Hurricanes, Centennial Authority finalize PNC Arena lease extension. Here are the terms

Philip Isley, chairman of the Centennial Authority, could barely hold back his emotions on Thursday morning. Seated at the head of a long wooden table, his voice trailed off as he spoke to his fellow board members.

It was hard not to get choked up as he relished in the fruits of his labor, manning an effort that saw the Centennial Authority and the Carolina Hurricanes finally approve a new lease agreement for PNC Arena set to last through 2044.

Initially settled upon in August last year, this lease secures the Hurricanes’ presence in Raleigh for the next two decades. The group also approved a separate plan for district redevelopment, which aims to transform the area surrounding the arena into a vibrant entertainment attraction.

“It’s been really hard,” Isley told The N&O, later adding, “I had no idea what I was getting myself into.”

The finalized contract represents a significant milestone for Raleigh and the Hurricanes, promising extensive economic growth and urban development.

But, before it could be agreed upon, Isley and his colleagues negotiated with the Hurricanes, the largest state university in North Carolina, the City of Raleigh, Wake County, the North Carolina General Assembly and the N.C. Department of Administration.

Isley embraced all these moving parts and the resulting pressure. And Thursday, at least for the time being, served as a victory lap.

“I think the cool thing about this whole process is we’ve been able to do things that no one thought we were gonna be able to do,” Isley said.

What are the terms of the agreement?

The agreement outlines several key provisions designed to benefit both the Carolina Hurricanes and the Raleigh community.

The extended lease removes all termination rights, ensuring the Hurricanes cannot relocate unless both the authority and the team fail to discuss the arena’s future in good faith by 2039.

Starting in 2029, the Hurricanes will pay the Centennial Authority $4.5 million per season, increasing to $5.5 million over the next 15 years, replacing their current rent-free status.

Additionally, the Hurricanes will invest $10 million in a sportsbook, office upgrades and premium seating. The authority commits to spend $300 million from tourism taxes to arena improvements.

Additionally, Hurricanes owner Tom Dundon has been granted the right to develop 80 acres of land surrounding PNC Arena. This development will start with 20 acres to be “mutually agreed” with the Centennial Authority, and will see a minimum investment of $800 million over the next 20 years.

The first phase of development, which Isley said will begin after N.C. State’s 2025 football season at adjacent Carter-Finley Stadium is complete, includes a mix of retail, office space, residential units, and a hotel.

According to a news release from the Hurricanes, development of the mixed-use district around the arena will be led by Gale Force Sports and Entertainment’s real estate affiliate Pacific Elm Properties, a Dallas-based company majority owned by Dundon Capital Partners.

Phase one, fulfilling $200 million of the total $800-plus million investment outlined in the agreement, anticipates completion in 2030.

The planned $300 million renovation of PNC Arena itself is another major component of the agreement. Funded by the Raleigh/Wake County hotel-and-restaurant tax, these renovations aim to modernize the nearly 25-year-old facility, ensuring it meets contemporary standards to “remain competitive regionally as the premier destination for sports and entertainment.”

The renovations are currently scheduled to take place in a three-year window over the summers of 2025, 2026 and 2027.

PNC Arena renovation plans take early pivot thanks to construction-price sticker shock

Why it’s a big deal beyond sports

The finalization of the agreement between PNC Arena and the Carolina Hurricanes marks a historic moment for Raleigh. According to Raleigh Mayor Mary-Ann Baldwin, the significance of this agreement extends beyond a simple lease extension and development plans.

Baldwin, who stopped by PNC Arena on Thursday morning to check out some suites, highlighted the transformative impact of the project, calling it the largest economic development project in the city’s history.

“I don’t think you’re going to recognize this area,” Baldwin said. “Five years from now, or 10 years from now, it’s going to come to life.”

With comprehensive plans for development and modernization, the deal promises to bring significant economic growth and create a vibrant entertainment district.

Baldwin compared the plan to The Battery Atlanta, a popular shopping complex in Cobb County, Georgia. She envisions the area as a full-on downtown-style destination, fitted out with places to eat, drink, hang out and bet on sports — although Baldwin admitted sports betting is “not my jam.”

One new element reveled Thursday is the inclusion of a new, 4,300-seat ballroom, operated by Live Nation, which would bring additional music and entertainment offerings to the mixed-use district. Live Nation is designing a venue that will serve as a community asset and host a wide range of events including concerts, comedy, community events, corporate meetings and special events, the news release from the Hurricanes said.

But when asked what she really wanted built on the land, Baldwin pointed to affordable housing.

“I think putting people out here, that will be transformative,” she said. “It’s empty parking lots most of the day and most of the year. All of a sudden you have people living here and a destination. It’s a game-changer.”

While no new documentation was made available, the terms sheets signed last August outlined mixed-use development commitments. Phase 1 is set to include at least 200 multi-family rental units, with 10% designated as affordable, workforce, or faculty housing.

While the term sheets said the Hurricanes would make “commercially reasonable efforts” to offer this housing at no more than 80% of the Raleigh Area Median Income (AMI). But now, Pacific Elm Properties has made a commitment to this workforce housing component, per Isley.

“What we’re really looking at is sports as an economic driver,” Baldwin said. “Great things are about to happen.”