December 8, 2012

Virginia governor rejects including money for new arena in his budget

Virginia's plan to lure the Sacramento Kings was put in jeopardy Friday after a request for a $150 million state subsidy was turned aside by the governor.

Virginia's plan to lure the Sacramento Kings was put in jeopardy Friday after a request for a $150 million state subsidy was turned aside by the governor.

Gov. Bob McDonnell rejected Virginia Beach's funding request on the grounds that any subsidy must be "economically justifiable," said his spokesman Tucker Martin.

While the Republican governor didn't completely shut the door on the proposal, he's not planning to include a subsidy in his 2013 budget. The request is still being reviewed by a state economic development board, but the panel offered a dim view as well on Friday, indicating it was too generous with taxpayer money.

Without the state funds, the Virginia Beach plan would almost certainly be finished. In his request to the state, Virginia Beach's economic development director said "this project cannot move forward" without the state's help.

The state's dollars were supposed to cover about a third of the $426 million project. The price tag includes the cost of a new arena and the expense of relocating the team.

If the door closes in Virginia Beach, it's not clear what that means for the Kings and their owners, the Maloof family. The team's future in Sacramento has been uncertain ever since the Maloofs walked away from a downtown arena deal last spring.

The family has said it wants to keep the team in Sacramento, but it's been widely reported that the Maloofs have been discussing a possible move to Virginia since August. Co-owner George Maloof reportedly met with McDonnell several weeks ago.

The possibility remains open for a move to Seattle, which is clamoring to return to the NBA. But the financier proposing an arena there wants to buy a team, and the Maloofs have said the Kings aren't for sale.

Eric Rose, a family spokesman, declined to comment on the Virginia situation Friday. The Maloofs have refused to confirm that they've been discussing a move to Virginia or anywhere else.

City officials had met with arena architects in Dallas the day before and were caught off guard by the governor's refusal.

Mayor Will Sessoms declined to comment through a spokesman, Marc Davis.

A spokesman for Comcast-Spectacor, the developer of the proposed Virginia Beach arena, declined to comment.

The Virginia plan encountered friction from elected officials all along. Bob Tata, a state lawmaker from Virginia Beach, told the Norfolk Virginian-Pilot recently that the project was "pie in the sky."

The president of the Virginia Economic Development Partnership, a state panel reviewing the arena plan for the governor, told city officials in a letter Friday that "more work is needed" on the city's proposal.

Martin Briley, the president of the partnership, said the state "has no current source of funding to accommodate this request."

He added that the state usually funds proposals when the business being recruited makes "significant commitments of resources to the venture."

Comcast-Spectacor has said it's putting in just 8 percent of the project's cost, or $35 million.

Virginia Beach has proposed putting in $241 million of its own money. The state's $150 million subsidy would have included $70 million for the arena itself and $80 million in team relocation expenses.

Sacramento's deal, abandoned by the Maloofs in April, was about 65 percent taxpayer funded.

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