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VIRGINIA BEACH — The city of Virginia Beach is providing $18.4 million more in taxpayer money — a 60% increase — than what it originally committed for the construction of an entertainment venue that will accompany the proposed surf park, The Virginian-Pilot has determined.
The new figure, which now totals $53.4 million, comes after a recent vote to increase the funding, which revealed that the city also discreetly slipped an additional $8 million for the entertainment center into its budget this past spring. At the same time, another $4 million was also made available for transfer to the project.
The growing cost to build the venue has been a point of contention for Councilman John Moss, who believes the city should have considered backing out years ago.
“If you’re not willing to say ‘no’ and walk away, you’re always going to overpay,” he said Wednesday.
Venture Realty Group of Virginia Beach is partnering with musician Pharrell Williams on the $325 million Atlantic Park project, which will also include apartments, offices, retail and restaurants on 10 acres at the Oceanfront. The entertainment venue, which was requested by the city to be part of the project to fill a void at the Oceanfront, will be built on Arctic Avenue between 19th and 20th streets.
Virginia Beach agreed to pay $30 million for a 3,500-seat music hall when it inked the development agreement in 2019. The city, which will own the venue, has increased that amount three times since then.
The first indication that the city would need to chip in more money came to light in 2021, when then-Deputy City Manager Ron Williams told the council that the original design plans were outdated and the facility needed to be larger with an expanded outdoor lawn and mezzanine and balcony levels.
The city approved an additional $9.2 million for a total of $39.2 million.
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Then, late last spring, in a vote that included dozens of other last-minute budget add-ons, the City Council approved the additional $8 million for the entertainment venue to cover increased costs as a result of supply chain issues and inflation, bringing the new total to $47.2 million.
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The $4 million that’s on standby has been earmarked for infrastructure improvements around the site or, if necessary, for the entertainment venue.
On Tuesday, the City Council approved another $1.2 million to cover $462,000 in increased construction costs and $750,000 for a stage and related fire suppression features.
Moss was the lone vote against it. He said the venue operators are supposed to cover the costs of sound and equipment.
“Why are we paying that?” Moss said. “That’s to facilitate the groups that are going to be performing; that should be part of the Live Nation expense.”
Oak View Group, an entertainment investment company, and Live Nation, which promotes live music events, will operate the venue and provide $5 million toward construction. The lease agreement between the city and the operators has not been finalized yet.
The developer is expected to close on the construction loan soon and break ground, according to the city.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com