Atlanta mayor announces approval of final agreement to transform Philips Arena

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Atlanta Mayor Kasim Reed has announced that the Atlanta City Council has voted to approve the extension of car rental tax collected at the CONRAC (car rental facility) at Hartsfield-Jackson Atlanta International Airport in Georgia, USA. The approval ensures that the Atlanta Hawks remain in the City of Atlanta for decades to come and will maintain Philips Arena, a keystone of Downtown Atlanta, as a highly competitive venue for sports and entertainment events.

On November 1, 2016, Mayor Reed announced the deal terms for the US$192.5m transformation of Philips Arena, specifically that:

– The public contribution for arena renovations is capped at US$142.5m, of which US$110m will come from a series of bonds backed by the recently expanded car rental tax collected at the CONRAC at Hartsfield-Jackson Atlanta International Airport and other facilities throughout the city. An additional US$32.5m will come from the city’s proceeds of the sale of Turner Field to Georgia State University and Carter and from the liquidation of other under-utilized city assets. No money from the city’s general fund will be used on this project.

– The Atlanta Hawks will contribute US$50m to the renovations of the arena. The team and the arena operator will execute an extension of the lease and operating agreement for the facility. Under this extension, the arena operator will make lease payments of US$5.9m to the city.

– The Atlanta Hawks have agreed to develop an Equal Business Opportunity (EBO) Plan that will ensure at least 31% participation by women and minority business enterprises. The team will hire a licensed attorney, jointly selected by the City of Atlanta and the Atlanta Fulton County Recreation Authority (AFCRA), to serve as an EBO monitor. This monitor will report on a quarterly basis about the status of the EBO goals.

– The agreement includes a break-up clause that would require the Atlanta Hawks to pay up to US$200m should the team leave the city prior to the 2047/2048 season.

– The ongoing capital repairs and maintenance costs of Philips Arena will be covered by a facility charge on tickets to be imposed by AFCRA.

– No property taxes or new taxes of any kind would be paid by or levied on City of Atlantaresidents or businesses to fund renovations of the arena. The City of Atlanta will not serve as a backstop for this debt associated with the renovations of the arena and this agreement will not affect the city’s bond capacity or credit capacity.

The Atlanta City Council also approved a resolution to create a Stadium Neighborhoods Community Trust Fund, which will fund projects to directly benefit residents of the surrounding neighborhoods. AFCRA will provide a one-time contribution of US$4m to the fund, and the city will contribute an additional one-time US$1m from funds to be determined within 60 days of the passage of the FY 2018 budget.

“I am pleased to announce that with today’s vote of the Atlanta City Council, the deal to renovate and modernize Philips Arena, our public sports and entertainment venue in Downtown Atlanta, is final,” said Mayor Reed.

“Combined, the City of Atlanta and the Atlanta Hawks organization will invest US$192.5m into the renovation, generating jobs and additional economic activity throughout the process. I believe the decision to invest in this asset will be one of the most consequential moves for Downtown Atlanta in decades. I extend my thanks to Atlanta Hawks owner Tony Ressler for his partnership, to NBA Commissioner Adam Silver for his support, and to our partners with the Atlanta City Council, the College Park City Council and the Atlanta-Fulton County Recreation Authority for their cooperation.”

The Hawks will start the modernization of Philips Arena during the summer of 2017, and the transformation will be completed by the start of 2018/2019 season, coinciding with the Hawks’ 50th Anniversary in Atlanta. The Hawks will play next season at Philips.

June 28, 2017

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