Costs, location, timeline: OKC Council approves development deal for new Thunder arena

City councilmembers voted 7-2 to approve a development agreement with the Oklahoma City Thunder ownership for a new downtown arena Tuesday.

The development agreement between the city and PBC Sports and Entertainment LLC — the owners of the Thunder and the Oklahoma City Blue teams — is modeled after an original 2008 development agreement, which was used to make improvements to the current Paycom Center arena where the Thunder team plays its home games.

“Some changes that are there are just refreshing the document, but moving forward with the partnership that we’ve had before, the long partnership that we’ve had with the team,” City Manager Craig Freeman said. “This does include approvals for the team similar to 2008 on the selection of the A&E (architectural and engineering) firm, the construction manager, the designs for the arena, but also on an owner's representative.”

The new agreement aligns with a letter of intent approved by a city council majority in September 2023. It lays out various details on how the upcoming arena will be funded, where it will be located, and when it should be opened.

Ward 6’s JoBeth Hamon and Ward 7’s Nikki Nice voted against the agreement. Last year the two councilmembers had opposed the new arena construction proposal, citing a lack of transparency over negotiations and concerns over funding priorities.

But that December, Oklahoma City voters overwhelmingly approved a 72-month, one-cent sales tax to fund construction of a new arena at a $900 million minimum cost.

What to know about the OKC Thunder arena agreement that the city council approved

Per the new agreement, the city would first use $78 million reallocated from MAPS 4 that was originally meant to be spent on improving Paycom Center. Then, the city would spend $50 million contributed by the Thunder ownership, before using a minimum of $772 million expected to be financed through the sales tax beginning on April 1, 2028. Surplus collections from the tax after construction and repayment of financing would then go toward long-term maintenance of the new facility.

There are no other revenue sources to fund the new arena, according to the agreement. Freeman emphasized that, if the design process shows potential for cost overruns, the city would work to find alternative, less-expensive options to keep the project within budget.

More: New OKC Thunder arena: Oklahoma City Council names proposed site, planned agreements

“If we can’t get part of the project value-engineered within the budget, (Thunder owners) do have the ability to finance that part of the project, to be able to keep it moving forward,” Freeman said. “And then, after plans are completed, if the team makes any request at improvements that are over the project budget, the team agrees, if we can’t value engineer those into the project budget, that they would pay for those parts of the project.”

The agreement confirms the new arena site will be the former Cox Convention Center, which is currently the home for Prairie Surf Studios. City management had previously notified the film studio owners that their lease at the building would not be renewed after December 2025.

Freeman also said the city will work with the team on a “more aggressive” target schedule, outlining a possible completion of the arena as early as June 2028. The latest deadline in the agreement is June 2030, but city officials often have said they hope to complete the arena ahead of the 2029-2030 NBA season. Thunder ownership retain the right to terminate the agreement if the city does not meet the 2030 deadline.

The team also can negotiate with the city to develop any unused property on the new arena site at market rate, with revenue from a ground lease to be used for its maintenance and improvements.

Who will maintain the new arena?

The city will own and maintain the new arena, which is expected to be at least 750,000 square feet. The agreement also includes a new parking garage onsite with at least 650 spaces. Additionally, about 1.4 acres of the new arena site is being reserved for a potential intercity transit hub in the future.

The agreement also details an ongoing collaborative process between the city and the team, with evaluations along the way to ensure the new arena is meeting NBA standards as well as maximizing team revenues.

The current agreement approved Tuesday does not specify details of a community benefits package championed by Ward 2 Councilperson James Cooper and patterned after a historic agreement from the Milwaukee Bucks team. This package is meant to establish a workforce intermediary and apprenticeship opportunities for low-income communities, secure living wages for employees at the arena, and launch a study group into a labor peace agreement, among other provisions.

Nice expressed concern that language from the community benefits package was not directly mentioned in the development agreement Tuesday. Cooper, who otherwise voted in favor of the agreement, also pointed out the importance of a workforce intermediary being used to help both local construction workers and hospitality industry employees.

Freeman said the city would be working with construction management to better connect the project with apprenticeships.

“I know the construction industry wants to encourage apprenticeships as well because they want to grow those various aspects of construction, and they have challenges with staffing as well,” Freeman said. “We’ve got to try to balance it with making sure that we’re building this within the budget that we have. We don’t want to do things that increase our budgetary costs on the project, but working with those construction managers to see what programs they have that they carry forward on what we can do to make sure we can incorporate that.”

City spokeswoman Kristy Yager said more agreements with the Thunder will be coming before the council, noting that the community benefits package resolution that passed last year was more about operations of the building and not so much the construction of the facility.

“This was the first step,” Yager said.

This article originally appeared on Oklahoman: New OKC Thunder arena agreement approved by city council