A renovation of Philips Arena, a key component of keeping the Atlanta Hawks in downtown, could be a $200 million to $300 million project, and Mayor Kasim Reed said Monday the public portion of that deal could be as high as $150 million.
In an interview with The Atlanta Journal-Constitution, Reed reiterated his stance that he expects to reach a deal to overhaul the downtown arena in the first quarter of this year. He said the total cost and the taxpayer portion of the overhaul hasn’t been fixed, but the city has identified a range of $100 million to $150 million that it could afford to finance.
The Atlanta Fulton County Recreation Authority owns Philips Arena and can issue bonds, but a potential deal of this scale will require the city to help “backstop” bond financing, Reed said.
“We have not settled on the number, but what we have looked at is our own capacity of what we can comfortably finance,” he said in an hour-long meeting with AJC reporters and the newspaper’s editorial board. “We think that number is between 100 million and 150 million (dollars).
“The total project would be anywhere from 200 million to 300 million (dollars),” he said.
Reed said the sources of funding haven’t been determined, but rental car taxes are likely to be part and he did not rule out funding from the Westside Tax Allocation District.
In October, the AJC first reported talks between the city and the Hawks about a significant arena remodel. At the time, Reed said the overall remodel could cost $150 million to $250 million. While Reed acknowledged then that public funds would be involved, he did not discuss an amount of potential public funds.
The renovation would be extensive and involve doing away with the wall of luxury boxes on one side of the arena. Reed has previously said a remodel also would involve connecting disjointed corridors for better flow of fans and opening corridors to the court.
Taxpayer funding of stadiums is a polarizing issue, and if a new agreement involving public funds is struck to rehab Philips, it’ll be the fourth deal reached since 2013 between a metropolitan Atlanta government and a major league franchise involving public subsidies for a sports facility.
The Falcons and Atlanta struck a deal for $200 million in bond financing for the nearly $1.4 billion Mercedes-Benz Stadium. That deal also will involve hundreds of millions more in public money for financing costs, operations and stadium upkeep over 30 years. Cobb County leaders lured the Braves away from Turner Field with an offer of $368 million in public funds for the future SunTrust Park. And the Atlanta United FC franchise will receive public support for their headquarters and training facility in Marietta.
The Hawks’ future at Philips — the team’s home since 1999 — has been in question since June when an ownership group led by billionaire investment guru Antony Ressler acquired the team. Ressler and fellow owner Grant Hill, in an interview with the AJC’s editorial board at the time, would not rule out moving the Hawks elsewhere in the region.
Philips Arena opened before the 1999-2000 NBA season and was home to the Hawks and the city’s former NHL franchise, the Thrashers, before the hockey team was sold and moved to Winnipeg in 2011.
Philips and surrounding infrastructure upgrades, including parking and streetscape, cost $213 million to build. The stadium was financed by private investment and about $150 million in public bonds, backed by stadium revenues (with any potential shortfalls backstopped by city of Atlanta and Fulton County taxpayers). Rental car taxes paid for infrastructure improvements.
The annual debt service of about $11.9 million is supported by operating revenue from the stadium, according to bond documents obtained by the AJC.
The recreation authority which owns Philips, refinanced the $124.5 million in bond debt in 2010. It is scheduled to be paid off in 2028.
More on this story as it develops…