Henrico arena proposed at Virginia Center Commons site

NOV. 12, 5 p.m. – Henrico officials appear to have found a site and developer for the indoor sports arena and convocation center they’ve sought for several years.

The Rebkee Company is proposing to redevelop Virginia Center Commons mall in Glen Allen as part of a plan to build the 4,500-seat, 220,000-square-foot arena for Henrico on about 25 acres of the mall’s 94-acre footprint. The Henrico Board of Supervisors Tuesday voted unanimously to authorize negotiations with the developer.

Henrico intends to budget $50 million to purchase the 25-acre site and pay for the arena’s construction, but Rebkee would build the facility and contract with a management company that would manage it and keep revenue from its operations. The Henrico Economic Development Authority would sell bonds to finance the county's obligation.

The arena would become the new anchor of the mall site. Rebkee plans to work with Shamin Hotels to build a hotel at the site and create other entertainment and retail options there as well.

“It’s just a win on so many fronts,” Henrico Recreation and Parks Director Neil Luther said of the proposal during an interview earlier today with the Citizen. “This is a redevelopment opportunity that’s once in a generation.”

County officials are particularly thrilled with the location, which sits in the center of Henrico geographically and virtually adjacent to interstates 95 and 295, making it easily accessible for Henrico citizens and visitors alike.

“You can’t beat this location,” Luther said. “It’s just a clear winner.”

The county sought bids for the project through Virginia’s Public-Private Education and Infrastructure Act of 2002, which is designed to foster faster completion of such infrastructure projects by allowing creative partnerships between government agencies and private companies.

A group of county officials led by Luther reviewed the three arena proposals Henrico received this fall and deemed the Rebkee plan the best, he said – largely because of the site.

Rebkee no stranger to mall redevelopment
County officials began the formal process of finding a developer for an arena last year. They received six proposals for the facility last fall (including a joint proposal from Rebkee and Hourigan Development), then selected two – from MEB General Contractors Inc. and Eastern Sports Management, LLC – as finalists and identified the Richmond Raceway Complex as their desired location.

But negotiations with the raceway reached an impasse, and the county re-opened the proposal process in August to the original six bidders – this time requiring that as part of their proposals, they identify a non-county-owned site that they could sell to Henrico. MEB, Eastern Sports Management and Rebkee were the only bidders this time. Luther declined to name the sites proposed by MEB and ESM, citing confidentiality clauses.

Rebkee this time submitted its proposal alone. The company soon will have control of about 75 acres at the mall site, Luther said. The mall site itself is divided into several parcels:

• the majority of the mall (about 67 acres), which owned by Kohan Retail Investment Group of New York, which purchased it from Simon Property Group for $9 million in 2017;
• the former Sears building, which is owned by Sears Roebuck and Co.
• the former Macy’s building, which is owned by Impact Investments Group;
• the JC Penney building, which is owned by JC Penney Properties Inc.;
• the American Family Fitness building, which also is privately owned.

Rebkee is planning to acquire the former three parcels, Luther said, but JC Penney and American Family Fitness will not be part of the deal. Rebkee and county officials have not yet determined exactly where on the site the arena would be located, Luther said.

Locating the arena at a site that's already operational and has a parking lot will save the county about $8 million in infrastructure fees compared to what it would have had to invest in a site at Richmond Raceway, County Manager John Vithoulkas told supervisors during Tuesday's work session.

Vithoulkas was resolute that the county would cap its total expenditures on the project at $50 million and said that establishing a cap would help county officials and the developer weigh possible options and then determine which to prioritize to stay at or under budget.

"We're going to get the biggest bang for the buck," he said.

Allowing a private group to operate the facility will save Henrico about $2.5 million annually, compared to what it would cost the county to do so itself, Luther said.

Rebkee is not a stranger to redeveloping aging malls. Along with Thalhimer Realty Partners, it purchased Regency Square in Henrico for $13.1 million and has undertaken a $50-million redevelopment project there, creating new out parcel buildings and partnering with Henrico County and Nova Aquatics of Virginia earlier this year to announce the construction of an aquatics facility at the site.

Virginia Center Commons mall opened in 1991 and was one of the last indoor malls built in the region.

Arena could host a variety of events
Henrico will retain the right to host events at the arena on a certain number of dates annually, Luther said. The county wants to make the facility available to its own citizens and sports leagues during weekdays and block off a number of weekends throughout the year for tournaments that will attract out-of-town visitors, he said.

A recent study conducted for Henrico County by Richmond Region Tourism estimated that the county was missing out on more than $30 million in economic impact from sports tournaments that would come to the county if adequate arena space for them existed.

Henrico realized more than $54 million in economic impact from 170 amateur sports tournaments and related spending on hotel rooms, retail outings and dining last year alone, according to county officials – a $7 million jump from the previous year. But construction of the arena likely would attract a number of basketball tournaments, volleyball tournaments and cheering and dance competitions as well as other indoor sporting events, Luther said. He’s also hopeful that it would attract Virginia High School League championships, too.

The county could “easily” fill 30 weekends a year with events and tournaments at the arena, Luther said.

“We’ve already heard from a large basketball event promoter who said, ‘We could put [tournaments at the arena] 11 weekends out of the year,’” he said.

Owning the arena also would allow the county to move its high school graduations out of VCU’s Siegel Center (which it rents for three days each June).

All county use of the arena would be free to Henrico, in exchange for its funding of the arena’s construction, Luther said. The private operator would be able to set rental fees, concession fees and any other arena charges, he said. It would keep those fees, while Henrico would benefit from the economic impact of visitors (through the county’s meals tax, hotel and lodging tax and sales tax, among others).

There are no plans currently for an indoor track or an ice rink for hockey or ice skating to be part of the arena, Luther said. Adding either would significantly increase the cost of the project, he said.

A track, for example, would cost an additional $9 million and also could prove to be counterproductive to the financial success of the facility for several other reasons, he told supervisors during Tuesday night's work session.

First, the presence of a track would make it difficult or impossible to divide the arena into 12 basketball courts, as the county desires.

"It compromises your ability to operate effectively in a multi-sport capacity," Luther said.

Second, county officials expect that a similar arena in Virginia Beach has a head start on attracting indoor track events from the region already. And third, Luther said, the indoor track event market is smaller and shorter in duration than that for basketball, volleyball or some of the other indoor sports that Henrico seeks to attract.

Because the indoor track season runs during the same winter months when basketball tournaments would seek to use the facility, both uses couldn't be accommodated simultaneously.

"Basically you're beginning to compete against yourself," Luther said.

County officials earlier this year visited an indoor arena in Rocky Mount, North Carolina that is similar in scope to the one they want to build here, but that facility contained fewer basketball courts than Henrico’s will, Luther said. The 153,000-square-foot Virginia Beach Field House offers similar indoor options but only four basketball courts.

Luther believes that Henrico’s central location, abundance of hotel rooms and easy access from I-95 and I-295 will tilt the scales in its favor, from an event-attraction standpoint, once the new arena opens.

The final agreement with a developer will require that it work hand in hand with Richmond Region Tourism to prove that events at the arena have generated a specific number of hotel room nights annually, Luther said. That number hasn’t yet been established, but officials believe 30,000 – or about 82 daily – is a reachable target.