Developer Sues Virginia Beach For $140 Million

– Virginia Beach Arena Rendering

A developer is suing Virginia Beach, Va., for $140 million after the city allegedly ruined its reputation by pulling out of a deal to build an arena.

In a 9-1 vote the Virginia Beach City Council decided in November to back out of the deal with Mid-Atlantic Arena to build a $220 million venue at city’s ocean front, according to The Virginian-Pilot. The city claimed that the developer failed to secure $70 million in financing and provide paperwork for a $150 million loan.

Mid-Atlantic contends in the lawsuit that it did in fact deliver loan documents on time and that the contract did not require it to secure the funding.

“The city pulled the rug out from under the developer, causing a substantial waste of time, money, goodwill and other resources,” the suit says.

“Making matters worse, the city immediately embarked on a public relations campaign to wrongfully blame the developer for the arena’s demise in a blatant effort to control the narrative in the media and divert the public’s attention form the city’s wrongful conduct.”

Several equity partners received refunds after the city ended the deal. The reimbursement money came from an escrow account that the developer said it invested “tens of millions in equity” into.

The suit also said that AEG, who planned on operating the new arena, “agreed to invest millions of dollars into the project and to have a profit-sharing interest.”

“Mid-Atlantic Arena LLC greatly desired to bring an arena to Virginia Beach, not a lawsuit; but since that is now impossible, we have no choice but to ask the courts to help us recover our significant investment, as well as lost revenue, and rebuild our standing,” the developer said in a statement.

The city entered an agreement with Mid-Atlantic in 2015. The deal was for the company to build a privately-operated arena on city land in exchange for up to $476 million over 33 years.