Quick Arena Facts
Arena Cost: $175 million
Land Cost: Capped at $20 million
Parking Garage Cost: $35-$45 million
The Rockets Pay: $105 million total - $8.5 million annual rent for 30 years
The Sports Authority Pays: $70 million
The City Pays: For the cost of the land
Private Business Pays: For the cost of the garage
NO Ticket Tax.
NO Tax Increases.
NO New Taxes.
NO Property or Sales Taxes will be used.
The Sports Authority's contribution comes from its budget of existing hotel occupancy and car rental taxes. These taxes will NOT increase if the arena passes or decrease if it doesn't.
The city will fund the land from its Convention and Entertainment Facilities Management budget which is made up of existing hotel occupancy taxes. These taxes will NOT increase if the arena passes or decrease if it doesn't.
Arena Maintenance: The Rockets will be responsible for arena operating expenses except for a $1.6 million annual capital repairs fund provided by the Sports Authority.
Arena Revenues: The Rockets will receive all the revenues from events at the arena with the exception of hockey if owned by someone other than Les Alexander.
Naming Rights: The Rockets will receive 95% of the naming rights. The city recieves 5%.
Parking Revenue: The Rockets receive parking revenue for their events including the Rockets, Comets and Thunderbears. The city receives ALL other parking revenue.
Hockey Use: An NHL team would receive its game-night revenues including parking and pay only what the Sports Authority determines. They could receive a subsidy from the Authority to offset losses. NO advantage will be given to the Rockets in acquiring an NHL team. The Aeros will be accomodated at fair market value or will be allowed to continue playing in the Compaq Center.
Location: One block north of the George R. Brown Convention Center on the east side of downtown.
Arena Capacity: 18,000 - 19,000 for basketball and 17,000 for hockey
Event Nights Per Year: Estimated 200 - 225
Public Use: The city will be allowed to use the arena rent free 20 times per year for any event.
Arena Faq
Why downtown?
The city of Houston is experiencing a re-birth of its downtown area. Cities like Baltimore, Cleveland and Indianapolis, to name a few, have used the building of sporting and entertainment facilities as a catalyst to economic growth in their central business districts. With the arts district, Enron Field, the expansion of the George R. Brown Convention Center, the new convention center hotel, all the lofts and new resturants and clubs downtown, the arena would be another important piece to the puzzle.
Other sites have been considered in the past but proved to be just as costly with far fewer benefits in the long run to the surrounding area. Downtown provides the best hope for economic growth and the best backdrop in the city - the skyline.
What about difficulties with traffic and parking?
Parking in downtown, even during multiple events, should be no more difficult to locate and navigate than it is at the Compaq Center or Astrodome. Fans of the Astros found that getting to and from Enron Field was far easier than at the Dome simply because their are so many more parking options and routes in and out of downtown as opposed to the Astrodomain.
What about the cost of parking?
Because parking lots in downtown are private, owners of those lots are free to charge whatever price they can get. However, because there are so many lots around downtown, you are likely able to find parking for close to the same cost as at the Astrodome or the Compaq Center (there, parking is added automatically to the ticket) - around $5. Parking shuttles will be available to take you to the arena from nearby lots or you can choose to walk, which is a nice change of pace if you haven't ever just walked through downtown before.
What about Astros mediocre season and slashing of payroll?
The problems with the Astros trimming their payroll after moving into Enron Field is unfortunate but has little to do with the Rockets or Comets. Major League Baseball has no salary cap in place and the Astros have never spent more than $50 million on payroll. The NBA has a salary cap that regulates the increase in payroll and the Rockets have routinely paid whatever is necessary to take care of players up to and over the constraints of the salry cap. The Astros, unfortunately, have a history of being a conservative team when it comes to spending on payroll. The opposite is true of the Rockets.
Why do we have to use tax dollars?
The majority of facilities, especially multi-use facilities like the proposed basketball/hockey arena, around the country are funded at least in part through some type of public subsidy. The size of the public contribution depends on the size of the city. The size of the contribution is generally inversely proportional to the market size of the city - the smaller the market size of the city, the larger the public contribution. In Houston's case, we are the 10th or 11th largest media market depending on whose ranking you use. The deal at hand is comperable and even slightly better than deals in cities with about the same market size such as Atlanta or Dallas. In addition, this arena will cost significantly less than the vast majority of arenas built over the past 5 to 7 years.
Where is the money coming from?
The Rockets will pay $105 million of the total cost in the form of annual rent payments including all construction cost overruns. The Harris County Houston Sports Authority will pay the rest. Its budget is made up of existing hotel occupancy taxes and car rental taxes. The land (capped at $20 million) will be acquired and paid for from the city's Convention and Entertainment Facilities budget which is made up of existing hotel occupancy taxes. No money will be taken from property or sales taxes or the city's general budget. In addition, a parking garage will be privately financed by a third party. The parking garage may be financed with an interest-free loan and paid off by the Sports Authority at a later date if no third party is willing to run the garage.
With the city's budget problems, is there enough money to build an arena?
Yes. NO money will be taken from the city's general fund or budget to pay for this arena. ALL of the public funds will be paid for out of existing hotel occupancy and car rental taxes that are not a part of the city's general budget.
Does the city make any money on this deal?
Yes. The city will receive $200,000 per year from naming rights, an arena suite for promoting city events, 20 revenue-generating events in the arena and a facility in the arena for promoting the city. More importantly, the increase in sales tax revenues in downtown because of visitors to the arena as well as the increase in property values (raising property taxe revenues) could be worth millions every year.
Why do we have to have a referendum?
In 1996, voters in Harris County and the city of Houston voted to create a hotel occupancy tax and car rental tax to offset the costs of Enron Field and a new football stadium. In 1997, the state legislature passed a bill forming the Harris County Houston Sports Authority as the entity that would control those funds. As part of that agreement, the use of those funds must be approved by the voters in a general referendum election.
Are we raising taxes?
No. The hotel occupancy and car rental taxes are existing taxes and WILL NOT NEED TO BE INCREASED to pay for the arena. These taxes will be in place for roughly the next 30 years and will not be reduced if no arena is funded. These taxes were voted into existence by the city and county voters in 1996 and cannot be used for anything other than sports and entertainment facilites according to state law.
Won't the taxes cost us in terms of conventions, etc. due to the cost of hotels going up?
No. In fact, not building an arena could cost more conventions than the tax itself. Despite the tax levy in 1997, hotel occupancy has risen steadily and is projected to continue to rise over the next 20 years. This tax will not increase with the building of a new arena. Houston's hotel rates are some of the lowest in the country when compared to other big cities. Building the downtown arena near the convention center will do more to attract conventions and larger events to the city than the high tax rate will discourage them.
How will this effect our chances of getting the Olympics in 2012?
A new arena could have a dramatic effect on the city's efforts to lure the Olympics to Houston in 2012. We already have the upper hand in venues and transportation and a new arena to go with Enron Field and the new football stadium would make that offer even more attractive.
What about the NHL and the Aeros?
The Sports Authority included specific provisions for an NHL team should one decide to relocate here or be bought by a local owner other than Les Alexander. The Authority will have the ability to provide a subsidy to an NHL team to help them be financially successful in an arena owned and operated by another owner.
The Aeros have been provided for in the deal as well. The Rockets are required to give the Aeros a fair-market deal under the terms of this agreement if the Aeros choose to play in the new arena. They are also free to continue playing in the Compaq Center.
With the building of Enron Field and the new football stadium, do we have the funds to build an arena too?
Yes. The Sports Authority sells bonds to pay for arenas and sports facilites. They have enough bonding capacity and expected revenues from hotels and car rentals to afford all three venues over the next 30 years.
Are other cities really a threat?
Yes. While Louisville may have been the only city vocal in its desire to lure the Rockets and Comets, other cities including Anaheim, Baltimore, St. Louis, New Orleans and Nashville (yes, NASHVILLE!!!) will undoubtedly line up to bid for the Rockets and Comets if the referendum fails. Louisville will likely continue to remain interested as well.
Will the Rockets leave if there is no deal this time?
We cannot say that it is a 100% certainty, but let's say it is a 99.99% certainty. Only a miracle would keep the Rockets in Houston if a referendum failed and we'd all prefer not to have to hope for one.
What makes the team so important to the community?
There are many reasons including the charity work done by the Clutch City Foundation, but the best reason may be civic pride. The joy and pride brought to a city (not to mention the notoriety) is invaluable. The victory parades and impromptu celebrations brought about by the championships were in sharp contrast to other parts of the county whose citizens rioted as the result of victories. The city of Houston is a great place to live and the Rockets and Comets are a part of that. They are as much a tradition and a part of our community as NASA, the museums, the theaters or the water ball! Keeping them is not just an investment in our city's business interests, it is an investment in the soul of Houston - one that will pay dividends for us and our children.
Sports Authority Arena Overview
* The Arena is targeted for completion on or before September 1, 2003.
* The Arena will be financed by the Sports Authority out of the NBA Club's rent and the Sports Authority's car rental and hotel occupancy taxes (like Enron Field). Approximately $105 million (present value) in proceeds will be generated by the NBA Club's rent payment.
* No ticket tax or other target tax is contemplated to finance the Arena.
* The NBA Club will pay an annual rent of $8.5 million.
* A Capital Repair Fund will be maintained to accommodate future major capital repairs at the Arena. $1.6 million from the NBA Club's rent will be deposited annually into the Capital Repair Fund. This payment will be subordinate to the rent supported debt.
* The NBA Club will be responsible for all operating, maintenance and capital repair costs and other expenses related to the Arena and will cause the Arena to be operated, improved and maintained in first class condition. The Sports Authority will contribute $1.5 million annually to a maintenance fund, which payment will be subordinate to the rent support debt.
* The NBA Club will receive all revenues from all events, including naming rights and advertising rights. However, the City of Houston will receive 5% of naming rights (up to $200,000 annually).
* The NBA Club will execute a 30 year lease and a Non-Relocation Agreement to insure its commitment to stay in Houston.
* The NBA Club will incur certain pre-development costs in connection with the design of the Arena prior to the Referendum. Similar to Enron Field, the Sports Authority will reimburse the NBA Club for architectural, engineering and other consulting fees incurred by the NBA Club in connection with the Arena; provided that if the Referendum is not approved, the maximum reimbursement will be $3 million.
* The City of Houston will get 20 days per year for its use (and to lease out for use by others) for non-revenue generating civic use and for uses related to conventions at the GRBCC, with the ability for 5 days to be used for charitable and educational purposes.
* If NHL hockey comes to Houston, the NHL Team is entitled to play its games in the Arena. The NHL Team to receive game-day revenue, but not naming rights, permanent advertising, suite premiums (other than incremental amounts paid by suite holders attributable to the NHL Team). The NHL Team may be asked to pay the Sports Authority a one-time "buy-in" payment and may receive a to-be determined operating payment from the Sports Authority. An NHL Team brought to the Arena that is affiliated with the NBA Club will not pay rent or receive the operating payment unless otherwise agreed.
* The Arena may be renovated in the 15th year of the lease if excess funds can be created through the refinancing of the original debt issued to finance the Arena.
* The Houston Aeros will be permitted to play in the Arena pursuant to a commercially reasonable lease.
* Upon opening of the Arena, Compaq Center will not be used as commercially competing venue. The City and the Sports Authority agree not to finance any venue for arena-type events which would compete with the Arena. The Sports Authority agrees to assist the NBA Club in obtaining a release from the NBA Club's obligation to play its home games at Compaq Center after the end of the 2002/2003 NBA season.
* If the Arena does not open on schedule, the NBA Club will be entitled to lease and receive all revenue from Compaq Center; provided the Rockets pay all day-to-day operating and maintenance costs and $1 per year until the Arena is completed. If the Referendum fails, the NBA Club will be entitled to lease Compaq Center for one year following the end of the 2003/2004 NBA season for a to-be-negotiated rent (not to exceed $1 million) and the obligation for operations and maintenance expenses.*
* The Arena may be used for the Olympics, with the City and/or the Sports Authority funding any costs associated with needed modifications.
* The parties agree to maximize diversity and community involvement and participation in the design, development and construction of the Arena.
* This provision is conditioned on the NBA Club obtaining a release of its existing lease obligation.
THE ULTIMATE SPORTS ROAD TRIP
By: Andrew Kulyk & Peter Farrell
| Toyota Center Ranking by USRT |
| Architecture |  | 5 |
| Concessions | | 6.5 |
| Scoreboard | | 9.5 |
| Ushers | | 7 |
| Fan Support | | 6 |
| Location | | 6 |
| Banners/History | | 6 |
| Entertainment | | 6 |
| Concourses/Fan Comfort | | 5 |
| Bonus: USRT Red Carpet Treatment | | 4 |
| Total Score |  | 61 |
April 4, 2004 - The latest stop on our venue visiting tour brought us to Houston, for what is the final piece of the city's goal to upgrade and improve their pro sports facilities. With the opening of Enron Field (now Minute Maid Park) in 2000 and the completion of Reliant Stadium in 2002, the Toyota Center completed the quest to give each of Houston's first class franchises an ultramodern and state of the art facility to call home.
Getting to the Venue
The Toyota Center is located in what is known as the Eastern Corridor of downtown
Houston and can be accessed rather easily by car, as I-10 and I-45 both have exits that are
just a few blocks away from the venue. Parking here is plentiful, with a number of surface
lots within a short walk of the venue, and parking rates ranging from $5-$10 for the most
part. Adjacent to the venue is a parking garage, south of the arena with a walkway
connecting to the suite level. Some street parking can be found with a little searching and
the desire to walk a bit further... meters aren't monitored on evenings and weekends.
Public transportation is not a fan friendly option here, so plan to drive.
Outside the Venue
As downtown venues go, there isn't a whole lot in the immediate vicinity of the arena in the
way of entertainment and eateries. Mostly vacant lots sit to the building's west and east.
Off to the north is the Brown Convention Center and still further north is Minute Maid Park.
With the construction and completion of these major facilities, the Eastern Corridor has
begun to see a revitalization taking place and it appears that the Toyota Center will only
augment that. The first sports bar in the neighborhood just opened across the street, and
there is a promise of more to come. Some nice spots near the ballpark if you want to walk
up that far.
PS...a stark testament to the huge disparity in economic class can be found in nearby Holt
Memorial Park, where dozens of Houston's destitute citizens can be found just a short walk
from the Arena.
The Concourses
The main entrance to the facility is at its northwest corner - a gleaming glass atrium that
gives the fan a striking view of Houston's downtown. Clean, wide, and brightly lit, with white
being the dominant hue, these concourses have a distinctiveness to them, as the floor of
each of the four sides of the main concourse has a mural with the direction labeled on it.
i.e....the south concourse has the word SOUTH inscribed in enormous lettering.
Also near the main entrance is one of the longest escalators in pro sports to take fans to
the upper deck.....let's say this time honored phrase again....."everything's big in Texas"!!!
And another thing, this being the Toyota Center, there are plenty of actual Toyota car
models on display throughout the main concourse here.
Concessions
A wide variety of concessions here at Toyota with suitably named stands such as
H-O-U-B-B-Q, Space City Dogs, Clutch City Pizza, and Baskets Grill (we should nickname this
place the Corolla, the Tundra or something like that, by the way) featuring all kinds of ethnic
foods whether it be Italian, Mexican, and of course Asian. Come here hungry......you will not
be disappointed..
A restaurant called the Red and White Club is located on the club level in the south end of
the arena. This restaurant features Houston's largest wine cellar and is open to all patrons
of the arena to enjoy a buffet meal in an elegant setting while the game goes on in the
background.
The Seating Bowl
Two levels of red colored seats sandwich two levels of suites on the sidelines and there is
the same effect sans suites on the baseline. Unlike its predecessor, the Toyota Center
does have a scoreboard hanging above center ice/court and boy is it a doozie!!! Its lower
portion is a four sided video screen, and its upper portion has an eight side LED board that
shows most of the graphics and in game stats. Just like its predecessor, there is a
scoreboard on the wall high atop each baseline with the same technology as the main
boards in the center of the arena.
As is the case in most new arenas, there is an LED ribbon board that encircles the seating
bowl at the second suite balcony/upperdeck balcony. Amazing how what was absolute
cutting edge for arena/stadia in 2000 is now virtually expected in a major pro sports venue
in 2004.
Premium Seating
Club seating here is located along the sidelines of the lower seating bowl. Fan in these
areas have exclusive access to their own club concourse at the top of the seating bowl,
which is separated from the main concourse which rings the exterior of the building. At
ground level is the Lexus Club, another premium area with 14 "courtside suites" (no view of the playing surface) all very plush and elegant. Eight suites ring the seating bowl
between lower and upper decks. Another interesting feature here is the "Tundra Party
Suite", where an actual truck is parked in the suite and on display. Reclining seats and wide screen plasma TV monitors are just two of the nice amenities for suite holders. From what
we could see, the parking deck and sky bridge is set up for suite and club seat holders only.
Banners and Retired Numbers
Ahhh yess, The Rockets hang their back to back NBA Championship banners from 1994 and
1995 (has it really been TEN YEARS already??) along with the retired numbers of Calvin
Murphy, Rudy T, Hakeem, Clyde "The Glide" Drexler, and Moses Malone.
Minor league hockey's Aeros also have a renowned history with their retired numbers and
banners as well. (What became of the Comets' banners????)
Slam Dunks, Assists, Fouls
Assist - useless trivia question.....What franchise can lay claim to a WHA, AHL, and, IHL championship??.....yessireee Bob, those Houston Aeros. How about that!
Slam Dunk - To the Rockets marketing campaign which revolves heavily around their
beloved YAO! Yao Ming is easily the most recognizable sports celebrity in Houston. Here at
the arena oriental food is easy to find, and during timeouts Yao offers fans today's lesson
in how to cheer in Chinese (this day's tutorial on the video board was the word "de-fense").
Foul - Ladies and Gentlemen (and anyone else)....we are now here to declare the karma of
the USRT to be dormant until further notice as the Rockets crash to their fourth loss in a
row by a 99-94 count to the deep and talented Sacramento Kings. If you haven't following us
lately, this was preceded by three other losses on official USRT stops.
Assist - Clyde Drexler has a BBQ restaurant not too far from the arena, which seemed like
a cool place for us to hit after the game, however....
Foul - it didn't appear to be open on this particular Sunday, doors appeared closed and
there wasn't a car to be seen in the parking lot. Next time, we hope.
Assist - Just a quick note of encouragement to Rockets color man Calvin Murphy as we
hope for all the best for him and his family. Calvin is a legendary sports figure back in our
area and we wish him well in resolving his current problems.
Slam Dunk - special thanks go to Rockets front office personnel Susan Newquest and Doug
Hall for giving so much of their precious time during our stay at the Toyota Center. Assist to
Rockets Media Relations guru Nelson Luis for setting us up with press credentials. Even
though we had game tickets in hand, it was an awesome experience sitting in the postgame
press conference room, and chatting up courtside with the likes of former Buffalo Braves
coach Dr. Jack Ramsay and even brushing by Sacramento Kings owner Gavin Maloof.
As usual the people of this fine city bring out the welcome mat like no other. Kudos to the
Rockets, and best of luck in your long awaited return to the NBA postseason!
Summary
One of the disappointments of this venue was the lack of visibility of the local Texas
culture... being visitors from up north, we almost expect to see the massive flag of the
Texas Republic dominating the rafters, the hints of country music, the cowboy murals. At
Astros games they sing and clap to "Deep in the Heart of Texas" during the 7th inning
stretch. At Reliant Stadium symbols of cattle brands line the concourses. So maybe a little
home cookin', how about the cheerleaders doing some line dance routines during the
breaks??? Something??? Anything???
Well they deliberately went away from the hoe-down theme, and instead the building has
more of a Chinese theme than a Texas feel. Yes this is Yao country and that is not too bad!
What you have here is bright, functional and pleasant arena. A nice addition to the Houston
skyline, one of the nicest seating bowls and great technological amenities, and a pretty
nice location. More development around the arena would be a real plus - still too many
windswept parking lots, although the gleaming Houston skyline beckons a couple of short
blocks away. All in all, the Rockets have a splendid new arena to call home.
HOUSTON SPORTS AUTHORITY MAY NEED TAXPAYER SUPPORT
October 29, 2009
Copyright 2009 MediaVentures
Houston, Texas - Taxpayers may be called in to help the Harris County-Houston Sports
Authority meet its financial obligations for debt incurred in construction of Minute Maid Park,
Reliant Stadium and the Toyota Center. Estimates say the agency may need up to $7 million a
year.
Facing balloon payments on $117 million in variable-rate bonds, the authority now is obliged to
pay off the debt in five years instead of 23 years. That would require $24 million a year - a figure
that, together with more than $30 million in additional obligations, would push the authority to the
brink of insolvency.
The alternative: Convince major banks to provide lines of credit that would give the authority a
two-year window to refinance. That would cost $7 million a year.
But those deals would create a new set of problems: The authority would have to take $7
million a year now used for stadium maintenance and the expenses of the Harris County Sports
and Convention Corporation and spend it on repaying the loans. To make up the difference, Harris
County may have to pick up some of those expenses with property tax revenue, a step that some
say indirectly violates stadium boosters' promise that taxpayer dollars would not be used to pay for
the new venues.
Using that $7 million to pay debt would create a budget hole for the convention corporation,
one that would have to be filled by Harris County, Sports and Convention Corp. Executive Director
Willie Loston said.
The Authority's chairman, however, said taxpayers will not be affected.
The sports authority was set up to manage the $1 billion in voter-approved bonds that financed the
construction of Reliant Stadium, Toyota Center and Minute Maid Park.
The authority's debt ran into trouble about a year ago when MBIA, a firm that insured its bonds,
was downgraded by analysts. Investors fled from $117 million in variable-rate bonds, forcing the
bank JPMorgan Chase to buy them up, under its contractual obligation with the sports authority.
JPMorgan then converted the debt into a loan and, per the contract, required payment in five years
instead of 23. Those payments amount to about $24 million a year.
After expenses and debt service, the authority nets about $12 million annually.
In addition, the authority had entered into an interest rate swap on the $117 million with UBS,
which allowed the agency to exchange its variable interest rates for fixed ones. When the bonds
soured, the swap went awry, creating an obligation for the authority to post $30 million to $35
million in collateral.
Without a lifeline, the two payments, which could total nearly $60 million, would deplete most
of the authority's reserve funds and push it toward default.
Because investor ratings firms require bond issuers to hold reserves, depleting them
significantly could cause the authority's bond rating, already just one step above junk status, to be
downgraded. That would significantly darken the prospects for what authority officials
acknowledge is the only long-term solution: refinancing.
Authority officials are pinning their hopes on a pair of potential deals. The first would be a line
of credit with JPMorgan to cover the $117 million. The second is another line of credit with UBS
that would allow the authority to avoid paying the collateral on the swap.
Both deals would greatly smooth out the authority's financial challenges. But they also would
force Harris County to grapple with an unexpected $7 million-a-year budget hole.
To make the deals work, the authority would need to pledge more of the money from parking
fees, the Houston Texans and the Houston Rodeo at Reliant Stadium for debt service. Currently,
that money is used by the Harris County Sports and Convention Corporation for operating
expenses and stadium maintenance.
Jack Yuran, director of financial planning in Harris County, said he and other officials are
trying to come up with a way to free up additional hotel tax funds to make it possible for their use
by the sports corporation.
One possibility under consideration is to move stadium utility costs - usually around $11
million a year - from the HOT tax budget into the tax-supported general fund or a special revenue
fund, Yuran said.
Numerous county and authority officials insisted that the use of property tax funds to pay for
expenses that were covered by money that will now go toward stadium debt does not represent a
breach of the promises made to taxpayers.
