Atlanta may help pay for arena remodel to keep Hawks downtown

City officials and the Atlanta Hawks are discussing a significant overhaul of Philips Arena to keep the team from leaving downtown.

Renovation of the 16-year-old arena could cost $150 million to $250 million, Mayor Kasim Reed told the Atlanta Journal-Constitution.

How much taxpayers might chip in hasn’t been determined. More detailed plans could come forward in the first quarter of next year, Reed said.

“We will retrofit Philips. That is the agreement. The discussion is about the number,” Reed said, referring to the total cost of a Philips renovation, not specifically the public amount.

The mayor first acknowledged in-depth discussions with the Hawks on Thursday during remarks at a real estate conference in Vinings, a few miles from the Braves’ future home.

The Hawks confirmed the talks but declined to discuss the matter further.

If a new deal 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 $1.4 billion Mercedes-Benz Stadium. 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 Falcons owner Arthur Blank and DeKalb County recently announced a deal for public support for the headquarters and training facility for Blank’s new Major League Soccer franchise, Atlanta United FC.

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 Atlanta Journal-Constitution’s editorial board at the time, would not rule out moving the Hawks elsewhere in the region.

The city’s wrenching loss of the Braves to Cobb County has only contributed to the uncertainty, and Reed has said he was open to discussing a public contribution to keep the Hawks.

In an interview, Reed said the Hawks have tapped a design team for the remodeling.

The team already has work underway on $2.5 million in significant, but unrelated, upgrades to player areas such as training rooms and lounges.

The makeover described by the mayor would be far more substantial. Reed said it will likely include undoing the “wall of suites” on one side of the arena, an element to the stadium that is not in fashion in the NBA.

Luxury boxes typically encircle indoor arenas, and the AJC reported earlier this year that at least one of the groups looking to acquire the Hawks had complained about the arena’s layout and stack of luxury suites.

“I think it will be highly unlikely that you will have the (suite) stack anymore,” Reed said. “Our building is the only building built since that time that did that.”

Reed said a remodel also would involve connecting disjointed corridors for better flow of fans and opening corridors to court.

Such an extensive overhaul would likely require the Hawks to play at least a portion of a season or perhaps longer in another arena, but Reed said such details are among a number of factors still being discussed.

The Hawks played games in Georgia Tech’s coliseum and the Georgia Dome when the former Omni was demolished to make way for Philips Arena.

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 Atlanta Fulton County Recreation Authority, which owns Philips, refinanced the $124.5 million in bond debt in 2010. It is scheduled to be paid off in 2028.

A message left for AFCRA Executive Director Keisha Lance Bottoms was not immediately returned.

The potential funding source for any public portion of the arena overhaul was not immediately known.

Though the team has yet to commit to staying at Philips Arena, the work the Hawks currently have underway has suggested the team isn’t leaving. The arena is undergoing significant cosmetic upgrades to the Hawks locker room area, improvements the new ownership feels are necessary to the facility.

After purchasing the team in June, Ressler said the arena needed to be remodeled or replaced. “There’s do-nothing. There’s remodel. Or there’s a new arena. Do-nothing is not an option,” Ressler said.

Hawks General Manager Wes Wilcox, discussing the Hawks facility upgrades and not a potential full renovation, said Thursday that the owners are “are fully committed to creating a first-class basketball environment in Atlanta.”

“As an immediate representation of that commitment, we commenced working on cosmetic updates and redecorating our existing locker room and player area with new identity,” Wilcox said. “We are confident that our players, staff and organization as a whole, feel and realize the magnitude of this change.”

Hawks star center Al Horford recently acknowledged that Philips Arena “wasn’t the best facility.”

“I’m very happy, very satisfied,” Horford said of the current work being done at the arena. “I think it’s great that the ownership are taking this initiative to make everything better. As players, we really appreciate it. It makes it more enjoyable to come in and work and have more resources here. From a player’s standpoint, this is what we’ve been waiting for.”

In other comments Thursday at the event held by real estate publication Bisnow, Reed said that developers are looking at the area around Philips Arena and the new Mercedes-Benz Stadium. The Georgia World Congress Center also plans a luxury hotel on its campus.

The pipeline of future development in the city is strong, and Reed said he expects to see plans in the future for $500 million to $1 billion in mixed-use development in the Philips Arena neighborhood.

Reed declined to say more about potential development around Philips Arena or identify would-be developers.

Last year, former Hawks lead owner Bruce Levenson told the AJC the team was in the early stages of discussing enhancements to the stadium, including potential for an entertainment district in the nearby tangle of railroad tracks and parking lots known as the Gulch.

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