Henderson is prepared to spend $40 million to build a controversial proposed minor league hockey arena.
If approved by the City Council, construction of the arena will cost $80 million, with $4 million set aside for contingencies, according to a contract made public by the city. The total cost would be evenly split between the Vegas Golden Knights and the city.
It’s the first time the city has publicly released the estimated cost of the arena.
The City Council is slated to consider arena-related agenda items at its Tuesday meeting. The 6,000-seat arena would be home to the future American Hockey League affiliate of the Vegas Golden Knights and would replace the Henderson Pavilion at Green Valley and Paseo Verde parkways.
According to a city presentation, $25 million of Henderson’s contribution will come from bonds that were authorized in April. Another $16 million will come from money set aside for a redevelopment area, and an additional $1 million would come from insurance proceeds, according to the presentation.
Revenues from the pavilion are not enough to keep the venue operational, the city said. Henderson CFO Jim McIntosh said the city will save money by not having to subsidize the pavilion.
Steep discount on rent
The initial lease term for the arena would be 20 years, with annual rent for the team set at $150,000. Rent will be subject to a 2 percent annual increase, according to the lease.
Fair market value for rent is about $3.3 million, according to the city.
The team is getting the discount because of its financial contribution to the project and the projected economic benefits of the arena for Henderson, according to a council agenda item.
The lease bars the team from moving from the arena until June 2027. If the team moves between 2027 and 2032, then the team must pay the city a penalty, according to the contract.
The arena would be about 165,000 square feet, with four locker rooms, a green room and dressing rooms, as well as infrastructure to support the performing arts. It would also contain space for at least one 6,000-square-foot restaurant and 2,000 square feet of retail space. The design and construction team will be selected through a competition, records show. That process is underway, the city said.
If approved, construction would start on the arena no later than Aug. 1, and the team would be able to move in no later than July 1, 2022, records show.
According to the city’s presentation, Henderson will get 37 days of “community benefit events,” which includes Henderson Symphony Orchestra performances. And it will get 20 days for events such as festivals, performing arts and youth shows.
Under the lease agreement, the team would keep revenue from naming rights, food and beverage sales, premium seating and merchandise. It also would keep revenue from ticket sales, except for community benefit events.
‘An arena doesn’t belong there’
The proposed arena sparked backlash from neighbors who do not want the development in their area, including a car parade protest that drew hundreds of people. Another protest is scheduled for Saturday morning.
John Dalrymple, spokesman for a citizen group called the Henderson Coalition for Responsible Government, said the project is a bad deal for the city.
“It looks like a huge win for the Golden Knights and a huge loss for the community, and that’s not the way it should be,” he said.
Dalrymple said the economic benefits that the city touts would still apply if the arena were built in another location.
“No matter how many studies and how many surveys they do, they can’t change the inescapable fact that this is an established community and an arena doesn’t belong there,” he said.
Dalrymple’s group took issue with a survey recently released by the city that found about 70 percent of Henderson residents think the arena would be good for the city.
An economic impact study later released by the city found construction of the arena could produce about $140 million of economic output.
The city has said the pavilion is limited as an open-air venue, and an arena would allow year-round access to events. The pavilion suffered from storm damage, which forced the canopy to be removed. It also has faced troubles with the seats and sound system, the city has said.