Agency to ensure Devils pay their dues; Newark hires group that oversaw arena's construction.

The Star Ledger – March 30, 2008

The agency that oversaw construction of the $375 million Prudential Center on behalf of the City of Newark has been hired to make sure the city receives its lease payment from the Devils.

The Newark Housing Authority has hired the Newark Downtown Core Redevelopment Corp. as its asset manager "to hold the tenant responsible for meeting the goals in the redevelopment plan and lease agreement," said William Crawley, chief operating officer of the corporation.

"We have the analytical role to evaluate the arena's performance on the revenue side and the expense side, to verify the arena is constructed according to the original plan, to focus on capital improvements and the upkeep of the arena and serve as eyes and ears," he said.

The $1 million, two year contract will be paid from the Devils' lease payments to the city.

The Devils' first lease payment to the city is due in October and will be based on revenue collections. Newark will receive a minimum annual rent of $2 million or 7 percent of all revenues from suites, concessions, naming rights and advertising revenues and 4 percent of the revenue from all other arena events, up to a maximum of $6 million a year for the first decade of the lease agreement. The Devils also have to contribute $1 million per year for upkeep.

Crawley said he will likely hire a recognized accounting or management firm to make sure the city receives the proper payment.
Under the contracts for the arena the Newark Housing Authority is the redevelopment agency and the landlord. But the mayor appoints both the housing authority commissioners and the board members of the Newark Downtown Core Redevelopment Corp. The contract also stipulates that the city receive the money from Devils' lease payments.

The redevelopment corporation was formed in 2006 to manage the construction of the arena after the federal government questioned the propriety of having the housing authority, then under investigation by for financial mismanagement, handle the arena construction.

The agency also has overseen the construction of complex land transactions and street repairs surrounding the project. Still under the agency's purview are development projects in the 24-acre downtown core redevelopment zone, new parks and an entrance plaza for the Prudential Center.

Keith Kinard, executive director of the Newark Housing Authority, said one of the first functions of the corporation will be to go through the redevelopment agreement and lease and spell out all of the responsibilities of the Devils and the corporation.

"At the end of the day,20the arena serves a number of functions, to provide entertainment, jobs, and, ultimately, provide revenue to the city. None of those things are possible if the business deals aren't working and the financials aren't strong," said Kinard.

Crawley said that during situations like last week when the Devils were fined for installing a pedestrian bridge without consent, the agency would be at the table to mediate between the Devils and the city.

The Devils' application for that bridge will be heard at the April 7 planning board meeting. The city also has given the Devils a two-week extension on their temporary certificate of occupancy to give them time to correct the interior stairway smoke-clearance issue that requires "fire watch" workers monitor the stairway, said Esmeralda Diaz Cameron, a spokeswoman for Mayor Cory Booker.

"I've certainly worked with them in the past, and the contract is pretty clear about obligations so I don't think there will be any problems," Devils owner Jeff Vanderbeek said about working with the Newark Downtown Core Redevelopment Corp.

Crawley agreed. "It just makes sense. We perceive the arena to be a Newark asset. Like any asset, you need to manage it. Our goal will to be keep clear lines of communication and help the Devils make the arena the pre-eminent entertainment venue in the state."