City Council wants traffic help from Sodo arena tax
The Seattle City Council on Monday told arena investor Chris Hansen that it wants some of the tax revenue generated by a new arena to be used for improvements to traffic and freight mobility in Sodo.
Seattle Times
Hours before the King County Council approved on Monday a plan for a new sports arena, the Seattle City Council told investor Chris Hansen it wouldn’t move forward unless some of the tax revenue is used for improvements to traffic and freight mobility in Sodo.
But the City Council also held out hope that successful negotiations with Hansen could be wrapped up within a week, clearing the way for a majority of council members to approve a deal in August to build a new $490 million arena with $200 million in public financing.
“We’re saying today we want to get to yes, and I think we can,” Councilmember Tim Burgess said.
Burgess was one of eight council members to sign a counterproposal mailed to Hansen on Monday. Bruce Harrell was the only member who didn’t sign. The letter outlines additional financial protections sought by the city and specific commitments to upgrade and protect KeyArena, in addition to some percentage of the tax revenue.
Later in the day — after a four-hour meeting that included two hours of emotional public testimony — the Metropolitan King County Council approved the Memorandum of Understanding (MOU) with Hansen by a 6-3 vote. The MOU is legally binding and sets a framework for a final deal that would be hammered out by the county, city and Hansen.
“I want to personally thank the King County Council for all of their hard work and for taking a big step today to move forward on our proposal,” Hansen said in a statement. “There is still much more to be done, but I am looking forward to sitting down with City Council members to figure out how we can make this deal work for everyone.”
Citing the low risk to taxpayers in the proposed deal, County Council members said they improved the agreement with amendments that ranged from statements of support for the Seattle Storm to an independent analysis that would look at the impact of the arena on Port of Seattle-related jobs.
Councilmember Bob Ferguson said the analysis — paid for by Hansen — should address the chief questions and criticisms about the arena’s potential threat to Port-related industries in the Sodo area.
Ferguson and others also stressed the emotional bonds and benefits of bringing the NBA — and possibly the NHL — back to Seattle. Ferguson noted he had one picture of him with his deceased father on his refrigerator, and it was at the opening of Safeco Field. “Those events really do have the power to bring people together,” he said.
Julia Patterson emphasized that the County Council was not taking a final vote. It still would have opportunities to weigh in after the economic analysis and when the broad agreement is translated to more detailed transaction documents.
But the three council members who voted against the agreement — Reagan Dunn, Larry Phillips and Pete von Reichbauer — said they still needed more assurances, particularly about Port jobs. “This is very fast-track, and we still need more numbers,” Dunn said.
Noting the agreement approved by the council is binding, von Reichbauer cited a number of problems. He said traffic issues had not been resolved to his satisfaction, and he predicted a slew of lawsuits from industrial concerns. “I think it’s going to be a college trust fund for a lot of lawyers,” he said afterward.
He also noted that Seattle Mayor Mike McGinn and County Executive Dow Constantine will select the economic analyst, who also must be approved by Hansen. “The two strongest advocates get to pick the consultant,” von Reichbauer complained.
Joe McDermott, who led the County Council’s review of the proposal, responded that if the study was biased it would hurt the professional reputation of the consultant.
The agreement now must get approval from the City Council, which has been more critical.
The council’s Monday letter to Hansen said the current proposal, which would direct 100 percent of tax revenues generated by the new arena to pay off public bonds, does not “represent an appropriate balance of public and private benefits.”
The letter notes that, with a share of the tax revenue, the city could leverage more transportation funding from the state and federal governments to build improvements that the city already has identified to protect freight corridors and ease congestion in Sodo.
“Under the MOU, all revenue [from the arena] is tied up paying off bonds for the arena itself,” Councilmember Mike O’Brien said. “We know that there will be traffic impacts to the city of Seattle. How can some of this revenue be available for transportation improvements?”
A spokesman for McGinn defended the existing proposal, saying the mayor’s staff worked for months to negotiate an MOU with Hansen that would bring a state-of-the-art arena to Seattle and protect taxpayers from risk.
“We respect the council’s due diligence, but it would be a mistake to pass up on hundreds of millions of dollars of investment in our city,” spokesman Aaron Pickus said. “We think it’s a good deal as it stands.”
The Port, which has opposed the arena because of potential impacts to its container and trucking operations, said it was encouraged by the City Council’s commitment to maritime jobs, but that it still wants a detailed environmental review of the arena project before it is approved.
“We believe the environmental-impact statement should be completed before signing the MOU, so that benefits and impacts of the project can be more completely understood,” said Charla Skaggs, spokeswoman for the Port.
The potential transportation impacts of a third sports arena to the city’s manufacturing and industrial sector, particularly Port operations, has emerged as the biggest obstacle to approving a new sports arena. The Port, the Manufacturing and Industrial Council and the Seattle Mariners all have opposed building the arena in Sodo.
The Seattle Planning Commission last week reminded city leaders that state, regional and city policies prioritize industrial uses and restrict those that could interfere with industrial and manufacturing operations. It urged caution, and more review, before an agreement to build a new arena is finalized.
Additional protections sought by the city include putting the city in first-lien position with respect to other creditors. The current MOU says the position will be negotiated when arena backers seek private financing. The city also is asking that Hansen and his investment group disclose the amount of equity they will put into arena construction and team operations. It further asks for independent verification of financial performance targets.
“We expect to see the same information that all your other partners and commercial lenders will have before making their investments,” the City Council letter says.
Council President Sally Clark said Hansen has been responsive to the city’s concerns and has worked with officials over the past several weeks to reach mutually agreeable terms.
“He’s been incredibly open and creative in these conversations,” Clark said. “I’ve been really encouraged by his willingness to talk with us.”
July 30, 2012
Adopted ordinance includes enhanced financial security and increased transparency
The Metropolitan King County Council today gave its approval to an amended memorandum of understanding (MOU) and interlocal agreement (ILA) that will govern King County’s role in a proposed arena in Seattle’s SODO district. The vote is the first step in the possible return of National Basketball Association to Seattle as well as a potential National Hockey League franchise.
“The Council, through our Budget Committee, has spent the last two months reviewing every aspect of the MOU and ILA,” said Council Chair Larry Gossett. “After the adopted amendments, the majority of the Council believes this effort by Mr. Hansen to return the NBA to Seattle and attract a National Hockey League team is worth pursuing.”
“I’m excited by the prospect of bringing back our beloved Seattle SuperSonics. But we can’t legislate on that alone,” said Councilmember Joe McDermott who chairs the Council’s Budget and Fiscal Management Committee. “That’s why we undertook a thorough and careful review of the arena proposal. Our region’s experts in finance, economics and transportation – like Justin Marlowe, Dick Conway and Doug MacDonald – helped us better understand the benefits and risks of this legislation. Our work convinced me this proposal has sufficient protections for the County’s General Fund and taxpayers. So I was happy to vote in favor today.”
In February, private investor Chris Hansen presented to King County and the city of Seattle a proposal to construct a new arena in Seattle’s Stadium District with the ability to host NBA and NHL teams. After negotiations between Hansen, County Executive Constantine and Mayor McGinn, a proposed agreement was announced in May, outlining King County’s role in the proposed arena project.
The adopted MOU caps the County’s financial contribution at $80 million if the facility is home to both an NBA and NHL franchise. If only an NBA franchise is located in the arena, the County’s financial contribution tops out at $5 million.
“It is time to get started. This does not presuppose the final outcome, nor other mid-step votes but this is a great opening salvo,” said Council Vice Chair Jane Hague.
“This proposal is different from previous sport stadium proposals. We can bring the Sonics home, create jobs and raise our region’s quality of life without having to raise new taxes. With no new taxes and vigorous taxpayer protections in place, why would we not rally behind a proposal that results in our region gaining a professional basketball and hockey team?” said Councilmember Julia Patterson. “King County’s goal has always been to find a way to make this opportunity work for all – business, government, investors, taxpayers and fans. I believe today’s vote signals that commitment. We should move forward with this process knowing there is still work to be done.”
“Today’s decision opens the door to a process that will involve a number of steps and many additional opportunities for evaluation and public comments,” said Councilmember Kathy Lambert. “The realization of this arena still revolves around the successful acquisition of a team. If an opportunity becomes available, we will be prepared to take advantage of the economic and cultural benefits an arena could contribute to our region. This is an example of public-private partnerships that allow many diverse opportunities and benefits with no new general tax dollars.”
“I appreciate the public feedback we received on both sides of this important issue. One key concern was the impact of this proposal on the local economy, and I am pleased that the Council approved my amendment requiring an independent economic impact analysis to ensure that we study the effect of the arena on jobs and economic activity before we commit public funds,” said Councilmember Bob Ferguson.
Today’s vote came after Councilmembers heard over two hours of testimony from more than 60 speakers voicing their support and opposition to the plan. This was the second Council meeting in which the public had the opportunity to testify. On July 19, the County Council joined the Seattle City Council for a special joint meeting to hear public comment on the proposed arena.
The Council’s Budget and Fiscal Management Committee held nine meetings on the arena proposal. The Budget Committee and Council also received an evaluation of the proposal from the independent panel formed by Budget Chair Joe McDermott. The members of the panel, experts in economics, public finance, public-private partnerships, labor, and urban development and transportation provided their analysis of the arena proposal.
The Council amended and then adopted the MOU and ILA, which outlines the terms of the agreement and what steps must be completed before any county financing can be used for the project. The amended MOU includes provisions for:
Enhanced Financial Security for the County: The rights of the City and County to secure rent payment from ArenaCo have been significantly strengthened, including additional security provisions enhancing the governments’ ability to obtain payment in priority to other investors and lenders.
Independent Economic Impact Analysis: An independent economic impact study will be performed examining the impacts that may result from the construction and operation of the proposed arena, including changes in employment, economic activity, and tax revenues. The analysis will also examine the arena’s projected effect on the overall regional economy and its compatibility with regional economic development plans. An independent consultant will conduct the analysis, with all costs paid for by ArenaCo.
Infrastructure: ArenaCo, the company created by Hansen to construct the arena will participate in providing pedestrian access to the facility from the International District Station and Stadium Station light rail stops adjacent to the arena.
Transparency: The City and County will have the right to review all relevant financial records relating to the ability of ArenaCo and ArenaCo Parent to carry out their financial obligations under the Arena Lease if an exemption from the state Public Records Act is granted. If an exemption is not available, ArenaCo and ArenaCo Parent will be required to provide an alternate means for the City and County to assess the ability of ArenaCo and ArenaCo Parent to carry out their financial obligations.
Benefit to the Community: ArenaCo will adopt a Community Benefit Agreement with appropriate community organizations and the City and County to provide benefits to the communities that will be affected by the Arena. ArenaCo will be required to communicate with a variety of community organizations, community members and the City and County to identify the appropriate issues to be addressed by the Community Benefit Agreement.
Team Name: The revised MOU strengthens the provision that ArenaCo must make its best efforts to ensure the NBA franchise that plays in the facility will be named the “Seattle SuperSonics.” It also includes a provision that, once the name is secured, the City will always retain the team name and history.
The County Council is the first legislative body to act on the proposal. The Seattle City Council must also adopt the MOU and ILA for the project to proceed. If the City Council makes any changes to the MOU or ILA approved today, the County Council will need to vote on whether to accept those changes.
“We want to thank all the people who invested so much of their time and energy over the last two months,” said Gossett. “From the Council’s Central Staff, to the members of the independent panel who volunteered their time to review the proposal, to all of the people who took the time to contact us or testify during this process. Your input played a vital role in creating the proposal we accepted today.”
Source: King County, Washington
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Dilemma X 
August 2, 2012
Athletics