Virginia arena subsidy sought
11/29/2012 12:00 AM
12/28/2012 12:13 PM
If the Sacramento Kings end up relocating to Virginia Beach, Va., the move will be funded almost entirely by Virginia taxpayers.
Virginia Beach on Wednesday asked the state of Virginia for $150 million to help build a new arena and assist the team with relocation expenses. The city itself would put in $195 million, and arena developer Comcast-Spectacor would contribute $35 million.
Including relocation costs, the project would be 90 percent publicly funded – a hefty subsidy that is already sparking some opposition from public officials. The state's share would require approval from lawmakers and the governor.
Nonetheless, the tentative financing plan suggests that Virginia Beach is getting increasingly serious about an arena and a major league team. The city's potential interest in the Kings became public in August.
In a briefing to the City Council late Tuesday, Mayor Will Sessoms said Comcast-Spectacor is discussing lease terms and is "very encouraged with the progress of bringing a professional sports team to Virginia."
Comcast officials had no comment Wednesday.
Sessoms and other city officials have refused to identify the team in question, but some media outlets in Virginia – quoting anonymous sources – have said it's the Kings. WAVY, a Virginia TV station, has reported that team co-owner George Maloof recently met with Virginia Gov. Bob McDonnell.
"I'm assuming it's the Kings they're talking to," said City Councilman Bill DeSteph.
DeSteph is among those who is skeptical about the public subsidies.
"We're going to put in $195 million and we can't afford it," he said Wednesday.
Eric Rose, a spokesman for the Maloofs, declined to comment.
The team's future in Sacramento has been uncertain since the Maloofs abandoned a tentative agreement for a new downtown arena.
The city would have paid about two-thirds of the cost, with the Kings and the arena developer paying the rest.
Despite the collapse of the downtown deal, the Maloofs have said they want to keep the team in Sacramento.
Other cities are interested in the Kings, too, including Seattle, which is working on its own arena project.
Virginia Beach city spokeswoman Mary Hancock said Peter Luukko, president of Comcast-Spectacor, is expected to outline the tentative terms of the arena deal at a City Council meeting next Tuesday.
She said it's Comcast, not the city, that's talking to the team.
Virginia Beach's request for state aid was transmitted to the Virginia Economic Development Partnership, a state-run board appointed by the governor and the Legislature.
In its letter, the city asks the state for $70 million in construction assistance and $80 million in moving costs.
The moving costs include an estimated $30 million in relocation fees to be paid to the league.
Another $42 million would compensate the team for lost revenue while it plays in a smaller arena for two seasons while the new facility is under construction.
The subsidy wouldn't help the Maloofs, however, with one of their biggest relocation costs: a $65 million loan from the city of Sacramento, which must be paid off immediately if the team leaves.
At least one member of the Partnership's board said he'd be surprised if the state would approve the $150 million request.
"It's very doubtful. It's just too much money in these economic times," said board member Hugh Keogh, a retired president of the Virginia Chamber of Commerce.
The governor's press secretary, Jeff Caldwell, said any subsidy would have to be "economically justifiable."
Virginia Beach's request for state aid suggests the city wants the issue resolved fairly quickly.
In his letter, economic development director Warren Harris said the state funding must be approved during the next legislative session. The session runs Jan. 9 to Feb. 23.
Harris added that "this project cannot move forward" without the state's subsidy.
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