Amazon HQ2! The Cavalier Hotel is Back! How Virginia Incentivizes Big Real Estate Deals
Friday, July 19 2019 | The Omni Homestead Resort | Hot Springs, VA
CONTINUING Written Materials LEGAL EDUCATION
A presentation of The Virginia Bar Association’s Real Estate Law Section Amazon HQ2! The Cavalier Hotel is Back! How Virginia Incentivizes Big
PRESENTERS Real Estate Deals
Sandra “Sandi” Jones McNinch
Sandi McNinch currently serves as General Counsel for the Virginia Economic Development Partnership. In this capacity, she performs all legal functions for VEDP, including the negotiation and preparation of grant performance agreements with Virginia companies receiving discretionary economic development incentives administered by VEDP.
Prior to working for VEDP, Sandi worked as a public finance lawyer at Troutman Sanders, LLP, and its predecessor, Mays & Valentine, LLP. She represented localities, issuers, borrowers, investment bankers, credit providers and trustees in financings for public and private facilities and infrastructure. She also represented localities and developers in negotiating and implementing public-private partnerships, including community development authorities, public-private procurement and incentive packages.
Sandi graduated from the College of William & Mary, Marshall-Wythe School of Law with a Doctor of Jurisprudence. She received a Bachelor of Arts in Criminal Justice from Michigan State University. Sandi is a member of the Local Government Attorneys of Virginia Association and the Virginia Economic Developers Association, for which she has served as its General Counsel, Vice Chair and member of its Board of Directors. She is also a member of the Virginia State Bar, for which she is a former Chair of the Board of Governors of its Corporate Counsel Section and a former member of the Board of Governors of its Local Government Law Section.
R.J. Nutter
R.J. Nutter's practice includes zoning, land use and environmental law, municipal corporations, commercial development, real estate investments and annexations. R.J. is a member of the Zoning and Land Use practice at Troutman Sanders. Chambers USA has ranked R.J.’s Southern Virginia Zoning and Land Use Practice as “Tier 1” and noted from client feedback, "He has been invaluable in allowing us to break ground as expediently and cost-effectively as possible."
Representative Matters
The biographical information is provided by the speakers or collected from their websites. • Represented a Fortune 200 company in negotiations with local officials for the expansion of their Corporate Headquarters in Virginia. The expansion involved a $300 million corporate campus and over 700 new jobs. • Represented one of the Region's largest hospital programs on approvals and funding for a major new hospital for Behavioral Health, which will be the largest such program in Virginia. • Successfully represented one of the Commonwealth's largest developers of continuing care retirement communities for a major expansion of their facility in Virginia. • Successfully represented one of the largest food production and process companies in the U.S. in negotiating state and local incentives and obtaining necessary land use and environmental permits for a new plant in Virginia. • Successfully represented an exciting new entertainment concept called TopGolf. This facility costing $28,000,000 sits on 14 acres with a 65,000 sq. foot building and targeted driving range. Obtained discretionary and administrative approvals from the city and assisted TopGolf with local incentives. • Represented one of the largest hotel developers in Virginia on obtaining state and local incentives and obtaining all public approvals for the restoration of a historic hotel; development of a residential community around the hotel and redevelopment of a large oceanfront hotel, conference center and condominium development all totaling approximately $500,000,000. • Represented Parsons Transportation on P3 proposal for extension of light rail in Virginia Beach. • Represented Breeden Companies on P3 project with City for a mixed use apartment, entertainment center and public parking complex. • Represented one of the nation’s largest banks in the financing of a 55MW utility-scale solar facility (approximately $250,000,000 in value) in New Mexico. The bank provided the construction financing and will provide the long-term financing. • Represented Town Center Associates in obtaining the necessary rezoning and text amendments to the City Zoning and Site Plan Ordinances to facilitate the $100,000,000 Town Center project in Virginia Beach consisting of high rise office buildings, 300,000 square feet of retail, a 13-story luxury apartment building, a hotel and other land uses. • Represented APM Terminals of Virginia (Maersk Sealand) to obtain local approvals and text amendments to accommodate an $800,000,000 port facility in Portsmouth, Virginia, which is the largest privately owned and operated terminal in the United States. • Represented Kellogg Brown & Root (formerly Brown & Root) to obtain VMRC approval for 250 slip marina in protected waters on the Eastern Shore. • Represented Sentara Health Systems, Inc. to obtain rezonings, conditional use permits and text amendments to accommodate a $100,000,000 hospital and office park facility in Virginia Beach. • Represented one of the largest hotel developers in Virginia on a 4-tower hotel, time share resort development resulting in approximately $250,000,000 of new capital investment. • Represented Kellogg Brown & Root, Inc. in annexation of property from one municipal corporation to another to accommodate the development of the largest marina and golf resort developments in Eastern Virginia.
The biographical information is provided by the speakers or collected from their websites. • Represented Galloway Corporation to obtain Wetland Board VMRC approvals for a 120 slip marina to facilitate an $80,000,000 redevelopment of a peninsula in Virginia Beach. • Represented AT&T Wireless, Inc. in deployment of telecommunication devices throughout Southeastern Virginia. • Represented McCale Development in the first large residential development in Virginia designed by Stephen Fuller & Associates of Atlanta. • Represents a wide variety of commercial businesses, national retailers and developers for a retail, mixed use and redevelopment projects throughout Southeastern Virginia. • Represented Hotel and Motel Association in protecting industry from proposed Base Realignment & Closure (BRAC) regulations. • Represented Goodman Company from West Palm Beach, Florida, for development of 500,000 sq. ft. regional mall known as Landstown Commons Shopping Center in Virginia Beach, and one other shopping center in Hampton Roads.
Related Practices and Industries • Real Estate • Land Use and Zoning • Hospitality • Economic Development • Energy Real Estate Transactions • Government and Regulatory • Healthcare Real Estate • Leasing • Natural Gas • Renewable Energy
Speaking Engagements • 2018- Featured Speaker at the ODU – E.V. Williams Center for Real Estate on Public Private Partnerships. • 2015- Featured Speaker at Annual Meeting of Virginia Zoning Officials on the Cavalier Hotel. • Presenter, 2011 Association of Defense Communities Annual Conference, Norfolk, Virginia on Post-Brac/Joint Land Use Study Implementation. July, 2011. • Past speaker on land use and environmental law for the American Planning Association, the Virginia Municipal League, Virginia Association of Zoning Officials and for CLE accreditation for attorneys, Local Government Attorneys Association in areas of Land Use Law and Chesapeake Bay Local Assistance Boards. • 2010- Speaker at Association of Defense Communities annual conference, San Francisco, California on Balancing private sector property rights while protecting local and regional military installations. • 2008- Speaker at annual meeting of local Government Attorneys Association on urban development areas. • 2009- Speaker at ULI of Hampton Roads program on Growth Opportunities. • 2009- Speaker and host of state-wide meeting of Virginia Association of Zoning Officials.
The biographical information is provided by the speakers or collected from their websites. • 2009- Speaker at Association of Defense Communities annual conference, Boston, Massachusetts on Encroachment Issues and Land Use Law. • 2009- Speaker at annual conference of Local Government Association on the use of Tax Incremental Financing to structure new deals.
Professional and Community Involvement • Virginia Beach Bar Association • Sandler Center Foundation Board of Directors, 2009-2014; Executive Committee 2012- 2018 • Base Realignment & Closure (BRAC) Citizen Advisory Panel, 2005 • Virginia Beach Court Appointed Special Advocates, Inc., Board of Directors 2006-2007 • ULI Advisory Panel Member for Loudoun County, 2005 • Virginia Beach Visions, 2002-2015 • Member of Urban Land Institute, 1990-2015 • Board of Directors for the Contemporary Arts Center of Virginia, 1998-2002 • Chairman, Zoning Subcommittee, Resort Area Advisory Commission, 1986-1991 • Member of Large Retail Task Force for the Virginia Beach City Council 2002 • Revise and monitor ordinances regulating the commercial and retail industry • Assistant City Attorney of Virginia Beach, Virginia, 1979-1984 • Member, Association of Defense Communities, 2009-2014 • Rankings and Recognitions • Named in Best Lawyers as "Land Use Lawyer of the Year" for Norfolk area 2012, 2014, 2017, 2019. • Southern Virginia, Real Estate: Zoning/Land Use, Chambers USA (2013-2019). • Named to Virginia Business magazine’s "Legal Elite" in Real Estate/Construction (2004) and Real Estate/Land Use (2007-2018). • Selected for inclusion in the May/June 2010 Law & Politics’ Super Lawyers, Corporate Counsel Edition. • Named to the 2006 Super Lawyers list in Real Estate/Eminent Domain Law and the 2007- 2018 lists for Land Use & Zoning. • Recognized in The Best Lawyers in America for Land Use & Zoning Law, Litigation - Land Use & Zoning, and Real Estate Law in the (2007-2019).
Bar Admissions • Virginia
Court Admissions • U.S. District Court for the Eastern District of Virginia • Supreme Court of the United States • U.S. Court of Appeals for the Fourth Circuit
Education • University of Richmond School of Law, J.D., 1978
The biographical information is provided by the speakers or collected from their websites. • University of Richmond, B.A., 1974
The biographical information is provided by the speakers or collected from their websites.
HOW VIRGINIA INCENTIVIZES ECONOMIC DEVELOPMENT PROJECTS
VBA Summer Meeting - July 19, 2019 VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP AUTHORITY Like a Local EDA, VEDP is a Separate Political Subdivision . Governed by a 17-member Board of Directors 11 appointed by the Governor or the General Assembly 6 ex-officio: Secretaries of Commerce & Trade and Finance; staff leaders of General Assembly money committees; leader of the Virginia Port Authority; leader of the GO Virginia funding organization . CEO is hired by the Board – not a political appointment . Primarily funded by annual appropriations: ~ $30MM . About 110 employees throughout Virginia and the world . Focused on traded-sector companies: bringing capital investment and jobs to Virginia helping Virginia companies expand helping Virginia companies access foreign markets not tourism 2 ECONOMIC DEVELOPMENT Economic Development is All About Maximizing Opportunities . Economic Development is a team sport . For VEDP projects, it requires collaboration and contributions at the state level, the regional level, the local level, and from the private sector . At the state level, many different agencies, entities and institutions may be involved: . VEDP . Port of Virginia . State Agencies: VDOT, VDRPT, DEQ, DACS, DHCD, Spaceport . Institutions: VCCS, 4-year colleges/universities . At the local level, many different city/county departments are likely to be involved . From the private sector, contributions will be made by the developer, utilities, engineers, and others
3 INCENTIVE PHILOSOPHY Virginia is not Considered a High-Incentive State . Strong bias for grants, not tax credits or exemptions . Better control . More predictable (and, therefore, more valuable) to companies . Easier to track . Strong bias for paying grants after revenues have been received – staying “revenue-positive” . Will consider alternatives (escrow or letter of credit) . Variety of grant programs available for a variety of needs, including many administered by other entities . Emphasis on ROI . Only for “traded-sector” companies – those receiving 50%+ of their revenue from outside the Commonwealth
4 IMPORTANCE OF THE RETURN ON INVESTMENT ROI is Critical . Governments want to make smart investments in projects . Each project should result in a reasonable return to the governmental entity, as well as the project company . For the Commonwealth, the ROI is primarily driven by income taxes paid by net new employees, and, to a lesser extent, sales taxes paid for construction materials . For localities, ROI is primarily driven by additional real property and personal property taxes . To be sure, for some projects, the return may not always be entirely financial or directly measurable – seeding a new industry sector in a distressed community, creating new jobs in a community with high unemployment, solidifying an important local employer
5 AVAILABLE TOOLS – CASH GRANTS Cash Grants for Companies . Commonwealth’s Development Opportunity Fund (“COF”) . Cash Grant – not formulaic; averages about $3K per new job . Capex: $5 million / $2.5 million (distressed) / $1.5 million (double distressed) . New jobs: 50 / 25 (distressed) / 15 (double distressed) . Virginia Investment Partnership Act: . Virginia Investment Performance Grant: up to $5 million for existing manufacturers or R&D companies investing at least $25 million . Virginia Economic Development Incentive Grant: up to $10 million for a project with 400 new jobs (1.5x PAW) or 300 new jobs (2.0x PAW) – typically HQ projects and service operations . Agriculture and Forestry Industries Development Fund: Modest grants for projects using Virginia agricultural and forestal products . Port of Virginia Grant: Up to $500,000 for companies in maritime commerce that create at least 25 new jobs . Infrastructure Grants: VDOT, VDRPT and GO Virginia 6 AVAILABLE TOOLS – TAX CREDITS AND EXEMPTIONS From the Commonwealth, Valuable Tax Credits and Exemptions . Sales tax exemption for equipment used in manufacturing / clean rooms / computer equipment used in larger data centers ($150 million capex and 50 jobs at 1.5x the PAW) . Major business facility job tax credit: $1,000 per new job over 50 / 25 job threshold . Port-related credits, subject to certain limits: . $25 tax credit per TEU of cargo going to port by rail or barge . $3,500 tax credit per new job or 2% of qualified capital investments for companies increasing their port volume . Up to $250,000 tax credit for companies increasing their port volume . R&D tax credits: with differing amounts depending on the size of the R&D expenditure and whether the R&D is undertaken in conjunction with a Virginia higher educational institution
7 EXAMPLES OF PROJECTS USING AVAILABLE TOOLS Projects Around the Commonwealth . Dollar Tree: Expanded corporate headquarters . From the Company: $110 million capital investment / 700 new jobs . From Virginia: $4 million COF / $5.3 million VEDIG / $1 million jobs grant / $650,000 VDOT grant / $500,000 Port grant . From Chesapeake: parking decks / infrastructure / $4.5 million cash grant . Essel Propack: Expanded manufacturing facility . From the Company: $31.2 million capital investment / 45 new jobs . From Virginia: $150,000 COF / $300,000 VIP grant / $333,600 Enterprise Zone incentives / $330,000 Tobacco Commission loan . From Danville: $379,000 cash grant . Nestle: Corporate headquarters relocation . From the Company: $36.3 million capital investment / 748 new jobs . From Virginia: $6 million COF / $748,000 jobs grant / $4 million VEDIG . From Arlington: infrastructure / $4 million cash grant
8 AVAILABLE TOOLS – TOURISM DEVELOPMENT FINANCING PROGRAM Support Gap Financing for Tourism Projects in Tourism Zones . May use state and local sales tax revenues to support gap financing for the projects. The revenues described below are available solely to fund principal and interest payments on the gap financing. . Tier 1: Developer has funding for at least 70% of the project, < $100 million project . From Virginia, 1% sales tax on transactions taking place at the project . From locality, a like amount . From developer, a like amount . Tier 2: Developer has funding for at least 80% of the project, > $100 million project, not retail . Increases to 1.5% sales tax on transactions taking place at the project
9 EXAMPLES OF TOURISM PROJECTS
These Projects Are Utilizing the Program
. Hyatt Place Hotel in Fredericksburg: $11 million / 40 jobs . City Center at Oyster Point in Newport News: $22 million / 250 jobs . Cavalier Hotel and Restaurant in Virginia Beach: $145 million / 385 jobs . The MAIN in Norfolk: $77.5 million / 250 jobs . Hotel Weyanoke in Farmville: $12.2 million / 76 jobs . Element Hotel in Hampton: $17.3 / 22 jobs
10 INFRASTRUCTURE GRANTS
Modest Grants to Prepare Sites for Economic Development . Virginia Brownfields Restoration and Economic Redevelopment Assistance Fund Site assessment grants (up to $50,000) to assess environmental conditions Site remediation grants (up to $500,000) for restoration and redevelopment efforts . Virginia Business Ready Sites Program (VBRSP) for 100+ acre industrial sites Site characterization grants to defray cost of assessing current condition (up to $5,000) Site development grants to get a site to the next tier (up to $500,000) Special program underway to assess every site 25+ acres
11 NEW TOOLS – WORKFORCE SOLUTIONS PROGRAM Still in Formation – Name and Details Yet to be Determined . This is a major new initiative of VEDP, meant to be a “game- changer” for workforce solutions for larger business location or expansion projects . Mid-term goal for the program to be ranked nationally in the top 3-5. The 5-year goal is for the program to be ranked #1 . Fully customized to a company’s unique processes, equipment, and procedures . Major deliverables . Customized process & job-specific training . Leadership & collaboration skills training . Quality systems training . Manufacturing technology training . Training Media (animations, videos, etc.)
12 NEW TOOLS – COLLABORATIVE JOBS ACT
Through the GO Virginia Initiative . Requires two or more localities actively collaborating on an economic development initiative . Requires that collaboration / initiative lead to a traded-sector company creating at least 200 / 25 new jobs at PAW and making a $25 million / $1 million capital investment . If requirements met, the localities may share up to 45% of the Virginia personal income tax withholdings from those employees for up to 6 years . Localities will decide how to spend the proceeds . Aggregate limit for all such awards of $20 million per year . Certification of joint plan of localities and qualifications of companies initially made by VEDP . Final award details to be approved by GO Virginia Board
13 NEW TOOLS – INCOME TAX MODIFICATIONS FOR CERTAIN COMPANIES IN CERTAIN LOCALITIES New Initiative to Spur Economic Activity in Distressed Communities . Available for new (after 1-1-18) traded-sector companies locating in one of 51 named localities . Spread across the Commonwealth . (A) Invest at least $5 million in real property and create at least 10 new jobs, or (B) create at least 50 new jobs at 1.5x FMW . If criteria are met and certified by VEDP: . Company will qualify, in effect, for a 0% Virginia income tax rate for its income for up to 6 years . Company may be eligible for an award from the COF, for up to $2,000 per new job for 6 years, at least half of which must be shared with its employees . COF is a limited resource, so future COF funds cannot be promised up-front
14 NEW TOOLS – OPPORTUNITY ZONES New Federal Legislation . Investors with unrealized capital gains will receive tax benefits for investing those gains in a Qualifying Opportunity Fund that will invest in Opportunity Zones: . Defer taxes on capital gains . After the deferral, pay those taxes at a reduced rate . Pay as little as 0% taxes on profits, if the investment is held for at least 10 years . Investment companies are creating Qualifying Opportunity Funds to accept the capital gains and make the new investments . Virginia has 212 Zones . See DHCD website
15 WHEN THE USUAL TOOLS AREN’T UP TO THE TASK Exceptional Incentives for Exceptional Projects . For large or unique projects, the usual toolbox isn’t quite right . Go to the Major Employment and Investment Project Approval Commission (“MEI Commission”), which includes Secretaries of Finance and Commerce and Trade and leaders of the General Assembly money committees . Seek MEI Commission approval to offer a special incentive to fit the opportunity . If MEI Commission approves, will then go to full General Assembly . VERY strong bias for paying incentives post-revenue . VERY strong bias for using incentives to improve economic ecosystem, in some way . Higher ed investments . Transportation improvements
16 RECENT EXAMPLES
Large Projects for Which the Available Toolbox was Inadequate
. Amazon HQ2: New corporate headquarters . From the Company: $2.5 billion capital investment / 25,000 new jobs . From Virginia: $550 million cash grant, up to $750 million if more jobs created / $295 million transportation infrastructure / $1 + billion higher education enhancements / $50 million K-12 STEM enhancements and higher ed internships – approved in 2019 General Assembly session . Always revenue-positive to the Commonwealth . Micron: Expanded manufacturing facility . From the Company: <$3 billion capital investment / >1,100 new jobs . From Virginia: $70 million cash grant – paid largely up-front, so clawbacks may be necessary – clawbacks secured by an escrow account – approved in 2019 General Assembly session . Merck: Expanded manufacturing facility . From the Company: $1 billion capital investment / 100+ jobs . From Virginia: $7.5 million cash grant / $2.5 million in higher education enhancements for both 2-year and 4-year institutions -- to be presented during 2020 General Assembly session . Always revenue-positive to the Commonwealth
17 THANK YOU
How Virginia Localities Incentivize Economic Development Projects Public Private Partnerships
R.J. Nutter, Partner 757.687.7502 [email protected]
July 19, 2019
Virginia Bar Association Local Government Objectives: a) Diversifying the Economy b) Creating New Jobs c) Stimulating Redevelopment d) Transferring Risk Brief Overview of Public Private Partnerships
PPEA PUBLIC PRIVATE EDUCATION AND INFRASTRUCTURE ACT OF 2002
A. Derived from Public Private Transportation Act of 1995 (PPTA)
B. Scope – applies to almost anything
C. Provides for both solicited and unsolicited proposals
D. Establishes the process at the state level and allows local governments to establish a comparable process for their locality
E. Unsolicited proposals may be rejected, but if accepted, the locality must then set time limit for competing proposals
F. FOIA protection during this process
3 Brief Overview of Public Private Partnerships
PPEA PROJECT EXAMPLES
A. Renovation of Capitol Square Buildings
B. Hancock Geriatric Treatment Center at Eastern State Hospital
C. VITA contract for IT services with Northrup Grumman
D. Department of Forensic Sciences laboratory and morgue facility in Northern Virginia
E. Various state VADOC correctional centers
F. George Mason Environmental Science Center, student housing
G. Construction of 5 new schools in Norfolk under a PPEA comprehensive agreement
H. Unsolicited proposal for a light rail project in Virginia Beach
Source: VML Steering Committee Report July 2016
4 Brief Overview of Public Private Partnerships
OTHER PUBLIC PROCESSES
A. RFQ (Request for Qualifications) – For Property Owned by the Locality
B. RFP (Request for Proposals) – For Property Owned by the Locality
C. Unsolicited Proposals from Private Property Owners – For All Private Property
5 Brief Overview of Public Private Partnerships
METHODS OF LOCAL GOVERNMENT PARTICIPATION
A. Own and pay for the components of the project
B. Pay for infrastructure
C. Pay for structured parking
D. Sharing tax revenues from the project
E. Tourism GAP Financing (58.1 – 3851.1)
F. Sale lease back of public property
G. Donate land or long term lease for $1.00 per year
H. EDIP Grants
6 Brief Overview of Public Private Partnerships
EVALUATION CRITERIA
A. Is the project desirable?
B. Experience and financial capability of the developer
C. Due diligence
D. Public hearing/public input - determine level of public participation
E. Evaluation components
1. Private to public investment ratio
2. Estimated time of recovery of public investment
3. Estimated long term financial return
7 Results
Partnership Benefits to the City
• 13 Projects • $1.06B Private Investment • $264.9M Public Investment • $4.0:$1 Ratio of Private to Public Investment
8 Results Breakdown
Recreation and Entertainment Commercial and Economic Development • 6 Projects • 7 Projects • $53.9M Private Investment • $1.01B Private Investment • $70.6M Public Investment • $194.4M Public Investment • $0.76:$1 Investment Ratio • $5.2:$1 Investment Ratio
Source: Virginia Beach Staff Report to City Council September 2018
9 Preserving the Cavalier Hotel
10 Brief History of the Cavalier Hotel
• Cavalier Hotel was built in 1926 and officially opened in April of 1927. • Hosted Presidents, political leaders, business men and women and famous actors and entertainers. • Hosted the annual Virginia State Bar meeting for 40 years.
11 The Trial - Colgate, Et Al. V. The Disthene Group, Inc., Et Al. (2013)
• The Colgate family sought the judicial dissolution of the Disthene real estate holdings which included the Cavalier Hotel property in Virginia Beach. • The Trial Judge, The Honorable Judge Roush, presided over the trial. She found there had been self- dealings and a breach of Fiduciary Duty with respect to Disthene's property and she ordered the properties appraised and sold. • The Trial Court appointed Charles Goldstein as Trustee who in turned hired Hunton & Williams. • The Trial Court's decision was appealed to the Virginia Supreme Court and the three-judge panel denied a writ, however, the full Supreme Court agreed to hear the matter. Several months later the parties reached a settlement.
12 The Business Deal
• Cavalier Associates bid to purchase all of the Cavalier property for $35,069,968.00. • Cavalier Associates was required to put up a nonrefundable 10% deposit of the purchase price in order to proceed. • The Court approved Cavalier Associates' bid and the Receiver's recommendation (June 10, 2013). • The closing was to be held 90 days after approval by the Court and there were no contingencies for closing. • Cavalier Associates began as much due diligence as they could perform and began negotiations with the City of Virginia Beach.
13 The City’s Participation
• Following the Trial Judge's decision, the Virginia Beach City Council appointed a Commission of Citizens and City Officials to develop a plan to try to save the Historic Cavalier Hotel (February - March, 2013). • The Citizens Commission recommended a series of incentives, financial and otherwise, to be granted to the successful buyer if the buyer agreed to preserve the Historic Cavalier Hotel (April 9, 2013). The incentives were forwarded to the Receiver for submission to all bidders. • The incentives included: • Targeted local tax relief; • Cost participation for necessary infrastructure improvements; • The extension of Economic Incentive Grants; and • Consider an extension of the Virginia Beach Boardwalk walk to the Cavalier property.
• The City entered into a Development Agreement with Cavalier Associates (July 19, 2013). • The Developer agreed to invest a minimum of $205,000,000.00 over the next 10 years of which $65,000,000.00 must be spent within three years of the Commencement Date (July, 2013). • Developer agreed to register the hotel on the National Register of Historic Places in Virginia Beach, Virginia. • The City agreed to a $8,200,000.00 EDIP grant (July, 2013). • The City agreed to $250,000.00 [$2,449,040.00] for improvements to Cavalier Drive (July, 2013). • The Development Authority agreed to an Incentive Grant of the incremental increase for real estate taxes up to $5,000,000. • The City agreed to purchase a Green Space Easement for the lawn and a Preservation Easement over the exterior of the Historic Hotel for $2,370,000 (July, 2013).
14 The City’s Participation
• The City granted a franchise for beach operations to Cavalier Associates for the beach in front of the Cavalier property (July, 2013).
• The City Council approved a rezoning for the Historic Cavalier Hotel parcel on the hill. Downzoned over 3,000 units for available hotel use and no more than 100 single family detached homes, townhouses and bungalows.
• The City Council approved the GAP financing program for the Cavalier in the amount of $18,000,000.00 or 12% of the projected costs for two hotels on the property (February, 2014).
• The City Council voted to increase the amount of GAP financing by $6,500,000.00 to $24,500,000.00 and, in turn, the Developer agreed to build a third hotel on the property and committed to increase the amount of capital spent on the project from $205,000,000.00 to $305,000,000.00 (March 7, 2017).
15 Summary of the City’s Participation
• $18 million capital investment in the project • $24.5 million in GAP financing (But For taxes) • Public-to-Private ratio of 10.5 to 1 (based on actual private spending) • City cost recovery – 7 years • Figures do not include residual sales of $120 million
16 Project Status to Date
• The Historic Cavalier Hotel has been completely renovated and is now on the National Registrar of Historic places. The estimated cost of the renovation was originally budgeted at $40,000,000.00 with a $10,000,000.00 contingency. • The actual cost turned out to be north of $85,000,000.00. • There are 85 rooms in the hotel and it carries a Marriott, Autograph Collection franchise. • 81 residences were approved and are either completed or under construction around the Historic Cavalier Hotel at the average selling prices of $1,200,000.00 per unit. • The homeowners enjoy a large amount of concierge services including membership in the Cavalier Beach Club which is restricted to the Cavalier residences and guests at the Historic Cavalier Hotel. • The Cavalier Distillery was approved by City Council and is operational. The Historic Cavalier Hotel has two signature restaurants: Becca for fine dining and the Hunt Room for casual dining and entertainment. The hotel also boasts a full service Spa, The Raleigh Room Lounge and a wedding venue. • A full-service 305 room Marriott Hotel is under construction on the Oceanfront along with a structured parking garage and 35 condominium units that wrap two sides of the parking garage. Opening is scheduled for early 2020. • The realignment of Atlantic Avenue will begin in 2019.
17 • In 2017, City Council approved the realignment of Atlantic Avenue and authorized the City Manager to apply for a TPOF Grant from the Commonwealth for one-half the costs of the realignment. Cavalier Associates agreed to pay for the REALIGNMENT remaining half. OF ATLANTIC • When TPOF funds were not available, the AVENUE Developer agreed to pay for the re- alignment costs and the City paid for the design of the road and infrastructure changes
18 Historic Lawn
19 The Cavalier
20 The Cavalier
21 The Cavalier
22 The Cavalier
23 The Cavalier
24 LOBBY & ROTUNDA
25 GUEST CHECK-IN
26 THE RALEIGH ROOM
27 THE RALEIGH ROOM
28 SOUTH LOGGIA
29 THE PLUNGE POOL
30 THE GRAND BALLROOM
31 MEETING ROOMS
32 FITNESS CENTER
33 Inspired by Pocahontas, who became Rebecca Rolfe when she moved from the Americas to London and became a respected society woman, Becca maintains Pocahontas’s love for the earth coupled with Rebecca’s elevated status and modern European sophistications. We imagine that despite having traveled across the Atlantic, Rebecca never lost her unbridled spirit and wild beauty. Becca embodies those qualities but is undeniably modern in both her look and her sensibilities.
34 35 Escape to the serene ambiance of The Cavalier’s SeaHill Spa, Coastal Virginia's most luxurious destination spa resort. With an extensive treatment menu, extraordinary bridal packages and exceptional customer service, SeaHill Spa provides an exquisite oasis for renewal of mind, body and spirit.
Steam Rooms – Sauna Rooms – Dressing Rooms – Ladies’ Whirlpool – Blue Lagoon Relaxation – Himalayan Salt Cove
36 The Cavalier Residences consists of 81 custom homes with an average sales price of $1,200,000
37 CAVALIER BEACH CLUB
38 39 40 41 42 43 ENTRANCE / LOBBY
44 LOBBY LOUNGE
45 PRE-FUNCTION
46 BALLROOM over 10,000 SF with garage doors opening to a 3,000 SF oceanfront deck
47 ROOFTOP SUSHI RESTAURANT with Panoramic Ocean Views
48 42 OCEAN
49 35 LUXARY RESIDENCES Townhomes – Flats – Penthouses – Luxury Penthouses Embassy Suites by HILTON Hilton’s luxury line of all two-room suites
50 QUESTIONS?
51