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ONTARIO, CA-The City of Ontario has unveiled its new $150 million, 225,000-sf Citizens Business Bank Arena on a 37-acre site just north of Interstate 10 between Haven and Milliken avenues. At a time when many California cities are struggling with their finances and the state itself is in a funding bind, the new 11,000-seat Ontario arena is paid for in full and debt free—with an outside operating contractor guaranteeing to pay the city at least $1 million per year.

Greg Devereaux, Ontario’s city manager, tells GlobeSt.com that the city paid cash for the new arena primarily through two sources of funding, land sales and annual city surpluses. Ontario bought 200 acres of land at what was once the Ontario Speedway for less than $2 per sf in the late 1990s, Devereaux explains, and that land rose tremendously in value over the years. The city sold all of the land except for the 37-acre arena site, earmarking the proceeds of the land sales to fund the arena. The $150 million price tag is the all-in cost of the project, including all soft costs such as architectural and construction management fees and all FFE (furniture, fixtures and equipment), Devereaux notes.

Besides accomplishing the rare feat of opening an arena that is paid for, Ontario also has struck a rare deal with its arena operator, AEG, the same company that operates the Staples Center in Los Angeles. The deal puts AEG 100% at risk for the cost of operating the arena, and it also provides that AEG must pay the city a minimum $1 million per year. After AEG pays the $1 million and takes its fee, the city also gets 75% of the back end, should there be any. “You won’t find many deals across the country that are structured like that,” Devereaux notes. He says that the arena is already on pace to book 160 events per year, ranging from minor league hockey to an exhibition game by the Los Angeles Lakers to a host of other entertainment and sports events.

The city foresees a number of benefits from the arena other than just the annual income from operations. As Devereaux points out, “We did not just build the arena because it is a nice amenity. We built it because it is part of our economic development strategy.” Among other benefits, the arena is expected to help the city’s office market.

Ontario is a jobs hub and wants to remain so, Devereaux explains, and the city sees the new arena as “part of our competitive advantage.” Companies that are looking to locate corporate offices in the Inland Empire need to attract knowledge workers, the Ontario city manager points out, and amenities like the arena—along with surrounding restaurants and retail space—will help corporations to attract those knowledge workers. The 37-acre arena site is the centerpiece of a mixed-use development called Piemonte at Ontario Center.

The Piemonte project is a development of Sacramento-based Panattoni Development Co. The 120-acre master-plan calls for a 123,034-sf, five-story class A office building; approximately 500,000 sf of retail space, a 256-room, full-service hotel and approximately 217 luxury condominiums. The City of Ontario estimates that Citizens Business Bank Arena and surrounding development are expected to bring in hundreds of new jobs and hundreds of millions of dollars of economic activity, as well as $10 million to $12 million of annual revenue to the city at buildout.

Ontario worked on the arena budget for 13 years, Devereaux points out. Two of its chief goals were building the facility without the burdensome debt that usually attends sports arenas and negotiating an operating contract that would guarantee annual revenue to the city. “We were only willing to do this if we could do it on our own terms, and we didn’t do it until we could do it on our terms,” the city manager says.

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