|VIP Sports and Entertainment is looking to use taxable bonds from the Economic Development Authority to capture a lower interest rate loan. -Courtesy/VIP Sports and Entertainment|
VIP Sports and Entertainment, the company hoping to bring professional baseball and soccer to Loudoun, wrote to the Economic Development Authority last week asking for a resolution for $55 million in taxable bonds to finance a stadium.
Hopes are for the stadium to eventually house the Loudoun Hounds of the Atlantic League of Professional Baseball and Virginia Cavalry FC, of the North American Soccer League.
An inducement resolution shows that an entity like the EDA is willing to issue a bond for projects that would ultimately help the county's economy.
Bob Farren, CEO of VIP Sports and Entertainment, hopes the EDA's resolution might mean a financing option with a lower interest rate, making the project cheaper.
The EDA does not back the loans or subsidize them with public money. It simply decides if the projects makes sense for the county and writes resolutions.
Brian Chavis, the chairman of the EDA, explains the organization is stewards for the community.
Traditionally the EDA has only dealt with tax exempt bonds for projects like Janelia Farms Research campus and Loudoun Country Day School.
Uses such as construction of nonprofit buildings and certain light manufacturing qualify as projects for a tax-exempt bond, meaning the stadium does not qualify.
According to Farren, construction of the stadium does not hinge on the taxable bonds he hopes would result from a future inducement.
If he doesn't receive the taxable bonds, Farren has to move on with the other financing plan he currently has in place. He hopes he can utilize the bond process to refinance the construction loan in the future.
Farren and VIP don't know whether they have a financial structure where taxable bonds make sense, but they want to open themselves to every possibility.
"I'm just trying to get the least expensive loan I can," said Farren.
The EDA has already written an inducement resolution for VIP contingent on the Board of Supervisors changing a clause in an ordinance that currently excludes a stadium from receiving a taxable bond.
Farren says he understands that it could take months to change the ordinance and months on top of that to float a bond. He's hoping for quick movement from the board.
"If they have to redo the law, I am dead on arrival. I'll close the door on that right now,” Farren said.
It seems unlikely VIP will pull off a taxable bond for the construction financing they need, and it's also unclear whether the taxable bond will be cheaper than another loan.
Steve Robin, council for the EDA, says in his experience taxable bonds command the same interest rate as commercial loans from institutions like Bank of America.
"Assuming the Board of Supervisors says OK the ordinance is changed, at that point the EDA would wait for a viable scenario for financing the bonds," said Robin.
VIP initially proposed construction of the stadium at the Kincora development on the corner of Routes 7 and 28.