Section 3919.504 - RequirementIn order for grants of Commonwealth funds to be used to construct or renovate a facility, the contracting municipality or contracting authority must contract with the professional sports organization to ensure compliance by the professional sports organization with the following terms and conditions:
(1) Agreement by the professional sports organization to remain and conduct professional sporting events in the facility for the duration of the lease or for the term of any debt of the Commonwealth, whichever is longer, but in no event longer than 29.5 years. The contract shall include agreement by the professional sports organization that if the agreement to remain and conduct professional sporting events is violated, the contracting municipality or contracting authority shall seek specific performance of the agreement to remain and conduct professional sporting events or receive a payment in the amount set forth in the agreement between the contracting municipality or contracting authority and the professional sports organization and the amount equal to the Commonwealth's principal contribution under this act to the construction or renovation of the facility.(2) Establishment of a procedure to provide written notice by the professional sports organization to the contracting municipality or contracting authority and the Commonwealth of any sale, transfer or relocation of its sports franchise or team immediately upon entering into any commitment to sell, transfer or relocate the sports franchise or team.(3) Agreement that if the professional sports organization sells or transfers its sports franchise or team, the purchaser or transferee shall be bound by and shall contract to be subject to the same terms and conditions required by this chapter as a condition of the sale.(4) Agreement that all costs of design and construction of a new or renovated facility which are due to delays or which exceed the projected costs set forth in the financial plan or contract with the office shall be the responsibility of the contracting municipality or contracting authority or the professional sports organization.(5) Agreement that during the term of the lease for the facility, the professional sports organization or the contracting municipality or contracting authority shall be responsible for all capital improvements to the facility and for all operating expenses relating to the use of the facility, including security, cleaning, insurance, maintenance and utilities.(6) Agreement to set aside a specified minimum number of days, at reasonable times throughout the year, to be available for the use of the facility by the contracting municipality or contracting authority or by the Commonwealth. Under this agreement, the Commonwealth shall receive the same number of days and be entitled to the same terms as the contracting municipality or contracting authority.(7) Agreement to make an additional rental payment of $25,000,000 reduced by available credits under subparagraphs (i) through (iii) in the tax year immediately following the expiration of the first ten-year period of occupancy or lease of the facility and at the expiration of every ten-year period thereafter. The professional sports organization shall pay the additional rental payment to the contracting municipality or contracting authority, which shall remit the additional rental payment to the Commonwealth. The additional rental payment made by the professional sports organization shall be reduced by the following credits: (i) The credits available for the first ten-year period of occupancy or lease shall be amounts paid to the Commonwealth which exceed the product of the baseline tax amount multiplied by 7.5. The credits available for each subsequent ten-year period of occupancy shall be the amounts paid to the Commonwealth which exceed the product of the baseline tax amount multiplied by 10. Available credits include all of the following: (A) An amount equal to all corporate net income tax, capital stock and franchise tax and personal income tax related to the ownership and operation of the professional sports organization.(B) An amount equal to: (I) all personal income tax withheld from its employees by the professional sports organization;(II) all personal income tax withheld from the employees of any provider of events at or services to, or any operator of an enterprise in, a facility or facility complex; and(III) all personal income tax to which the Commonwealth would be entitled from performers or other participants, including visiting teams, at an event or activity at the facility.(C) An amount equal to all sales and use tax related to the operation of the professional sports organization and the facility and enterprises developed as part of the facility complex. This clause includes sales and use tax paid by any provider of events or activities at or services to a facility, including sales and use tax paid by vendors and concessionaires and contractors at the facility.(D) An amount equal to all tax paid, by the professional sports organization or by any provider of events or activities at or services to a facility, to the Commonwealth related to the sale of any liquor, wine or malt or brewed beverage in the facility or facility complex.(E) The amount paid by the professional sports organization or by any provider of events or activities at or services to a facility or facility complex of any new tax enacted by the Commonwealth following the effective date of this chapter.(ii) In addition to the credits available under subparagraph (i), the professional sports organization may credit an amount equal to one-third of the following, incurred prior to the occupancy or lease of the facility:(A) all personal income tax withheld from personnel by the professional sports organization or by a contractor or other entity involved in the construction or renovation of the facility; and(B) sales and use tax paid on materials and other construction costs, whether withheld or paid by the professional sports organization or other entity, directly related to the construction or renovation of the facility.(iii) To the extent the amount of the credits available for a specific ten-year period under subparagraphs (i) and (ii) exceeds $25,000,000, the excess may be carried over and added to the amount of credits claimed under subparagraphs (i) and (ii) for the following ten-year period. Any excess credit still remaining shall be carried over to subsequent ten-year periods until it is exhausted or until the expiration of this chapter under section 509, whichever is sooner.(iv) Payments shall be made by the professional sports organization and remitted by the contracting municipality or contracting authority at a time and in a manner, including required documentation of all credits, as the office prescribes. This subparagraph includes annual reconciliation of all credits under subparagraphs (i) through (iii). All tax records and information shall be subject to all confidentiality protections provided by the act of March 4, 1971 (P.L. 6, No. 2), known as the Tax Reform Code of 1971; however, the Department of Revenue shall provide records and information to the office as necessary for the office to enforce this chapter.(8) An agreement that, upon sale of the facility or the expiration or termination of the lease at the facility, the Commonwealth shall have an option to purchase for $1 a one-third interest in the facility. 1999, Feb. 9, P.L. 1, No. 1, § 504, imd. effective.