Update: The Golden State Warriors are incredibly popular both regionally and nationally and with the popularity and success of the Santa Cruz Warriors locally, the franchise has received interest in relocating the Santa Cruz Warriors to a more permanent home elsewhere in the Bay Area. Given this increased pressure it is critical for the City to expedite discussions and options for creating a permanent home for the Santa Cruz Warriors in Santa Cruz.

The City is working to finalize discussions with the Santa Cruz Warriors and the Santa Cruz Seaside Company regarding the future of the Warriors in the City of Santa Cruz. More recently, the City, the Santa Cruz Seaside Company and the Santa Cruz Warriors have met to consider potential site development options for an arena anchored mixed-use project that could be developed on the existing or slightly expanded existing site controlled by the Santa Cruz Seaside Company.

At the August 11, 2020 Council meeting the Santa Cruz City Council solidified their support for the Santa Cruz Warriors and voted unanimously to:

1. Direct the Mayor to contact the Warriors management expressing the City’s appreciation for the Warriors’ presence here in Santa Cruz;
2. Communicate our very strong interest in discussing the Warriors’ continued long term presence in Santa Cruz
3. Communicate our interest in thinking creatively regarding possible permanent facility options including the funding of such options;
4. Follow up on the direct contact with a letter memorializing the above commitment and strong interest in a continued relationship and presence in Santa Cruz for the Santa Cruz Warriors; and
5. Direct staff to move promptly in setting up initial discussions on this subject between the appropriate partners and return back by within 60 days with a report on progress and actions taken to date and additional items under way on the partnership.

In late February 2021, the Santa Cruz Warriors provided notice to the City that they would like to exercise their option to extend the Arena Lease with the City for an additional year, through September 17, 2022 and Council approved this extension at the March 23, 2021 meeting. Exercising the lease extension options will enable the parties to continue discussions and mixed use options for a permanent home for the Santa Cruz Warriors in Santa Cruz.

Project Overview: In 2012, the Kaiser Permanente Arena was developed as a public private partnership between the City of Santa Cruz, the Santa Cruz Seaside Company, the operator of Santa Cruz’s iconic Beach Boardwalk amusement park, and the Golden State Warriors, a National Basketball Association team. The Arena is the home arena for the Santa Cruz Warriors, a franchise of the NBA Development League. The Arena is managed by the Warriors and primarily hosts league affiliated events, although the Arena has served a broader community purpose, hosting significant community and City events over the last 8 years.

The Santa Cruz Seaside Company ground leases the land to the City and the City, who owns the Arena building, leases the Arena to the Santa Cruz Warriors. The location of the Arena was chosen to serve two primary purposes, to bolster the downtown economy and serve as a catalyst for revitalizing the lower Pacific/Front area, building a stronger connection between the Downtown and Beach areas.

Prior to the original seven year expiration of the leases, the City, Santa Cruz Seaside Company and the Santa Cruz Warriors extended the original agreements an additional two years to 2021 with an option to extend through September 2022. All other substantive terms and commitments remain in place.

As part of the original agreement with the Santa Cruz Warriors, the City loaned the franchise $4.07 Million for the construction of the facility. The City additionally receives Admissions tax from all applicable (non-community) events held in the arena. As part of the loan agreement, repayment was structured over the term of the lease agreement and any extensions. The Santa Cruz Warriors are current on all of their payments and, to date, have repaid just under $3 Million of the original loan with a balance of $1.1 Million remaining.

Discussions regarding a permanent facility have been on-going over the last seven years including the 2016 analysis conducted by the City with Victus Advisors, sports arena consultants specializing in market and mixed-use arena project feasibility studies. The Study concluded favorably that a permanent arena could succeed in Santa Cruz and that the existing location was among the top preferred locations for its continued success. The study specifically addressed the following considerations:

• The market support for a permanent arena facility in Santa Cruz
  A determination of the size and features that a successful arena would require
• The extent to which an arena facility in Santa Cruz can cover its operational costs on an annual basis, and to what extent it can contribute to funding its own capital construction costs
• Recommendations on management and operations structures
• An assessment of the economic development benefits that would accrue to the city from arena operations and construction
• The likely future effect of arena operations on existing public assembly facilities such as the Civic Auditorium
• Potential to engage other community stakeholders such as the University of California, Santa Cruz, the Santa Cruz Seaside Company and the Golden State Warriors as a partner in
  development of a new facility