CHICAGO – A $280 million partially bond-financed overhaul of the Quicken Loans Arena – home of the National Basketball Association’s Cleveland Cavaliers -- cleared its final hurdle with the Cleveland City Council’s approval this week.
The council voted 12-5 in favor of the plan after a two-week delay pushed by council critics.
The city has committed $8 million in annual subsidies from an admissions tax on arena events beginning in 2024. Its contribution will total about $88 million over 11 years.
The vote followed concessions from the NBA team that included a guarantee to match all admissions tax revenue that will go to cover debt service, and a commitment to fund upgrades to city high school and recreation center basketball courts.
The Cuyahoga County Council previously signed off on a resolution paving the way for a $140 million bond issue to help cover the $280 million price tag.
Approval of a new lease and other documents came despite opposition from some county council members and local organizations that believe the funds could be better spent elsewhere or that team owner Dan Gilbert should contribute more.
In addition to the city contribution, the renovations to the 22-year-old arena rely on $16 million from the county and $44 million from the local group Destination Cleveland's share of a county bed tax, with the remainder covered by the team. Increased rental payments from the team and hotel taxes would also go to help repay the borrowing.
The project is aimed at upgrading and extending the life of the venue, as well as to resolve what are described as important structural and operational deficiencies.
Backers say the upgrades will avoid the need to build a new arena at an estimated cost between $500 million and $750 million. The renovations, supporters say, will ensure the team remains in Cleveland through 2034, seven years past the current expiration of its lease. Supporters say the county-funded renovation is needed to preserve the revenue generated by the arena while opponents said the county should have gotten more out of the deal.
County officials have retained Squire Patton Boggs LLP, and Forbes, Fields & Associates Co. LPA to serve as co-bond counsel on the 2017 Arena Bonds. Stifel Nicolaus & Co. has been hired as financial advisor.