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Beach's projected Sportsplex earnings sink 42 percent
By Deirdre Fernandes, The Virginian-Pilot - 2/3/2009
VIRGINIA BEACH
The City Council is poised to turn over the management of the Sportsplex and about 85 acres of land to two private groups, but the plan is likely to take longer to complete and generate less money than originally expected.
City analysts have lowered the projected revenues from the deal to $39 million over 20 years - 42 percent less than the $66.7 million anticipated last fall. Most of the new revenue would come from business, real estate and lodging taxes associated with the project.
The initial plans called for an indoor field house, outdoor turf fields and a shopping center. Now, with the economic downturn and the difficulty of obtaining financing, the project will be built in phases.
"Based on the economy and how it's changed radically from the fall... we're very comfortable," said Cindy Curtis, the parks and recreation director.
Initial projections, using the developer's numbers, assumed that most visitors who came to the Sportsplex from outside the area would stay in city hotels and eat in Beach restaurants, said Ron Berkebile, a budget analyst. The updated numbers assume visitors might spend money in Chesapeake and Norfolk, too, he said.
The deal still brings in additional revenue to Virginia Beach, said Brian Kirwin, a spokesman for one of the developers.
"The $39 million is $39 million more than it's making now," he said.
The City Council will vote on portions of the deal today and the rest later this month.
About 14 acres would be leased to a Fredericksburg-based group to build an indoor field house with courts for soccer, lacrosse, field hockey and volleyball. The developers, who include John Wack, the manager of the Fredericksburg Field House, would have an option to lease another 24 acres for outdoor turf fields.
Wack would pay $100 rent for each parcel and share a portion of his field house revenue - about $1.87 million over 20 years - with the city. He has promised to make about $1.7 million in improvements, including paving the Sportsplex parking lot.
In a separate but related deal, the Beach would turn over the management of the Sportsplex and the national hockey training center to Hometown Heroes restaurateur Chuck Thornton, who plans to spend $1.2 million to install artificial turf and upgrade the concessions.
Thornton would have a five-year option to lease for $100 about 7 acres next to the Sportsplex for a shopping center and share about $72,450 in revenue with the city over 20 years.
The city now spends $447,000 annually on the Sportsplex, and those costs would go away under the agreement, Curtis said.
Along with the cheap leases, the city would give both developers incentive grants worth a total of $2.9 million - essentially a rebate on the real-estate taxes the they would have paid over 10 years. Councilwoman Barbara Henley said the city's benefit is unclear. Wack, for example, proposed doing a similar but smaller project on private land a few miles from the Sportsplex two years ago, Henley said. She also worries that if the Sportsplex isn't successful under private management, it might be returned to the city.
"If we're not pleased with their management, yes, it would come back to the city," Curtis said. "But we'll welcome it with the $1.2 million in improvements."
Having Wack's indoor field house in the same area as the Sportsplex, several soccer fields and other sports-related development, will help lure visitors and tournaments, Curtis said.
"I think it's still a great deal," Councilman Ron Villanueva said.
Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com
