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Cover Story - March 2009

Tip Off at the Orlando Events Center

While the $480 Million Orlando Magic Home Progresses, City’s Others Venues on Hold

By Debra Wood

The $480 million Orlando Events Center, the first project of a three-venue, nearly $1-billion municipal program to enhance Orlando downtown’s entertainment options, is progressing as a sign of life amidst an otherwise slowing construction economy.

The $480 million Orlando Events Center has started construction.
The $480 million Orlando Events Center has started construction. (Photo by Bob Braun / www.bobbraunphoto.com)

“The events center is going great, and everything is coming together,” says Scott Skidelsky, vice president and general manager of Turner Construction Co.’s Orlando office, program manager for the project.

The center will serve as home to the National Basketball Association’s Orlando Magic. The team is developing the 18,500-seat NBA arena, and the city will operate it and rent it for concerts, exhibitions and other events once it opens in the third quarter of 2010. The center not only features premium spaces with clubs and party suites but also provides a children’s zone and a large public bar on the main concourse level with a view of the action.

“The events center truly is a multipurpose, multievent building,” says Brad Clark, principal and senior designer with HOK Sport of Kansas City, Mo. “We’ve designed it to be an iconic structure for Orlando.”

HOK Sport designed the 780,000-sq-ft, seven-level arena, in conjunction with C.T. Hsu + Associates and Baker Barrios Architects, both of Orlando. The design team met its 31% minority (MBE/DBE) participation goal.

The project’s $480 million overall cost includes $380 million for the building’s construction; $40 million for the land; and $60 million for infrastructure and parking. Hunt Construction Group of Orlando, in association with local minority firms Rey Group, R.L. Burns, HZ Construction and Albu & Associates, broke ground on the concrete structure last year. The MBE/ DBE firms hold 30% of an overall $280 million general construction contract.

RDV Sports, the Magic’s parent company, pitched in $50 million, and lease payments from the team will bring in another $12 million. The project relies on $270 million in Tourist Development Tax bonds issued in March 2008, plus other public financing. A decrease in tourist revenues will likely adversely affect the city’s ability to service debt on the events center.

The concrete structure will sit on an auger-cast pile foundation. Erection of the first trusses is scheduled for summer.

Minority and local labor

The events center construction team has agreed to hire at least 24% minority and women businesses. Although the work was not completely bid out at the end of 2008, the team was exceeding its goal.

“There’s been a tremendous amount of outreach, completed through meetings and communications,” Skidelsky says. “You pick the tool, and it’s been used on this job.”

Bill Morthland, vice president and Southeast division manager with Hunt Construction, says his firm’s formal outreach program includes multiple orientation sessions at a local high school. More than 200 people attended the first session focused on how to bid, which was held before Hunt secured the job. The company also is requiring major subcontractors, such as mechanical, to include minority participation.

“Pricing is competitive, and we’re seeing a tremendous amount of subcontractor interest,” Skidelsky says.

Experienced players

“When the city and the Magic started looking at state-of-the art facilities, they looked at the Charlotte Bobcats [arena] and said, ‘That’s what we want,’” says Morthland, whose firm constructed that North Carolina facility. “When it came time to compete, we brought the team that built the Charlotte Bobcats, and that’s who is building the [Orlando] arena right now.”

Hunt veterans with 20 years to 30 years experience with sports facilities are working on the project. HOK Sport also has considerable arena experience, having recently completed the Kansas City Sprint Center in Kansas City, Mo. Turner is ranked as the top sports contractor, according to the most recent ranking in Engineering News-Record. Hunt is ranked second.

“Our experience played a big part,” Clark says. “I’ve been working with the Magic for probably close to 10 years, looking at renovation studies for the [existing] Amway Center. All of that played into it. They believed in the people, the firm and our ideas.”

The design and construction team hope the early momentum and enthusiasm continues as the project progresses, and they can deliver the job on time and within budget.

“You have the No. 1 arena designer, the firm that has done the most in the country and the top two sports builders overseeing it,” Skidelsky says. “You cannot lose.”

Other Venues Projects Derailed?

Lower than expected tourist tax revenues, due to the faltering economy, may have side railed Orlando’s plans to break ground by yearend on the $425 million Dr. P. Phillips Orlando Performing Arts Center and move forward with a $175 million renovation of the Citrus Bowl. The PAC building is projected to cost $454 million, with $354 slated for the building and $71 million for land, parking and infrastructure.

Balfour Beatty Construction of Plantation, Fla., ranked highest on the center’s short list of construction managers, and center officials are negotiating a contract. The city anticipated issuing about $130 million in Community Redevelopment Agency bond anticipation notes early in 2009 to fund the start of construction. However, in January, Orange County announced an anticipated 5% reduction in tourist tax revenues, related to declining occupancy and room rates.

Orlando Mayor Buddy Dyer has asked staff to evaluate cost-reduction measures, including timing, project schedules, site configuration and other opportunities to reduce the overall project budget.

The center has raised $86 million from private donors, but the project depends on public financing—primarily the CRA bonds and $130 million in city-backed tourist tax bonds.

In a letter to supporters, Katherine Ramsberger, DPAC president, called the center a viable project but acknowledged it is at a critical juncture and that the organization may need to make adjustments to its program and plans.

“As the city reviews its position, we also are taking steps to identify areas where greater efficiency and savings will be achieved while still maintaining the highest level of project integrity,” Ramsberger says in the letter.

Declining hotel occupancy in Orange County is nothing new, says hotelier Harris Rosen, chief operating officer and president of Rosen Hotels & Resorts in Orlando. In 2006, he presented city and county officials with a report showing a decline from 80% occupancy in 1996 to 69% in 2006 and proposed adding one-cent to the tourist tax for advertising to boost occupancy, and create jobs. That did not happen. Although the additional one-cent tourist tax passed, the convention and visitors bureau received 100% of collections for the first two years, but during a 10-year payback of the event center debt, half of the additional one-cent tax goes to pay for the events center and the other half, less $2.8 million, toward advertising.

“Occupancies were crumbling,” says Rosen, who estimates occupancy rates are now in the mid-60s and will hit or fall below 60% this year. “We were concerned in 2006 and our concern has heightened since then, because 2007 and 2008 have been awful, and part of the result of those numbers is we won’t have the tax flow from tourist tax dollars to support the construction of the performing arts facility and the refurbishing of the citrus bowl. I suspect what they are intending to do is make sure they have enough money to finish the arena.”

The city has hired HTNB of Lake Mary, Fla., and Rhodes + Brito Architects of Orlando to design renovations to the 70-year-old Citrus Bowl, adding upscale club seats, luxury boxes, and new bathrooms and concession stands. Primary funding was to come from $21 million in CRA bonds and $140 million in tourist tax bonds. This project also will likely face delays and possibly changes to the scope of work.

In addition to the three community venues, as part of the package, the Orlando Magic agreed to design and build five community recreation centers, contributing $12.5 million in cash and $12.5 million in other funds. Turner will build those facilities. Orange County will own and control those sites.

 

Useful Sources:

Orlando Events Center
http://www.orlandoeventscenter.com/

Orlando Performing Arts Center
http://www.orlandopac.org/

 

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