The recent Arena Deal offers numerous examples of Council’s masterful canards.

Guest Contributor: Pat Cardwell

Typically, we get angry and frustrated when our elected officials make campaign promises and don’t even try to follow through with them.  The Virginia Beach City Council takes a different approach. They count on citizen apathy and use of the written press, radio and television media to put out stories that do not represent the deals or the circumstances surrounding the deals they enter into accurately.

Call it spin, misrepresentation or a prevarication. In this case, it is designed to keep people at bay while our City Council continues to increase our spending and taxes for development projects while ignoring the real problems of Virginia Beach, like for e.g. drainage issues which lead to horrendous flooding.

It took a small group of committed citizens to lead a bipartisan uprising to stop light rail. But what about the light rail taxes, that money is not coming back. Council’s spin is we will use that money to deal with the drainage issues.  It’s the equivalent of a shell game or a classic bait and switch.

The recent Arena Deal offers numerous examples of Council’s masterful canards.

They keep most of the deal confidential and blame the developer for that. The first problem, we can’t read it. Next, the financing commitment originally offered by USM comes from a Chinese bank. As part of that deal USM had to purchase Chinese steel, which despite concerns on its quality, Council told the citizens it is a better deal then we can get domestically.

Then when the Chinese financing falls through, we have whoops problem number 1. 

Here USM comes back with a plan to complete a bond offering of investment grade bonds and a 40 million dollar capital commitment from USM.  The spin from the council and adequately repeated in the media, this is a great deal, we are no longer required to use the Chinese steel. Council concluded investment grade bonds would fix the interest rate that the city taxpayers would have to pay and the 40 million dollar contribution by USM was real skin in the game.

That led to whoops problem number 2. 

USM could not complete an investment grade bond offering. Why, because obviously investors did not like the deal. So USM raises the amount of the bond offering now in the form of junk bonds and USM’s parent company got nervous and the 40 million dollar commitment became 20 million. This time a supermajority of the council would not vote for the deal and it died.

Except it didn’t, now we have arrived at, whoops problem number 3.

The deal was to expire at the end of last year. So Council was asked by USM for a 60-day extension to comply with the “original deal” whatever that is. 60 days brings us to last Tuesday’s meeting. And here we are the deal is over right because USM didn’t provide the financing.

This brings us to, whoops problem number 4. 

USM, in a clear sign of desperation, has the McGuire Woods law firm write an “opinion”, gives it to Council and says we have an opinion from a law firm that says a supermajority vote of Council is not needed. What does this mean? It means USM has reached desperation stage because it could not timely comply with the deal.

Now for those of you that do not know or understand law firm opinions. Typically, they present all sides of the argument and offer an opinion at the end. Then, they heavily disclaim the opinion to protect themselves from a malpractice perspective. USM, Council, and the media all dutifully reported that there was an opinion on the number of votes required.

Nothing could be farther from the truth.

McGuire Woods wrote a legal brief arguing on behalf of its client USM, why the supermajority vote wasn’t required to approve the Arena transaction. On the first page of the letter to USM, Mr. Lamb the author of the letter, states on two separate occasions that “this brief evaluates.” and “this legal brief relates to…” It is the kind of document that is typically submitted in pleading form as a Memorandum in Support of a Motion for Judgment or Summary Judgment. It is purely an advocacy piece.  Calling it an opinion is a pure canard.

Last night a “final extension” of 60 days was granted to USM. If on the 61st day, the deal is not complied with by USM, it must be terminated immediately.

So how will City Council and USM determine in a private meeting to get around whoops problem number 5?

Well, no one knows yet, but this writer believes USM will again propose material changes to the deal and we will be forced to hope that three members of City Council or more vote to support their real constituents, the taxpayers of Virginia Beach.

By |2017-01-17T10:05:32-05:00January 8th, 2017|

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Pat Cardwell