% Meals*

2.025% Sales Tax

Bond Financing

$0.25 Real Estate Tax Atlantic

Park

* Excluding the Entertainment Venue

NOTE: All revenue generated by Atlantic Park development only

Bond Financing & Project Construction Fund• The City will create a Community Development Authority (CDA) to

leverage the combined public/private investments and facilitate development and financing

• The CDA is only applicable to the project components and real estate of Atlantic Park

• Bonds issued by the CDA will not be City debt nor obligation• The members of the CDA board will be members of the City Council • Project Construction Fund will be created to pay for other project

components. The fund serves as a form of gap financing

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Primary Purpose of the CDA

• 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 imposed by the CDA only on the Atlantic Park development

Development Agreement Project Acquisition

Atlantic Park Community

Development Authority

Bond Proceeds

$58.05 M Parking* $7.5 M*

Streetscapes

Construction Draws

ProjectConstruction

Fund

$30 M*Entertainment

Venue

* Funded by TIP Fund

Atlantic Park

Next Steps

November 12 Public Comment / Hearing

November 19 VBDA and City Council requests for approvals

Dome Site – Atlantic ParkDevelopment Agreement Overview

Virginia Beach City CouncilOctober 29, 2019

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