Industries

Major-league move?

City considers adding 18,500-seat arena to its amenities

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Print this page by Elizabeth Cooper

Like many Virginia Beach visitors, Cynthia Robitalle planned to make a return trip to the resort city, only not as a tourist but as a resident.

Within months of her first visit in 2002, Robitalle packed up her belongings in Toronto and moved to Virginia Beach where she opened a gift shop on the oceanfront. “I came here as a tourist and decided to come back as a permanent tourist,” says Robitalle, who had always wanted to live near the ocean.

During her initial stay, she not only walked the beach but also checked out the city’s amenities, cost of living and quality of life. “I liked the general vibe,” she recalls. “It’s an alive place that has a lot to offer, particularly for families. I wanted to live in an environment that’s respectful, safe and comfortable, and I got all those vibes when I visited.”

One possible future amenity is an 18,500-seat arena and potential professional sports franchise, additions that are also being promoted as economic engines for the city. But the cost could be high. The $350 million facility would be located eight blocks from the oceanfront across from the Virginia Beach Convention Center.

Comcast-Spectacor and Live Nation have proposed to partner with the city on the arena. Comcast-Spectacor has also committed to pursuing a professional sports team for the facility. An economic impact study prepared by Old Dominion University economics professor James V. Koch predicts that an arena would generate $98 million in revenue, including $66 million in Virginia Beach in 2015, its anticipated first year of operation. The arena would also bring 1,230 new permanent jobs to the region and would attract more than 1.4 million people annually. Plans to bring a deal to city council in October have been pushed back at least three months.

“This is a project that will be good for the city, and on a broader scale, the region and the state, not only by increasing our national profile, but by also generating tremendous economic impacts and small business opportunities,” says Warren D. Harris, director of Virginia Beach Economic Development.

The arena’s supporters believe it will burnish the reputation of a city that already is garnering high marks for its quality of life and economic activity. The financial news website 24/7 Wall St., for example, recently named Virginia Beach the best run large city in the country. The website cited the city’s low rates for violent crime, unemployment and poverty along with its diverse tax base and high rates for high school graduation and health insurance coverage.

Other observers offer similar accolades. (See list on page 86.) These commendations are no surprise to Robitalle, who closed her gift shop four years ago to become a stay-at-home mom. “There are invaluable resources here,” she notes, listing public libraries, the Contemporary Arts Center, public transit and an array of free events and festivals at the oceanfront. “They’ve been extremely helpful in terms of the quality of life.”

Major manufacturer expands
Those things also help attract businesses to the state’s largest city. “If you look at the work force, there’s an excellent school system with close ties to local universities and trained personnel coming out of the military,” says Christian Koestler. He’s the vice president of operations for STIHL Inc., manufacturer of the top-selling brand of gasoline-powered, handheld outdoor power equipment in the country and the top-selling brand of chain saws in the world.

Nearly 40 years ago, Germany-based STIHL chose Virginia Beach as its U.S. headquarters, based on the city’s proximity to the nearby port of Hampton Roads, access to rail and road systems, and educated work force. STIHL now has about 1,900 employees in Virginia Beach. “We’ve had a longstanding partnership with the city,” Koestler adds. “You couldn’t ask for more.”

This spring, STIHL announced it was adding 52 jobs and investing $10.3 million in a 53,000-square-foot expansion of its accessories building. The company also purchased the former Lillian Vernon headquarters, giving it an extra 850,000 square feet of space. “They’ve had great success,” says Scott Hall, business development coordinator for Virginia Beach’s economic development department. 

He believes the city’s pro-business policies not only attract new companies but help retain existing ones. “The City Council is very proactive and engaged with our business community, whether its work-force development or infrastructure needs. We don’t care if somebody has two employees or 2,000 employees. We provide assistance to get them to where they want to be.”

Last year, the city announced 94 business projects, representing more than 1,800 jobs and $95 million in new capital investments. Economic development activity has remained strong this year. Along with STIHL’s expansion, IMS-Gear, a manufacturer of gear assemblies for the North American automotive market, invested approximately $35 million to expand its local operations; Huntington Ingalls Industries subsidiary AMSEC LLC opted to keep its headquarters in Virginia Beach, announcing plans to move closer to I-264; and Osen-Hunter Defense Systems decided to move into a new facility in the Taylor Farms Commerce Center.  Plus, $30 million of projects, including a new Target store, are under way at the 46-year-old Pembroke Mall, the region’s oldest shopping mall. “We’re pretty excited with how things are going,” Hall adds. “We’ve more than held our own with cities around the country the past several years.”

The recent accolades have definitely helped. “It kind of serves as the Good Housekeeping seal of approval and sends a big message to business leaders,” Hall notes. “They want to invest money in a place that they think will be successful from a business perspective and a place where their families can be comfortable living and where they can have a quality work force.”

Target industries
Sizing up its strengths and weaknesses, the city identified professional, scientific and technical services, information services, high-performance manufacturing, and company and enterprise management as its 2012 targeted industries. “We looked at demographics, markets and the physical realities of the city,” Hall says. “We don’t have a lot of land for a three-, four- or 500,000-square-foot distribution center, and this is not the location for real heavy manufacturing.”

Virginia Beach boasts several major homegrown firms, including Liberty Tax Service, which began trading its shares on NASDAQ in July; health-care insurer Amerigroup Corp., whose headquarters will remain in Virginia Beach after its proposed purchase by Indianapolis-based WellPoint, Inc., and nonprofit organ procurement organization LifeNet Health, which is building a $21 million research and development facility next to the company’s headquarters in the Princess Anne corridor. Set to open this month, LifeNet’s Institute of Regenerative Medicine is the first of its kind in the U.S. It will develop cellular therapies and use tissue engineering to aid recovery from traumatic injuries and illnesses. “It’s groundbreaking research,” Hall notes. “It’s a homegrown company that’s really taken off.”

Although Amerigroup will become a wholly owned subsidiary of WellPoint,  the company will maintain a significant presence in Virginia Beach. “We started here 18 years ago and don’t know any other home,” says John Little, Amerigroup’s executive vice president of external relations. “This is a robust community.  The cost of living is good, and we have access to good secondary schools, colleges and universities, and the amenities of a beach community.” Amerigroup has about 2,400 employees in Virginia Beach but plans to move about 500 to the former USAA headquarters in Norfolk.

Ensuring that Virginia Beach Public Schools produces graduates ready to work for companies like LifeNet and Amerigroup, as well as start their own businesses,  has been James G. Merrill’s goal since becoming superintendent of Hampton Roads’ largest school district six years ago. Merrill spearheaded the division’s Compass 2015 plan, which states that by 2015, 95 percent or more of graduates will have mastered the skills needed to succeed as 21st-century learners, employees and citizens.  “It gets us above and beyond the SOLs,” he says. “Those are skills you can’t measure in SOLs [the state’s Standards of Learning tests] ― critical thinking, problem solving, working in groups.”  The School Board sought community input in developing the plan more than four years ago. “You turn to your community and say, ‘What do you want to do for your kids?’ ” Merrill adds. “It’s a little scary because parents and business leaders tell you what they want.”

What they want are graduates who are not only academically proficient, but also effective communicators and collaborators, with an eye toward global awareness, responsibility and innovation. Teachers were charged with designing lessons differently, creating collaborative, problem-based research activities while stressing math, reading and other skills required for the state tests. “All SOLs will still be taught, but in a way that’s much more engaging for kids,” Merrill explains. “Some of our teachers get 100 percent SOL passage rates using these skills.”  However, state standards for instruction often do not coincide with Compass 2015 activities. “We push on anyway and hope the policies will catch up with us.”

Compass 2015 has drawn national attention. This spring, The Washington Post placed 10 of the city’s 11 high schools among the top 9 percent in the United States. Princess Anne High School also was ranked among the top 500 public schools by U.S. News and World Report on its Best High Schools list. In addition, Merrill became the division’s first chief to be named Virginia Superintendent of the Year. He is up for the National Superintendent of the Year Award early next year. 

But the commendations have not paid off when it comes to budgets. Earlier this year, the school system faced a nearly $40 million shortfall for 2012-13 that would have forced layoffs of 248 first-year teachers. “We were looking at very draconian cuts,” Merrill recalls. “We had been reducing the budget for three or four years. Eventually you get down to the bone.”  In the end, the shortfall dropped to $4.3 million, thanks to additional state funding and a City Council-approved 6 percent real estate tax increase.  Still, budget constraints have left Virginia Beach dealing with larger classes, fewer materials and a reduced support staff. “Those things over time have an eroding effect,” Merrill adds. “The impact of the reductions won’t be felt right away, but they’re going to catch up with us.”

Light-rail referendum
The rising number of people coming to the city to work and play has led Virginia Beach to re-evaluate its transportation needs. In November, voters will be asked to weigh in on the prospect of bringing light rail to the city. They rejected a similar referendum in 1999, but supporters hope the success of Norfolk’s light-rail system, The Tide, will make a difference this time. They contend light rail will ease traffic congestion and offer an alternative for travelers dealing with high gas prices. Opponents argue that the city should not bring the matter before voters until a light-rail study is completed next year. Preliminary estimates indicate that extending The Tide from its current endpoint at Newtown Road along the Virginia Beach city line to the city’s Town Center would cost $254 million. The cost would be $807 million if the light rail was extended to the oceanfront.

Having never driven, Cynthia Robitalle relies on mass transit, but she and her 6-year-old daughter are often frustrated when routes are removed or when they must wait an hour or more for buses in areas without shelter. “I’m excited for myself and what The Tide would bring to the oceanfront,” she says.

In the meantime, the city has joined forces with Old Dominion University to launch the Center for Innovative Transportation Solutions, which opened last month in the Town Center. Researchers will use modeling and simulation techniques to look at transportation issues, such as traffic flow, future road projects and the impact of development on the road system. A comprehensive transportation model could help ease congestion, says John Sokolowski, executive director of Old Dominion’s Virginia Modeling, Analysis and Simulation Center. “Cities often don’t have the resources or professional background to develop that kind of modeling in the level it needs to be done. That’s where our expertise can help.”

It doesn’t take an expert, however, to see that Town Center is paving the way for the Pembroke Central Business District to become a higher-density, more urbanized area. “We get six million overnight tourists annually, and about 60 percent visit Town Center,” Hall notes. “It’s downtown for Virginia Beach.”

The 17-block development features an array of shopping, dining, entertainment and housing options, 800,000 square feet of office space and the 1,300-seat Sandler Center for the Performing Arts.

On the other hand, city officials are working with property owners and businesses surrounding Naval Air Station Oceana to prevent encroachment from high-density development on lands surrounding the base. Oceana, which employs more than 19,000 personnel, was a target in the last round of military base closings because of encroachment. The Yes Oceana program that emerged from that close call offers incentives to convert high-density properties around the base into businesses such as warehouses and wholesale operations. Businesses unable to conform are assisted with relocation to other sites in the city.

Anthony Cataldo, owner of Cataldo Builders Inc., constructed a new facility in the area four years ago with assistance from Yes Oceana. “We have a beautiful facility, and the location is a plus,” Cataldo says. “The city helped tremendously, and the incentives are something that drive people to take another look into being in the area.”

The program’s success hinges on city leaders’ commitment to building and maintaining a strong relationship with the Navy. Retired flag officers and senior enlisted personnel serve on the city’s Military Economic Development Advisory Committee. The city also offers services to help military members transition to civilian life, support for defense contractors and recreational facilities to meet the needs of military members and their families. “We want to let them know we’re here, and we care,” Hall says.

That, says Robitalle, is one of the things that first attracted her to Virginia Beach and keeps her here. “I’ve found invaluable resources here full of support,” she says. “That’s been extremely helpful in terms of our quality of life.” 

Related Virginia Beach stories:
Interview with: Carlos Campo, President, Regent University, Virginia Beach


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