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Charlotte City Council last night approved changes to a 2022 agreement with the Charlotte Hornets that will allow the NBA franchise to build a stand-alone practice center on taxpayer-owned property behind Spectrum Center.
Council voted 7-1 to move forward with the revised agreement. Renée Johnson cast the lone dissenting vote. Three members were absent: Tariq Bokhari, Tiawana Brown and LaWana Mayfield.
City government will keep its $275 million commitment as negotiated in the 2022 agreement in exchange for a 15-year lease extension through 2045 by the Hornets at the city-owned arena. Terms within that $275 million have shifted: $245 million will go toward arena renovations over the next two summers, up from $215 million, while public funding for the practice center will be reduced to $30 million from $60 million.
Money from existing tourism taxes will fund the city’s portion of the projects; the 2022 agreement relied upon $60 million from possible arena district naming rights and practice center naming rights.
The changes will allow the Hornets to move faster on the proposed practice center, with an anticipated opening in 2026 instead of 2027 or 2028. Under the original deal, the city would have owned the practice center and it would have been built as part of a planned redevelopment of the Charlotte Transportation Center.
Instead, the practice center will be built on a 3.2-acre, city-owned parcel at 501 E. Trade St., property that is now used as a gravel parking lot for the arena. In addition, the Hornets receive a 5-year option on the remaining 40% of the land — the practice center will occupy 60% — to build a hotel or related development tying into the arena.
Council yesterday added a new wrinkle from recent discussions: city government will own a portion of the practice center commensurate with its $30 million investment in the practice center. Having a small ownership stake resolves a concern raised by several council members during discussion of the amended agreement: ensuring community events, such as youth basketball clinics and games, are part of the practice center’s use.
The Hornets will have majority ownership of the practice center and are expected to invest $70 million to $100 million into the project. The team requested a revised agreement because it is now under new ownership. Last summer, a 20-person investor group led by financiers Gabe Plotkin and Rick Schnall acquired majority interest from Michael Jordan in a deal that valued the franchise at $3 billion.
As part of the agreement, the Hornets and the city will allocate 16% of construction contracts to minority-owned businesses and 14% to women-owned small businesses.
City administrators said the new agreement “alleviates the city’s financial obligations associated with potential cost of penalties on construction delays, required 350 parking spaces (to be provided to the team), cost overruns and practice facility maintenance.”
Republican councilman Ed Driggs said previously and reiterated yesterday that the new terms are, at worst, revenue neutral.
Tracy Dodson, assistant city manager in charge of economic development, has estimated savings of $16.7 million to $22.7 million for city government under the new terms.
Councilman Malcolm Graham pointed out that, while the small ownership stake in the practice center ensures community use for the practice center, he and others still want to see adjustments made by the Hornets to accommodate more economic development-related community uses at Spectrum Center.
City government owns the NBA arena while the Hornets run the building and reap all operating profits while absorbing any operating losses.
As part of controlling the 3.2-acre parcel behind the arena, the Hornets agreed to provide 125 parking spaces for city government employees for daytime use and up to 125 more on the remaining 40% as it’s developed.
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