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NOVEMBER 10, 2015 MINUTES - SPECIAL FORMAL SESSION CITY OF VIRGINIA BEACH "COMMUNITY FOR A LIFETIME" CITY COUNCIL 4GAtB C MAYOR WILLIAM D.SESSOMS,JR.,At-Large Jtiq . G VICE MAYOR LOUIS R.JONES,Bayside-District 4 p4 -. ?'p�, M.BENJAMIN DADAVENPORT,At Large A.. 2. ROBERT M.DYER,Centerville-District I BARBARA M HENLEY,Princess Anne-District 7 ` SHANNON DS KANE,Rose Hall-District 3 .4. 71n , ?iu JOHN D.MOSS,At Large AMELIA ROSS-HAMMOND,Kempsville-District 2 r € 4 e� DUf NPS\ JOHN E.UHRIN,Beach-District 6 ROSEMARY WILSON,At-Large JAMES L. WOOD,L.vnnhaven-District 5 CITY HALL BUILDING 2401 COURTHOUSE DRIVE CITY COUNCIL APPOINTEES VIRGINIA BEACH, VIRGINIA 23456-900.5 CITY MANAGER JAMES K.SPORE PHONE:(757)385-4303 CITYATTORNEY-MARK D.STILES CITY COUNCIL AGENDA FAX(757)385-5669 CITY ASSESSOR-JERALD D.BANAGAN E-MAIL:Ctycncl@vbgov.coe t CITY AUDITOR-LYNDON S.REMIAS IO NOVEMBER 2015 CITY CLERK--RUTH HODGES FRASER,MMC MAYOR WILLIAM D. SESSOMS,JR. PRESIDING I. SPECIAL FORMAL SESSION - City Council Chamber- 4:00 P.M. A. CALL TO ORDER—Mayor William D. Sessoms, Jr. 1. READING OF THE MAYOR'S CALL FOR FORMAL SESSION B. ROLL CALL OF CITY COUNCIL IL INFORMAL SESSION - City Council Chamber- A. CALL TO ORDER—Mayor William D. Sessoms, Jr. B. RECESS TO CLOSED SESSION III. FORMAL SESSION - City Council Chamber- A. CALL TO ORDER—Mayor William D. Sessoms, Jr. B. CERTIFICATION OF CLOSED SESSION C. ARENA PROJECT Douglas Smith, Deputy City Manager D. OFF-SHORE OIL AND GAS EXPLORATION Clay Bernick, Administrator—Environment and Sustainability Office IV. ADJOURNMENT ********************** If you are physically disabled or visually impaired and need assistance at this meeting, please call the CITY CLERK'S OFFICE at 385-4303 ******************** 11 i -1- A :4C r��fiC7 t`z n 52,./V-,_ G i' (U ,)>1' -l kz r ,S .�b L�' -y 4,- 64 �F Ol'R NkV�.aY VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia November 10, 2015 Mayor William D. Sessoms, Jr. called to order the Virginia Beach City Council's SPECIAL FORMAL SESSION in the City Council Chamber, City Hall, on Tuesday, November 10, 2015, at 4:00 P.M, to discuss the potential award of a public contract concerning the ARENA project Council Members Present: M. Benjamin Davenport, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Shannon DS Kane, John D. Moss, Amelia N. Ross-Hammond, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: None November 10, 2015 -2- ITEM#65386 MAYOR'S CALL FOR FORMAL SESSION Mayor Sessoms read the Mayor's Call for the SPECIAL FORMAL SESSION: November 10, 2015 "HONORABLE MEMBERS OF CITY COUNCIL In accordance with the Virginia Beach City Code Section 2-21, and by the authority vested in me as Mayor of the City of Virginia Beach, I hereby call for a SPECIAL MEETING of the VIRGINIA BEACH CITY COUNCIL: Tuesday,November 10, 2015, at 4:00 P.M. City Council Chamber City Hall 2401 Courthouse Drive The purpose of this SPECIAL MEETING is for City Council to CONVENE A CLOSED MEETING pursuant to Virginia Code Section 2.2- 3711(A)(29) to discuss the potential award of a public contract concerning the ARENA PROJECT because discussion in an open session would adversely affect the City's bargaining position or negotiating strategy. No votes will be held, other than the votes in open session to convent and cert] the closed meeting. Sincerely, s/ William D. Sessoms,Jr. Mayor" cc: City Manager City Attorney City Clerk City Auditor Deputy City Managers Media and Communications FOIA Office November 10, 2015 Gt141A $EAc j r City of Virginia Beach ✓y Z irs ��t Z 5 Op OUR NAS\ON VBgov.co m WILLIAM D.SESSOMS,JR. MUNICIPAL CENTER MAYOR BUILDING 1 2401 COURTHOUSE DRIVE VIRGINIA BEACH,VA 23456-9000 November 10, 2015 (757)385-4581 FAX(757)385-5699 wsessoms @ vbgov.com HONORABLE MEMBERS OF CITY COUNCIL In accordance with the Virginia Beach City Code Section 2-21, and by the authority vested in me as Mayor of the City of Virginia Beach, I hereby call for a SPECIAL MEETING of the VIRGINIA BEACH CITY COUNCIL: Tuesday,November 10, 2015, at 4:00 P.M. City Council Chambers City Hall 2401 Courthouse Drive The purpose of this SPECIAL MEETING is for City Council to CONVENE A CLOSED MEETING pursuant to Virginia Code 5C 2.2-3711(A)(29) to discuss the potential award of a public contract concerning the ARENA PROJECT because discussion in an open session would adversely affect the City's bargaining position or negotiating strategy. No votes will be held, other than the votes in open session to convene and certify the closed meeting. Sincerely, /(11'(7( William D. Sessoms, Jr. Mayor cc: City Manager City Attorney City Clerk City Auditor Deputy City Managers Media and Communications FOIA Office -3- ITEM#65387 Mayor William D. Sessoms, Jr., entertained a motion to permit City Council to conduct its CLOSED SESSION,pursuant to Section 2.2-3711(A), Code of Virginia, as amended,for the following purpose: PUBLIC CONTRACT: Discussion of the award of a public contract involving expenditure of public funds, and discussion of terms or scope of such contract, where discussion in an open session would adversely affect the bargaining position or negotiating strategy of the public body pursuant to Section 2.2-3711(A)(29) • Arena PUBLICLY-HELD PROPERTY: Discussion or consideration of the, acquisition of real property for public purpose; or of the disposition of publicly-held property, where discussion in an open meeting would adversely affect the bargaining position or negotiating strategy of the public body pursuant to Section 2.2-3711(A)(3). • Beach District November 10, 2015 i I i -4- ITEM#65387 (Continued) Upon motion by Councilman Moss, seconded by Councilman Uhrin, City Council voted to proceed into CLOSED SESSION at 4:02 P.M. Voting: 11-0 Council Members Voting Aye: M Benjamin Davenport, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Shannon DS Kane, John D. Moss, Amelia N. Ross-Hammond, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: None (Closed Session 4:02 P.M. - 4:10 P.M.) November 10, 2015 -5- CERTIFICATION ITEM#65388 Mayor Sessoms RECALLED the SPECIAL FORMAL/CLOSED SESSION to order at 4:10 P.M Upon motion by Councilman Dyer, seconded by Council Lady Ross-Hammond, City Council CERTIFIED THE CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS. Only public business matters lawfully exempt from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies. AND, Only such public business matters as were identified in the motion convening the Closed Session were heard, discussed or considered by Virginia Beach City Council. Voting: 11-0 Council Members Voting Aye: M Benjamin Davenport, Robert M. Dyer, Barbara M Henley, Vice Mayor Louis R. Jones, Shannon DS Kane, John D. Moss, Amelia N. Ross-Hammond, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: None November 10, 2015 -6- PRESENTATIONS ARENA PROJECT ITEM#65389 (4:11 P.M.) Mayor Sessoms welcomed Douglas Smith, Deputy City Manager. Mr. Smith expressed his appreciation to City Council for their continued support of the Arena and Staff's untiring efforts. Mr. Smith advised Ms. Andrea Kilmer, representative of United States Management (USM), has asked to address City Council. The Mayor welcomed her. Ms. Kilmer expressed her appreciation to all of the City Staff that has worked on this Project for the past two (2) years. The last few weeks Doug Smith and Mark Stiles have been tireless in their efforts to work out the details of this Agreement. Today is an important milestone as this transaction creates a new "National Model"for Public/Private Investment. The parties have worked diligently in addressing issues raised by all of the stakeholders, specifically, the Citizens of Virginia Beach. This Arena is a "game-changer"for the City and the Region. Ms. Kilmer advised the local team members, along with SB Ballard and Clark Nexsen, will have hands-on involvement with the construction and day-to-day operations of the Arena. They are proud of the economic impact the Arena will have on the City with creating new jobs during construction and after. The Arena will serve as a venue for major entertainment and professional sports that currently bypass the Region. The goal is to be up and running in 2018: ",; .4_,.. Arena Project Update City Council Public Briefing Douglas L. Smith November 102015 u � �� l" I' 'fir ' Adm d9 � November 10, 2015 9 I II i -7- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Mr. Smith advised a lot of the information in today's Briefing is a repeat of information presented last year; however, he feels it is important to make sure to refresh everyone's memory. Below is an overview of today's Briefing: Presentation Overview • Summary of Arena Plans and Developer Team • USM Plan of Finance • City Plan of Finance • The Deal l Documents", • Timing • Path Forward ' r kBr% s$ 2 Below is the Summary of Arena Plans along with the key features: Summary of Arena Plans The Arena will have the following key features: Location Next to the Virginia Beach Convention Center at Oceanfront Cost 5200,000,000 Size 500,000 square feet Capacity 16,500:expandable to 18,000 Ownership Structure City to lease land necessary for construction of Arena to USM for a term of 60 years Operator USM (SMG) Premium Seating: Suites 30 Club Seats 500 Loge Boxes 40 3 November 10, 2015 -8- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) The Developer, USM, consists of the following local and nationally based companies: The Developer Team t Ito - The USM Team consists of the following: United States Management,LLC Design/Build Team ? Management and Admin Team ESG/CMEC Operations Team ESG Public Relations �_ �_... ....._7 Rubin Communications Group Design I Arena Operations and AECOM ' Legal/Tax Management Clark Nexsen SMG GreenburgTraurig Design/Build Wilks,Alper,Harwood,McIntyre Joint Venture Mortensen Construction S.B.Ballard Construction 4 USM's Plan of Finance includes private ownership and financing of$170-Million of private debt. The City will make incentive payments to the Developer equal to direct taxes generated by the Arena,plus 1% of the existing Hotel Tax. The VBHMA agreed to this participation as a part of the lodging tax: eu USM Plan of Finance for Arena The Developer will be responsible for providing the financing for the Arena. Private ownership and financing is a unique,non-traditional structure The financing consists of$170 million of private debt from foreign lender,$40 million of private equity provided by the Developer,of which$10 million is for working capital. The City will make incentive payments to the Developer equal to the direct taxes generated by the arena plus 1%of the existing hotel tax. D Payments to be made from an Arena Fund established by the City and funded,subject to annual appropriation,until 2045. November 10, 2015 -9- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) USM Plan of Finance for Arena (cont,) • The Developer is expected to pledge to its lender the City payments it receives for payment of private debt to be issued. • The Developer can also pledge Arena revenues, including parking and development fees included in the ticket price. • The City and Developer will enter into a 60-year lease for the property. • The Developer is responsible for any revenue shortfalls. Shortfalls in debt service or default by the developer to its lender will not create City responsibility. Developer debt is non-recourse to the City. • At termination/expiration of lease,ownership of the Arena vests in the City. 6 The City is responsible for construction of the "off-site" infrastructure and improvements an estimated at $76-5-Million. The improvements will be funded through the issuance of Public Facility Revenue Bonds and Debt Service will be paid from the City Tourism Investment Fund("TIP"): City Plan of Finance Arena _ = Infrastructure USM will design and construct the on-site infrastructure improvements at city cost subject to a cap • The City will design and construct and fund off-site infrastructure improvements. • The total cost of these improvements as estimated at$76.5M • These improvements will be funded through the issuance of Public Facility Revenue Bonds. Debt service on the$76.5 million for the infrastructure will be paid from the City's Tourism Investment Program Fund("TIP Fund")*. • Scope of infrastructure improvements: Surface parking area o Stormvaler collection and conveyance .> Public Plaza Area LED Lighting and Streetscaping, Undergrounding Utilities Turn lanes and sidewalk improvements and traffic signalization 7 November 10, 2015 -10- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Below is a refresher of the TIP Fund, which finances Projects related to Tourism and mainly located near the Oceanfront. The additional$1.00 per night Hotel Room Flat Tax will not begin until January 2017: The Tourism Investment Program (TIP) Fund The TIP Fund is funded with a 5-cent cigarette tax,10%amusement tax,5% participatory sports tax,5%hotel tax,1.06%meals tax,plus other smaller taxes. Currently,the primary expenditure is for debt service of almost$24 million on the Convention Center and the Hurricane Protection Project and other tourism related projects. The hotel room flat tax is wr ire& planned to be increased in $ �l r FY-17 from$1.00/night to a � 4• `^ total of$2.00/night for five years to help support debt service on the Infrastructure. a Below is the Summary of Financing Sources for City Expenses and Incentive Payments to USM. It is important to understand that this Project is in no way expected to have any impact on the General Fund: Summary of Financing Sources for City Expenses and Incentive Payments to USM 30-Year USM Incentive Payment —$3.2 million est.annual payment from 1%of hotel tax from TIP fund;plus$4.5 million from annual taxes generated by the facility;plus$1.7 million in real estate and personal property taxes(year 1 estimates,escalated each year)to be paid from Arena Fund City Costs —$6.5 million average annual debt service payment on$76.5 million paid from TIP fund for 20 years -Annual fiscal impacts Total Net fiscal Impact $6.5 M Payments to USM $9.4 M City Services SS_5 MM Total Annual Fiscal Impact $3.2 M City responsibility not expected to have any impact on the General Fund •City components are from the taxes generated by the arena and from the TIP fund a November 10, 2015 -11- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) The "Basic Deal" is set forth below. The key points are the Project is privately owned, managed and controlled; the Lease will go thru the Development Authority; and, the property changed from 5 acres to 5.8 acres of land: Msl The Basic Deal I. Privately,owned,managed,controlled Arena in Virginia Beach II. City providing land,infrastructure and revenue streams supporting the facility's debt service • City land leased through VBDA • 5.8 acres plus exclusive use of plaza and parking areas during events • 60 year term • City's interest in land subordinated to private loan-pay off loan or lose land • All"But for taxes"and 1%Hotel tax paid into Arena Fund and disbursed to USM for debt service • $76.5M in infrastructure paid from TIP Fund 10 The Basic Deal (conet) III. USM obligations • Finance,construct and operate the Arena • Build it in accordance with plans • Maintain and Operate Arena according to minimum standards for quality and number of events • Primary operational standards=20 events of 7,500 or more and 450,000 total paid attendance • Subjective standards for maintenance and operation based on comparable arenas located in Lincoln,Tulsa,Jacksonville 11 November 10, 2015 i pl -12- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Below are the documents related to the Arena: Deal Documents 1. Development Agreement Relationship through construction 2. Cost Participation Agreement On site infrastructure 3. Lease Primary 60 year agreement 4. Arena Revenue Fund Flow of tax revenues to USM for 30 Agreement years VBCC and Arena 5. Cooperation Agreement City,USM,Lender 6. Loan Cure Rights Agreement 7. City Council Resolution The Development Agreement manages the City's relationship with USM through construction: Development Agreement ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ARTICLE I DEFINITIONS 4y pqun a 0.vNeen ARTICLE II ARENA PROJECT pt ➢Neon ev cnY 2J M 9nc yz Il l.irvmem.ro X S IGNMe ARTICLE Iy PLANS IrrorovwmeIDe ARTICLE I%ASSIGNMENT AIII p,y pnunmrm I imi+io�u w 0.vNow� ?S fl P1 miALAulannsra zz Pd e••m wc� Pr waelv.npp.* I ARTICLE%MISCELLANEOUS ARTICLE IV PRELIMINARY PERIOD Jqy Mw1YYen ,yews ]43 EIM1n o,Terr,inweAm yx pametivw cemaimw eM L.na us pooranl.vxnw 14A Proi.n Rnmwnva 4.4 I eel conoNmwm 12A gsnansamahamatt 4.1 Coll.ruatonI nw cwmwuen J9A4.p 5001 43 14.4 14.2 limmusnAUFACul 41 FaLIMIaeeniwtiw e,U R I•r ARTICLE V CONSTRUCTION LOAN CLOSING Bwffimn LI pewoonce na ie mnaru tWasaWlsal 4S 4.4 Cann�ueuen 20.24 .10 Me Jury 1,1•1 E..nesuw parwme4 4L 9.422 ewncC U tc,x ARTICLE VI CONSTRUCTION OBLIGATIONS n_ ewwry vMm nr 41 43 D•vw .n wpwrom+nn 4.4 fm'eec rwwnlmn oeimaanwm ,owe _ L nenwayN 03 REPRESENTATIONS EP SENTATnfw • ARTICLE XI SMALL BUSINESS ENHANCEMENT ARTICLE VII REPRESENTATIONSANO WARRANTIES REQUIREMENTS AND MINORITY CONTRACTING GOAL LI From con Z3 From 0.smw� 13 November 10, 2015 -13- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Below are the Key Development Agreement Terms. Since the City is dedicating property taxes, there will be some private loan approval rights: Key Development Agreement Terms • Approval of private loan terms limited to(1)assuring full funding of loan;(2)City and lender protections and cure right; (3)absence of terms likely to result in credit rating agencies treating USM debt as direct City debt;and(4)general consistency with debt-equity structure. • Timing • After adoption Resolution USM has :• 8 to 10 months to secure loan commitment. 8 to 10 month to close the loan :• 10 to 12 months to start construction • Outside Opening Date: October 2019 14 The Lease is for sixty (60)years: '570-14,‘ Lease • 1. PREMISES;PLAZA;PARKING • 20.NOTICES • 2. TERM • 22.MEMORANDUM OF LEASE • 3. RENT AND OTHER CONSIDERATION • 23.WAIVER • 4. TAXES AND UTILITIES • 24.PROVISIONS SUBJECT TO APPLICABLE LAW • 5. USE AND OPERATION • 25.GOVERNING LAW;VENUE • 6. CONSTRUCTION OF IMPROVEMENTS BY TENANT;MODIFICATIONS TO • 26.WAIVER OF JURY TRIAL ARENA • 27.MEDIATION;LITIGATION • 7. OWNERSHIP OF IMPROVEMENTS AND OTHER PROPERTY • 28.NON-APPROPRIATION • 8. MAINTENANCE AND REPAIR • 29.NET LEASE • 9. CONSTRUCTION;DISCHARGE OF • 30.POWER AND AUTHORITY LIENS • 31.RESPONSIBILITY OF TENANT • 1 • 11.INDEMNITY 11.INSURANCE • 32.COUNTERPARTS • 12.DAMAGE OR DESTRUCTION • 33.SUBMISSION • 13.CONDEMNATION • 34.LEASEHOLD FINANCING • 14.DEFAULT • 35.FEE SUBORDINATION • 15.ASSIGNMENT AND SUBLETTING • 16.SURRENDER • 38.TRANSACTION AGREEMENTS • 17.QUIET POSSESSION;STATUS OF • 37.NONDISCRIMINATION TITLE • 38.DRUG-FREE WORK PLACE • 18.SUCCESSORS AND ASSIGNS •• 19.MISCELLANEOUS 39.ADDENDUM AND EXHIBITS November 10, 2015 I pl I -14- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) The Key Lease Terms consist of Parking and Redevelopment of the forty (40) acres surrounding the Arena site. It is important to note the "season"for the Arena is the off-season for the Oceanfront with events being held between October 151 thru May 15`'': -KEY LEASE TERMS • Parking • City must identify and provide 2700 spaces for any show with over 6,500 ticketed guests • Ticket holders for Arena Events will be allowed to park free in City-owned or controlled lots and garages during Arena Event Periods from October 1 —May 15. • Any public parking spaces eliminated by redevelopment must be replaced • Redevelopment of 40 Acres • Developer approval/replacement facilities • Use restrictions • For 40 years if the City financially supports the development/operation of an indoor entertainment venue with more than 4,000 seats within 5 miles of Arena, USM is relieved of all minimum operating standards. 16 The City does have remedies should USM breach any Agreements: Key Lease Terms • Remedies to the City if USM breaches agreements(enforcement of City rights) • Go to court and have Judge tell them to stop • Minimum Operating Standards—if not met for 2 consecutive years, City can buy for appraised value or outstanding loan balance plus fees whichever is more • Arena Revenue Fund payments continue absent an adjudicated default and USM's failure to comply. • If USM defaults on their loan • The bank can •: Step in and put in a new operator;or •r Proceed to foreclosure • The City can(if the bank does not cure) •: Acquire property from USM for FMV;and o- Assume the loan or pay it off(amount paid to lender deducted from acquisition price paid to USM) Pre-opening:with no prepayment or other penalty Post-opening:City responsible for lenders fees and charges above outstanding principal and interest OR •r Allow arena to go into foreclosure 17 November 10, 2015 i I I -15- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) The Cost Participation Agreement is for the infrastructure to support the Arena. The City is responsible for the construction of the off-site infrastructure improvements: Cost Participation Agreem.. (Arena infrastructure) • The City is responsible for the construction of the On-Site Infrastructure Improvements (within the Project Area)and the Off Site Infrastructure Improvements. All infrastructure improvements will be City owned and maintained(except major venue signs).The Cost Participation Agreement governs construction of the On-Site Infrastructure Improvements by USM for the City. x i a8 r a o a m`, 18 The Developer will construct the on-site infrastructure improvements on the City's behalf: Cost Participation Agreement (Arena infrastructure) • Developer to construct On-Site Infrastructure Improvements on City's behalf • Allows On-Site Infrastructure Improvements.which will eventually be public infrastructure.to be integrated into the design of the Arena to include a singularity of design and quality. • Allows On-Site Infrastructure Improvements to take advantage of shared mobilization costs,project cohesiveness,ownership-related risk during construction,and the ownership by the City of the On-Site Infrastructure Improvements as public amenities. • Agreed cost cap of$45,020,000 for On-Site Infrastructure Improvements. • USM to follow City guidelines for SWAM-certified small business enhancement. 19 November 10, 2015 I � f -16- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Below is a summary of the Arena Revenue Fund Agreement: Arena Revenue Fund Agreement • To support USM's financial obligations relating to the Arena Project,City has agreed to create and manage a fund(the"Arena Fund")as authorized by §§15.2-5921-5927 of the Code. • Purpose of Agreement is to conform to state law requirements and set forth the parties respective rights and obligations regarding the Arena Fund. • 30 year term • Direct taxes from Arena Operations("But For"taxes)included in Arena Fund based on actual receipts when received: • Real Estate Taxes • Personal Property Taxes • Business License Tax(BPOL) • Admission Taxes • Local Sales Taxes(1%) • Local Meals Taxes(5.5%) • Portion of State sales tax(2.025%) 20 Below are some more details relating to the Cooperation Agreement. Communication is key to maximize both venues'utilization: Cooperation Agreement • Due to their close proximity, Arena and VBCC will need to collaborate and closely coordinate important operational functions - parking, traffic control, security, booking, scheduling and other similar functions that could impact each facility's ability to perform, especially given the potential future development of the Arena Project Area. • The purpose of this document is to set forth general policy guidelines and parameters regarding date, availability, booking and scheduling in order to minimize potential conflicts with major events as well as maximize both venues'utilization. 21 November 10, 2015 I I II -17- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) Below is a summary of the Loan Cure Rights Agreement: Loan Cure Rights Agreement • Standard agreement between City as Landlord, USM as tenant and Lender to memorialize their understanding and agreement with respect to matters relating to the Transaction Documents and the Loan Documents and the transactions evidenced and contemplated thereby. • We have the framework, however, we cannot finalize until USM and Lender reach agreement on loan terms 22 Below is the details regarding the Resolution City Council will consider on December 8th: City Council Resolution • CITY MANAGER AUTHORIZED TO : • Execute Development Agreement • Execute remaining transaction documents after: :•State reviews and approvals(General Assembly&State Treasurer) ;•Conditions to loan closing satisfied • 5.8 acres to be transferred to VBDA when these conditions satisfied and VBDA agrees to execute lease and re-convey land to City 23 November 10, 2015 I II -18- PRESENTATIONS ARENA PROJECT ITEM#65389 (Continued) From today, the next forty (40) days are set forth to follow the schedule below: Path Fo rwa rd • November 10 CC public Briefing—Docs Publicized • November 17 VBDA Briefing • November 19 Public Briefing at VBCC • December 1 CC Public Hearing • December 8 Vote • December 15 VBDA vote to authorize their role in transaction 24 Discussion i �4. Mayor Sessoms expressed his appreciation to Deputy City Manager Smith, the City Attorney, as well as USM for their hard work. City Council's cooperation in bringing this deal to fruition is a big factor in the success of this project. November 10, 2015 -19- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 5:00P.M. Mayor Sessoms welcomed Clay Bernick, Administrator - Environment and Sustainability Office. Mr. Bernick expressed his appreciation to City Council for their continued support. Mr. Bernick stated City Council adopted a Resolution regarding Offshore Drilling approximately five (5) years ago. The Resolution supported exploration, requested that royalty payments be split between the States on the Atlantic Coast and no impact operations for longevity of the City's relationship with the Navy. City Council requested information from both sides of this issue and, introduced Deborah Murray, Attorney with Southern Environmental Law Center: •-,.. ,.:.-7_r, s Drii1in WHAT'SAT � - Ms. Murray expressed her appreciation to City Council for the opportunity to provide information to the City. Ms. Murray advised that the Federal Government provides a new Plan every five (5)years: 2alt-2a120a+M Gay lsasa,y zsac rto .ay.�a.MA Mia-Mlanlb aM SaNn Rtlmtic haRsn Ana °�' Q xmt+ngana wtMry Y;Y •,uu.o-,�.� ,:-�, ,� Norm aNnnt,c ,w i P Ms0-Atlant,t x } t } South Atigntic i'i 02015November1 ,+ of r:ms" "j1� n , -20- PRESENTATIONS OFF-SHOREPLORATOIL AND GAS EXPLORATION ITEM#65390 (Continued) , "Ou strategy cels for e ,, areas offshore,exploring�� " protecting places that are too special to dri I Secretary of the Interior Sally Jewell � x lr 4 yA Below is the draft Proposed Program issued in January 2015: Five Year Program (Draft Proposed Program Issued January 2015) Proposed proposed Final Program Final Five Year Expect Program Early 2016 _Program Announced Oil lGasleaseSaiet2021) xplorationPlan Devpment and Production November 10 , 2015 -21- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) According to the Quest Report, some of the benefits from Offshore Drilling are identified below. However, it is important to note that the Quest Report overstates jobs and economic activities because the report is based upon inaccurate information: Benefits of Offshore Drilling? 25,000 jobs? Revenue sharing? Lower gas prices? Thriving Tourism Economy and then Coastal Way-of-Life is at stake should Offshore Drilling begin in the Mid-Atlantic Region: What's at Stake? Thriving Tourism Economy and Coastal Way of Life November 10, 2015 I II -22- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) Virginia Beach Tourism 2014: $1.4 billion spent by visitors Over 12,500 jobs,$244 million in salaries Coastal Virginia Tourism 2013: $4.4 billion Over 43,400 jobs,$875 million in salaries Commercial Fishing 2013: Virginia 4th in the Nation for Volume of Fish Landings (Highest on East Coast) Also, Military Operations and the City's relationship with the Military are at stake should Offshore Drilling begin in the Mid-Atlantic Region: What's at Stake? Military Operations November 10, 2015 1 fl -23- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) Below is the Department of Defense Oil and Gas Stipulations from 2010: Department of Defense Oil and Gas Stipulations(2010) in relation to the 2017-2022 OCS Planning Area `vn i I �T �� 16 � Newport News. p iiflfl J) �!�5'p Nodolk�Bean i�fi hili " is hi y �` Nc Oil and Gas Stipulations No Oil and Gas Activity �� —0 No Permanent OiI 8 Gas Surface Structures "ft,111.nw•. ,,y ce,uY .. .s`yea F.rwarnu Site Specific Stipulations � 'Der ;,q,�' Below is the proposed Virginia Offshore Leasing Area: PROPOSED VIRGINIA OFFSHORE LEASING AREA Nouaixn lee, / vswamr, /„* ,'//,; /''' ./7 ';'<//:;''''''''''' ..,4# d'l'4.' Lesme 2Gt]2G22 05 Mi�rina Area A - 6 nen�i Saye 22G luer3 t I til c..s in 1c ry;N ..,.<rn .>I (-nu,r ,„wand ..nr November 10, 2015 � � f —24— PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) The Natural Environment is also at stake should Offshore Drilling begin in the Mid-Atlantic Region: What's at Stake? Natural Environment The Secretary of Interior must consider the relative environmental sensitivity ranking of an area and the Atlantic, according to the Department of Interior, ranks near the top of the scale: ,,�. �x� }y{ { � ,y Str 1kti 4�@iP ` kt tl�I l. a 3 —* FAI IAN 1111111 PI ll'Gl + 't, � sa x,x November 10, 2015 1 � IL —25— PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) awen 0..",,: -.'''' ,. _-'ef:_ '''iii.".r''' :7'.- 1/4. °,1:;''- '''.- ' Below is a depiction of the organisms recently discovered in the deep water of the Norfolk Cannon: µ$ l lam" d'b� ��1V 9ay�' '.41. ‘ It s� e ' � 4114 ouMery VA NC �a ttl f '4* :, t,- .1„,sie _it, ., , .fi . .ii ts.it4F Ima4e courlrsY fBeepwcter•n ID13-PnthwaYs to Xhe Abyss. A('hfSO.1,113GS November 10, 2015 -26- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) Below is the map of the North Atlantic Right Whale sightings: North Atlantic Right Whale Sightings Map (November 1,2010 to November 1,2015) Because whales swim continuously, exact locations are obsolete within minutes of a sighting. Source: NOAA..Northeast Fisheries Science Center (http:dwww.nefsc.noaa.gov/pstjsurveys/) Unfortunately, we all know, it only takes one mistake for a disaster to take place. There is no such thing as "safe" Offshore Drilling and no guarantee for effective or quick clean-up: 1,4 . fie. November 10, 2015 -27- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) The effects from the BP Oil Spill are being felt five years later. In fact, the 2014 Oyster Harvest levels are 1/3 of pre-oil spill: �R f r• The Map below shows spill reports from July 2010 to April 2015. In Louisiana alone, an average of 1,500 "minor spills"are reported each year: Gulf Spill Reports July 2010 to April 2015 ou_fcn y o � *71'4* + #Ly�sr� fry t :A • t t 4a1'i ri.3. #i. 'f PkRSf alt'♦a `a� `"`,+�` yfirM i y t•;Sy�id.d�fAS� i�� as*�_,^ �ss x V t j .fRidA R � Source:National Response Center,NRC) November 10, 2015 _28_ PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) March 25,2015 • \— \'SRC�Iti1;\tiL fl "The dirty industrialization of the coast required to support the oil industry will be at odds with the strong existing tourism and fishing industries dependent on clean beaches,water and fisheries" Below is a picture of the infrastructure located in Louisiana: W .. Nh ;n ren a November 10, 2015 i II I -29- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) Below are the Locals opposed t Offshore Drilling. Also, the Resort Beach Civic League recently noted opposition as well: Local Opposition to Offshore Drilling • Virginia Beach Restaurant Association • Virginia Beach Hotel Association • Resort Advisory Commission • Sandbridge Beach Civic League • Lynnhaven River NOW • Princess Anne Garden Club • Virginia Beach Garden Club Below are the Local Governments opposed to South Atlantic Drilling and Exploration: LOCAL GOVERNMENTS OPPOSED TO SOUTH ATLANTIC.DRILLING & EXPLORATION ''� �` E I 1 tl Isia J N Horv,t J ty NC 6 6 R f NC N ,N J NC �, r I R. h NC C`ok l l NC NC vx� 6. G II8'-I C p Ili 11 NC SLJ NC _ C D C t,t•('. Sin -2°' p k AC • a �P 7 _ -; � t Id I_N �vs Iy IV Nc te I N_ Vuilr NC =; .,.}. - 41 Iiy kM9c,NC Yfriy tom.I e Each,NC .. KII Dcr IRITIS NC r A(IJr..B a n SC KJ.i I la SC �� u a a trn� sc a tal c S 4",`, I h i C rte,SC thh I.3 h5' C I b SC 1 I 1 S( SC4. k [I(` " fi GA H It H tl SC 5 1 C November 10, 2015 i 11 -30- PRESENTATIONS OFF-SHORE OIL AND GAS EXPLORATION ITEM#65390 (Continued) r'-',,..4.--'----'-':::;:: - .;,.:-.. . •ri g ' F9 - -7.72 Fr,' -•ArofeltA!*--*-4‘'. - '41 � . ., .ruFrl at�P---i-.7-4-.m si ' '' ! Sou thern Environmental 0;4 Law Center Mayor Sessoms expressed his appreciation to Ms. Murray for this presentation and to City Staff that has worked on this issue. November 10, 2015 -31- ADJOURNMENT ITEM#65391 Mayor William D. Sessoms, Jr., DECLARED the City Council SPECIAL MEETING ADJOURNED at 5:36 P.M. ( / 2t.1(3014 c Amanda Finley-Barnes, CMC Chief Deputy City Clerk Rdth Hodges Fraser, MMC William D. Sessoms,Jr. City Clerk Mayor City of Virginia Beach Virginia November 10, 2015