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Council endorses tourism‑financing for Hotel Indigo; residents ask whether taxpayers benefit
Summary
Council unanimously endorsed a tourism development financing participation for a private renovation of Hotel Indigo on the oceanfront; the developer and staff said the program uses new sales/use tax revenues to repay the award with no upfront city dollars, but public commenters questioned whether forgoing tax receipts effectively subsidizes the project.
Council considered an ordinance endorsing a tourism gap financing structure for a private renovation of the oceanfront hotel at 2809 Atlantic Avenue (to be operated as a Hotel Indigo).
Lindel Stone, representing the development team, said the project will reinvest roughly $19 million of private capital and upgrade an aging oceanfront property to an upper‑upscale nationally branded hotel that supports year‑round visitation and jobs. Stone told council the city’s participation through the tourism development financing program (TDFP) is performance‑driven, repaid solely from new sales and use tax generated by the project, and requires no upfront city or state capital. "There is no recourse to the city, the authority or the commonwealth," Stone said.
Three members of the public spoke. One asked whether the project would cost taxpayers anything out of pocket; staff and the presenter said it would not. Another speaker, Vanc Elwaru, criticized the arrangement and argued the deal would effectively have the city and state forego portions of sales tax revenue that would otherwise flow to the locality, describing the structure as providing $5 million in taxpayer‑backed support and asking, "Can someone please explain to me how this is a good deal for the taxpayers?" The development team and staff reiterated that the TDFP draws repayment from new taxable activity the project is expected to create.
Council voted 9–0 to approve endorsement of the tourism‑financing participation as presented.
What’s next: staff will finalize paperwork consistent with the tourism development financing program and the Virginia Beach Development Authority’s role as administrator; the project will still require building and operating approvals and compliance with the TDFP performance provisions.
