Mayor Kasim Reed Announces Approval of Final Agreement to Transform Philips Arena
Tuesday, June 20th, 2017
Mayor Kasim Reed announced that the Atlanta City Council has voted to approve the extension of car rental tax collected at the CONRAC at Hartsfield-Jackson Atlanta International Airport. 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 $192.5 million transformation of Philips Arena. Specifically:
The public contribution for arena renovations is capped at $142.5 million, of which $110 million 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 $32.5 million 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 underutilized City assets. No money from the City’s general fund will be used on this project.
The Atlanta Hawks will contribute $50 million 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 $5.9 million to the City.
To promote full and equal business opportunities in connection with the transformation of the arena, the Atlanta Hawks have agreed to develop an Equal Business Opportunity Plan that will ensure at least 31 percent 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, 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 $200 million 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 AFRCA.
No property taxes or new taxes of any kind would be paid by or levied on City of Atlanta residents 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. AFRCA will provide a one-time contribution of $4 million to the fund, and the City will contribute an additional one-time $1 million from funds to be determined within sixty days of the passage of the FY2018 budget.
“I am pleased to announce that with the 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 $192.5 million 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.
"We want to thank the Mayor and his team as well as the City Council for the action for the transformation of Philips Arena, which is part of an important commitment to the redevelopment of downtown that the City and the Hawks share,” said Tony Ressler, Atlanta Hawks Basketball Club Principal Owner. “This vote shows the enthusiasm we all have for making Philips Arena and its surrounding areas a sports and entertainment destination for residents and visitors alike.”
Atlanta attracts more than 51 million visitors each year making it one of the top five most visited cities nationwide, according to the Atlanta Convention and Visitors Bureau. In 2015, tourism generated $15 billion in visitor spending. The hospitality industry is responsible for more than 230,000 jobs for metropolitan Atlanta residents.
Going forward, the City will continue to work with Atlanta Hawks’ ownership to transform the area known as the “Gulch” into a prime destination for sports fans and visitors, a project that will require an estimated $1 billion in investment.