The two deals are intimately connected because of money – the city has been unable to guarantee a cash contribution to the $355 million arena project, especially since Newark currently faces a budget deficit pegged in the $60 million range. But the lease extension, which moves the expiration date from 2031 to 2065, will give the city a $100 million "signing bonus" from the Port Authority, as well as another $65 million in cash a year for the next several years.

The way that the financial agreement on the arena sets up is that the city will pump the $100 million plus the first year's $65 million into the project, and will sell some $35 million in bonds. The owner of the Nets and Devils, called the YankeeNets, has promised to kick in another $130 million, and that all adds up to $330 million. The remaining $25 million would be raised by the combined efforts of the Essex County Improvement Authority and the New Jersey Redevelopment Authority, the latter a new agency that will be set up to oversee the project. The YankeeNets have also promised to cover any cost overruns.

Under the terms of the agreement, which still has to be signed by the YankeeNets, the site will be owned by the city and leased to the two pro teams for a term of 30 years. Under current plans, actual construction would begin by the middle of next year, with a targeted opening in time for the 2005 season for the two teams.

There are several hurdles yet to clear to stay on that timetable. The targeted site still has to be assembled and acquired--it has multiple owners. The project also has to be approved by the city's planning board, and opponents of the arena, who say the money should be spent on other things, are expected to use that venue to continue their efforts to block it. Finally, the upcoming election provides a potential stumbling block since the two top candidates for Essex County executive have made the arena an issue.

In any case, "this vote will go down in the history of Newark as one of the most important ever taken," Newark Mayor Sharpe James told reporters and council meeting attendees after the council meeting last night.

Instant Insights /

$355M Arena Project Takes a Giant Step Forward

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