Houston’s sports arena and stadium building binge continues, as plans take shape for the new downtown basketball/hockey arena. The arena was approved by an overwhelming majority of voters last November, and groundbreaking for the new home of the NBA Houston Rockets and the WNBA Houston Comets is anticipated early this year.
The arena also will be designed to accommodate an eagerly anticipated NHL hockey team at a later date. Until Houston lands the NHL franchise, it is widely anticipated that Houston’s current minor league hockey team, the International Hockey League’s Houston Aeros, also will call the new arena home, contingent upon the development of agreeable lease terms.
The construction of the new arena comes close on the heels of Enron Field, the new home of the Houston Astros, and Reliant Stadium, currently under construction for Houston’s new NFL team, the Houston Texans. In what has been called the fastest development of major league sports facilities in modern times, almost $1 billion will have been spent from 1997 to 2002 on sports stadiums in Houston.
In addition to providing new homes for Houston’s major sports teams, the development of these facilities is intended to boost the city’s chances to land the 2012 Summer Olympics. Houston is one of eight American cities that are currently interested in hosting the 2012 games.
The new arena, which is expected to seat between 18,000 and 20,000 sports fans, is yet another key component in Houston’s incredible downtown revitalization. According to the Houston Downtown Management District, downtown Houston has $2.2 billion in construction projects either recently completed or under way. Downtown projects currently under design total another $1.1 billion.
The budget for the arena project is $175 million, less than the $250-million price tag for Enron Field or the $367-million cost for Reliant Stadium. As with both the baseball and football stadiums, the basketball and hockey arena will be built in partnership between the teams that will use the facility and the Harris County-Houston Sports Authority.
Houston area voters approved the arena by 65 percent in November’s general election, a dramatic reversal of the defeat suffered by a similar proposal in 1999. In the first vote, the downtown arena was rejected by a 55-percent margin. That vote cast doubts over whether Rockets and Comets owner Les Alexander would keep the two teams in Houston. Following that defeat, the Houston Chronicle reported that the vote would “leave the Rockets’ future unclear, as New Orleans and other cities are expected to court a team.” St. Louis, Louisville, Las Vegas, and Baltimore also were reported to be interested in luring the Rockets away from Houston.
“I can’t thank the community enough,” Alexander said following the successful referendum. “I think the people always wanted to vote with the Rockets and Comets, but they didn’t have all the information in 1999.”
With the construction of the new arena, the Rockets and Comets will remain in Houston for 30 years after the teams’ leases at Compaq Center expire in November 2003.
Under the terms of the agreement between the Sports Authority, the Houston Rockets, and the city of Houston, the land for the arena will be purchased and owned by the city. The Sports Authority will construct and own the facility, and will hold a 30-year ground lease on the site. The city of Houston will receive ownership of the arena at the end of the ground lease.
The Rockets will pay annual rental payments of $8.5 million per year over the term of the agreement. In addition to the rental terms, the Rockets have signed off on a non-relocation agreement to ensure that they remain in Houston for the duration of the lease. The Rockets will be responsible for the costs of operating the facility, will bear the costs of maintaining the arena, and will receive the revenue generated by the operation of the arena.
In constructing the arena, the Sports Authority will issue bonds backed by a pledge of revenues from existing car rental and hotel occupancy taxes, as well as a pledge of the Rockets’ $8.5-million annual rental payments. No new taxes are involved, a point that stifled opposition to the project during the referendum.
The Rockets also are responsible for bearing the cost of any overruns related to the construction, design and equipping of the arena in excess of the $175-million construction budget. The basketball club also will be responsible for up to $8 million in concession area build-out expenses.
The arena is currently being designed by Kansas City-based HOK Sport. This is the same design firm used by the Sports Authority for both Enron Field and Reliant Stadium.
The new facility will be built on a four-block site on the eastern edge of downtown Houston, immediately to the southwest of the George R. Brown Convention Center and several blocks south of Enron Field.
The city of Houston is currently in the process of acquiring those portions of the property it does not already own.
Some controversy recently arose over the city’s plan to close a fire station to make way for the arena. The 30-year-old Fire Station 8, located within the arena construction site was slated to be closed at the end of January. Houston’s other Central Business District station, Fire Station 1 also was to be closed at the same time to allow for the development of an aquarium-themed restaurant.
Station 1 firefighters and apparatus were to share space in Station 9, some 2 mi. northeast of downtown. Station 8 manpower and equipment were to be housed in a temporary facility that has not yet been built. Until the temporary facility could be built, the trucks were to either park in various locations in the downtown area, or be “roving” through the Central Business district, to await calls for service.
The day before the two stations were to be closed, Houston Mayor Lee P. Brown abandoned the immediate closure idea after a blistering barrage of opposition from City Council and the firefighters’ union. It was decided that the two stations would continue to operate at their current locations until a temporary station within the Central Business District can be prepared for their use.
In addition to the arena facility itself, the Sports Authority also will construct a parking garage adjacent to the arena site. When completed, the location of the parking garage will allow it to be used for both arena functions and for events at the Convention Center. The Sports Authority anticipates private sector support to finance land acquisition and construction costs for the garage. As with the arena, ownership of the parking facility will revert to the city of Houston after the 30-year term of the agreement.
When the new arena opens, the future of the Rockets and Comets current home, Compaq Center, may continue to be in doubt. At the present time, the official position of the city’s Convention and Entertainment Facilities Department is that they are “reviewing various options for Compaq Center.” The agreement on the new facility allows for either the sale or continued use of Compaq Center for non-competing events.
In addition to ownership of the arena and parking facility following the 30-year lease, the city of Houston is expected to benefit in a number of additional ways in return for its $20-million investment in the project. The city will receive $200,000 a year from its portion of the naming rights revenue. The agreement with the teams and the Sports Authority requires that 5 percent of the income from the sale of the naming rights go to the city on an annual basis.
The city’s Convention and Entertainment Facilities Department will receive the use of a promotional suite, which is valued at between $250,000 and $500,000 annually. The city also will receive 20 event days per year for charitable and educational purposes, as well as other civic events, including certain revenue producing events.
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