It’s been five years since the
former home of the El Paso Diablos, Cohen Stadium, was demolished to make way for a new entertainment district.
Since then, the site has been quiet.
On last Tuesday, a project that will remake a portion of the site into a music venue received a $31 million boost from the city of El Paso. A divided City Council
narrowly approved a controversial incentive agreement with Venu, an entertainment development company formerly known as Notes Live.
The company is raising $80 million to build a 12,500-seat amphitheater on the former Cohen site in Northeast El Paso. It’s calling it the Sunset Amphitheater.
“I’m very supportive of this item because it’s going
to bring a quality of life and a quality of place not only Northeast, but also the whole city of El Paso,” Mayor Oscar Leeser said.
The city estimates the facility would have an economic impact of $5.4 billion over 25 years. Construction is expected to begin this fall, with the venue opening by 2026.
The
incentive agreement was passed by council 4-3, with Reps. Josh Acevedo, Cassandra Hernandez and Isabel Salcido in opposition.
The representatives questioned items within the agreement, including a non-compete clause and an $8 million loan to Venu. The 6-year-old company utilizes a fundraising model for its projects that relies on wealthy investors and memberships for luxury suites at the venues.
In addition to the one in El Paso, Venu has five ongoing projects in Oklahoma, Colorado and Texas.
According to its website, Venu has also completed fundraising for six projects in Georgia and Colorado.
“We have no concerns of their financial capacity, but a lot of consideration was put into risk mitigation for the city,” said Karina Brasgalla, the city’s interim director for economic and international development. “We have extensive recapture clauses and events of default (agreements). We have
liquidated damages (clauses). We really protected the city’s interest.”
A non-compete clause in the agreement specifies that the city will not develop any new city-owned entertainment venues with more than
4,000-person capacity within 60 miles of the amphitheater. An exception is made for voter-approved projects, including the Downtown multipurpose center approved by voters in 2012.
The agreement states that Venu has a “first right of refusal to develop and/or operate any voter-approved project.”
The non-compete clause does not apply to private
developers or other local government projects.
At last Tuesday’s City Council meeting, Robert Mudd, president and chief operating officer at Venu, said El Paso is the only market they are working with where they have a non-compete clause.
He said a potential competitor of a similar-sized venue would compromise
the economic viability of the amphitheater.
“What we did with the city of El Paso was work very diligently to make sure that we kept hold of commitments that were made through the bond project, while at the same time protecting our interests to make sure we don’t have a large competitor right down the street.” Mudd said. “That ultimately would compromise both of the projects.”
Acevedo said he found the non-compete clause shocking.
“I was under the impression up until today that this non-compete (clause) was a standard thing that you have used in all of your agreements, and we have been singled out,” he said at the meeting.
Hernandez said
the non-compete clause was “complete news” to her.
“It is concerning that we are conflating two agreements and not being genuine and forthcoming with the public,” she said. “If this political body ties us to this agreement, what is the return for the public?”
Brasgalla said the non-compete clause, the radius
restriction and the first right of refusal were all included in the April 23 term sheet.
“We’ve had extensive discussion both with City Council, our legal counsel and with the company,” she said. “Part of this is making sure that the Notes Live venue stays competitive but also the MPC. We still have a voter-approved bond project on our slate of projects to fulfill.”
The Downtown multipurpose center, also known as the MPC, has been delayed since it was approved by voters in 2012.
“It’s waiting for council action, so they’ll have to make a decision on the next steps,” Brasgalla said.
The agreement will provide incentives worth $30.9 million to Venu for the development of the amphitheater.
Under the agreement, the city will provide Venu with 17 acres of city-owned land.
Tax rebates will be provided via Tax Increment Reinvestment Zone #11, including up to $8.6 million in property tax rebates, $7.6 million in sales tax rebates and $980,000 in mixed-beverage sales tax rebates
Venu will also receive an eight-year, $8 million development note loan from the Texas Economic Development Fund.
Under the agreement, the loan is forgiven if Venu completes construction within 36 months from entitlement. The company also needs to produce a minimum of 25 events per year from the third to the fifth year of the rebate period.
The agreement also says Venu will need to secure a contract with an operator – companies that host events, such as Live Nation Entertainment — for at least
40 events per year.
“We’re very excited that this is able to deliver on the promise of the Cohen Entertainment District Master Plan, there’s a lot of work put into this,” Brasgalla said. “We’re anticipating a high level of international spending. Folks coming over the border, attending events and possibly staying the night has a huge impact for the city and
region.”
