Most wouldn't consider it a birthday gift for the village's 50th anniversary or a box tucked under a Christmas tree.
But after months of speculation, Hoffman Estates will finally own the Sears Centre.
Within the week, the village is expected to have a final closing and assume control of the 11,000-seat arena built in 2006. The village board at Wednesday's special meeting approved the deal to take ownership of the building.
The board also authorized a maximum of $3.5 million for the Sears Centre. All votes were unanimous.
Observers four years ago called it the worst-case scenario for the arena to falter, and for the Ryan Companies to walk away from the investment. The action leaves Hoffman Estates responsible for the $55 million construction loan.
"We pledge to do our best to make sure the Sears Centre remains a great asset to our community," Mayor William McLeod said.
Village officials said the arena will likely lose $1.2 million in operating expenses next year. That's about double what it lost in 2008. That doesn't include the construction loan. The village won't have to start making the $2.9 million loan payments until 2011, as Ryan will take care of 2010.
The board also approved a temporary contract with the new arena management firm, Global Spectrum. The contract covers the arena until March, though a 10-year deal with Philadelphia-based Global will likely be tendered in February. Global is asking for about $11,000 per month, or $132,000 annually. The village board voted to extend $420,000 to Global for start up costs including tickets and food service.
In 2011, Global offered to be "at risk," and would be paid depending if the arena turns a profit.
Village officials said no money will come out of its general fund to pay for the Sears Centre. Operating costs are estimated at $1.2 million to $1.9 million next year. The $700,000 in question is for startup costs, including the $420,000 that was approved on Wednesday. As a contingency that amount might not be spent.
The village has a special fund with about $3 million reserved for the arena. Village Manager James Norris also pointed to the village's rainy day fund, which could be used for the arena. The fund currently has about $730,000.
A temporary contract was needed on Wednesday as a stopgap to ensure the building wouldn't go dark in January and scheduled events, like the Shillelagh college hockey tournament, could go on.
The village planned on receiving the deed on Dec. 1, but Ryan and Sears Holding Corp. delayed and debated how the building transfer was going to be handled, Village Attorney Art Janura said. Sears held a minority stake in the building and has a $1 million annual deal for naming rights that runs through 2016.
Officials have yet to identify a revenue source in the budget for the loan payments. Village officials have said they're trying to avoid a property tax increase but acknowledge one may be necessary to generate the $2.9 million in annual payments. That amount jumps to $3.9 million in 2016. The loan, with interest, could run up to $88.4 million over 20 years. However, the village could refinance the loan in 2015.
"My taxes are going to go up in 2011 and beyond," said frustrated resident Wendell Howell while addressing the board. Howell also mentioned the proposed police department layoffs, questioning the village's spending.
As part of the agreement with Ryan, the village is paying off a $2.1 million bank loan that Ryan used to pay for the arena's basketball court, football field, scoreboard and other essential arena items. Playing nice with Ryan prevented the arena from closing in November and saved the village $7.6 million.
Trustee Raymond Kincaid remains confident in Global, saying its resources should bring leverage and attract more acts to play at the Sears Centre. Philadelphia-based Global owns the NHL's Philadelphia Flyers and is a division of Comcast Spectacor. A poor reputation and competition from the Allstate Arena in Rosemont is to blame for keeping some acts away from the Sears Centre now.
Under Global, Kincaid said the village would also have more say over matters. He mentioned how Ryan, instead of adding a fee to all tickets for parking, set up booths to take money from event attendees. That snarled traffic in the parking lots, causing headaches.
There's also talk on making the building more community friendly, including more graduations and events like youth cheerleading.
Trustee Cary Collins argued that Ryan never provided adequate financial information to the village. Kincaid agreed and asked that Global provide the village detailed financials on a regular basis.