191858

The City of Portland ordains:

Section 1. The Council finds:

1. The Rose Quarter is the premiere event complex in Oregon, encompassing the Moda Center and the Veterans Memorial Coliseum, hosting over 260 events and attracting more than 1.7 million people to Portland’s Central City each year.
2. The Portland Trail Blazers of the National Basketball Association (NBA) have been a City treasure since 1970, providing civic pride, identity, joy, and meaningful economic activity to the City of Portland, metropolitan region, and state of Oregon.
3. The City of Portland and Oregon Arena Corporation entered into multiple foundational agreements in the early 1990s leading to the development of the Rose Quarter including: privately-funded construction of the Rose Garden Arena (now Moda Center), an entertainment/office building and two parking structures, and publicly-funded development of two additional parking structures, a public plaza, several new streets and other necessary infrastructure.
4. Rip City Management, LLC is the successor entity to Oregon Arena Corporation and operates both the Moda Center and the Veterans Memorial Coliseum today.
5. While most of the land at the Rose Quarter is City-owned, Rip City Management, LLC continues to own the Moda Center Arena and a parcel of property that sits beneath a portion of the Arena.
6. The Arena Ground Lease became effective when the new arena opened on October 12, 1995 for a term of 30 years and will terminate, unless extended, on October 11, 2025. 
7. The combined economic impact of Rose Quarter events is estimated at over $600 million in annual economic output each year, supporting nearly 6,000 jobs with a majority of this output linked directly to Portland Trail Blazers games.
8. It is critically important to Portland, the metropolitan region, and the state of Oregon that the successful operation of the arenas at the Rose Quarter continues, and the Moda Center remains the home court for the Portland Trail Blazers.
9. The Moda Center is nearing thirty years old, is the oldest NBA arena yet to undergo a comprehensive renovation and will need significant reinvestment to remain competitive in the league and continue serving as the home of the Portland Trail Blazers well into the future.
10. The City and Rip City Management LLC have been working in good faith to develop the framework for a long-term agreement that would fund a major renovation of the Moda Center and keep the team in Portland for 20 or more years. 
11. Rip City Management, LLC intends to seek public funding from sources in addition to the City to provide the public financial support necessary for a long-term agreement and needed major renovation. 
12. It is in the best interest of the City to enter into a five-year bridge agreement with a possible five-year extension that will transfer the Moda Center arena into public ownership, allow the City to reinvest certain revenues generated by Portland Trail Blazers home games into sustaining improvements to the arena, provide time for the parties to secure additional commitments necessary for a long-term agreement and major renovation, and ensure that Oregon’s favorite basketball team plays at Moda Center until at least 2030.
13. Resolution No. 37654, approved by the City Council on February 28, 2024 approved the general the terms of this arrangement and instructed City staff to work with Rip City Management to develop the Purchase and Sale Agreement for the arena and Kosei parcel that is attached to this ordinance as Exhibit A.
14. The City and Rip City Management have negotiated the sale price of the properties based on an analysis of current fair market values.  Rip City Management is willing to sell the property and arena to the City for a Purchase Price allocated amongst the Property as follows: $7,130,000.00 for the Real Property and Kosei Improvements, and $1.00 for the Arena Improvements. The process used to negotiate this purchase price was informed by the terms of the original Arena Ground Lease which stipulated certain considerations and methodology when negotiating a sale.
15. Transferring the Moda Center Arena into City-ownership is a key financial component of the new Arena Operating Lease and provides important property tax benefits to the operators. It also gives the City greater control of the building and potential changes to it in the future. In addition, public ownership of the Arena makes future public investment into the building easier, including from debt-related sources such as taxable public bonds. 
16. As part of the performance of due diligence on this property, the City retained a team of industry experts to conduct a thorough facility condition assessment of the arena prior to finalizing the terms of the purchase. The assessment raised no serious concerns about the condition of the building, and while it is approaching 30 years old, it has been well maintained by the operators. This assessment informed the development of the Capital Expenditures Plan required by the Arena Operating Lease. 

NOW, THEREFORE, the Council directs:

1. The Mayor or City Administrator is authorized to execute all acquisition documents in a form substantially similar to those attached as Exhibit A, and take all other actions and execute any other documents necessary to close the transaction. All documents must be approved as to form by the City Attorney prior to execution. 
2. The Mayor and Auditor are hereby authorized to pay up to $7,130,001 for the acquisition of the Properties as described in Exhibit A as well as reasonable closing costs and other fees associated with a property acquisition subject to the terms of a Purchase and Sale Agreement, approved as to form by the City Attorney in a form substantially similar to Exhibit A. Sufficient funds for this purchase are available in the City’s Spectator Venues and Visitor Activities Fund. The Spectator Venues and Visitor Activities Program Budget for FY2024-2025 may require amendment in the Fall adjustment process to reflect this expenditure.
3. The City Administrator is authorized to act on behalf of the City and approve amendments to these agreements provided the amendments do not substantially alter the City’s financial obligations.

Section 2.  The Council declares that an emergency exists because of requirements to receive approval of the transaction from the NBA, the rapidly approaching notification date to extend the current Arena Ground Lease, and time is of the essence to complete the acquisition; therefore, this Ordinance shall be in full force and effect from and after its passage by the Council.