I am a supporter of the SODO Arena, and have watched the Key Arena process with great interest. If a good deal at Key can be worked out, I would be for it. But the process so far has raised more questions than answers.
I want to bring the Sonics back to Seattle as much as anyone, but I want to make sure that we do it right. At a time when homelessness is dramatically on the rise and Seattle increasingly feels like a city built only for the wealthy, we should not enter into any agreements with arena investors at KeyArena that would take money away from taxpayers and expose the City to financial risk.
Today, the City Council received its first briefing on Mayor Ed Murray’s recommendation to pursue negotiations with Oak View Group (OVG) regarding its proposal to renovate KeyArena. I commend the Council for retaining independent experts to analyze OVG’s “financial terms and conditions, municipal financial protections, and [their] expertise and wherewithal to successfully complete the project.” Nevertheless, OVG’s proposal raises serious concerns about the financial risk to Seattle, and that is even before we look at the neighborhood and traffic impacts.
From my review so far, here are the financial issues in the the OVG proposals that deserve scrutiny:
The City of Seattle could potentially responsible for cost overruns—we’ve been there before and we know how this uncertainty goes.
Unclear and significant debt financing from Goldman Sachs, including unknown contingencies to secure project financing. We must invest in projects we can trust.
Additional costs down the line. With this proposal, the City of Seattle would be on the hook for maintenance and other expenses in the future.
An uncertain revenue stream. This plan may not pencil out for taxpayers, who are only ensured $1 million fixed annual rent payment minus “development incentive credits.”
Numerous tax credits. Tax reform should be one of the paramount concerns of local lawmakers, and the tax credits on admissions taxes, leasehold excise taxes, and parking and parking fees certainly don’t fit with our vision of a more progressive tax structure.
Lost parking garage revenue to General Fund. Revenue from two Seattle Center parking garages will be directed to Oak View Group to finance this proposal—according to city documents, these two garages generate about $4 million per year for the General Fund. That’s money that the City needs and could be spent much more wisely.
As you can see, there are some very substantial reasons to be cautious about this proposal—concerns that should have been heard before. Instead of following a responsible review process to analyze the KeyArena proposal, Mayor Murray followed a political timetable that did not include any independent financial review.
While I’m encouraged that the City Council is now taking on a leadership role in diving into the details of Oak View Group’s proposal, I also remain concerned that the accelerated process for negotiating and approving the deal will leave almost no opportunity for the public to weigh in. The Mayor is proposing to “cut a deal” with OVG and a majority of council members before the opportunity for significant public review. That raises a serious red flag, because we know public scrutiny can make a difference.
Meanwhile, we have the benefit of a thoroughly vetted arena proposal that has been approved by both the City and County Councils - let’s check the last box on that project by approving the street vacation so that Chris Hansen can move forward in his work to return the NBA and NHL to Seattle.
This is what good governance is all about—balancing the needs and desires of the public, while remaining fiscally responsible. We must be good stewards of public dollars and public land, and know which opportunities will make the most sense for our financial present and future.
Our city is in a great position to return the Sonics and NHL to Seattle. We have two competing proposals to build a new arena in our city—and we must uphold strict standards for protecting the public interest on financing and transportation so that we can negotiate a deal that protects taxpayers while also putting ourselves in a position to attract teams to Seattle.
That’s why I support approving the street vacation for Chris Hansen’s arena project in the Stadium District. And it is also why I believe we must address some serious concerns with the Oak View Group proposal to renovate KeyArena before entering into any agreements with their investment group.