Broward County Commission Regular Meeting
Director's Name: Monica Cepero
Department: County Administration
Information
Requested Action
title
MOTION TO APPROVE Term Sheet (“Term Sheet”) attached hereto as Exhibit 1 between Broward County (“County”) and the Arena Operating Company, Ltd., the Florida Panthers Hockey Club, Ltd., and Sunrise Sports and Entertainment, LLC., (collectively referred to as the “Panthers Parties”) providing the conceptual terms of an agreement to replace the existing Amended and Restated Broward County Civic Arena Operating Agreement (“Current Operating Agreement”) with a new nine-year Operating Agreement (“New Operating Agreement”), with two, five-year renewals at the County’s sole option, and to authorize the County Administrator to negotiate and bring back to the Board for consideration and approval agreement documents that are consistent with Term Sheet, subject to continuing financial review and further subject to approval as to legal sufficiency by the County Attorney’s Office.
body
Why Action is Necessary
Broward County Board of County Commissioners (“Board”) action is required to approve the Term Sheet.
What Action Accomplishes
Approves the Term Sheet and conceptually approves key terms for a New Operating Agreement.
Goal Related Icon(s)
☒County Commission
☐Go Green
☐MAP Broward
Previous Action Taken
None.
Summary Explanation/Background
THE COUNTY ADMINISTRATOR’S OFFICE RECOMMENDS APPROVAL OF THE ABOVE MOTION.
This item supports the Board's Value of "Cultivating community culture, arts, recreation and life-long learning" and goals relating to diverse artistic, cultural and recreational amenities and programs.
The Broward County Civic Arena ("Arena"), now known as the Amerant Bank Arena, is a multipurpose sports and entertainment venue owned and financed by Broward County. The Arena is managed by the Arena Operating Company, Ltd. ("AOC"), a subsidiary of Sunrise Sports & Entertainment, LLC. ("SSE") and affiliate of the Florida Panthers Hockey Club (“Team”) Ltd, (collectively referred to as the “Panthers Parties”) on behalf of the County pursuant to the terms of the Amended and Restated Broward County Civic Arena Operating Agreement among the Panthers Parties and the County dated January 12, 2016 (the “Current Operating Agreement”). Under its existing terms, the Current Operating Agreement expires on June 30, 2028.
The County and the Panthers Parties desire to extend their partnership including to ensure long-term success of the facility; and the Panthers Parties have proposed terms to replace the remaining four years of the Current Operating Agreement and enter a New Operating Agreement for nine years with two, five-year renewals at the County’s sole option.
The proposed Term Sheet is attached as Exhibit 1. The major points of the term sheet are:
Duration
• New Nine-year Operating Agreement through June 30, 2033 with two five-year renewals through June 30, 2038, and June 30, 2043, respectively). These renewals are at the County’s sole discretion.
Panthers Parties Commitment
• Agree to pay County $51.5 million (an amount equal to the total outstanding debt for the Arena) within 30 days of complete execution of Agreement in order to fulfill any further obligation to make future bond payments in the Current Operating Agreement, which would have required the Panthers Parties to make approximately $12.8 million in future bond payments over the remaining term. The remaining amount would be applied to the County’s portion of the outstanding debt for the Arena.
• Continue to invest in community through:
˗ donating at least $1 million annually to various community efforts in Broward County;
˗ contributing $300,000 annually to support youth hockey initiatives in Broward County; and
˗ increasing co-branded marketing assistance to Broward County from $500,000 to $1 million annually.
• Continue specific obligations from Current Operating Agreement including:
˗ making “good faith efforts” to utilize registered Broward County small businesses for at least 25% of the work at the Arena (and community events);
˗ providing 10% revenue share or EBITDA (earnings before interest, taxes, depreciation, and amortization) sharing (whichever is greater) with an increased revenue threshold compared to the Current Operating Agreement and 10% profit share in the event of a sale; and
˗ paying all property insurance premiums for the County-owned Arena facility.
County’s Commitment
• Annual Payments to team to repair, improve, and operate the County- owned Arena facility
˗ $25 million annually for the initial nine-year term of the New Operating Agreement and first renewal (if applicable) of New Operating Agreement (5 years)
˗ $20 million annually for the second renewal (if applicable) of New Operating Agreement (5 years)
˗ For initial nine-year term, Panthers will be required to spend on average $10 million of annual payment to be used for capital expenses to repair and improve the County-owned Arena facility. Expenditures are subject to County approval.
˗ Replaces the existing County Annual Contributions under the Current Operating Agreement (avoiding approximately $4.8 million over the remaining four-year term).
• Development Plan for Arena Property in Sunrise
˗ Panthers Parties to provide vision and plan to develop the County property around the arena for Board consideration and approval within four years after the date of execution
˗ Rights to develop the Arena Property revert back to County if Panthers Parties do not timely submit a vision and plan, enter into a land lease, do not commence development or complete foundational construction by certain milestones.
If this item is approved, final documents for the Board’s later consideration will be negotiated and drafted; those documents will be consistent with the terms of the Term Sheet. In addition, County Administration staff will work with the Tourist Development Council to obtain their input.
Source of Additional Information
Kevin Kelleher, Assistant County Administrator, (954) 357-7320
Fiscal Impact
Fiscal Impact/Cost Summary
No property taxes are used to support the Arena. Funds for the first year of the New Operating Agreement in the amount of $25 million will be funded with Tourist Development Taxes. The fiscal impact of the remaining term of the initial term of the New Operating Agreement (8 years) is $200 million. Funding for upcoming years will be addressed through the annual budget development process.
The County will also be receiving $51.5 million from the Panthers Parties and will be saving $4.8 million from avoiding annual payments to the Panthers Parties remaining under the Current Operating Agreement and may receive revenues under various revenue sharing opportunities in amounts to be determined according to the Current and New Operating Agreements.