City, Hawks discussing big mixed-use project at Philips Arena

The Atlanta Hawks are in discussions to redevelop the area surrounding Philips Arena.

The Atlanta Hawks are in discussions to redevelop the area surrounding Philips Arena.

Philips Arena

Opened: 1999

Cost: $213 million, including infrastructure upgrades

Capacity: 18,118 (basketball)

Tenant: The Atlanta Hawks/ Atlanta Dream

Suites: 92

Owner: The Atlanta Fulton County Recreation Authority

Operator: Arena Operations LLC (the Hawks)

Sources: Philips Arena website, AJC archives

The Atlanta Hawks are in discussions to redevelop the area surrounding Philips Arena into a mixed-use entertainment district, multiple people with knowledge of the negotiations told The Atlanta Journal-Constitution.

The plan, which would involve investments of hundreds of millions of dollars, could rank among the largest commercial redevelopments conceived for downtown Atlanta in a generation, according to several people who declined to be named because of the sensitivity of the negotiations.

The discussions are fluid and coincide with negotiations with the city over public support for a major Philips Arena renovation, which was first reported by the AJC in October. But the Hawks and its partners would steer private development around the arena.

It’s unclear when a deal could come together, though state legislation to extend a rental car tax could be required to help clear the way for the project.

Among the ideas under consideration is a complex similar to L.A. Live at the Staples Center in Los Angeles that would include more retail and restaurants and perhaps offices and residences, said two people with direct knowledge of the discussions.

The Hawks also are using the mix of shops, offices, restaurants and residences the Braves plan next to their budding Cobb County ballpark as a model, one of the people said.

The potential Hawks project — combined with the Georgia World Congress Center, CNN Center, the Georgia Aquarium, the nearly $1.5 billion Falcons stadium, the College Football Hall of Fame and other attractions around Centennial Olympic Park — is aimed at cementing the western edge of downtown as one of the Southeast’s biggest entertainment draws.

The Hawks would attempt to create a live-work-play destination in an area largely populated by workers and tourists. The team is contemplating a number of properties around the arena — including land within downtown’s “Gulch” — but additional property as well.

The area crackles with life during the work day or when the Hawks, major concerts, conventions and the Falcons are in town, but activity wanes as little residential development has caught on over the years. That might be set to change with a new 400-plus unit, nearly $100 million Post Properties apartment project starting construction in recent months.

A spokeswoman for Mayor Kasim Reed declined to comment. The Hawks cited in a statement a policy of declining to comment on potential development deals.

“As we have previously stated, we are working with the city on tenant improvements to Philips Arena and its environs,” the team said in the statement.

Mixed-use developments next to arenas are becoming more common as a way for teams to diversify their revenue streams and as a pitch to local and state governments to support a bevy of incentives.

The Hawks also envision working with Turner Broadcasting System to make improvements to CNN Center, which for many fans is the front door to Philips Arena. The Hawks do not own CNN Center and a Turner spokeswoman said last week the office, retail and hotel complex is not for sale.

Gov. Nathan Deal’s office is said to have been briefed last month on the discussions as well.

In October, Reed also said the neighborhood around the arena could soon see plans by private developers for $500 million to $1 billion in new residential and commercial development. But Reed declined to say then if the Hawks would be involved in such development.

The car rental tax was a funding stream that financed critical infrastructure around the site when the arena was built in the 1990s. The remaining bond debt on the arena is paid for by arena operating revenue.

An extension of the rental car tax would likely fund arena improvements or nearby infrastructure and not the privately-funded development.

Kennesaw State University sports economist J.C. Bradbury said there has been a keeping-up-with-the-Joneses air of inevitability that a deal with the Hawks would soon come after the Braves and Falcons inked deals for new facilities.

“We’re worried about fairness among billionaires who own sports teams,” Bradbury said.

But Bradbury said he isn’t sure Atlanta will see the benefit that Cobb might from new spending by new visitors at the entertainment district around SunTrust Park. He said an extension of the city’s rental car tax, often pitched as a device that mostly hits tourists, also hits many locals.

Earlier this year, Reed said during a meeting with the AJC’s editorial board the proposed renovations of Philips Arena could total $200 million to $300 million, and that the city could afford to finance $100 million to $150 million in public money. The Hawks have previously confirmed renovation discussions but have declined further comment.

The Hawks' prior ownership group openly discussed a desire for denser development and more to do around Philips, but the current owners have said little since purchasing the team last year.

The Hawks’ interest in having at least some say over the mall at CNN Center has been rumored in commercial real estate circles for months. What kind of control or partnership the Hawks might seek involving CNN Center isn’t clear.

A spokeswoman for Turner Broadcasting System said last week Turner is contemplating renovations to the complex’s mall and the CNN studio tour, a popular tourist draw.

She declined to confirm whether the company is in discussions with the Hawks about other potential partnerships.

Turner’s TNT network is a major NBA broadcaster and reached a new long-term deal with the association in 2014. TNT broadcasts NBA playoff games and more than 60 regular season games per year. Turner also is a joint-venture partner with the NBA in its digital and television assets, including NBA TV, and mobile applications.

The L.A. Live complex next to Staples Center — home of NBA’s Lakers and Clippers and NHL’s Kings — houses an ESPN studio, restaurants, bars and shops. It was also in some ways the inspiration for the Braves $400 million mixed-use development under construction next to the future SunTrust Park. The Braves have said the ballpark and the bulk of the entertainment district known as The Battery will open in time to start the 2017 season.