VIRGINIA BEACH, VA—The first steps to building a major entertainment and sports arena here have been reached with the city and United States Management agreeing on terms that spell out the roles of the public and private sectors in the project.

The $200 million, 18,000-seat stadium will be built on city-owned land located across from the Virginia Beach Convention Center on 19th Street in the Resort District.

Virginia Beach received two offers earlier this year for the stadium. Among the reasons why the City Council opted for USM's proposal, according to CEO Andrea Kilmer, was the proposed "unique nature of the financing."

Some $40 million is coming from private equity; the balance from an international bank headquartered in China.

Terms of the deal include USM:

• assuming all financial and operational risk, including any shortfalls;

• receiving one-eighth of the existing city hotel tax as well as admissions and concessions tax revenue generated inside the arena;

• Leasing the five-acre site for $1 per year for 40 years.

The city, for its part, will:

• Be responsible for nearly $53-million in infrastructure costs including roadway improvements, utilities and site development required for the arena;

• Possibly make an additional $26-million in streetscape enhancements to the surrounding area.

Mortenson Construction of Minneapolis will be the lead contractor on the Beach arena project along with S.B. Ballard of Virginia Beach. AECOM Architects of Kansas City and Clark Nexsen of Virginia Beach will collaborate on the design.

USM and the City Council are working toward a Dec. 9 vote on the term sheet and approval of all development agreements in the first quarter of 2015. Groundbreaking is expected to occurr this coming fall and with delivery two years later.